Greetings from Brussels!
Apple is on the cusp of releasing its updated operating system iOS 14.5 next week, which will usher in a new privacy-centric approach. With the advent of the company’s new privacy notification policy, iOS app developers will be required to obtain explicit user permission to track activity to facilitate serving up personalized ads.
In a recent communication, the company announced to the app developer community that all apps must abide by its new App Tracking Transparency framework. All forms of tracking will need to be explained, for review by Apple, and must be declared in the product’s App Store privacy information section. This new privacy framework will be applicable across the suite of devices, including iPhone, iPad and TV OS systems effective as of 26 April.
Apple has said that some mobile apps may be banned from their App Store if they do not comply with the forthcoming privacy standards in conjunction with their app developer program license agreement. On the flip side of the coin, there are many voices in the industry who expect that a high number of users may decline to be tracked across apps and websites given such an explicit choice. Invariably, the fear is of the negative impact to the mobile advertising industry ecosystem: Such a restriction may lead to serious shortfall in ad tracking and targeting data gathered from Apple devices by third parties.
Apple has been vocal for some time regards improving the privacy of its users, and this latest privacy innovation was already floated by the company last year. There are some who have been critical of this move. Facebook, for one, has been ruffled by these latest changes essentially arguing that Apple is using a dominant market position to self-preference their own data collection while obstructing competitors to use the same data. This new explicit consent could harm Facebook’s (and others) ad revenue.
The Financial Times reports this week that these latest privacy changes coincide with Apple’s expansion of its own advertising business. In addition to the existing Apple Store search ads results introduced in 2016, the company now plans to add a secondary channel level of advertising to the Suggested App feature (in store), which will give advertisers the ability to promote their apps across the whole Apple network. For context, I read elsewhere that the App Store drives the bulk of Apple services revenue today, including a 15% to 30% commission on in-app purchases. Apple clearly see this new additional channel as an important enhancement to their revenue streams.
Moreover, this new advertising channel may be of greater appeal to advertisers once the new privacy changes come into play potentially reducing the effectiveness and return on targeted ads. Critics will argue that these privacy changes favor Apple’s own competitive business interests first and foremost, as claimed by Mark Zuckerberg. It is interesting to note that while the new App Tracking Transparency framework prohibits third-party tracking without user consent, first-party tracking is allowed. The Apple Store Search Ads are technically first party, as there is no third-party data sharing since Apple owns the store. You could conclude that this is conveniently poised to favor Apple interests giving its own ad network an unfair advantage.
All considered, Apple’s move is bold, and the introduction of explicit consent for third-party tracking is certainly going to have some level of impact. Something to watch.