The demise of user tracking may be close at hand, as major technology firms increasingly take up privacy measures amid intensifying scrutiny from regulators and elected officials.
These steps are clear wins for privacy advocates and evident complications for brands that rely on ad-targeting. But that’s where the clarity ends. Big Tech is moving into uncharted waters, and the ripple effects illustrate how much of the internet hinges on following people around online.
The hangover from Apple’s launch of antitracking features for iPhones last year still persists for some brands, retailers and other advertisers. Now most other mobile devices will gear up to follow suit, with similar updates heading for Android.
Google’s two-year plan, revealed last week, expands the scope of its Privacy Sandbox to its mobile operating system. The Sandbox is the same initiative charged with retiring third-party cookies — and therefore user-tracking — in Chrome browsers. The goal is the same: The company aims to develop new standards and technologies that protect user privacy, but won’t scuttle the search giant’s voluminous advertising business. Others have been developing new ad solutions that don’t require tracking, such as Yahoo, which launched “ID-less” contextual targeting based on machine learning and other cues.
But the effect on mobile cuts to the heart of online advertising’s growth. Mobile ad spending skyrocketed 23 percent in 2021, pulling in more than $295 billion, and forecasts for this year peg $350 billion. Consumers are also buying more with their smartphones. In the U.S. alone, sales are expected to surpass $728 billion by 2025, breaking 44 percent of all e-commerce in this market.
People logged 3.8 trillion hours on mobile devices last year, a report by App Annie, now Data.ai, revealed. The company’s chief executive officer Theodore Krantz called mobile “the go-to device of the future,” as phones “break records in virtually every category — time spent, downloads and revenue.”
More usage, including shopping, equates to more tracking, which underscores the need to button up consumer privacy. For Google, the scenario also lays out the high stakes in getting that just right. So it matches the spirit of Apple’s update, but not the execution.
When App Tracking Transparency on iPhones launched in April 2021, it had a steep and immediate impact. The feature gave users an easy way to keep third parties from monitoring them across apps, and according to Flurry Analytics, nearly all U.S. iOS users jumped on it within the first three weeks. Just 4 percent permitted apps to track them. Numerous app-driven brands, retailers and marketplaces told WWD that they saw the drop-off in their businesses, and some are still trying to recover.
The future modification to Android may be even more consequential. Google’s mobile platform accounts for some 70 percent of the global smartphone market.
In a dig, likely at Apple, Anthony Chavez, vice president of product management, Android security and privacy, called blunt tools “ineffective” in his blog post — a suggestion that Google will take a more nuanced approach. Of some sort.
He explained that “these solutions will limit sharing of user data with third parties and operate without cross-app identifiers, including advertising ID. We’re also exploring technologies that reduce the potential for covert data collection, including safer ways for apps to integrate with advertising SDKs [software development kits].”
Those ways are anyone’s guess, as Chavez offered few details. But the ambiguity was by design.
Google invites partners, developers and regulators to offer input and shape how it builds the tech. Bathing Android in the dulcet narratives of user privacy, achieved through cooperation, accomplishes a few different things: As a collegial effort, it’s distinct from Apple and its typically closed, singular development. Letting partners weigh in early may mitigate criticism later as well, the company presumably hopes. Kicking off the Privacy Sandbox for Android as a collaborative work in progress also explains why there are no concrete technical details yet.
Some marketers aren’t waiting for the specifics, as the work to analyze and restrategize has already begun.
Based on what’s known now, Margo Kahnrose, of commerce intelligence and marketing platform Skai, can see how modifications across content, placements and performance measurement will need to play out.
As chief marketing officer for the firm, which counts retailers such as Target, Best Buy, Amazon and Macy’s as clients, Kahnrose believes Android’s privacy revamp “can have a stratifying effect on digital, in that channels that relied heavily on third-party data — i.e., social, programmatic — may need to move up the funnel, focusing on branding and broader audience targeting, while other channels, paid search and Apple Search ads, capture the demand.
“We are going to have to start embracing holistic measurement, incrementally. It is going to be a more durable solution for advertisers than trying to hack the new normal.”
For others, Google’s plans come with hefty dose of déjà vu. According to Belardi Wong, a direct-to-consumer marketing firm that works with Bombas, Allbirds, Birkenstock and other brands, numerous clients already prepared for the iOS 14.5. For them, Android’s privacy push smacks of more of the same.
The effort included diversifying their marketing mix with other channels, such as direct mail, audio and connected TV. Along the way, they noticed an eye-opening discovery.
“With Apple, and now Google, limiting conversion tracking and measurement capabilities, channels that previously ‘under-performed’ compared to Facebook — because Facebook was able to attribute direct click and view through conversions — are now much more comparable in terms of performance,” Calla Murphy, Belardi Wong’s vice president of digital strategy and integrated marketing, told WWD.
“This includes channels such as TikTok, Pinterest and Snapchat and contextual targeting or targeting by topic or cohort.”
This experience sheds light on another matter, namely how the inability to track iPhone owners devastated Facebook’s Meta. The social media-slash-metaverse company blames Apple for losses that, it expects, will amount to $10 billion this year. Chief executive officer Mark Zuckerberg seemed to know this would happen, as he’s been vilifying the feature and the company that built it for two years now.
He’s spoken out to employees — or “Metamates,” as he calls them — investors and the general public across internal meetings, earnings calls and even newspaper ads. The theme was always the same: Apple’s software update amounts to an attack on small businesses, the CEO claimed. But in the face of Google’s pledge to stop user-tracking in Android, Zuckerberg has been uncharacteristically quiet.
A 2020 appearance on “Axios on HBO” may offer a clue as to why: Apple’s App Store is a restrictive gatekeeper, he said, but Android developers aren’t beholden to the Google Play store. “[So] at least you still have a way to get your app on people’s devices,” he said, referring to the ability to load apps from the internet. “And that means that people aren’t completely going to be shut out if they’re doing something that Google doesn’t prefer.”
Those words may or may not offer comfort to the Facebook and Instagram parent today, two years later. But something else might — and it could have its iOS nemesis to thank for it.
Its stomach-churning drop in market capitalization, which booted it from Bloomberg’s top 10 ranking of most valuable companies, could also help it dodge a Congressional microscope. With its historic plummet, from over $1 trillion last year to $565 billion, Meta apparently shimmies under the $600 billion monopoly threshold set in a crop of looming House antitrust bills.
The takeaway: Privacy alone remains a thorny issue for Big Tech. But when it overlaps with monopoly concerns, expect the complexities to multiply.
Google, for whom being investigated and sued over antitrust charges is a way of life, surely got the memo. It structured the Privacy Sandbox to please everyone, from end users to advertisers, website owners and regulators. But it still wound up becoming another vector for allegations of anticompetitive tactics. And with more than $200 billion in annual revenue, primarily from ads, and a $1.689 trillion market cap, there’s no chance it can join Meta under the legal limbo stick.
So far the bid to end tracking in Chrome, which offers hints of what may come with Android, has been fraught. The plan to deprecate cookies hasn’t actually gone to plan at all, triggering nerves from advertisers and media companies, a delay for another two years and a late-breaking pivot from its original solution, FloC, to an alternative last month.
Meanwhile, lawsuits in the U.S. as well as abroad accuse the company of damaging businesses or using privacy as an excuse to hoard data on consumer web behavior.
A recent complaint filed by German publishers and other content companies in January demanded that EU antitrust regulators step in and stop the cookies from crumbling. In the UK this month, competition regulator the Competition and Markets Authority accepted the tech giant’s latest commitments not to use the cookie strategy to hurt competition, but vowed to keep a close eye on the matter. Such cases add to Google’s antitrust headaches, which fueled its request for a federal court to throw out another Texas lawsuit, after it lost an appeal of a $2.8 billion EU antitrust case in November.
The twists and turns matter, as tech companies realize that their “Wild West, anything goes” phase is coming to an end. Facing growing calls for regulation and accountability, companies like Meta, Microsoft, Amazon and Apple spent record amounts on D.C. lobbyists last year, at nearly $70 million.
Most of these tech empires have faced anticompetition probes or court cases, as well as consumer privacy complaints, particularly as issues of all stripes keep springing up, from Apple AirTag-enabled illicit surveillance to how Amazon secures Alexa voice processing data or Ring doorbell camera footage. While troubling, product-specific concerns have a definable scope, unlike the vast reach of online tools, which could carry equally vast potential harms — and not just with the current internet or devices.
Skai’s Kahnrose nodded to that, though in much more optimistic terms.
The Privacy Sandbox for Android announcement arrived just days after she watched the recent parade of metaverse-related Super Bowl ads, and the dots connected in her mind, she added. If the internet is evolving into this shared virtual world, Google’s moves may signal that “we are moving toward a safer web and there is room for new relationships between consumers and brands.”
In the meantime, the biggest risks may not target brands, which seem to be adapting, but the tech platforms themselves. How they navigate that, as they build for the future, however, will matter to everyone.