Learn English – Why is ‘spatial’ written with a t instead of a c

It's not about a contraction "winning" over a possessive. "Its" is the possessive form of "it", like "his" is of "he", "her" is of "she" or "their" is of "they". There is no missing apostrophe; the forms go back to a time when English was a highly inflected language. It predates modern, or even Middle, English.

The possessive formed by the apostrophe+s construct is a more modern, uninflected, less-marked form. There are only a very few commonly used words — pronouns — that still use the older forms. Markedness tends to survive in words that are used very frequently, even when other aspects of the language are losing their markedness. It's the same reason why we still say "men, women and children" rather than "mans, womans and childs" when the plural ess marker is nearly universal in the rest of the language.

When working with words that end in Y, the rules are the same to pluralize nouns and to conjugate a verb for the present tense in third person singular (he, she, it). The rules are:

• Where a consonant comes before the Y, change the y to i and add es
• Where a vowel comes before the Y, just add s

For an example of a verb where a consonant comes before the Y, look at how fry becomes fries. (He fries. She fries. It fries.)

For an example of a verb where a vowel comes before the Y, look at how fray becomes frays. (He frays. She frays. It frays.)

The bonus here is that when you move on to conjugate the verb for the past tense, the rule remains similar:

• Where a consonant comes before the Y, change the y to i and add ed
• Where a vowel comes before the Y, just add ed

Thus, the past tense for fry becomes fried and the past tense for fray becomes frayed.