Starting next year Apple will require apps to collect explicit permission from users to track them and turn the capability off by default. Last week the tech giant revealed apps that don’t comply will be removed from the App Store.

The privacy measure, which Apple calls App Tracking Transparency (ATT), is set to shake up the online advertising industry, which has for over a decade built business models on the collection and exchange of consumers’ data.

Now, with Apple effectively forcing a fundamental change, the industry says consumers may not know what they are giving up when millions opt out next year, and is lamenting its own inability to convince consumers.

Australian consumers are typically either unaware of the pervasive tracking commonly used online or oppose it. A survey by Australia’s privacy regulator showed most local consumers are uncomfortable with targeted advertising and businesses keeping databases on their activity.

Turning off tracking

ATT was slated to be included in this year’s iOS 14 update but Apple delayed it until “early” 2021 to give the developers and the online advertising industry more time to prepare.

When rolled out, ATT will effectively turn off tracking by default, requiring explicit user consent to turn it back on. It is safe to assume many consumers will not do that, meaning app developers, and advertising companies will lose access to the advertising IDs – known as identifier for advertisers (IDFA) – used to track, retarget, and measure the effectiveness of ads.

For marketers the changes represent a serious challenge to established ways of working.

According to Ray Kloss, the ANZ Marketing Director of networking giant Cisco, “Our single biggest challenge is what’s happening with data privacy around things like cookies and third party data. That makes it hard.”  

The changes have bristled an online advertising industry that sees IDFA as fundamental to their business models and the open web they support.

In October, a cohort of advertisers sought to delay the privacy measure with a complaint to France’s competition regulator alleging Apple is abusing its dominant market position to distort competition with ATT.

Apple’s vice president of software engineering Craig Federighi speaking at an EU privacy summit last week. Image: Youtube.

Facebook has also been critical of the change, saying it would make some of its own advertising tools useless for Apple devices and could cost itself and publishers significant advertising revenue.

Apple is holding firm, doubling down on its privacy push, last week revealing it would remove apps from the app store that did not comply with ATT.

“Of course, some advertisers and tech companies would prefer that ATT is never implemented at all,” Apple’s Vice president of software engineering Craig Federighi told an EU privacy summit Tuesday. 

“When invasive tracking is your business model, you tend not to welcome transparency and customer choice.”

Federighi said the resistance is to be expected from certain companies but the advertising industry would “adapt” as it had done in the past for Apple’s changes to location tracking.

“Getting this right will take time, collaboration, listening, and true partnership across the entire technology ecosystem. But we believe the result will be transformative.”

Privacy or profit

The industry tells a different story, with claims ranging from Apple failing to fully consider the consequences of ATT to the tech giant being more interested in cementing its own dominance than protecting its users.

Leading online advertising group the IAB says Apple did not consult ad industry experts in advance of the changes. The group says it is worried the proprietary feature will “lead to more fragmented and less predictable privacy and data protection for users”.

While the IAB – which represents publishers, brands and advertising technology companies – does welcome that Apple is ultimately leaving tracking choices up to consumers, it says it is concerned the giant is doing it in a proprietary way and may not communicate the tradeoffs with its users.

“There’s reason to believe that if a communication of value exchange (for example, personalised and relevant ads in exchange for access to content) is clear, and if any user choices are demonstrably respected, then users might not reject all ID-based advertising activities outright,” the IAB wrote in a blog post earlier this year. 

“Apple’s approach does not do anything to make the value exchange clear, nor does it acknowledge the range of data usages, which in many cases can improve user experience.” 

Adtechs push back

For companies heavily invested in second and third party data, the tone is stronger. Because Apple’s changes are a direct threat to business. 

Lotame COO Mike Woosley. Image: lotame.com

Lotame, an adtech that “curates” second and third-party data exchanges for enterprises, says the changes, if widely adopted, will hurt app developers who typically offer apps for free and monetise them through advertising.

“In our experience developers will lose 40 per cent or more of monetisation on impressions when they cannot be characterised with data,” says Lotame COO Mike Woosley.

Woosley is skeptical of Apple’s public push for privacy, telling Which-50 the move is more to do with “enhancing the barriers in a closed system to advance an economic advantage”.

The Lotame COO says Apple should consider more granular user controls than blocking advertising IDs by default.

“If Apple would only allow users to block the IDFA per app, they would not need to take any draconian action with publishers, and we wouldn’t be discussing it. Blocking the ID wholesale and making developers go trench to trench to permit it ensures that this vital avenue of monetization is substantially squeezed shut.”

Woosley argues Apple is entering new territory by effectively stopping the monetisation of data and tracking. “They’ve reached the point where they are trying to enforce social norms, not a device protocol.”

He says better solutions are needed to strike a balance between user privacy and monetisation.

“As we evolve, the digital media industry needs to deliver methods of monetisation that are clear, transparent, reverent of consumer privacy and feed a virtuous cycle.  Lotame supports the open web and the tools needed to sustain it.  

“Apple’s actions are far overstepping any reasonable cover around privacy, clearly in support instead of the company’s own direct interests.”

Last Tuesday Apple’s Federighi acknowledged the industry blowback but said the tech giant is itself skeptical of critics’ motivations.

“It’s already clear that some companies are going to do everything they can to stop App Tracking Transparency, or any innovation like it, and to maintain their unfettered access to people’s data … We need the world to see those arguments for what they are: a brazen attempt to maintain the privacy invasive status quo.” 

Blame to share

Luke Taylor, the founder and COO of fraud protection company TrafficGuard says tech giants are taking the lead on privacy and their technology changes will end up being more effective than regulation.

“The days of targeting users for advertising based on their behaviour and information shared across sites are numbered – this is another nail in that coffin. This will impact the effectiveness of programmatic advertising, it will also impact the sharing of data from publishers to Google and Facebook within their advertising networks.”

Luke Taylor, founder and COO of f TrafficGuard.

Taylor, an online advertising vetran, says the industry deserves some blame for failing to communicate benefits of tracking to consumers, and the role it plays in keeping content outside paywalls.

“As an advertising industry, we’ve done a very poor job of communicating to the end user as to why we’re tracking them, and why this is beneficial. Publishers, advertisers and adtech haven’t done enough to communicate the value exchange of advertising to consumers. 

“While consumers should have the right to decide what is collected, sold and shared about them, they should be making an informed decision. Many people just don’t understand the direct relationship between choice and innovation, and advertising.”

Apple has already delayed the implementation of ATT once and refused to put a date on its release beyond “early next year”. There may yet be time for the industry to collaborate on better solutions. But it is fast running out.

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