Who’s Winning Apple’s Privacy Ping Pong Game? Is It Even About Privacy?

At a privacy conference keynote back in 2018, Tim Cook stated that privacy is “a fundamental human right.”? By that point, Apple’s plans to block tracking and attribution methods, depended on by ad platforms and those who use them, were well underway. To this day, Apple and the ad platforms have been stuck in a game of privacy ping pong, batting against each other with restrictions versus workarounds.

The question is, what’s the prize Apple is playing for? Is it protecting the rights of their users or building out an ad business? Let’s look at how the game has been played so far.

Apple’s attempt to win at advertising

We have to go back more than a decade to find a time when Apple was trying to compete with, rather than stifle, mobile advertising. In 2010, they announced iAd, highlighting the interactivity of the ads it served and the ability to keep users within the app when they tapped.

Developers would initially keep 60% of ad revenue generated, with Apple retaining the rest. Apple’s cut was later lowered to 30%. However, it was still considered too costly compared to the competition, especially when its walled garden approach on iOS meant that it could only offer marketers and publishers a fraction of the global smartphone market.

Apple killed off the struggling iAd in June 2016 – it was not missed, relinquishing its stake in the mobile ad market while Google and Facebook’s mobile ad revenues continued to balloon.

But long before this it was clear that Apple’s stance on mobile advertising had changed: they were no longer going to compete with their rivals, they were going to obstruct them.

A relentless volley against tracking – Intelligent Tracking Prevention

The first sign that Apple was going to adopt the position of privacy protector came in 2014, when CEO Tim Cook penned an open letter to customers which said, amongst other shots aimed at its competitors:

“Our business model is very straightforward: we sell great products. We don’t build a profile based on your email content or web browsing habits to sell to advertisers. We don’t ’monetise’ the information you store on your iPhone or in iCloud. And we don’t read your email or your messages to get information to market to you. Our software and services are designed to make our devices better. Plain and simple.”

Apple upset the digital advertising world again in 2015 with the release of iOS 9, which allowed Safari users to install third-party ad-blockers. Users who installed them would be able to avoid, amongst many other types of advertising and tracking, Google’s major moneymaker: search ads.

Between 2017 and 2020, Apple kept racking up privacy points with blow after blow to its rivals. The launch of Intelligent Tracking Protection (ITP) in 2017, which limited website tracking capabilities in Safari by blocking some types of third-party cookies, fundamentally affected how digital marketers measured and optimised for performance on iOS.

With their cookies cut, marketers turned to other options for maintaining tracking capabilities. One was link decoration: When website users clicked a link to go to another site, the first website could include an ID in the destination URL, which the second website would store in a first-party cookie and share back with the first. This enabled the tracking of user activity between the two sites.

Apple hit back with ITP 2.1 in 2019, which reduced the usefulness of first-party cookies by cutting the amount of time they could be stored on a user’s device to seven days. They cut it again, in ITP 2.2, to one day. Ad tech then adjusted link decoration so that IDs were stored in non-cookie website data. You can guess what happened next: Apple released ITP 2.3, which deleted all website data for sites not visited by the user after seven days.

In 2020, Apple served its final blow to cookie-based tracking by blocking all third-party cookies in Safari by default.

2020 to today: Safari secure, Apple moves on to apps

By 2020, Apple had fully committed to the privacy hearts and minds game. Shifting public sentiment, along with regulatory changes such as the EU’s GDPR, had made privacy a top public concern. No one would dare say that privacy shouldn’t be respected, so by Apple positioning themselves as protectors of privacy, the implication was that anyone who opposed Apple also opposed privacy protection.

At this point, Google was unveiling privacy reforms of its own: it announced its intention to phase out third-party cookies in Chrome as well as the Chrome Privacy Sandbox, an ongoing initiative to replace cookies within the browser privacy-compliant alternatives relying on aggregated and anonymised user data.

With tracking turned on its head in all major browsers, in 2021 Apple moved on to app tracking, where it could deal further blows to its competitors' mobile ad revenue. The industry-shaking release of Apple’s App Tracking Transparency framework (ATT) meant that users had to opt in via a prompt when an app wanted to track them. Around 62% of users opted out.

Developers considered using a list of device characteristics — such as IP addresses, screen resolutions, plugins for web browsers, installed apps, and time zones – to create a unique combination that could act as an identifier. Apple then informed the industry that it would reject apps from its App Store that contained these types of IDs.

In February 2022, Google announced it would be bringing similar measures to its own mobile OS with the Android Privacy Sandbox, due to be released in the following years.

Apple never stopped playing in the advertising business

Since Apple first positioned itself as a privacy protector, commentators have been trying to guess their strategy: Is it purely a PR move? Is there a genuine ethical basis? Are they obstructing their ad-revenue rich competition? There will never be a definitive answer, and aspects of all three are most likely true.

If Apple was purely playing a PR game, they didn’t take top spot on the podium; consumers in the United States — their key market — still do not trust Apple with their data more than Google, though both are more than twice as trusted as Meta’s Facebook and Instagram.

What we do know is that Apple has done very well following ATT. Its advertising business more than tripled in the six months since its introduction, cornering a lucrative market that generates 87% more consumer spending than the Google Play Store. Apple’s in-house Search Ads business now accounts for 58% of all iPhone app downloads, up from just 17% the year before, and analysts expect the business to be making $20 billion in revenue within three years.

Apple’s competitors may have lost a slice of the marketing pie but they certainly weren’t starving in 2021: Google’s advertising grew 42.5% year-on-year following the post-ATT exodus; Meta may have lost as much as $10 billion as a result of ATT but still made $33.7 billion in ad revenue; and Amazon’s seeing growth in ads, too, with $31 billion in ad revenue, up from $19 billion.

In the end, Apple has won the game on iOS, where its in-app ad solution helped drive a 24% increase in services revenue, while Google, Meta and Amazon continue to compete outside of it. So far, Apple has swatted away charges that they are not playing fairly, though the EU’s incoming Digital Markets Act may well put a few cracks in their walled garden.

Is Apple’s privacy agenda truly consumer-focused or are they using privacy to benefit their own competitor objectives? Both are likely to be true. Love to hear your thoughts.