Apple News, Ad Blockers, and Asymmetric Models

Apple is getting ready to release iOS 9, which will include the Apple News app as well as the ability to block many browser-based ads. Publishers using Apple News will be able to keep 100% of any ad sales they generate themselves and 70% of any ad sales generated through iAd.

Taken together, Apple News and ad blocking seem focused on improving the user experience. In Jobsian style, Apple is starting with its vision of the optimal user experience -- fewer ads, more security/privacy, and less demand on computer resources -- and working backwards to the most appropriate technology/approach. iOS 9 hasn't been released (in non-beta form), but it appears publishers will still be able to use native advertising in Apple News, and that native ads in published web content will survive most ad blocking. If true, it would mean Apple is taking advertising control away from the companies that aggregate user data and track/target users with advertisements (also known as programmatic advertising) and returning this control to content publishers and creators.

With Apple News and ad blocking, Apple is betting it can improve the user experience and thereby drive even more profitable hardware sales. Apple's business model doesn't rely on advertising profits -- it relies on hardware profits driven by a superior user experience.

Apple's model is asymmetric to Google's business model, which depends on user data and profits from targeted advertising. Because Google relies on advertising profits rather than hardware profits, it will be hard for Google to follow Apple's approach. For this reason ad blocking and Apple News could be unique, differentiating activities for Apple. As discussed previously, companies should compete to be unique rather than competing to be the best. See post titled Defaults, New Performance Attributes, and Competing to be Unique. 

If Apple News is widely adopted, it's also easy to imagine it supplanting a lot of web browsing. Apple users could end up getting most of their news from Apple News, reducing the need to browse. This hurts Google but not Apple.

For additional information readers should check out Charles Arthur's excellent article, "The adblocking revolution is months away (with iOS 9) -- with trouble for advertisers, publishers, and Google."

The author owns stock shares of Apple.