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June 23, 2021

Apple block on third party cookies will change digital media forever

By GlobalData Thematic Research

For years, Apple has been positioning itself as a stalwart defender of consumer privacy. This stance differentiated the company from Google and other Big Tech companies, but the latest changes Apple made to its browser, Safari, may have undesired consequences. The changes mean that third-party cookies that conduct cross-site tracking no longer work on Safari. Consumers and privacy advocates have welcomed the move, but they have made life more difficult for advertisers and small publishers.

Apple has been tackling privacy issues since 2015, when it first introduced an ad blocker to Safari. In 2017, it released a privacy feature called Intelligent Tracking Prevention (ITP), which was added to Safari and Apple’s mobile operating system, iOS. Two years later, ITP appeared on macOS, Apple’s desktop OS.

The debate around online privacy has grown in the last five years, and Apple has communicated to its customer base that it was strengthening the privacy features of its products. The company likes to remind its customers that it doesn’t sell their personal information to advertisers, unlike Google, Amazon, or Facebook. In 2019, during the CES consumer electronics trade show in Las Vegas that Tim Cook’s company famously does not attend, Apple paid for a billboard outside one of the venues that said, “What happens on your iPhone, stays on your iPhone”.

Fast-forward to 2020, and Apple took the logical next step on its privacy drive. It stepped up the ITP feature to block, by default, without exceptions, all third-party cookies. This means that advertisers and publishers now have less information about who is visiting their pages, effectively ending targeted ads in Apple’s ecosystem.

In 2021, it followed with an iOS update that asks users to opt in if they want in-app ad tracking.

Apple stance on third party cookies will have wide ranging consequences

Cross-site tracking cookies have a bad reputation, but the entire business model of many digital advertising companies is built on targeting ads to users based on their browser history. Non-targeted ads have lower click-through rates and, therefore, generate less revenue for advertising companies.

The measure also puts small publishers at a disadvantage. Large global publications, like The New York Times or The Guardian, have the infrastructure in place to continue tracking their readers while they browse the different sections of their websites and apps, with or without third-party cookies, allowing for a certain degree of targeted advertising. Smaller publishers do not always have that infrastructure in place and, instead, relied on the analytics provided by digital advertisers.

By switching off third-party cookies completely, Apple is not only killing off the business model of many ad companies, but also giving an advantage to established publishers.

Businesses will have to adapt

This is not a problem that digital media companies have had to deal with globally yet, as Apple’s share of the smartphone market is not dominant anywhere in the world outside the US and, even there, Safari is not a market leader. Apple’s share of the desktop computer market is small everywhere, including in the US.

Nonetheless, business models will have to be adapted, as it is unlikely that there will be a way back for third-party cookies. Apple’s move puts pressure on Google to move in the same direction, with the company already promising to phase out support for third-party cookies by 2022.

A focus on privacy is undoubtedly welcome. However, when Google ends cross-site tracking on Chrome and Android, the company will continue to have plenty of information about its customers based on their activity across all Google products, not least search, in which Google has global dominance. As for smaller digital media companies, they will need to adapt or leave the market.