Apple’s new privacy feature will change the web. And not everyone is happy about it

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A man using the smartphone in the Office

Apple is introducing some limitations to the data collection practices that underpin targeted advertising.

Image: FRANCESCO RINALDI / Getty Images

Ever been spammed with sportswear adverts after looking up gym membership fees, or been bombarded with tempting hotel discounts upon booking flights for your next getaway?

These sort of adverts, almost eerie in how relevant they are to users’ interests, are now a common part of our experience of using apps and the web. But with the new release of iOS 14.5, and with it a new feature called App Tracking Transparency (ATT), these ads might now become less of a common sight.

The Cupertino giant, in effect, is introducing some limitations to the data collection practices that constitute the bread-and-butter of creepy targeted advertising arising from our use of apps.

ATT was confirmed earlier this year, and it is a major blow to most modern-day online advertising strategies. The feature requires apps to get users’ permission before tracking their data across other companies’ apps or websites for advertising purposes.

SEE: An IT pro’s guide to robotic process automation (free PDF) (TechRepublic)

In other words, if users decide to select “Ask app not to track,” then the app’s developers will not be allowed to collect data about users’ behavior outside of the services provided on their own platform.

In practice, developers will be stopped from accessing the user’s Identifier for Advertisers (IDFA), which is a software-based identifier attributed by iOS to track activity across the network of apps and websites that sit within a single device.

IDFA, among other tools, is used by advertisers to create detailed profiles of users’ clicks, interests and preferences, in order to tailor ads specifically to each device’s owner.

Apple’s identifier is only one part of a wider ecosystem, in which ad-tech firms, social media platforms, websites and others put together vast amounts of information about users from a variety of sources.

A common method to collect user data is to deploy trackers to different apps and websites. According to Apple, the average app has six trackers, in most cases allowing third parties to collect information from different platforms.

The idea is to link all of the data to build up user profiles – and expose each individual to the right ad, at the right time.

ATT will not only interfere with app developers’ ability to keep track of users’ activities across other websites and apps. If the feature is enabled, apps will also have to refrain from sharing information with data brokers.

Data brokers collect information or buy it from other companies, including social media platforms, and aggregate thousands of pieces of data to create consumer profiles that can be used for targeted advertising. Apple says that some brokers are sitting on up to 700 million consumer profiles worldwide, which include as many as 5,000 characteristics for each individual.

Apple scores big privacy points

The release of iOS 14.5 and with it of ATT, therefore, has the potential to seriously destabilize the advertising ecosystem.

“Indeed, I think that it will force brands to re-evaluate their tagging, attribution and in-app marketing strategies but also to make sure that they clearly articulate the consumer benefits of sharing personal data,” Thomas Husson, principal analyst at Forrester, tells ZDNet.

Apple, for its part, drives very little revenue from advertising. The company’s business model relies mostly on selling hardware and services – which is why it can easily take the high ground on privacy matters.

For a long time, Apple has presented itself as an industry leader in privacy protection, with dozens of privacy-protecting products ranging from cookie-blocking to intelligent tracking prevention in Safari, iOS and MacOS.

Previous iterations of iOS 14, in fact, already came with a new “privacy nutrition label”, which summarizes all of the data that a given app collects and details how the information is used by developers.

And ATT, which goes one step further in reinforcing users’ control over their privacy, has been widely supported by digital rights groups. Once more, therefore, Apple is building up its reputation as a champion of privacy.

“It’s a big step. In the coming days, hundreds of millions of people will be made far more aware of the fact that they have the power to not be tracked,” Michael Connor, executive director at not-for-profit Open MIC (Open Media and Information Companies Initiative), tells ZDNet.

“Apple exerts extraordinary influence on the mobile phone ecosystem, and this will set the bar for other apps. People will hopefully come to expect that opting in is a choice they have, rather than something that is inflicted.”

In defense of targeted advertising

It goes without saying that not all industry players have given as warm a welcome to the new feature. For those that are more reliant on the benefits of targeted advertising, the announcement has rather come as a matter of deep concern.

One of the most prominent voices to raise against the new feature has been Facebook’s. The social media platform’s billion-dollar earnings are reliant on advertising, since the company uses the information generated on its platform to help advertisers sell products and services.

Facebook also widely uses trackers to gather information about users from other apps, and further refine the precision of targeted ads. According to Facebook, over one billion people see an ad generated thanks to its tracking technology every month.

“Facebook has to be overwhelmingly concerned with advertising, because that’s the overwhelming proportion of their business,” Eric Schmitt, senior director analyst at Gartner, tells ZDNet.

SEE: Top 10 iPad tips (free PDF) (TechRepublic)

The social media giant has gone out of its way to challenge ATT, adopting a confrontational tone to undermine what it describes as a move that will only serve Apple’s interests, while impeding small businesses’ ability to ensure their ads are seen by the right customers.

From newspaper ads headlined “We’re standing up to Apple for small businesses everywhere” to blog posts quoting commissioned research about the benefits of targeted advertising: Facebook has undertaken a strong PR campaign to fight back against the new feature.

According to the social media company, small businesses could end up seeing a cut of over 60% of website sales without personalized ads.

Facebook argues that, deprived of advertising revenue, content creators will have to turn to other methods to make money. This could result in charging users for subscriptions or in-app payments – which benefits Apple, which takes a cut.

“There’s no doubt that many businesses, including small businesses, have benefitted from super-precise targeting and measurement that’s available on Facebook,” says Schmitt. “There is a tremendous level of concern among those businesses about the degradation of targeted advertising.”

But this concern is not limited to the impact that ATT could have on Facebook’s services to advertisers: rather, it is the whole industry that seems to be shifting as a result of privacy concerns.

The advertising wind is blowing

Apple’s move comes as digital rights groups increasingly bring some of the practices underpinning digital advertising under the spotlight. The constant tracking users are subjected to for the purpose of targeting ads has been condemned as too intrusive, akin to surveillance, and sometimes even leading to discriminatory practices.

Recent analysis carried out by Pew Research Center showed that an overwhelming 74% of Facebook users did not know that the company kept a list of their traits and interests; at the same time, over half of respondents said that they were not comfortable with this process.

“We’ve run around collecting all this data, linking it and joining it, to a point where some of the providers in the advertising ecosystem even beyond Apple have some level of discomfort with what’s going on,” says Schmitt. “The industry has made its own bed, and this is the way the wind has been blowing for some time.”

Facebook has been left with little choice but to comply with Apple’s new feature. In its latest blog post, the social media company announced that it will be implementing new advertising protocols after the release of iOS 14.5, and working towards new approaches to the advertising ecosystem that are less reliant on data.

Google has also acknowledged that change will be coming as a result of ATT. The search giant’s more quiet acceptance of the new feature might be due to the fact that the company has been developing alternatives for ad-targeting for a couple of years already.

For example Federated Learning of Cohorts (FLoC) was released by Google last month as a way for brands to reach customers with relevant content without using individual identifiers, and instead grouping users in large crowds of people who share similar interests.

Citing a study from Pew Research Centre, which found that 82% of respondents believe that the risk faced due to data collection outweigh the benefits, Google executives said that consumer trust had been eroded by current advertising practices.

It can hardly be said that FLoC has received much appraisal, with a number of browsers even removing the feature due to privacy concerns. But going forward, there is much to be won from building new approaches to advertising that are protective of user privacy.

“The question now is whether there is a safe and palatable alternative for precise audience targeting,” says Schmitt. “That is really the multi-billion-dollar question. I don’t think there is a good answer out there for that yet.”

According to Schmitt, advertising is rather likely to fall back to techniques similar to the television, rather than the internet. “We’re advising a lot of out clients to dust off some of those media-planning playbooks that were used 20 years ago,” he says.

The privacy battle goes on

For privacy activists, however, the battle is far from over.

“We’d be naïve to think that Apple’s new feature alone will bring the world of advertising under control,” says Open MIC’s Connor. “It’s a step, but there is a long way to go. We shouldn’t open the champagne just yet.”

For Connor, the only acceptable outcome would be to put a complete halt to targeted advertising, and instead encourage alternative approaches that are more privacy-conscious.

In other words, open the door to new competitors that will pose an existential threat to the business model of companies like Facebook. In that context, it is no wonder that the social media firm adopted such a strong stance against Apple’s ATT.

One thing is certain: iOS 14.5’s new privacy feature is a smart reputational move that is in tune with customer expectations while also causing some trouble for the competition. On this occasion, therefore, Apple seems to be scoring a big win.

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