Apple Makes a Privacy Change, Facebook and Advertising Companies Cry Foul

By Reed Albergotti and Elizabeth Dwoskin, The Washington Post

30 August 20

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Apple’s long-standing effort to improve its customers’ privacy is pitting it against an advertising industry that believes Apple has grown too powerful.

n the coming weeks, Apple plans to change its iPhone software to make it more difficult for advertisers to track Apple customers, an effort that will help further one of the company’s long-standing goals: protecting the privacy of its customers.

But with Apple under the antitrust spotlight, its privacy move has also been called a power move by an advertising industry that is scrambling to adjust to the changes, expected to be included in iOS 14, the company’s latest mobile operating system expected to go live next month.

On Wednesday, Facebook became the latest organization to speak openly about the changes, telling investors and users that Apple’s move will hurt the social network’s bottom line because it will limit the kind of personalized targeting that makes Facebook’s ads so valuable to advertisers. “This is not a change we want to make, but unfortunately Apple’s updates to iOS14 have forced this decision,” the company said in a blog post.

Some in the advertising industry see the move as part privacy, part self-interest on the part of Apple. Apple also offers advertising, and by limiting the amount of data outside marketers collect, Apple’s access to the data becomes more valuable.

“I think there’s probably 30 percent truth in that they’re doing it for privacy reasons, and it’s 70 percent that they’re doing it because it’s what’s good for Apple,” said Nick Jordan, founder of Narrative I/O, which helps companies gather data for advertising. “It’s a question for regulators and courts whether they should be able to wield the power they do over this ecosystem,” he said. “They created it, but can they rule it with an iron fist?”

In an interview with The Washington Post, Apple Director of Privacy Engineering Erik Neuenschwander said the changes were part of Apple’s privacy road map. When asked whether Apple considers how regulators or competitors might view privacy changes, such as the new policies on advertiser tracking, he said the customer is always Apple’s main consideration.

Facebook and Apple have sparred in the past over privacy, with Apple CEO Tim Cook making critical remarks aimed at the social network and Facebook CEO Mark Zuckerberg calling out Apple for the high prices it charges for its devices. Most recently, Facebook joined a chorus of app developers in criticizing the 30 percent fees Apple charges for money earned on its App Store.

Apple and Facebook are both facing investigations by lawmakers and regulators into whether they have wielded their power in anticompetitive ways. Apple is facing a landmark lawsuit filed by Fortnite owner Epic Games that claims Apple is using its status as an alleged monopolist to overcharge app developers with 30 percent fees on App Store earnings.

The latest altercation between Apple and Facebook concerns new pop-up messages expected in iOS 14. Apple says that when customers open apps, they’ll be asked whether they would like to give that specific app permission to track them with something called an “ID for Advertisers,” or IDFA. Apple created the IDFA in 2012 to help app developers earn money on iOS. The unique number, assigned to iPhone customers, allows advertisers to track their movements around websites and apps by following that unique identifier.

For years, IDFA was turned on by default on iPhones. Only by going into the phone’s settings could users turn off that feature. The IDFA helped Facebook and other developers learn what apps users downloaded, how frequently they used those apps, their in-app purchases, and the websites they visit on desktop and mobile devices and Apple TV.

With the new pop-up messages, customers will be forced to make a choice. It is likely that most consumers will opt out of being tracked. Facebook said in a blog post that it would render its off-platform ad network so ineffective that it may not make sense to offer it to developers at all. Facebook said that in testing it had seen a more than 50 percent drop in revenue as a result of the loss of data from Apple.

Over time, Neuenschwander said, Apple has been handing users more and control over how IDFA is used, giving them the ability to turn it off completely when the company launched iOS 10 about four years ago by turning on the “limit ad tracking” switch in the phone’s settings.

Neuenschwander wouldn’t say how many Apple customers turned that switch on in the settings.

Like Facebook, Google and several other companies, Apple runs an advertising business that relies on personal data it gathers to show people “relevant” advertising. “We collect your personal information,” Apple’s App Store & Privacy guidelines say. “ … We also use information about your account, purchases, and downloads in the Stores to offer advertising to ensure that Search Ads in the App Store and ads in Apple News and Stocks, where available, are relevant to you.”

But Apple doesn’t consider this data gathering “tracking,” according to Neuenschwander. That’s because Apple collects the data from its own users on its own apps and other services. Facebook and other advertisers, Apple says, gather data on users even when they’re not using Facebook.

By reducing the amount of data Facebook and other advertising companies can gather from IDFA numbers, Apple is limiting their ability to gather data on users as they bounce from app to app, or website to website.

“There’s been no discussion, no commercial transaction. They’re saying this is what we decided is right in the name of privacy and this is what we’re going to do,” said Stuart Ingis, a partner at the law firm Venable who represents the Partnership for Responsible Addressable Media, an association of advertisers. Ingis said Apple is harming the very economy that fueled innovation and growth in app development, which in turn helped Apple sell more phones.