Apple's new sign-in feature could hamper Google and Facebook's ad targeting

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Apple announced a new loginfeature called “Sign in with Apple” for iOS 13 that will require apps that enable third-party login options to build in Apple sign-in, per The Verge. The feature will enable users to log into apps with TouchID or FaceID. Further, users will be able to hide their email addresses from developers, and instead Apple will provide a randomized, unique proxy email address that will forward to a user’s personal email.

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The new feature could disrupt Google and Facebook’s hold on single sign-on (SSO), limiting their ability to harvest user data from third-party apps. Apple’s feature will compete with Google and Facebook’s respective SSO tools, the “Sign in with Facebook” and “Sign in with Google” buttons that appear in third-party apps.

SSO tools have become popular among developers looking to reduce friction in the account creation process and drive greater adoption. Google and Facebook have so far dominated the SSO space, and the features have enabled them to track users and strengthen data profiles used to target ads. If iPhone users decide to use Apple’s new SSO features instead, that could erode some of the ad targeting power Google and Facebook have accumulated.

While Apple’s SSO feature won’t kill Google or Facebook’s ad businesses, losing third-party data could meaningfully weaken their ad targeting abilities. Google and Facebook still amass enormous quantities of first-party data through their owned sites and apps, which will enable them to maintain effective ad targeting despite Apple’s new feature.

While it’s unclear how significant the data provided by third-party mobile apps is in accurately targeting ads, it certainly helps them form stronger insights into user behavior, which ultimately translate into higher ROI for advertisers, and higher ad rates for the duopoly. For instance, Google and Facebook may stop knowing if a user signs into Spotify and lose confidence in accurately serving that user music-related ads as a result.

The stakes are made higher because iPhone users are concentrated in the duopoly’s most lucrative markets in terms of ARPU: Themajority of the900 million iPhone owners worldwide are in western markets, China, and Japan. And while iPhone users are the most likely to shift their behavior, the scope of the loss could even extend further, as the sign-in feature will work on Android and Windows devices too.

As we’ve previouslyargued, Apple’s clampdowns on limit third-party data collection will drive up the value of first-party data — particularly that which speaks to niche, coveted audiences. Apple isn’t competing with Google or Facebook for ad dollars, so it can afford to take harder stances around data collection. In late May, for instance, it seriously restricted third-party data tracking in its Safari browser.

For its part, Google rolled out a similar feature for its Chrome browser, but with less commitment — users can opt in or opt out, versus Apple’s complete ban. By taking more overt action on the privacy of its users, Apple likely hopes to further distinguish its offerings from rivals. But a collateral consequence of its recent moves will be increased demand for first-party data.

That’s a good thing for Google and Facebook — and Amazon’ssoaring ad business — but it also could create space for savvy publishers to win back some ad dollars, as could they prove a stronger bet to reach certain niches than tech giants.

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