Apple and Alphabet-owned Google are shaking up the $330 billion digital-advertising industry. By making it harder for marketers to track individual users, the technology giants can cement their own dominance while pleasing privacy-focused regulators. The rest of the online ad sector and mobile-game companies will feel the shockwaves.
The iPhone maker’s Chief Executive Tim Cook will soon force advertisers to get explicit consent before tracking users across different apps. Many will probably decline. Meanwhile, Google is removing from its Chrome browser third-party cookies, which allow digital marketers to build targeted advertising profiles of individual netizens.
The advantages for the Big Tech duo are manifold. Cook gets to claim the moral high ground over data-hungry rivals like Facebook. The changes also encourage app developers to ditch advertising in favour of subscriptions, of which $2 trillion Apple can take a cut. And Google, by doing away with third-party cookies, effectively increases the scarcity value of its own first-party data, gleaned from searches and other sources. Finally, regulators are likely to appreciate any moves that stop web and smartphone users from being covertly surveilled.
But not everyone will be popping the champagne. Take mobile gaming. Smartphone-based titles raked in almost half of the gaming industry’s $175 billion of revenue in 2020, according to analytics firm Newzoo. But signing up new punters without individual targeting will be tricky. And in-game advertisers, who help to bankroll the industry, may be reluctant to splash out after Apple’s privacy changes.
Likewise, online marketers may struggle to place targeted ads without third-party cookies on Google’s Chrome browser, which is on about 70% of desktop computers according to Statista. The lack of targeting will in turn reduce the value of advertising slots sold by online publishers like newspapers and ad-industry middlemen, sapping their revenue. The industry’s hopes will be pinned on companies like $36 billion software group Trade Desk, which is helping marketers to find cookie alternatives.
The consequences of the Google and Apple changes highlight a crucial problem for regulators. Tighter privacy standards often strengthen the industry’s biggest players, who either have preferential access to data or can make money in other ways. The risk is that a private web becomes the domain of an even more private club.
Also Read: ‘Spin cycle’: UK finance watchdog finds rare area to act tough
Also Read: Beijing-based ByteDance plans to develop semiconductors