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This is an audio transcript of the FT News Briefing podcast episode: Apple’s privacy policy wreaks havoc on rivals

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, November 2nd, and this is your FT News Briefing.

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Barclays chief executive Jes Staley is the latest high-profile figure to fall because of his relationship with Jeffrey Epstein. And the big UN climate conference in Glasgow is under way. We’ll give you a taste of what’s been happening there. Plus, Apple this year started letting users choose if they wanted to be tracked by advertisers. A lot of people opted out, and so a lot of tech companies have been hit.

Brooke Masters
It suggests that the digital advertising market has been based on practices that actually people don’t like.

Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.

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[CLIP OF A CROWD PROTESTING]

Marc Filippino
Protesters were on the streets of Glasgow yesterday as world leaders delivered speeches at the UN climate conference or COP26.

[CLIP OF WORLD LEADERS SUCH AS JOE BIDEN AND BORIS JOHNSON SPEAKING AT THE COP26]

Marc Filippino
Also in Glasgow is our climate reporter Camilla Hodgson. She was inside the conference centre where the formal events are being held.

Camilla Hodgson
It’s a little like a circus. It’s very, very busy. There are thousands of people here. There were people queueing for about an hour just to get to the security checkpoint, so that all took a bit of time. Meanwhile, outside in Glasgow, it was blowing a gale. Perhaps the Glaswegians wouldn’t be as dramatic about it, but it felt quite cold to me.

Marc Filippino
So Camilla, as our colleague, Leslie Hooke, told me yesterday, this is a huge diplomatic event and it seemed like every major world leader was there. You know, we played at some moments from a few speeches earlier. Did any of the remarks from high-profile speakers stand out to you?

Camilla Hodgson
This isn’t a world leader, but Sir David Attenborough, the broadcaster, delivered a very powerful speech during the opening ceremony. He talked about humanity being the smartest species who ever have lived on the earth, and it was quite a nice counterpoint to what had been until then a series of quite downcast speeches, people saying, “We are not where we need to be. We need to step up our game.” Mr Attenborough, obviously, laid that point as well, but it was a little more heartening to hear him talk about where we can find hope and the fact that humanity isn’t necessarily doomed.

Marc Filippino
Thanks, Camilla. That’s our climate reporter Camilla Hodgson in Glasgow for the COP26 climate conference.

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Marc Filippino
Barclays chief executive Jes Staley was planning to attend the climate conference in Glasgow. He didn’t make it, though, because he was forced to step down from his job. It was a shocking departure, and it blindsided the bank, and it follows an investigation by British financial regulators into the way Staley described his relationship with Jeffrey Epstein. That’s the late, disgraced financier and sex offender. Here’s the FT’s banking editor Stephen Morris.

Stephen Morris
Staley knows him because he was his personal private banker at JPMorgan back in the early 2000s. Staley took over Barclays in 2015 in the UK, and several years later it came to light, and regulators took a look again at their relationship and specifically how Jes Staley had described the relationship both to the board of Barclays and British regulators. And although we haven’t seen the full report, we can at least infer today that regulators concluded Jes Staley had not been completely honest or mischaracterised his relationship with Epstein to such an extent that he has felt that he’s had to step down. Now, this is obviously shocking for yet another Barclays CEO to have to step down in scandal, the second one in ten years now. But until the full picture comes out, we don’t know exactly what Staley is alleged to have mischaracterised that went on between the two men.

Marc Filippino
Stephen, what do you know about the man Barclays has tapped to replace Staley? His name is CS Venkatakrishnan.

Stephen Morris
Venkat, as he’s known, is a longtime lieutenant of Jes Staley. They worked together at JPMorgan, and he was one of the first people that Jes Staley tapped up to leave JPMorgan and join him in London at Barclays. He’s a risk officer by trade. It’s hoped that he will bring a more safer pair of hands to the bank. Jes Staley is a bit more of a swashbuckling character. Venkat, I’ve met him a few times, he’s a very nice guy. He’s, he’s very considered, and he has the full backing of the board, apparently. They said that he’s been their number one pick for a few years, but still he’s been catapulted into the limelight, possibly a year or two before anticipated. And of course, in incredibly difficult circumstances. So his main aim will be repairing relations with regulators, talking to investors and calming them down, and then seeing what he can bring to the bank. He’s already taken the opportunity to say how disappointed he is his boss and his mentor has left, so he’s not distancing himself from his predecessor. But as we say, he’s shunned the limelight until this period. So really, he’s a bit of a blank sheet of paper.

Marc Filippino
Stephen Morris is the FT’s banking editor.

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OK, so we know Apple is a powerful company, but its decision earlier this year to allow users to opt out of tracking showed how much power Apple has over other tech companies. Many apps were simply walloped by Apple’s move. To talk more about this, I’m joined by our chief business commentator Brooke Masters. Hey, Brooke.

Brooke Masters
Hey, Marc.

Marc Filippino
So, Brooke, how badly has Apple’s change to its privacy policy hit other tech companies like Snapchat? I’m mentioning Snap because it recently announced earnings, and its share price absolutely plummeted after it mentioned Apple’s privacy policy.

Brooke Masters
Well, what Snap said is without being able to follow people around the internet, their advertising is much less targeted. So it’s much less attractive to people who want to buy advertising, and it has wiped projected ad sales out for companies that do this. Patrick McGee, who works at the FT as well, did a really interesting calculation and found that it’s almost $10bn in projected ad sales that just vanished because people stopped spending money on it because the ads aren’t as good.

Marc Filippino
Wow. I mean, that is just astonishing. How do companies plan to respond to this?

Brooke Masters
Well, they are finding different ways to target users. If they can’t follow them around the internet, they can do other things. Twitter, which was affected but said the effects were only modest, what they’re doing instead of saying, you know, “You, Marc, went and looked at, you know, the Boston Red Sox site, and therefore we will offer you advertising about Boston or about baseball. Instead what they say to advertisers is, “If you want to advertise about Boston, buy ads on the topic ‘Boston’.” So when somebody tweets about Boston, then they get an ad about it, which is much less intrusive. That’s not following you around. That’s, you know, you put yourself on Twitter saying, I’m interested in Boston, and Twitter is serving you up an ad that matches.

Marc Filippino
Right, I’ve actually seen those. Not for the Red Sox, though, for the Mets.

Brooke Masters
Apologies. I’m a Mets fan as well, and that’s insulting to say that you would root for the Red Sox.

Marc Filippino
It’s all right. (laughs) Don’t worry about it. Have any companies been able to dodge the worst of Apple’s privacy policy?

Brooke Masters
Well, Google, which has a different way of collecting information on you, is doing fine. Basically, Google has a first-party relationship with you because when you go to Google and search for something they know you’re searching. So they don’t need to track you around the internet. They already have you on Google, and so they have been just fine in their ad sales.

Marc Filippino
So while we’re talking about all these companies that have been negatively affected by Apple’s privacy policy, you know, how has Apple fared?

Brooke Masters
Well, you see, Apple, like Google, has direct information about you. It doesn’t need to follow you around the internet. You’re on its phone. And so its advertising, which is a relatively small part of its revenue but one of the highest margin parts and one of the fastest growing part, is doing great. It’s up 40 per cent this year.

Marc Filippino
What does this all tell us about the digital advertising markets method of raising revenue? Is it flawed?

Brooke Masters
I would say it suggests that the digital advertising market has been based on practices that actually people don’t like. If people were happy to be tracked all around the internet, the fact that Apple has asked them to say, “Please allow,” wouldn’t matter because we would all be fine saying, “Oh yes, I’m really happy for Facebook to ride around and see everything I do.” But the reality is most digital advertising is sold in a way that people really don’t like once they know about it. And so I think it will require everyone to rethink. I personally think we actually need some common standards so it’s not just Apple saying you can’t do this, but actually that there are privacy rules that say you can’t do this. In Europe now because of GDPR, which is their 2018 data privacy regulation, when you click on a website the first time you get there, it always asks, “Are you happy for us to track you?” Because they have to do that now. And that’s not Apple being nice or Apple caring about its customers. That’s, like, the law, and that matters.

Marc Filippino
And that’s something that regulators or maybe even Congress could do here in the US?

Brooke Masters
Absolutely. And actually, California is moving this way and thinking about it. Unfortunately, Congress has gotten very hung up on partisan debates when it comes to the internet because Republicans and Democrats have different things they don’t like and haven’t moved forward as fast as I think many people wish they would.

Marc Filippino
Brooke Masters is our chief business commentator. Thanks, Brooke.

Brooke Masters
Thanks for having me.

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Marc Filippino
One more thing before we go. You know how when you get older, your memory starts to get a little foggy? That totally happened to us last month. The FT News Briefing turned three years old on October 15th, and it completely slipped our minds. Now it’s OK if you didn’t get us a birthday present. You tuning in every day is enough of a gift. But if you want to give us a little something, you could leave us a review on Apple Podcasts or your app of choice. It helps other listeners find the show. So thank you again for your support.

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You can read more on all these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.

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