The data-driven advertising industry is no stranger to scraps. From day one, the industry has been forced into one fight after another. And it might have yet another battle looming. But this time the threat doesn’t come from privacy advocates, politicians or Microsoft with its default ‘Do Not Track’ feature for Internet Explorer. This time it could be Apple.
In February Apple became the owner of US Patent Number 8,069,485, titled ‘Techniques to Pollute Electronic Profiling’, which it acquired from Novell. The patent is for technology that essentially creates dummy identities and activities for a user. So, for example, if John is a Mac user who also happens to be an unemployed online gambling addict with a shoe fetish, the technology could fabricate online activities and display behaviour that suggests to data collectors that he’s actually the CEO of a leading finance firm who enjoys foreign holidays and salsa dancing.
In setting out the problem the technology would solve, the language used in the patent is surprisingly polemical:
Concerns about the government and its knowledge about its citizenry is often referred to in a derogatory sense as actions of “Big Brother” who is omnipresent and gathering information to use to its advantage when needed. The electronic age has given rise to what is now known as thousands of “Little Brothers,” who perform Internet surveillance by collecting information to form electronic profiles about a user not through human eyes or through the lens of a camera but through data collection.
This form of Internet surveillance via data collection is often referred to as “dataveillance.” In a sense, thousands of “Little Brothers” or automated programs can monitor virtually every action of users over the Internet. The data about a user can be accumulated and combined with other data about the user to form electronic profiles of the users.
The diagram below from the patent gives an overview of how the process could work:
The result would of course be less data for marketers, which in turn would lead to more less efficient and less effective advertising, plus a significantly different online experience for Apple users. That experience will be worse for those who would rather see ads for things they’re actually interested in, and better for those willing to put up with untargeted ads in exchange for complete privacy.
However, if Apple were to make such a move it could be as much about hurting Google as winning brownie points with privacy-conscious consumers. As Apple has privacy issues of its own, it seems unlikely such a move would be an altruistic one based on the company’s values. If they were to use it, it would be a move akin to Microsoft’s recent attempt to make ‘Do Not Track’ a default setting on Internet Explorer i.e. it appears that Google’s competitors are waking up to the fact that if Google has an Achilles’ heel, it’s its dependence on data.
The Data-Dependent Google Stack
As things stand, data is of course one of Google’s key strengths. The company has built out an impressive ad tech stack and is out in front of the competition when it comes to stitching the different components – search, display, video and mobile – together. And Google’s upcoming Doubleclick Digital Marketing ad platform is expected to strengthen their position further still, as advertisers will be able to optimise their spend and buy media across the various digital channels from within a single, integrated platform. Data is the thread that binds the different channels together.
But this type of cross-channel optimisation depends on marketers being able to access accurate sets of data. Losing access to that information for Mac/iPad/iPhone/iPod users would hit data-driven advertising hard. While it certainly wouldn’t spell the end of the industry or come anywhere close, it would represent a major blow for an industry already under the watchful eye of consumers and regulators.
An Apple-Induced Data Famine
Apple own a significant enough chunk of the market on desktop, mobile and tablets to make a difference. And most users are the type of well-heeled, brand conscious consumers that advertisers covet. Add Microsoft’s Do Not Track default into the mix (which hasn’t completely gone away you know), and Google could very suddenly lose access to large amounts of highly valuable audience data. Sure, there would be plenty of others in the industry affected as well, but Google would in all likelihood be Apple’s prime target as few others in the ad tech space represent a meaningful threat to Apple.
However, at this point it’s important to stress that at this stage this is still just a patent. Perhaps Apple only wanted it so it could sit on the IP before it comes crashing into the market with its own ad exchange? Or perhaps such a feature will only be incorporated into Safari? Or perhaps the patent will sit in a box along with the many other unused patents owned by the company?
But hurting Google just might prove to be a far more attractive option. While they’re fierce competitors on many fronts, particularly in mobile, tablets (Google’s tablet launches tomorrow) and TV, they remain very different companies when you look at how they make their money. A whopping 96 percent of Google’s revenue comes from advertising. Whereas for Apple, advertising remains something of a sideshow. Thus far iAd has struggled and Apple hasn’t shown much appetite for developing multichannel advertising beyond mobile or getting a foothold in the emerging exchange-based ecosystem.
So when you boil it down, it’s consumer dollars that drive Apple’s business model, and advertiser dollars that drive Google’s. Whether to use that patent or not just might turn out to be a no-brainer.
