Philippa Kaur

ONLINE SHOPPERS often feel they are being watched. Put an item in your basket but fail to buy it, and it may follow you plaintively around the internet for days. Announce your engagement on social media and you will be hit with ads for the honeymoon. As you turn 40, expect the attention of elasticated-trouser merchants.On April 26th Apple, which supplies one-fifth of the world’s smartphones and around half of America’s, introduced a software update that will end much of this snooping. Its latest mobile operating system forces apps to ask users if they want to be tracked. Many will decline. It is the latest move forcing marketers to rethink how they target online ads.By micro-profiling audiences and monitoring their behaviour, digital ad platforms claim to solve advertisers’ age-old quandary of not knowing which half of their budget is being wasted. In the past decade digital ads have gone from less than 20% of the global ad market to more than 60%, according to GroupM, the world’s largest media buyer. Even last year, amid the pandemic, the business grew by 9%. As lockdowns ease it is going gangbusters. On April 27th Alphabet, Google’s parent company and the world’s biggest digital ad platform, reported first-quarter ad revenues up by 34%, year-on-year. The next day Facebook, the second-largest, said its own ad revenues had grown by 46%.Stronger privacy protections may make their ads less effective. In 2018 the EU imposed its General Data Protection Regulation (GDPR) and America’s most-populous state introduced the California Consumer Privacy Act. Both made it harder to harvest users’ data. Apple’s Safari web browser has blocked the “cookies” that advertisers use to see what people get up to online since 2020. Google has similar plans for its more popular Chrome browser.Apple’s latest change makes explicit an option that was previously hidden deep in its phones’ settings. Users can forbid apps to access their “identifier for advertisers” (IDFA) code, which singles out their device, and from tracking their activity across other firms’ apps and websites. It amounts to a “seismic shift” in in-app advertising, says Jon Mew, head of the Internet Advertising Bureau, an industry bodyThe platforms best-placed to survive the shake-out are those with lots of consumer data of their own. Google’s $147bn ad business gets most of the information it needs from the terms users type into its search bar. Amazon, whose digital-ad business is the third-largest and growing fast, has the advantage of being able to track what people buy after seeing ads on its site—a “closed loop”, as marketers call it. Apple knows where iPhone-users go, what time they wake up and much besides. It has a small but growing ad business, selling prominence in its app store, for instance.For Facebook, which knows more about its users’ interests than about their shopping needs, Apple’s changes are more worrying. In August it warned they might reduce revenues at its Audience Network, through which it sells ads to other apps, by as much as 50%. But the Audience Network represents less than a tenth of its business. Thanks to its deep knowledge of users, it will still be better at targeting than almost anyone else. “In a world with a lot less data, who has relatively more?” asks Brian Wieser of GroupM. The effect of GDPR was, if anything, to increase Facebook’s and Google’s market shares, he adds.To improve its tracking of purchases, Facebook is moving to create a closed loop of its own. Last year it introduced Facebook Shops on its flagship social network and Instagram Shops and ts sister photo-sharing app. Mark Zuckerberg, Facebook’s boss, speculated in March that “we may even be in a stronger position if Apple’s changes encourage more businesses to conduct more commerce on our platforms, by making it harder for them to use their data…outside of our platforms”.Not every ad platform will be able to adapt as easily. Smaller publishers with fewer data and resources will suffer, believes Nicole Perrin of eMarketer, a research firm. Publishers that rely on third-party cookies will be hit hardest. The day Apple launched its new policy, a group of German publishing companies lodged a legal complaint with Germany’s antitrust authorities. Small platforms may also find it harder to persuade phone users to trust them with their data. AppsFlyer, an ad-tech company, found that iPhone users agreed to tracking from shopping and finance apps more than 40% of the time, but 12% of the time with casual gaming apps. The inability to share data is forcing advertisers to come up with new ruses. One is to bypass rules banning data transfers between ad-tech companies by consolidating. In February AppLovin, a mobile-software company, acquired Adjust, which provides mobile-ad attribution, reportedly for $1bn. Another is to ask users to “sign in”, which lets an app monitor their behaviour with no need for IDFAs. And instead of targeting individuals, marketers can target broader interest groups—coffee lovers, Daily Mail readers, and so on—much as they did in the pre-internet age. It’s “back to the future”, says Mr Wieser. In another throwback, advertisers will have to resort to old-school techniques for gauging ads’ effectiveness, such as looking for a rise in sales in a region where an ad ran but not elsewhere. That will favour campaigns which promote general awareness of a company’s brand; effects of so-called direct-response ads, which require consumers to take an action (like clicking), would be too small to measure. Platforms that mostly attract brand advertising will thus benefit. Snap, whose social network popular among teenagers belongs to that group, posted a year-on-year rise in revenues of 66% in the first quarter.The less advertisers know about their audience, the costlier advertising will become. Facebook has argued this will hurt small businesses. It is probably right, thinks William Merchan of Pathmatics, a data company. Digital ads promise to cut waste in media buys, he says. Now that ad firms are again in the dark about which half of their budget is wasted, they are “going to have to just spend more”. More

YOU HAVE to hand it to the “technoking”. For all his impish self-aggrandisement, mockery of deadlines, baiting of regulators and soon-to-be-sideline as a “Saturday Night Live” comedy host, Elon Musk is deadly serious about technology. So serious, in fact, that as he was discussing the nitty-gritty of neural networks on an earnings call on April 26th, he did not miss a beat when what sounded like his infant son let out a wail in the background. The record net profit of $438m in the first quarter, the seventh consecutive one in the black, came as almost an afterthought.Such is the allure of Tesla’s whirring money machine that many now give the benefit of the doubt to Mr Musk’s more eccentric claims. His latest involves artificial intelligence (AI). In the future Tesla will be remembered not just as an electric-vehicle (EV) and renewable-energy pioneer, he says, but also as an AI and robotics company. He bases this on a belief that it is close to cracking the challenge of self-driving cars using just eight cameras, machine learning and a computerised brain in the car that reacts with superhuman speed. He calls full self-driving “one of the hardest technical problems…that’s maybe ever existed.”Amid the techno-optimism, though, Tesla also faces the dreary reality of everyday life. Though it expects to deliver about 50% more vehicles this year than in 2020, or around 750,000, like other carmakers it is struggling with a shortage of computer chips. The fiery crash of a Model S in Texas, killing two, has raised concerns about its self-driving technology (reports that its Autopilot function was involved are “completely false”, Mr Musk said). A pandemic-related shortage of engineers hit its output in China, source of much of its recent growth. And the Chinese authorities, which used to shower love on the American firm, are showing signs of Tesla fatigue. Mr Musk may one day find the boundaries of his kingdom constrained not by physics but by geopolitics.He is no longer alone in talking in grandiose terms about Tesla. These days more sober sorts vie to justify Tesla’s valuation of $700bn or so, which puts all other carmakers in the shade. Jed Dorsheimer of Canaccord Genuity, a Canadian asset manager, starts with the invention of the printing press in 15th-century Europe when describing Tesla’s potential. Adam Jonas of Morgan Stanley, an investment bank, believes Mr Musk’s EVs are in the midst of something akin to a “Model-T moment”—provided he can, like Henry Ford, crack mass manufacturing to make Teslas more affordable. Both compare Tesla with Apple, the American technology giant, to illustrate how Mr Musk could create a money-spinning ecosystem of gadgets and services that reinforce each other.For some, the comparison with Apple is more apt than that with legacy carmakers. Silicon Valley-like innovation excites Tesla bulls more than car sales do. On Wall Street, the value ascribed to Tesla’s relatively low-margin EV business is increasingly eclipsed by a mixture of more nebulous, but potentially more lucrative ones, mostly involving software. Those include the sort of connected services, such as maps, entertainment, ride-sharing, semi-autonomous driving and over-the-air upgrades that make Tesla cars a geek’s dream. Few assume, as Mr Musk does, that fully autonomous “robotaxis” are imminent. But some, such as Mr Jonas, think fleets of Tesla ride-sharing services, probably with someone at the wheel, will soon be rolling through city streets.The magical realism may go beyond that. Besides AI and software, Mr Musk is also doubling down on Tesla’s original plan to build, alongside an affordable car, a zero-emission energy business. He has outlined the intention of producing three terawatt-hours of battery capacity within a decade, more than 12 times as much as the goal of Volkswagen, its nearest EV competitor. Besides bringing the cost of cars down to $25,000 a pop, the batteries will also go towards Tesla’s home-energy-storage business. That would create what he calls a “giant distributed utility” that can cope with increased electricity demand as more people use EVs, as well as provide grid stability at times of bad weather. Mr Dorsheimer, who is particularly bullish on Tesla’s solar and storage business, thinks its energy brand could become “Apple-esque”.Thinking differentApple, worth more than three times as much as Tesla, is a flattering firm to be compared to. It is also the prime example of how deftly an American company can handle the ebb and flow of superpower rivalry. Yet when it comes to geopolitics, Tesla may be at a disadvantage. It is just as global as Apple: last year it made half its sales outside of America; 21% came from China. But the $2trn global car market is more than four times the size of the one for mobile phones. With many more firms involved, cars are more politically sensitive than smartphones. Initially countries like China and Germany threw down the welcome mat for Tesla’s gigafactories, partly to goad local firms into producing better EVs. Now that this is happening, the pressure to keep Tesla down is increasing.If Mr Musk is right that self-driving is the future of getting around, concerns about data-gathering and national security are bound to rise. China has already hinted it is sensitive to them. This year the government restricted the use of Tesla vehicles by military personnel and employees of some state-owned firms because of data-security concerns. Mr Jonas, for one, thinks Tesla’s position in China will be “substantially diluted” during the coming decade, as the car market morphs into a transportation utility run and regulated by the state in concert with local champions.Cyber-paranoia may, of course, make it as hard to sell a Chinese car in America as an American car in China. And compared with the “insanely hard” problems Tesla is trying to crack, even superpower politics must seem like a minor irritation. But although Mr Musk can claim to be mastering the realm of physics, politicians, bureaucrats and spooks run much of the real world. That is a source of power that even the technoking cannot disrupt. More

IN THEORY, THE battle for e-commerce in India should be a purely commercial one, in which two of the world’s biggest retailers, Walmart and Amazon, compete with each other and Reliance Industries, a conglomerate that also owns India’s biggest retailer. In reality, there is a fourth force: the prime minister, Narendra Modi, and untold numbers of small merchants that support his Bharatiya Janata Party (BJP). As nationalists, they naturally side with Reliance, which is led by Mukesh Ambani, India’s richest man. That makes the battle visceral, mixing business, politics, xenophobia and billionaires.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

FEW COMPANIES have a history as long and interesting as Merck. Founded in 1668 by Friedrich Jacob Merck as a pharmacy in Darmstadt, the world’s oldest apothecary has survived several European wars, two world wars and the Nazi regime. In 1917 America’s government confiscated its American subsidiary under the Trading with the Enemy Act. It has operated as a rival business, based in New Jersey but, confusingly, also named Merck, ever since.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

AS THE VACCINATION programme in most countries accelerates, people will be thinking about going back to the office, if only for a couple of days a week. Many workers will have got out of the habits of the 9-to-5 day and the prevailing customs. The pandemic will also have changed attitudes towards behavioural traits that were seen as quite normal before the appearance of covid-19. Here are some suggested dos and don’ts for the new world order.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

THE PANDEMIC will fade, but its effects will linger. With workers confined to their homes, many of the processes they would once have carried out in the office had to be automated. This has given a boost to “robotic process automation” (RPA), a tautological label for software that does this. Having got a taste of RPA, managers want more. This desire helps explain how UiPath, an obscure software firm from Romania, managed on April 20th to raise $1.3bn in an initial public offering (IPO) on the New York Stock Exchange. This valued it at around $30bn, higher than what Spotify, the hit Swedish music-streaming service, fetched when it listed in 2018.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

PETROLHEADS DESCENDED on China’s largest exhibition complex on April 21st for the opening of Auto Shanghai, the first big global car show since the start of the pandemic. Dozens of typical exhibitors, from Cadillac to Kia, flaunted their latest models to China’s burgeoning consumer class. Yet the most popular booths, as judged by foot traffic, belonged to a clutch of Chinese companies with little carmaking experience: Huawei, a telecoms giant; DJI, the world’s biggest drone-maker; and Evergrande, a property developer.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

THEY PROMISED to “deliver excitement and drama never before seen in football”, and for a few short days they succeeded—just not in the way they had hoped. On April 18th a dozen of Europe’s top football clubs announced plans to disrupt the game with a breakaway “Super League”. Investors cheered. But fans revolted, broadcasters turned up their noses and governments vowed to block the plan. Within 48 hours half of its founding members dropped out. It was soon declared dead.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More