While a long time coming, DOJ’s antitrust lawsuit against Google has arrived at an important time for the ad tech industry, as marketers are bracing for Apple’s crippling Identifier for Advertisers (IDFA) changes. And with Apple also being accused in the recent 449-page report from the US House of Representatives of abusing its respective monopoly power, Tim Cook must be weighing his next steps very carefully.
Could Apple’s tightening grip on advertisers make it the next tech giant to be subpoenaed? That is the question the $80 billion ad tech industry is currently pondering.
As of now, Apple Inc. seems to be stuck between a rock and a hard place: it has spent millions to position itself as a user-privacy centric company, and in developing a replacement for the IDFA, which has been the cornerstone of personalized digital advertising for years. At the same time, doing away with the IDFA in favor of its proprietary closed-system SkAdNetwork, would make Apple an even more likely candidate for an antitrust suit.
However, with its recent postponement of the IDFA changes to early 2021 Apple still has time to shift its current trajectory and avoid following in Google’s footsteps. It would be wise for the tech giant to take note of Google’s case and either keep the IDFA or redevelop the SkAdNetwork in a way that does not make advertisers completely dependent on its monopolized user data.
In its current form, Apple’s proposed SkAdNetwork looks like an even bigger move towards monopoly than what Google has done in the search industry. Although Google is by far the biggest player in its field, at least, there are other alternative search engines consumers can freely use. The IDFA, on the other hand, impacts the entire ecosystem for advertisers, marketers, consumer data providers, and app developers who have little choice but to play ball with Apple.
It is not the first time Apple is using its upper hand to force the market to comply. In recent months, app developers have been pushing back against Apple’s gigantic 30% fee from all sales made in its app stores – a massive barrier for monetization. Only vastly successful companies like Epic Games even have the ability to pursue a legal battle with the tech giant. But even Epic thus far hasn't been successful at forcing Apple’s hand.
At the current pace, however, the ongoing antitrust proceedings will take a long time to effect meaningful change for the ad tech industry. Publishers are frustrated that the lawsuit against Google focuses mostly on the company’s distribution agreements that make it the default search engine but fails to address their key concern about the company’s practices in online advertising.
According to a recent study by U.K. competition authorities, only 51 cents of every 1 dollar spent on advertising reaches the publisher. The remaining 49 cents simply evaporates into the digital supply chain. Clearly, there is a reason for publishers to be frustrated about it. The DOJ case illuminates the harsh reality of our industry:
And navigating out of the mess we’ve created will be a very delicate, slow, and tedious process. While the DOJ took the first steps with Google, it surely has Apple in its sights as well. If Apple wants to be on the right side of this history in the making, the giant should start thinking about how it can work with the ad tech industry rather than attempt to dominate it.