Tuesday, November 5, 2024

Apple’s iPhone privacy changes indicate a desire to enter the advertising market.

According to an analyst at RBC Capital Markets, Apple’s (AAPL.O) recent privacy modifications for iPhones are evidence that the company is considering entering the internet advertising industry dominated by Facebook and Google.

Most iPhones have allowed users to choose which applications can track user activity since an April software update, which is critical information that lets firms like Facebook offer personalized adverts to users and assess their impact.

Many digital advertising and mobile gaming companies, including Facebook, are concerned about the feature, which Apple calls App Tracking Transparency (ATT). Facebook claims it has made it more expensive and difficult for marketers to promote on its platforms.

“We view (the privacy changes) as a sign that Apple may want to compete in global advertising,” RBC analyst Brad Erickson said in a client note late Thursday while starting coverage of Facebook, Amazon, and Alphabet with “outperform” ratings.

According to Refinitiv statistics, Erickson has a four-star rating for the accuracy of his earnings projections and recommendations on internet firms.

“(Apple) can use data privacy as cover while it invests in a search algorithm behind the scenes,” Erickson said, referring to potential advertising revenue from a Google-like search engine.

If advertisers had “no choice but to fly blind with the loss of signal from Apple,” Google-owned YouTube and Amazon’s Connected TV could benefit as advertisers’ next best alternatives, Erickson said.

In August, Evercore ISI analysts speculated on Apple’s probable advertising goals, claiming that “hampering third-party advertising” would help the company get off to a good start in advertising. Nonetheless, they stated that ATT was created for the purpose of user privacy rather than revenue.

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