Apple Inc.'s move to make it easier to block ads on iPhones and
iPads is troubling publishers and heightening tensions with its
Silicon Valley neighbors.
The next version of Apple's mobile-operating system, due out as
early as next month, will let users install apps that prevent ads
from appearing in its Safari browser.
Putting such "ad blockers" within reach of hundreds of millions
of iPhone and iPad users threatens to disrupt the $70 billion
annual mobile-marketing business, where many publishers and tech
firms hope to generate far more revenue from a growing mobile
audience. If fewer users see ads, publishers—and other players such
as ad networks—will reap less revenue.
The move also is a competitive weapon against Apple rival Google
Inc., which makes more money from Internet advertising than any
other company in the world.
Making ad blockers available on iOS, one of two main
smartphone-operating systems, is expected to prompt more consumers
to use the technology. The benefits of blocking ads arguably are
greater on smartphones than on personal computers, because they can
reduce the clutter on small screens and help pages load faster.
"Apple is going to create a massive consumer appetite for
blocking ads," said Sean Blanchfield, chief executive of PageFair,
a company that helps publishers combat ad blocking.
Apple's is a more lucrative audience. Users on iOS spend more
money on their devices than those on Google's Android operating
system, making them more desirable to advertisers.
Ad blockers have long been available for Web browsers on
personal computers, and have attracted a small but loyal following.
Users can surf the Web without seeing banner ads, advertised links
on search results or commercials before online videos. Apple
permits ad blockers on its Safari browser for PCs.
About 6% of global Internet users employ ad blockers, according
to an August report by PageFair and Adobe Systems Inc. That report
said 198 million users ran ad blockers in June 2015, up 40% from a
year earlier. Wells Fargo analyst Peter Stabler estimates that ad
blockers will reduce spending on Internet ads by $12.5 billion
world-wide in 2016.
"The ad-blocking problem is real and growing, and ad-blocking on
iOS is only going to accelerate it," said Jason Kint, CEO of
Digital Content Next, an association of digital publishers.
Apple isn't powering the ad-blocking software itself. Instead,
it is allowing outside developers to write programs to work with
the browser in its iOS 9. That means users must find an ad-blocking
app and install it, an extra step that may deter some people.
Apple describes the apps as "content blocking," because they can
prevent images or other parts of a Web page from loading, as well
as advertising.
Apple says it won't allow ad blocking within apps, because ads
inside apps don't compromise performance as they do on the browser.
That distinction serves Apple's interests. It takes a 30% cut on
money generated from apps, and has a business serving ads inside
apps.
What's more, iOS 9 will include an Apple News app, which will
host articles from major news publishers. Apple may receive a share
of the revenue from ads that accompany those articles.
One concern for publishers is that ad-blocking software may
provide users with a better experience, free from auto-play videos
and hidden trackers that follow users around the Internet.
Dean Murphy, a developer who is creating an ad-blocking app
called Crystal for iOS 9, said it can improve performance
dramatically. In tests, he said the websites of 10 news
organizations loaded nearly four times faster with the ad blocker
and used 53% less data.
But Mr. Murphy said he feels conflicted, because publishers will
lose advertising revenue.
"I can see the publisher side of this. This is how they monetize
their business," he said. "The way I justify it to myself is the
mobile Web is just so cluttered that something needs to be done
about it."
Apple's support of ad blockers puts the company further at odds
with Google. Over the past year, Apple CEO Tim Cook has repeatedly
criticized the data-collection practices of technology companies,
such as Google, that personalize advertising for users.
In a June speech, Mr. Cook said some prominent Silicon Valley
companies had lulled consumers into complacency about their
personal information and delivered a warning. "You're not the
customer. You're the product," he said.
Google permits ad blockers in its Chrome browser for personal
computers, even though that hurts its own ad business. For now,
it's not as easy to block ads inside Chrome on mobile devices.
Google declined to comment for this article. At its annual
shareholder meeting in June, Chief Executive Larry Page said,
"We've been dealing with ad blocking for long time." He said
marketers need to "get better at producing ads that are less
annoying and that are quicker to load," pointing to search ads as
an example.
Mr. Stabler, the Wells Fargo analyst, said Google is more
exposed to the threat of ad blockers than companies with heavily
used apps, such as Facebook Inc. While Google has many popular apps
on iOS including Google Maps, YouTube and Gmail, many users still
access services like search in a mobile browser.
"It seems like this is part of the ongoing tussle between these
two entities," said Mr. Stabler. "It's yet another arrow that Apple
can put into the ankle of Google."
Write to Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com and
Jack Marshall at Jack.Marshall@wsj.com
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(END) Dow Jones Newswires
August 30, 2015 20:35 ET (00:35 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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