In a revolutionary move, technology giant Apple (NASDAQ:AAPLApple (NASDAQ: decided to enable the ad-blocking technology on its new mobile operating system. Apple has come to realize that this emerging technology niche that is widely used on other platforms has a very strong demand by users who are looking to avoid increasing amounts of advertising on their phones. As shown in the chart below, demand for ad blocking apps has increased significantly in recent years among PC users who are somewhat correlated to the boom in online advertising technology market. While the PC market was a heavy user of ad blockers, mobile devices were absent from this market as mobile ads are growth engines for many online advertising firms like Google (NASDAQ:GOOGGoogle (NASDAQ:, Yahoo (NASDAQ:YHOOYahoo (NASDAQ:, and facebook (NASDAQ:FBFacebook (NASDAQ:.
Demand for the iOS dedicated ad blocking apps exceeded expectations with more than 600,000 downloads recorded for the ten most popular apps, as shown in the chart above. This download wave of ad-blocking apps could impact Apple's rival Google directly, as most of its revenues are generated from online advertising and iOS ads are a significant portion of the mobile ads revenues for Google. However, it is not that clear whether Google will be impacted by this move in a substantial manner.
First, ad-blocking apps will enable whitelists of “approved” ads that will be displayed on a mobile device that downloaded a particular ad-blocker. These whitelists enable chosen advertisers who paid the ad-blocker to bypass the ad-blocker and display their ads on a device almost exclusively as most of the other ads have already been removed. An exclusive display is a highly valuable feature for an ad, and advertisers will probably pay to receive that premium service. This will not create an ads-free iPhone but adds another layer for companies to benefit from mobile ads. To even to be able to use this service, advertisers still need to advertise online, probably through the biggest network – Google. This process will impact advertisers more than it impacts Google as they will have to pay a premium for ad-blockers to join their whitelists, and they don't have enough power to challenge Google's prices.
