The Battle for Digital Privacy Is Reshaping the Internet

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As Apple and Google make privacy changes, companies grapple with the fallout, Madison Avenue is fighting back and Facebook has cried.
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SAN FRANCISCO — Apple introduced a pop-up for iPhones in April asking people for permission to be tracked by various apps.
Google recently outlined plans to disable a tracking technology in its Chrome web browser.
And Facebook said last month that hundreds of its engineers were working on a new method of serving ads without relying on people’s personal data.
The developments may seem technical, but they were connected to something bigger: an increasingly fierce battle for the future of the Internet. The battle has ensnared tech titans, rocked Madison Avenue and disrupted small businesses. And it heralds a profound shift in how people’s personal information can be used online, with profound implications for the ways businesses make digital money.
At the center of the battle is what has been the lifeblood of the internet: advertising.
More than 20 years ago, the internet revolutionized the advertising industry. It scrapped newspapers and magazines that relied on selling classified and print ads, and threatened to dethrone television advertising as the primary way for marketers to reach large audiences.
Instead, brands spread their ads across websites, with their promotions often tailored to people’s specific interests. Those digital ads fueled the growth of Facebook, Google and Twitter, which offered their search and social networking services to people for free. But in return, people were tracked from site to site by technologies like “cookies,” and their personal information was used to target them with relevant marketing.
Now that system, which has grown into a $350 billion digital advertising industry, is being dismantled. Driven by fears of online privacy, Apple and Google have begun revamping the rules around online data collection. Citing the mantra of privacy, Apple has rolled out tools that stop marketers from following people. Google, which relies on digital advertising, is trying to get it both ways by reinventing the system so it can continue targeting people without misusing access to their personal data.
When personal information is no longer the currency people give for online content and services, something else has to take its place. Media publishers, app makers and ecommerce stores are now exploring different avenues to survive a privacy-conscious internet, in some cases overturning their business models. Many choose to make people pay for what they get online by charging subscription fees and other fees rather than using their personal information.
Jeff Green, the chief executive of the Trade Desk, an ad technology company in Ventura, California that partners with major ad agencies, said the behind-the-scenes battle was fundamental to the nature of the web.
“The internet answers a question it has struggled with for decades, namely: how is the internet going to pay for itself?” he said.
The consequences could harm brands that relied on targeted advertising to get people to buy their goods. It may also hurt tech giants like Facebook initially, but not for long. Instead, companies that can no longer track people but still need to advertise are likely to spend more on the biggest tech platforms, which still have the most consumer data.
David Cohen, chief executive of the Interactive Advertising Bureau, a trade group, said the changes would “continue to generate money and attention for Google, Facebook and Twitter”.
The shifts are complicated by the opposing views of Google and Apple about how much ad tracking should be rolled back. Apple wants its customers, who pay a premium for its iPhones, to have the right to completely block tracking. But Google executives have suggested that Apple has turned privacy into a privilege for those who can afford its products.
For many people, this means that the Internet can look different depending on the products they use. On Apple gadgets, ads may be only slightly relevant to a person’s interests, compared to highly targeted promotions on Google’s web. Website makers can ultimately take sides, so some sites that work well in Google’s browser may not even load in Apple’s browser, said Brendan Eich, a founder of Brave, the private web browser.
“It will be a story of two internets,” he said.
Companies that do not keep up with the changes run the risk of being run over. Increasingly, media publishers and even apps that show the weather are charging subscription fees, just like Netflix charges a monthly fee for video streaming. Some ecommerce sites are considering raising product prices to maintain their revenues.
Think of Seven Sisters Scones, a mail-order confectionery in Johns Creek, Georgia, that relies on Facebook ads to promote its items. Nate Martin, who leads the bakery’s digital marketing, said that after Apple blocked ad tracking, its digital marketing campaigns on Facebook became less effective. Because Facebook was no longer able to get that much data about which customers like pastries, it was more difficult for the store to find interested buyers online.
“Everything came to a halt,” said Mr Martin. In June, the bakery’s sales fell to $16,000, from $40,000 in May.
Sales have been stable since then, he said. To offset the declines, Seven Sisters Scones has talked about raising prices on sampler boxes to $36 from $29.
Apple declined to comment, but its executives have said advertisers will adapt. Google said it was working on an approach that would protect people’s data, but also allow advertisers to continue targeting users with ads.
Since the 1990s, much of the web has been rooted in digital advertising. In that decade, a piece of code planted in web browsers — the “cookie” — began tracking people’s browsing activities from site to site. Marketers used the information to target ads to individuals, so someone interested in makeup or cycling saw ads on those topics and products.
After the iPhone and Android app stores were launched in 2008, advertisers also collected data about what people were doing in apps by placing invisible trackers. That information was linked to cookie data and shared with data brokers for even more specific ad targeting.
The result was a huge advertising ecosystem that underpinned free websites and online services. Sites and apps like BuzzFeed and TikTok have thrived with this model. Even ecommerce sites rely in part on advertising to grow their business.
But distrust of these practices began to grow. In 2018, Facebook became embroiled in the Cambridge Analytica scandal, in which people’s Facebook data was unlawfully collected without their consent. That same year, European regulators issued the General Data Protection Regulation, laws to protect people’s information. In 2019, Google and Facebook agreed to pay record fines to the Federal Trade Commission to resolve allegations of privacy violations.
In Silicon Valley, Apple has reconsidered its advertising approach. In 2017, Craig Federighi, Apple’s chief of software engineering, announced that the Safari web browser would block cookies from tracking people from site to site.
“It kind of feels like you’re being followed, and that’s because you are,” said Mr. Federighi. “No longer.”
Last year, Apple announced the pop-up in iPhone apps that asks people if they want to be tracked for marketing purposes. If the user says no, the app should stop monitoring and sharing data with third parties.
That sparked outrage from Facebook, one of the affected apps. In December, the social network ran full-page newspaper ads saying it was “standing up to Apple” on behalf of small businesses that would be damaged once their ads could no longer find specific audiences.
“The situation will be challenging for them to navigate,” said Facebook CEO Mark Zuckerberg.
Facebook is now developing ways to target people with ads using insights collected on their devices, without allowing personal data to be shared with third parties. If people who click on deodorant ads also buy sneakers, Facebook can share that pattern with advertisers so they can show sneaker ads to that group. That would be less invasive than sharing personal information such as email addresses with advertisers.
“We’re in favor of giving people more control over how their data is used, but Apple’s sweeping changes have happened without input from the industry and those most affected,” a Facebook spokesperson said.
Since Apple released the pop-up, more than 80 percent of iPhone users worldwide have opted out of tracking, according to ad tech companies. Last month, Peter Farago, an executive at Flurry, a mobile analytics company owned by Verizon Media, posted a post on LinkedIn calling it “time of death” for ad tracking on iPhones.
At Google, Sundar Pichai, its chief executive, and his lieutenants began discussing in 2019 how to provide more privacy without destroying the company’s $135 billion online advertising business. In studies, Google researchers found that the cookie broke people’s trust. Google said its Chrome and advertising teams concluded that the Chrome web browser should stop supporting cookies.
But Google also said it wouldn’t disable cookies until it had another way for marketers to continue serving people targeted ads. In March, the company trialled a method that uses its data sources to group people into groups based on their interests so that marketers can target ads to those cohorts rather than individuals. The approach is known as Federated Learning of Cohorts or FLOC.
Plans keep moving. Google will not block trackers in Chrome until 2023.
Still, advertisers said they were alarmed.
In an article this year, Sheri Bachstein, the head of IBM Watson Advertising, warned that the privacy shifts put the risk of relying solely on ads. Companies need to adapt, she said, including by charging subscription fees and using artificial intelligence to serve ads.
“The big tech companies have given us a clock,” she said in an interview.
Kate Conger contributed coverage.
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