Ride the Lightning

Apple Strikes a Blow for Consumer Privacy

April 28, 2021

ZDNet reported on April 27 that those creepy highly targeted ads we see all the time may become less of a common sight. Apple is releasing iOS 14.5, and with it a new feature called App Tracking Transparency (ATT), designed to make these ads less common.

ATT 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.

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, along with 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.

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 harvest information or purchase 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 have up to 700 million consumer profiles worldwide, which include as many as 5,000 characteristics for each individual.

The release of iOS 14.5 with ATT has the potential to seriously rock 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, told ZDNet.

Apple (uniquely) can take the privacy high ground because it derives little revenue from advertising, with the overwhelming percentage of its revenues coming from sales of hardware and services.

Is Facebook happy about this? Nope. Facebook’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 refines 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, told ZDNet.

Facebook has gone out of its way to challenge ATT, adopting a confrontational stance to undermine what it describes as a move that will only serve Apple’s interests, while damaging 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 ATT.

Facebook says that small businesses could end up seeing a cut of over 60% of website sales without personalized ads.

Recent analysis carried out by Pew Research Center showed that 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.

Facebook has little choice but to comply with Apple’s new feature. It has 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 changes will be coming as a result of ATT. Its 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.

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, grouping users in large crowds of people who share similar interests.

Citing a study from Pew Research Center, 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.

iOS 14.5’s new privacy feature is a good reputational move that pleases customers while causing trouble for the competition. A very smart move by Apple.

Sharon D. Nelson, Esq., President, Sensei Enterprises, Inc.
3975 University Drive, Suite 225|Fairfax, VA 22030
Email:  Phone: 703-359-0700
Digital Forensics/Cybersecurity/Information Technology
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