Benedict Evans: Behind Apple’s stealth ad play

“It turned out that Apple was able to collect all the data it wanted.”

From Evans’ “Can Apple change ads?” posted Monday:

Once upon a time, Apple was the iPod company. iPods were a much bigger business than the Mac, and they also made Apple a dominant force in the music industry. Then, as we all know, Apple jumped horse to the iPhone, which was a vastly bigger business again. But meanwhile, music switched from the download-to-own model pioneered by Apple to subscription streaming, and Apple was very late to streaming. Today it has an adequate, me-too streaming music product, but it’s far from setting the agenda. Apple doesn’t matter much in music anymore…

Five or six years ago, when it became clear how important machine learning would be, a lot of people wondered if Apple’s increasingly vocal advocacy for privacy could be a strategic liability. ML was the future and ML was data, but Apple was talking a lot about not collecting data.

It turned out that Apple was able to collect all the data it wanted, in ways that it could claim were still private, and perhaps just as importantly it was also able to persuade machine learning people to find a home inside Apple’s culture.

Conversely, privacy has become more and more of a strategic asset, both in the abstract as a marketing tool but much more tangibly as Apple built things like payment, credit cards, smart speakers, watches, biometric sensors and now, probably, AR glasses (which, amongst other things, are a wearable camera and microphone).

This also reflects a broader theme – Apple has a tendency to build up strategic assets in discrete blocks and small parts products, and then combine them into one. It’s been planning to shift the Mac to its own silicon for close to a decade, and added biometrics to its products before adding Apple Pay and then a credit card. Now it has Apple Pay and ‘Sign in with Apple’ as new building blocks on the web, that might be combined into other things. It seems pretty obvious that Privacy is another of those building blocks, deployed step by step in lots of different places. Privacy has been good business for Apple, and advertising is a bigger business than all of those.

So, Steve Jobs changed music by sweeping away an arcane, complex, user-hostile experience driven by perverse incentives and misaligned industry structures. That also describes mobile apps before the iPhone. Does it describe online advertising? Well, yes – obviously.

My take: The foresight and patience to combine discrete blocks into new strategic assets is one of Apple’s super powers.