Apple has decided that this Monday is the day that everything, or a lot, changes in the advertising market. The company has delivered on what it promised: to give users of their devices a voice and vote on how their data is handled. The iPhone maker said that this spring it would launch a new feature that will force all applications to ask users for permission if they want to be tracked for advertising purposes, and here it is. Polls suggest, and Facebook admits it, that up to 80% will say no.
All the data of the users tracked in the apps or websites of other companies to know what they buy, where they travel, or what they eat became pure gold when designing advertising campaigns. But Tim Cook, Apple’s CEO, has wanted to put people’s privacy first, he said. So the scene can immediately change for users of iOS, the software that Apple iPhones work with. Its latest version, iOS 14.5, is available for download from today and comes with the App Trancking Transparency (ATT) function, which disables the advertising identifier (IDFA) by default and will allow users to decide what data are willing to share and which are not.
A revolution that has put many companies on the warpath, terrified by the Copernican change that this change in software will bring to their business models. Facebook is, without a doubt, the one that has raised its voice the most, since the data of the users and the publicity that it can generate from them, is what makes it a very profitable company. And today the social network has joined a lawsuit filed against Apple in Germany on the grounds that its maneuver will damage targeted advertising on iPhones.
In the lawsuit, filed with the country’s Competition regulator, nine associations have participated, representing companies such as the aforementioned social network and Axel Springer, owner of Bild, Die Wlt and Insider. All of them have alleged that the new iPhone privacy settings represent market abuse and a violation of Competition law.
“As a result of these unilateral measures, Apple is preventing all of its competitors from processing commercially relevant data in its ecosystem,” the business associations said in a joint statement. Plaintiffs in Germany predict a 60% drop in ad revenue for app developers as the changes make it harder for third parties to collect the data they need to place ads.
Thomas Hoppner, from the Hausfeld law firm, which represents companies that sue Apple, assures that the changes introduced by the apple company will lead to more applications changing their business model and charging users instead to keep the service free for advertising, according to the Financial Times, which also reports complaints against Apple in France for the same reason.
Apple has rejected their arguments, saying that the new privacy framework contained in its iOS 14.5 software strongly upheld personal privacy, which it described as a human right, and the privacy laws of the European Union. “User data belongs to them and they should be able to decide whether and with whom to share their data,” Apple said in a statement.
Impact for Facebook
The concern is highest among market analysts who said this Monday that when Facebook reports its first quarter earnings this Wednesday, investors will be very concerned about how the new privacy notification emerging on Apple iPhones will affect the second quarter.
According to data from industry analysts, Facebook faces a decline of up to 7% in revenue for the second quarter if as suspected that 80% of users prevents the company from tracking them on iPhones, $ 2 billion of less revenue.
Last year, Facebook fought back against Apple’s plans, publishing entire advertising pages in newspapers. New York Times Y Wall Street Journal, accusing Apple of harming small businesses that rely on personalized ads and harming the free internet.
In fact, Facebook CEO Mark Zuckerberg has accused Apple of behaving anticompetitively, hindering other developers from benefiting their own app ecosystem. “Apple may say they are doing this to help people, but the movements clearly follow their interests,” he said in January during a meeting with analysts.
Zuckerberg calls Apple “hypocritical” because he says it will force companies to turn to subscriptions and other in-app payments for revenue, of which Apple takes a share.
In response to Facebook’s allegations, Apple has said that “we believe this is a simple matter of defending our users” and that people should have the option to allow their data to be collected and shared. According to a report commissioned by Apple, an average app includes six third-party trackers that are there to collect and share the data online.
The ad industry, in any case, seems clear that change is coming, even without the iOS update. As the BBC reports, technology consultant Max Kalmykov wrote on Medium that advertisers had to “prepare for the next era of privacy-focused digital advertising.” That can include contextual ads, such as fashion-related ads that appear only on fashion websites rather than following random people on the web. Also the placement of advertisements on podcasts would be another form of non-intrusive advertising.
Meanwhile, and according to the British chain’s website, Apple says it supports the advertising industry and has introduced new free tools that allow advertisers to know how successful a campaign is, without revealing the identities of individual users.