Stronger privacy protections may make their ads less effective. In 2018 the EU imposed its General Data Protection Regulation (GDPR) and America’s most-populous state introduced the California Consumer Privacy Act. Both made it harder to harvest users’ data. Since 2020 Apple’s Safari web browser has blocked the “cookies” that advertisers use to see what people get up to online. Google has similar plans for its more popular Chrome browser.
Apple’s latest change makes explicit an option that was previously hidden deep in its phones’ settings. Users can forbid apps to access their “identifier for advertisers” (IDFA) code, which singles out their device, and from tracking their activity across other firms’ apps and websites. It amounts to a “seismic shift” in in-app advertising, says Jon Mew, head of the Internet Advertising Bureau, an industry body.
The platforms best-placed to survive the shake-out are those with lots of consumer data of their own. Google’s $147bn ad business gets most of the information it needs from the terms users type into its search bar. Amazon, whose digital-ad business is the third-largest and growing fast, has the advantage of being able to track what people buy after seeing ads on its site—a “closed loop”, as marketers call it. Apple knows where iPhone-users go, what time they wake up and much besides. It has a small but growing ad business, selling prominence in its app store, for instance.