I have been seeing a lot of news about privacy in general and that got me thinking why now, what triggered it. Reading back I found an interesting pattern and when I tried connecting the dots it went back to 2010 (maybe even earlier). So here it goes.
Prologue: If I were to simplify, there are 2 types of advertising: Display Ads & Search Ads. These are mutually exclusive. This story captures Apple's journey from Display to Search Ads in the quest for more money.
2010: Steve jobs introduced iAds which was Apple's advertiser business. In iAds, app developers could show ads to users to make some extra money. Among other things in the launch announcement he said
“Developers [of free apps] need to find a way to start making their money. A lot of developers turn to advertising – and we think these current advertisements really suck.”
I will get to why this line is important later. Just remember that this form of advertising is called Display Advertising.
2011-2013: Apple was late to the advertising game but sensing the revenue opportunity it wanted to be a market leader. In the next 3 years it tried many things to improve its competitiveness . From simple things like lowering the minimum budget requirements so smaller players can play to more complex things like enriching the ad landscape.
2014: Apple launches the cross device retargeting product , one of the most precise form of ads. For those of you unfamiliar with this, remember when you have seen an advertisement of a hotel or a flight follow you everywhere, even on different devices? This is what enables it.
2015: Apple had hoped to gain 50% of advertising market share but in reality it had only been able to capture a meager 2.5%
Enter Courage:
2016: Remember Apple's meme about Courage about the AirPods? Well they actually did it internally as well. Having failed to be a market leader, they decided to close down iAd and took an exact opposite direction.
They had a plan. If they couldn't capture the market share, they would create a new market. It was a two fold strategy.
First, they launched App store ads. These are the ads that you see when you go to app store and search for app, Apple would show you an advertisement of something similar. These are called Search Ads.
2017: Second, if I can't have it, no one can. Remember in the beginning of this post I talked about Display Advertising, Apple decided that if they cant be successful they will destroy this market for everyone. In the wake of destruction, hardest hit are the developer of free apps because that is their main source of income, the very people Jobs wanted to support in 2010. Talk about irony!
They were quite smart about it as well. Instead of showing their cards at open they were purposefully slow about it. In 2017, Apple launched ITP 1.0 (Intelligent Tracking Prevention) . We can skip the details about the specifics but suffice to say this was the fall of the dominoes for Display advertising making it increasingly harder to make money from it.
2018-2019: Apple kept releasing newer version of ITP like 2.0 & 3.0 with the last version being the final nail in the coffin for Display Ads. This was a master-stroke from Apple. Not only did they kill the market they also ensured that their competitors waste time chasing increasing difficult hurdles of ITP only to come to realize that it was a dead-end.
2020: Advertisers need to spend money somewhere. With ITP launches, advertisers soon realized that there was no point in spending money on Display Ads so they shifted their budgets to Apple's search Ads. By 2020, estimate says Apple makes $5B a year from this which is expected to grow to $20B by 2024.
2021: Competitors still had a little bit of ammo left by using increasingly complex hacks behind the scenes. However Apple doubled down on its PR narrative about privacy saying that data from 3rd party is privacy unsafe and only 1st party data can be trusted. They called it App Tracking Transparency. An example of 1st party is Apple, so effectively they shield themselves from its fallout. In all of this it is never truly explained why 3rd party is inherently bad and 1st party is inherently bad. I guess if you repeat something a 1000 times it becomes the truth.
Since Apple has total monopoly on iOS it uses very different privacy language when it comes to Apple vs others.
Softer undertones when Apple wants to use your data. Notice the default button favors Apple
Wait a minute, one might say that because I already agreed to buy an Apple device I am fine to let them use my data. But like they say, the devil's in the details. If you look at what data they use, they use your apple id, age, gender, zipcode & past purchases. But that's not all, this is from their website
'Consistent with Apple’s policies on tracking, this may include information that individual developers have collected through their relationship with users based on their direct interactions with them'
Which implies if there is a developer who wants to misuse your data, there are no protections to stop them.
Now let's see how Apple treats advertisers who don't want to use Apple's Search Ad.
So it took 10+ years but Apple has firmly captured the advertising narrative. They are setting the rules and everyone is following them.
Facebook & Mark have been furious how Apple is having it's way and nobody bats an eye. They threw a lot of tantrums and rightfully so but Facebook having destroyed its own self image, nobody listened. And so out of desperation Facebook is building Metaverse where they can show whatever ads they want.
Epilogue: I will end it with a riddle. I have an offer you cannot refuse. 'You pay me $15 billion dollars every year and in return I will use it to build your competitor from the money you just paid me.'
Disclaimer:
- I have small positions in both Apple & FB
- All information is from public sources
- This post is not an attempt on ethics. Rather it's an attempt to capture how large corporations fight with each other.
- Personally I have given up on privacy, there are just too many leaks everywhere.
Leave a Reply