NWS News Corporation

By Lukas I. Alpert and Patience Haggin 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 28, 2020).

Privacy changes in Apple Inc.'s new operating system are sending ripples through the digital publishing world, with outlets that rely heavily on advertising bracing for a sizable drop in revenue from iPhone users.

The upgrade, which is set to roll out this fall, will require apps to ask users whether or not they want their web activity tracked. Some publishers worry that most users will opt out, hobbling their ability to show personalized ads in apps and dealing them a blow at a time when the industry is trying to recover from the coronavirus pandemic.

"When every publisher is fighting for every last advertising cent, this couldn't come at a worse time," said Martin Clarke, publisher of DMG Media, operator of the Daily Mail and MailOnline.

Apple's change, which affects collection of Apple's advertising identifier for users, known as IDFA, also drew criticism from social-media giant Facebook Inc., which said Wednesday it would affect the company's multibillion-dollar business of facilitating ad sales in apps. The new privacy controls will also have an effect on other ad-technology companies that facilitate ad sales, as well as makers of apps that sell ads using those intermediaries.

Sheri Bachstein, the global head of consumer business at the Weather Co., which operates weather.com, estimated that the price advertisers are willing to pay to advertise within iPhone apps could decline by as much as 40% as a result of the change. That is because advertisers generally pay a premium for ads targeted based on users' interests and behavior on the web.

Apple says it doesn't plan to prohibit tracking, but will simply require app makers to obtain permission from their users to do so.

The development comes as tensions between publishers and Apple have been rising. Last week, a trade group representing thousands of publishers, including the New York Times, the Washington Post and The Wall Street Journal, pushed for better terms that would allow them to keep more money from digital subscriptions sold through Apple's app store. Dow Jones & Co., publisher of the Journal and a unit of News Corp, has a commercial agreement to supply news through Apple services.

In 2017, Apple upgraded its Safari browser to block third-party cookies -- snippets of code that track users across the web -- by default, affecting publishers' ability to target advertising. Earlier this year, Google unveiled plans to implement similar restrictions in its market-leading Chrome browser by 2022.

DMG's Mr. Clarke said when European regulators implemented restrictions under a new privacy law, the General Data Protection Regulation, or GDPR, they left it to publishers to formulate the language alerting viewers about their privacy rights, but Apple is forcing everyone to use what he called a "harshly worded prompt."

The pop-up prompt will state that the app owner "would like permission to track you across apps and websites owned by other companies. Your data will be used to deliver personalized ads to you." In a survey by Tap Research Inc., 85% of respondents said that if they saw this message in their favorite app, they would select "Ask App Not to Track."

"This seems aggressively aimed at getting people to opt out," Mr. Clarke said. "For Apple to interject itself like this into our relationship with our readers is outrageous." He said the Mail's iPhone app draws about 1.2 million viewers a day of its total 16 million average daily users.

"You're almost scaring the consumer into saying, 'Wait a minute. Am I comfortable with this?'" said Mark Wagman, managing director at Ascential PLC-owned marketing consulting firm MediaLink.

Alex Austin, chief executive of Branch Metrics Inc., said the ad-tech company will assume Apple's advertising identifier "is dead for everything we're doing."

The impact of the coming changes won't be felt uniformly by all publishers, but could be meaningful for companies that have "programmatic," or automated ad sales, and have large numbers of iPhone app users.

"It's by no means life-threatening to us, but for smaller, independent publishers that are very reliant on programmatic, this could be really destabilizing," said Peter Spande, publisher and chief revenue officer of Insider Inc., which publishes Business Insider.

Jonah Peretti, the CEO of BuzzFeed Inc., said while publishers may feel some effect in the short term, ultimately the industry will adjust.

"There are trade-offs for publishers. More direct, contextual advertising in the long run, but short term it could reduce the spending of some programmatic advertisers," he said.

Write to Lukas I. Alpert at lukas.alpert@wsj.com and Patience Haggin at patience.haggin@wsj.com

(END) Dow Jones Newswires

August 28, 2020 02:47 ET (06:47 GMT)

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