Ad industry worried about expansion of Apple's iPhone privacy features

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Ad industry experts are concerned about the future expansion of Apple's privacy features on iPhone, including the recently released Private Relay and Hide My Email.

Apple released both features as part of its iOS 15 software update, bringing new privacy protections months after releasing App Tracking Transparency — a privacy mechanism that has pummeled the mobile advertising industry's revenue.

Both Hide My Email and Private Relay are only available to users who pay for an iCloud storage subscription. However, according to The Information, many ad industry watchers are worried that Apple could expand the privacy features or promote them to a wider group of users.

"It's got the industry holding their collective breath," said Grant Simmons, a vice president at ad performance tracking firm Kochava.

The ad industry is concerned about the features because they threaten two data metrics — IP addresses and emails — that advertisers have been using to mitigate the effects of App Tracking Transparency (ATT).

Private Relay works like a virtual private network (VPN), masking a user's IP address from site or app operators and encrypting web traffic. Hide My Email creates a randomly generated email address that forwards messages to a user's primary inbox.

While Private Relay blocks many ATT workarounds that companies have invented, Hide My Email will make it harder to know which customers bought its goods and services, complicating efforts to target those customers with future ads.

Robert Jewe, a marketing consultant, said that Apple "will just continue to take out different parts of advertising and marketing." He likened the privacy features to a "tax" on advertisers.

Apple's privacy moves may also have inspired other companies to follow suit. Google, for example, says it plans to bring Apple-like privacy features to Android — further threatening the ad industry.

While the features have impacted the wider privacy industry, The Information reports that Apple's own ad business has bloomed in the past few years. Apple's ad business generated about $4 billion in revenue in 2021, up from $300 million in 2017. Analysts believe that number could expand to at least $10 billion in the future.

Although advertisers are concerned about Apple's privacy push, the Cupertino tech giant said that the customer response to the features have been "overwhelmingly positive."