This particular case is probably not the best example, though, given that the lack of apostrophe for "its" is inconsistent with its use for possessive case for regular nouns in the same circumstances. If we really wanted to maximize readability, we'd use apostrophe for possession everywhere (including "he's" for "his") and use something else entirely to denote the contraction of "is" and "has" - preferably two different markers since these can also be ambiguous in many cases. Or vice versa, use apostrophe for contraction and e.g. hyphen for possessive: "it's" vs "it-s" etc.