By Russell Brandom.

The brutal logic of online advertising

The internet is an ad-tracking machine. It’s been true for long enough that we rarely talk about it anymore, but it bears repeating. For all the free speech and free information, nearly any site you visit will come with a dozen different tracking cookies, enabling uniquely tailored ads to follow you from site to site. Targeted advertising is still the best way to make money on the internet, so those cookies are everywhere. (The Verge is no exception; that VR room isn’t cheap.) Sites try not to be creepy about it, some harder than others, but the overarching logic is hard to escape. It’s a multibillion-dollar business, and it pays for nearly everything you see online.

Yesterday at WWDC, Apple threw a wrench into that system. Alongside new autoplay blockers, the latest versions of Safari (currently in beta) will have a new tool for blocking third-party ad trackers, aggressively identifying and blocking any cookies used to track users across the web. As Craig Federighi said onstage, “It’s not about blocking ads, but your privacy is protected.”

It’s an important move, particularly for the mobile web, where Safari manages just under 30 percent of browsing sessions. When Safari added the option for ad-blocking with iOS 9, it was a day of reckoning for many web companies — raising hard questions about the future of mobile browsing. This week’s announcement is primed to make a similar splash.

According to Marc Al-Hames, who works on the privacy-focused browser Cliqz, companies are already scrambling to figure out the best way around the new restrictions. “This is a cat-and-mouse game, and it always has been,” Al-Hames says. “Users try out different things to protect themselves, and there’s a multibillion-dollar ad tech industry thinking of ways to circumvent it.”

Surprisingly, Google and Facebook are poised to come out of that game ahead. But to understand why, we need to dig into how the new policy works. Safari has had some version of cookie-blocking for years, but the previous default was to allow cookies “from websites I visit.” The new policy goes further, using machine learning to identify tracking behavior no matter how the cookies are served. In many cases, blocking those cookies outright would break basic functionalities. Instead, Safari puts a strict time limit on how long the cookie can stick around, keeping cookies available for 24 hours after a visit and outright deleting anything older than 30 days.

The crucial distinction is between the first-party sites you’re purposefully visiting and the third-party trackers that come along for the ride. As long as a cookie is associated with a website you’ve visited in the last 24 hours, Safari won’t change much — which gives popular sites like Facebook and the various Google services an easy way around the new restrictions. The systems hit hardest by Safari’s new policy will be third-party systems like Criteo or Adroll, which silently coordinate cookies in the background of thousands of sites. Not coincidentally, Criteo’s stock plummeted in the wake of the announcement.

That’s much less of a problem for Google and Facebook, which already dominate online ads. Most people visit Facebook or a Google service every day, and those users will never be too far outside the 24-hour window. Both services also work as a kind of permanent login, used to access sites like Twitter or WordPress without a separate password. As a result, most users stay logged in to Google and Facebook as long as they’re online. Combine that with omnipresent Like buttons, and you’ve got an easy way to see what people are doing on the web. And as long as you’re visiting Facebook once a day, Safari won’t get in the way of that tracking.

Google and Facebook’s biggest challengers in ad-targeting are telecom companies like Verizon and Comcast, which were given a huge boost by recent shifts in US telecom policy. But those companies should fare just as well. Both Verizon and Comcast invested heavily in web media alongside advertising tech, which means they can take advantage of the same first-party exception as Google and Facebook. (Disclosure: One of Comcast’s media investments is a minority stake in Vox Media, parent company of The Verge.) As long as you’re visiting AOL or Huffington Post sites once a day, Verizon will have no problem targeting ads, and cookie-serving deals may extend that reach even further.

At the same time, ad networks that aren’t attached to popular websites will take a serious hit. It won’t be a total blackout, since most modern networks supplement cookies with more advanced fingerprinting techniques that profile visitors without transmitting any data. They can also try to make cookie-serving agreements with websites, collecting data at the same time that they serve the ads themselves. But the new Safari policy will still put those ad companies at a permanent disadvantage to more powerful players like Google and Facebook. Those companies were already outmatched — with Google and Facebook capturing 90 cents of every new dollar spent on online ads — and the new browser moves will make it even harder for them to survive. The result will tip the balance even farther toward the handful of giant companies that already dominate the web.

Apple isn’t the only force pushing the web in that direction. The European Commission’s recent anti-tracking proposals would establish a similar distinction between first and third parties. Only last week, Google announced an ad-blocker for Chrome that’s likely to edge out small players even further. It’s still hard to say what that will mean for smaller websites and everyday users, but Google and Facebook will only become more central to the business of the web.

Underneath it all is the basic logic of consolidation. These players — Google, Facebook, Verizon, and Comcast — control huge portions of how we connect to the web, from the servers to the fiber to the device, ending with the browser itself. Now, they’re using that control to play for advantage in ad-tracking, with users stuck in the middle. iOS and Safari are incredibly powerful tools in that fight, and by all appearances, Apple is using them to try to craft a less invasive web experience for its users. But after more than a decade of ad tech, untangling that knot may be harder than the company realizes.

By Russell Brandom

Sourced from THE VERGE