Apple's Ad Blockers Rile Publishers By Dow Jones Business News, August 30, 2015, 08:35:00 PM EDT Apple Inc.'s move to make it easier to block ads on iPhones and iPads is troubling publishers and heightening tensions with its Silicon Valley neighbors. The next version of Apple's mobile-operating system, due out as early as next month, will let users install apps that prevent ads from appearing in its Safari browser. Putting such "ad blockers" within reach of hundreds of millions of iPhone and iPad users threatens to disrupt the $70 billion annual mobile-marketing business, where many publishers and tech firms hope to generate far more revenue from a growing mobile audience. If fewer users see ads, publishers—and other players such as ad networks—will reap less revenue. The move also is a competitive weapon against Apple rival Google Inc., which makes more money from Internet advertising than any other company in the world. Making ad blockers available on iOS, one of two main smartphone-operating systems, is expected to prompt more consumers to use the technology. The benefits of blocking ads arguably are greater on smartphones than on personal computers, because they can reduce the clutter on small screens and help pages load faster. "Apple is going to create a massive consumer appetite for blocking ads," said Sean Blanchfield, chief executive of PageFair, a company that helps publishers combat ad blocking. Apple's is a more lucrative audience. Users on iOS spend more money on their devices than those on Google's Android operating system, making them more desirable to advertisers. Ad blockers have long been available for Web browsers on personal computers, and have attracted a small but loyal following. Users can surf the Web without seeing banner ads, advertised links on search results or commercials before online videos. Apple permits ad blockers on its Safari browser for PCs. About 6% of global Internet users employ ad blockers, according to an August report by PageFair and Adobe Systems Inc. That report said 198 million users ran ad blockers in June 2015, up 40% from a year earlier. Wells Fargo analyst Peter Stabler estimates that ad blockers will reduce spending on Internet ads by $12.5 billion world-wide in 2016. "The ad-blocking problem is real and growing, and ad-blocking on iOS is only going to accelerate it," said Jason Kint, CEO of Digital Content Next, an association of digital publishers. Apple isn't powering the ad-blocking software itself. Instead, it is allowing outside developers to write programs to work with the browser in its iOS 9. That means users must find an ad-blocking app and install it, an extra step that may deter some people. Apple describes the apps as "content blocking," because they can prevent images or other parts of a Web page from loading, as well as advertising. Apple says it won't allow ad blocking within apps, because ads inside apps don't compromise performance as they do on the browser. That distinction serves Apple's interests. It takes a 30% cut on money generated from apps, and has a business serving ads inside apps. What's more, iOS 9 will include an Apple News app, which will host articles from major news publishers. Apple may receive a share of the revenue from ads that accompany those articles. One concern for publishers is that ad-blocking software may provide users with a better experience, free from auto- play videos and hidden trackers that follow users around the Internet. Dean Murphy, a developer who is creating an ad-blocking app called Crystal for iOS 9, said it can improve performance dramatically. In tests, he said the websites of 10 news organizations loaded nearly four times faster with the ad blocker and used 53% less data. But Mr. Murphy said he feels conflicted, because publishers will lose advertising revenue. "I can see the publisher side of this. This is how they monetize their business," he said. "The way I justify it to myself is the mobile Web is just so cluttered that something needs to be done about it." Apple's support of ad blockers puts the company further at odds with Google. Over the past year, Apple CEO Tim Cook has repeatedly criticized the data-collection practices of technology companies, such as Google, that personalize advertising for users. In a June speech, Mr. Cook said some prominent Silicon Valley companies had lulled consumers into complacency about their personal information and delivered a warning. "You're not the customer. You're the product," he said. Google permits ad blockers in its Chrome browser for personal computers, even though that hurts its own ad business. For now, it's not as easy to block ads inside Chrome on mobile devices. Google declined to comment for this article. At its annual shareholder meeting in June, Chief Executive Larry Page said, "We've been dealing with ad blocking for long time." He said marketers need to "get better at producing ads that are less annoying and that are quicker to load," pointing to search ads as an example. Mr. Stabler, the Wells Fargo analyst, said Google is more exposed to the threat of ad blockers than companies with heavily used apps, such as Facebook Inc. While Google has many popular apps on iOS including Google Maps, YouTube and Gmail, many users still access services like search in a mobile browser. "It seems like this is part of the ongoing tussle between these two entities," said Mr. Stabler. "It's yet another arrow that Apple can put into the ankle of Google."