On April 26, 2021, in its iOS 14.5 update, Apple released both a new set of updates for iPhone users and also one of the biggest and most controversial changes to privacy settings. users Apple – and industry – have never seen. Along with new emojis and a more sophisticated Face ID unlock when wearing a mask, Apple launched App Tracking Transparency (ATT), which requires those who offer apps on the App Store to request the consent before tracking user activity on other companies’ apps and websites. In other words, Apple has now placed tight controls on the tracking activities that companies have been undertaking intensively, profitably and unseen for nearly a decade, giving users unprecedented control over how their data is. tracked and used.
The ecosystem before iOS 14.5
Identifier for Advertisers (IDFA) is one of the many tracking tools app developers have always had at their disposal. This is a unique code attached to each Apple device that can be used to aggregate user data from all apps and services on that device, creating a comprehensive profile of a user’s habits and interests. When a user uses an app, this IDFA data (along with other device information) is purchased by advertisers – through the ad supply chain of data brokers, servers, networks, and exchanges – to effectively target users with in-app ads relevant to their behavior. Another specific use case for this device information is’ attribution, ‘the process by which advertisers can track the origin of users’ clicks, purchases, and downloads, which in turn is used to. assess the effectiveness of their ad spend, campaign performance and ultimately, return on investment.
AT in detail
At first glance, ATT appears to be raining on the sunny, largely limitless advertisers parade. Although iPhone users have been able to turn off IDFA-based tracking for a while (via Settings> Privacy), ATT shifts the load to app developers to give users active choice through a standardized Apple pop-up window. ; the process no longer relies on users being aware or aware of data security. Users should now be asked if they should “Ask app not to track”, and if this option is selected, apps may not track or target the behavior of other apps installed on that user’s device. .
Apple defines “tracking” broadly; this includes access to IDFA as well as any other device identification techniques, which means app developers cannot bypass ATT by tracking users through alternative credentials (such as than the device’s fingerprint). While there are some narrow exceptions – for example, to prevent fraud or to allow businesses that have multiple apps to track users across those different apps (for example, Facebook may use data obtained from Instagram) – most activities are subject to the ATT. ATT also imposes new disclosure obligations on applications; they need to be more transparent about the data they collect and share.
Impact and challenges
While it’s still early days and full industry-wide reporting is limited, there have been initial reports showing up to 90% user churn, which is undoubtedly a of concern to stakeholders in the ad technology ecosystem. With User Device IDs banned, app publishers relying on an ad-supported model, and advertisers relying on targeting users with personalized ads, face a significant drop in revenue as their iOS audiences become accessible. can dramatically decrease overnight.
No industry player has been more opposed to ATT than Facebook, which has said that Apple’s new system “will make it much harder for small businesses to reach their target audiences, which will limit their growth and performance. ability to compete with large companies â. Mark Zuckerberg (CEO of Facebook) is said to have said that ATT is clearly in Apple’s “competitive interests” and Dan Levy (Facebook vice president, Ads & Business Platform) calls the changes “control of the entire Internet “.
Facebook does not appear to be alone in its concerns. Competition law-based regulatory action in response to the ATT is already in full swing across Europe, as organizations have been keen to challenge Apple’s approach – most of these actions focus on the fact that ‘Apple does not apply these rules to its own applications and to IDFA access. ; in fact, Apple subsequently launched a number of new ad units within the App Store that offer exactly this functionality. Various French players, including the Interactive Advertising Bureau and the Mobile Marketing Association, filed a complaint with the French Competition Authority (CMA) in October 2020. In March 2021, the French CMA rejected a request for interim measures aimed at block the deployment of ATT and the parties are now working on their main arguments before the final decision of the CMA which is expected in two years. Likewise, nine industry associations representing companies, including Facebook, Axel Springer, Die Welt and Insider, filed a complaint with the German CMA in April 2021.
While the regulatory challenges take some time to come to an end, it is clear that CMAs are carefully considering the matter and ensuring that they consider and balance both data privacy rights and competition concerns. In a joint statement, the UK’s CMA and the Information Commissioner’s Office said that âneither competition nor data protection regulations allow for an empirical approachâ; they will not allow the use of data protection arguments to justify anti-competitive behavior.
With change comes innovation
As with any industry shock wave, stakeholders are currently struggling to adapt. However, given the ice ages associated with regulatory investigations, the market will need to adapt to the new world of ATT, as it is here to stay for the foreseeable future. Advertisers can turn to contextual advertising, which is advertising based on the content of the application, rather than a specific user profile. For example, receiving targeted advertising for running trainers while using your exercise tracker app. Additionally, Apple has made it clear that its ATT framework is only about providing and using user data on the device and in the app. As such, apps that require login or registration (which requires obtaining consent for the provision and use of data, outside of the device) are likely to receive a benefit. significant.
Additionally, Apple does not specify when in the user experience applications should display the required pop-up window in the application. As such, app developers have the discretion – and the ability – to explain to users via their own messaging in pre-consent screens, the purpose and value of tracking, and why a user might want to be. monitoring.
As controversial as it may be, ATT appears to represent a broader shift in the industry by the very large platform providers to give users greater control over their data and more informed choices over how it is used. While the motives for such a decision may be questionable given the significant business gain for these large platform providers resulting from such a decision, much of the public discourse is one of confidentiality. Against this backdrop, it will be interesting to see how CMAs across Europe respond to complaints and how app developers and advertisers look to innovate in the face of this significant overhaul of user tracking.