App Tracking Transparency; Apple’s Advertising Business

In this post, I’ll talk about App Tracking Transparency (ATT), how Apple is different from Facebook and how Apple’s own advertising business is seemingly exempted from it

What is App Tracking Transparency?

Starting iOS14.5, apps have to ask explicit consent from users if they want to track users across different apps and websites. At the heart of the matter is whether advertising platforms such as Facebook should have automatic access to Apple users’ Identifiers for Advertisers (IDFA). IDFA is a unique identifier for your device. It is to your device what Social Security Number is to you personally. Traditionally, the likes of Facebook did have access to IDFA by default. Users had to opt out of cross-app tracking. Facebook used IDFA to deliver personalized ads. For instance, after learning that you just bought some sporting gears from Scheels, they could serve you ads for sporting equipment from other retailers. Also, IDFA helped Facebook measure the effectiveness of their ads. If you get served an ads from a chocolate brand and proceed to actually buy some from it, Facebook can tell the brand that their ads helped convert you into a buyer.

With the introduction of App Tracking Transparency (ATT), access to IDFA by default was severed. Developers now have to seek explicit consent from users whenever they want to regain such access. In a popup, developers can tailor their message to users and make their case as to why allowing tracking is to the users’ benefit.

Source: Apple

How Apple and Facebook differ in their approach to advertising

Before we proceed, let’s take a moment to talk about how Apple defines tracking. Here is Apple:

Tracking refers to the act of linking user or device data collected from your app with user or device data collected from other companies’ apps, websites, or offline properties for targeted advertising or advertising measurement purposes. Tracking also refers to sharing user or device data with data brokers.

Examples of tracking include, but are not limited to:

– Displaying targeted advertisements in your app based on user data collected from apps and websites owned by other companies.

– Sharing device location data or email lists with a data broker.

– Sharing a list of emails, advertising IDs, or other IDs with a third-party advertising network that uses that information to retarget those users in other developers’ apps or to find similar users.

– Placing a third-party SDK in your app that combines user data from your app with user data from other developers’ apps to target advertising or measure advertising efficiency, even if you don’t use the SDK for these purposes. For example, using an analytics SDK that repurposes the data it collects from your app to enable targeted advertising in other developers’ apps.

The following use cases are not considered tracking, and do not require user permission through the AppTrackingTransparency framework:

– When user or device data from your app is linked to third-party data solely on the user’s device and is not sent off the device in a way that can identify the user or device.

– When the data broker with whom you share data uses the data solely for fraud detection, fraud prevention, or security purposes. For example, using a data broker solely to prevent credit card fraud.

– When the data broker is a consumer reporting agency and the data is shared with them for purposes of (1) reporting on a consumer’s creditworthiness, or (2) obtaining information on a consumer’s creditworthiness for the specific purpose of making a credit determination.

Source: Apple

Long story short, Apple allows that an app can track you within its property and your data doesn’t leave your phone. It’s also not tracking if the data sharing is for an official purpose that is not ads-serving. Think about it this way. When you walk into a Walmart and walk around the aisles, the cameras inside the store can tell Walmart what you like and what you don’t. I rarely venture into a Walmart’s candy or cheese aisle. I am fine with Walmart knowing it because the store is their property and I have a direct relationship with them whenever I shop there. However, it would be not OK if Walmart struck a deal with Starbucks that allows the two companies to share my shopping behavior in their stores with each other without my consent. It would be really creepy.

The same goes for our data on mobile device. Facebook can serve us ads based on our behavior on their properties, including the big blue app, Messenger, Instagram or Whatsapp. To Apple, that’s possible and allowed. However, it is no longer allowed that Facebook follows users across websites & apps, and uses such knowledge to serve ads without our consent. A permission has to be granted first.

Shortly after the introduction of ATT, Apple debuted their Apple Search Ads. Apple Search Ads enables developers to serve users ads on the Search Tab of the App Store. According to the company, 70% of App Store users used the Search tab to find apps and 65% of searches result in downloads. Hence, it’s a valuable real estate to both Apple and developers. To enable targeted ads, Apple groups customers into segments based on data that they retrieve from:

  • Apple ID: name, age, location, gender, or anything that you list on your Apple ID
  • Device information: language setting, device type, OS version, mobile carrier
  • Apple News & Stocks: topics and categories that you interact with
  • App Store: searches on the App Store. Downloads from the App Store and in-app purchases are only allowed when the targeting is done by the app’s developer. Said another way, the fact that you downloaded Call of Duty and the stuff you bought inside the app can only be used for targeting by Call of Duty itself, not somebody else

Apple has received a lot of criticisms since the introduction of Apple Search Ads. Some critics say that Apple has a double standard for its own advertising business because there is no popup to ask for users’ permission with Apple Search Ads. The criticism is misguided in my opinion. The reason why there is no permission seeking from Apple is that the company uses only first-party data (data that users already give Apple and data that is created & gathered on Apple’s apps) for targeting. It doesn’t use data gathered on other apps to serve you ads on the App Store. Based on how Apple defines tracking as I laid out above, it is not tracking. In fact, Apple’s definition of tracking is similar to that of World Wide Web:

Tracking is the collection of data regarding a particular user’s activity across multiple distinct contexts and the retention, use, or sharing of data derived from that activity outside the context in which it occurred. A context is a set of resources that are controlled by the same party or jointly controlled by a set of parties.

Source: World Wide Web

In the case of Facebook, it wants to get users’ data OUTSIDE its property apps for targeting. With ATT, Apple wants their rival to at least ask us, the users, for permission to use our own data. To Facebook, it’s unfortunately a bridge too far. I mean, I am not naive enough to think that financial benefits aren’t in Apple’s calculations when they plan out ATT and Search Ads. The difference here is that while Facebook makes money at the expense of user privacy, Apple found a way to generate more revenue and still honor our privacy. Other critics say that Apple creates its own advantage because, with ATT and the new Search Ads, Apple is likely the only party that can track app download conversion. It is true that Apple will likely be the only advertiser that can tell developers whether their ads are effective. But does Apple have a duty to allow Facebook to track users and know the conversion from the App Store in the first place? If a native Facebook shop that lives entirely on Facebook runs a Google ads to get people to come to the store and make purchases, will Facebook let Google know whether and when a purchase is made? I don’t think so. Hence, why does Facebook want something from others that it doesn’t want to do in the first place? Plus, whether we download an app is our data. Why should Facebook’s desire to know that be put above our privacy? It’s a weird criticism, if you ask me.

In short, Apple has been a company with a perspective and excellent, like wealthiest-in-the world excellent, at making money with their products and services true to that perspective. In this case, Apple thinks it can deliver targeted ads while respecting users’ privacy and making, I assume, a great deal of money in the process. If there is anything I think Apple could have done better, it’s the communication and the timing of ATT and Apple Search Ads. But overall, I think I agree with this Twitter user

Disclosure: I have a position on both Facebook and Apple (I know, I know)

One thought on “App Tracking Transparency; Apple’s Advertising Business

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.