How Apple’s iOS 14.5 Update Shakes the App Economy

IPhone users around the world started receiving a series of unknown messages on Monday after downloading Apple’s latest software update: Do they want to be tracked?

Ten months after Apple’s promise “Improved privacy features” for iPhones, the changes have finally arrived with iOS 14.5, despite Loud protests from Apple rivals and antitrust complaints in France and Germany.

The first time users open each app after updating, they’ll be faced with a simple question: “Allow (app name) to track your activity on other companies’ apps and websites?”

There will be two possible responses: “Ask the application not to track” or “Allow”. App developers will have some room to argue the case for the follow-up, but when faced with such a blunt choice, most users should say no.

What tracking notifications will look like in iOS 14.5 © Apple

What exactly is tracked?

Until now, apps could collect and share with third parties such as data brokers all kinds of personal information about you, including your location, other apps you use, when you logged into the app, an encrypted version of your email address, phone number, and a unique number that identifies your iPhone, called IDFA (Identifier for Advertisers).

According to Fun Corp, an application developer, “hundreds of billions of user actions and events” are tracked every day. Washington Post writer found 5,400 trackers took data from his phone in just one week. Many apps send data to multiple partners, including Facebook and Google.

When iPhone users browse apps and surf the web, they leave crumbs of data every time, including a copy of their IDFA, allowing the online advertising industry to profile their behavior. , which advertisers use to serve them with advertisements deemed relevant. .

What happens when I refuse to be followed?

Apple wants all apps to obtain explicit consent for this behavior. If users opt out the very first time they receive the notification, an app won’t be able to access their IDFA forever. And Apple expects apps to not share other data, including phone numbers or emails.

Will I stop receiving advertisements?

No, you will get the same number of ads but they will not be personalized. The advertising industry believes that the wording of the original notification did not adequately explain the value of follow-up.

Users will still receive ads, but by cutting the flow of data, they will be less relevant and apps will be able to charge the advertiser less.

In short, the advertising-based business model that a lot of free apps have relied on is taking a heavy hit.

How apps should display the information they collect

How apps should display information about the data they collect © Apple

So what do businesses think?

Digital Advertising Industry Worth Over $ 350 Billion Per Year And Many App Developers are furious.

Facebook, in particular, has built an $ 80 billion a year business by profiling its users and selling them personalized ads. The company has run full-page print ads in several newspapers, including the Financial Times, saying the changes will hurt small businesses that won’t be able to reach their customers as easily.

He also claimed that Apple was using its “dominant position in the market to itself prefer its own data collection while making it nearly impossible for its competitors to use the same data.”

“They claim it’s a matter of confidentiality, but it’s a matter of profit”, Facebook said. “We are not fools.”

Other companies including Snap, Twitter and TikTok will also be affected, and many companies reliant on mobile advertising have experimented with workarounds. in the USA and in China.

More recently, Mark Zuckerberg hinted that the change could benefit Facebook, however, if it encouraged companies to shift their advertising budgets to direct commerce. Facebook recently invested in tools to enable more online shopping on its platforms.

The big exception

A business won’t ask users if they want to be tracked. Google decided that it would simply stop using IDFA.

While it is damaging for Google to lose access to data from other apps, it already has a huge amount of data from its own suite of apps to rely on.

When an iPhone owner uses Google, Maps, Chrome, Gmail, or YouTube search, Google can still use this data to create ad profiles, unhindered by Apple’s policy change.

What’s in this for Apple?

Apple has long made privacy a key selling point of the iPhone, in order to strengthen its premium position in the market.

But there are other benefits to be gained from changes as well.

Without being able to sell the data they collect to third parties, applications will have to turn to billing their revenues to consumers. And Apple takes a 15-30% commission on all app purchases and subscriptions through the App Store.

Meanwhile, Apple also plans to extend its own “Privacy-centric” advertising company.

I have an android phone. Does it affect me?

For the moment no. But the Google operating system will likely follow in one form or another. Google is in the process of creating “privacy-focused” ads for the desktop. A similar change for mobile apps seems likely.

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