Apple and Google Are Changing the Digital Advertising Model, Whether Advertisers Like It or Not
For decades, web-based companies have had free rein to track their users’ activity online and sell the information they gather to third parties. That era may be ending soon.
Apple and Google recently announced plans to incorporate new privacy software into their web browsers, which will severely limit the data web-based companies will be able to collect.1 The change is likely to result in more online privacy for users and less intrusive ads from a wide range of websites, while simultaneously strengthening the hold Google and Facebook have over the digital advertising market.2 This is significant because digital advertising revenue is the foundation on which most websites are built,3 and is expected to generate $83 billion in revenue by the end of 2017, which is a sixteen percent increase from 2016.4
Whether internet users realize it or not, internet companies are closely monitoring their online activity. In fact, they not only monitor online activity, they also track, package, and sell that information to third parties. Who they sell it to, and what it is ultimately used for, can range from direct marketing by online retailers to scientific studies by scholars, and everything in-between.5 This is commonly referred to as big data, and it is the lifeblood of online advertisers.
Most websites collect their users’ information by using cookies. For the uninitiated, these cookies are not the delicious treat one feels guilty for eating in the break room at work. Instead, cookies are small pieces of data that are stored on a user’s web browser while the user is actively browsing a website.6 Cookies are an integral part of the internet, as they allow websites to remember passwords, site preferences, and products in an online shopping cart.
Apple considered these privacy concerns when it included an “intelligent tracking prevention” system into its recent iOS and desktop Safari web browser.7 The new feature prevents websites from tracking cookies on the browser for more than twenty-four hours, which it hopes will curtail predatory ad targeting by third-party advertisers. However, the cookie blocker will not halt all cookie tracking. For instance, the feature is not likely to interfere with tracking by internet giants like Facebook and Google, since most of their users stay logged into their user accounts all day, or visit the sites at least once a day. However, the twenty-four-hour limitation is likely to be a huge problem for smaller advertising companies that rely on cookies to collect internet users’ data.
This is especially true considering Google recently announced its own plan to “filter ads” from its popular Google Chrome web browser, beginning sometime in 2018.8 To be sure, ad-blocking apps have been around for a long time, but this will be the first time Google has built an ad blocking software into its Chrome web browser. Reports have also surfaced that Google plans to roll out an ad-blocking software for Android in 2018 as well. However, Google does not plan on blocking its own ads from the Chrome web browser, but only ads that are deemed “intrusive” by the user or Google’s own algorithm.9
As a work-around, more traditional companies are searching for other ways to use their customers’ data without relying on cookies. Verizon recently introduced an opt-in service called “Verizon Up” which tracks its customers’ web browsing, app usage, and device location.10 In exchange for this information, Verizon promises its customers perks such as free Uber rides, iTunes gift cards, and the chance to win free concert tickets. Instead of poaching its own customers’ data without their knowledge, Verizon has chosen to confront the issue head-on by offering its customers a benefit in exchange for their private information.
Although the move to block cookies will keep personal information out of the hands of third-party websites, it is likely that Google and Facebook will continue to reap the benefit of tracking its users’ online habits. Of course, right now there is nothing to stop Google or Facebook from selling that information to third parties or using it for its own purposes. This sparks a question on personal privacy: is it better for a large number of companies to have a small amount of user information, or for two companies to have it all?
GLTR Staff Member, Georgetown Law, J.D. expected 2018; University of Maryland, B.S. 2008. ©2018, Joseph Simpson