Why Apple is Leaving the Ad Business

iad-logoWhy muddy yourself in the digital ad business when you don’t have to? Apple’s move makes sense…for now anyway.

Did the Internet just get one step closer to an ad-free experience?

Apple, often thought to be the most conscientious of the huge tech companies regarding user privacy, may have just moved the dial for the entire industry, according to Dillon Baker in Contently.

Baker explains that Apple, at essence a hardware company, received a mighty hefty fee from Google, basically a data collecting ad service,  in 2014. The billion dollar payment allowed Google to have its search bar on iPhones and other Apple hardware.

“Google’s business is largely based on digital advertising—search ads and a vast ad network make up the majority of its revenue—all of which is driven by data collected by its platforms of Chrome, Gmail, Android, YouTube, and, of course, Google Search,” Baker explains.

“Apple, on the other hand, is a hardware business,” he continues.” iPhone, iPad, and Mac sales make up the majority of its revenue. It’s why Apple can strong-arm Google into paying $1 billion in exchange for keeping the search bar on its hardware.

“As a result of this advantage, Apple is starting to move away from what many consider a fundamental part of the Internet: advertising,” Baker notes.

So while Google puts more than a 1,000 of its employees to work to fight ad fraud, Apple blithely announces it’s putting iAds on the shelf and consumers everywhere have one more reason to adopt Apple’s products.

Given this news, it makes more sense now why Apple allowed ad blocking technology to run on their Safari platform; this is where they want the user experience to go anyway.

“Phasing out ads is a luxury afforded by Apple’s hardware business model, as well as a direct attack on Google’s data-dependent ad business,” Baker notes.

As digital marketers go head to head with disgruntled consumers, can Apple lead the way toward that bright, shining ad-free Internet of the future? For its own users, yes, although those billion dollar Google payments are currently generated through advertising. Apple still needs a good enough portion of the world looking at advertising on non-Apple devices to keep that revenue stream alive. They just don’t want it on their own devices. Fascinating how this is playing out.