When do the feds come for Apple's ad business?
Did Elon just inadvertently blow up a $30 billion revenue stream for Tim Cook?
You know who’s having a good week? Google and Facebook.
I know their recent earnings reports would say otherwise. But in terms of playing the long game, think about what Elon Musk just stirred up, and how it could benefit the duopoly.
Suddenly folks like Florida governor Ron DeSantis and Sen. Marsha Blackburn (R-Ky.) are not only eyeing Apple’s monopolistic control of its App Store (as Axios smartly details here) but they are turning (or attempting to turn) a beloved company into yet another corporate bad guy in the public eye.
That’s hard to do, but this sort of thing is Ron’s specialty.
While it’s certainly odd that Elon and his DC buddies are just finding out about Apple’s aggressive App Store take rates (there was a rather Epic trial about this very thing), you have to realize these folks, as smart as they are, are a little slow on the draw when it comes to the internet.
I have my doubts that regulators are going to be able to force Apple to stop charging a 30% tax on app store payments (I’m also not a lawyer). But here's why this is good for Google and Facebook. I’m not sure if you’ve heard, but these companies have lots of lobbyists. When DeSantis and JD Vance and others come calling about Apple’s App Store policies, I’d thinking the lawyers at Google and FB might say something like:
“Hey, while I have your attention, have you heard about this IDFA thing? Funny story….Apple blew up everyone’s ability to track how ads perform on mobile devices, and then suddenly rolled out their own ad business, which uses all sorts of tracking. I know right! And they ran all these commercials about tracking is bad! Ballsy right?”
The timing seems ideal for Google and Facebook to bend regulators’s ears about just how much of a hypocrite Tim Cook is. The Axios branded content posts practically write themselves.
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Let’s talk a bit about Apple’s advertising ambitions, in light of how they rocked so many others attribution worlds:
Apple’s own ad tracking used to be ON BY DEFAULT until they got called out on it!
Lara O’Reilly from Insider has a good round up of just how aggressively Apple is building up an ad business, including building a new DSP from scratch.
They are coming for more TV dollars. Apple already has global MLS rights, and may grab NFL Sunday Ticket. Think they won’t try to sell more targeted ads?
Tim Cook is so two-faced on advertising that he even made me feel bad for Facebook when Apple started charging Facebook 30% for SELLING ADS ON ITS OWN APP, putting that tactic in the same category as a mobile game that sells virtual goods. Come on.
I wrote a post about a year ago on why I was rooting for Apple against Meta. While I think FB is getting what it deserves, Its extremely hard to. now view Apple as the valiant good guys anymore.
The challenge I see for Google and FB is that this Apple IDFA/ATT story is hard to explain to people - even those of us who work in the ad business. Can Senators who are fired up about App Store anti-trust issues take all this in and process the ad tech stuff as a separate issue? Would the FTC ever get involved, given that Commissioner Lina Khan is a Biden appointee, and Musk is making this a Republican cause? This is not exactly my area - you’d have to ask the folks over at Politico. Yet the FTC is clearly interested in cracking down on whatever constitutes ‘surveillance’ advertising.
So I wonder whether Elon’s tantrum may shake things up that suddenly Apple’s glorious ad future could be less than certain…
Speaking of Elon, he sure can’t help himself can he? Not only did he fire so many people that the company’s ad tech literally doesn’t work, according to the Financial Times, he continues to serve as a one man brand safety violation, causing many advertisers to duck and cover, even as he threatens them (which reminds me of an old Jerky Boys ripoff about Aggressive Advertising).
It’s one thing for brands to be worried about their ads ending up next to Anti-Semitic tweets, or porn - do they want to funnel money to a social platform when the CEO is the problem.
This week on my Next in Marketing podcast, I talked to Zefr co-founder and CEO Rich Raddon (Zefr has been my partner on this recent round of excellent podcasts). Raddon been very active in working with GARM (Global Alliance for Responsible Media) a cross-industry initiative that includes both major advertisers like Mars and Mondelez, media agencies such as Dentsu, and platforms like Google, Snap ,Facebook - and bet you didn’t know this - Twitter.
GARM aspires to get everyone on the same brand safety page, and define what is ok and what isn’t. The group is actually mad at Twitter for not living up to its commitments.
“They came up with an architecture of 12 categories, with various risk thresholds,” said Raddon. “All of the platforms have agreed, ‘look we’re gonna abide by making sure that stuff that isn’t brand safe, that doesn’t meet the floor definition, never makes it onto the platform. But were’ also going to enable a third party system to allow brands to have the tools to be able to measure and target around low medium and high. risk thresholds.’”
It turns out that some brands are ok with edgy stuff -and some aren’t.
Zefr uses its tech - bolstered by an AI acquisition over the summer- to help brands classify levels of risk. Which would seem to be right up Elon’s alley.
Here’s the problem. Zefr uses humans and machines -what it calls “cognition AI” to track brand safety.
What makes cognition AI work? “Humans looking at content at and answering questions at scale,” Raddon said. “On any given day we have hundreds of thousands of videos being looked at. They act as the training data that allows. our training data to match up to billions of videos.”
“It’s not something you can fake,” he added. “There will always have to be humans involved in the process.”
Elon doesn’t seem to be super into humans. Though he does love faking it.