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  • Apple’s latest effort to improve user privacy on its devices, known as App Tracking Transparency (ATT), is a part of iOS 14 and could be implemented by early 2021.
  • This change, which requires apps to obtain permission before tracking and collecting user data for the purpose of advertising, will have a major impact on advertisers.
  • Facebook said in a statement to Business Insider that Apple’s trying to “self-preference their own data collection while making it nearly impossible for their competitors to use the same data.”
  • Tech columnist Jason Aten argues that the tech giants butting heads is about more than just ads — it’s about allowing users to choose between giving up their data for more “personalized experiences” and maintaining their privacy.

Apple and Facebook have very different ideas about how you use and interact with technology. Those differences have never been more clear than the current tension between the two companies over Apple’s decision to require apps to obtain permission before tracking and collecting user data for the purpose of advertising.

You can argue over which of the two companies provides a better experience for users, but ultimately, you can’t have what Facebook calls “personalized experiences” and still maintain the level of user privacy that Apple says is its core value. You only get one by giving up at least part of the other.

Apple’s latest effort to improve user privacy on its devices, known as App Tracking Transparency (ATT), is a part of iOS 14 – and it has very real implications for advertisers. That explains why Facebook is concerned. As the second largest advertising platform in the world, Facebook has said that ATT could “render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14.”

Facebook’s Audience Network is the part of the company’s advertising business that allows businesses to place ads in third-party apps, mostly for games. It’s a small part of Facebook’s advertising business, but it still highlights the effect Apple’s change could have on advertisers and the apps and websites that depend on those ads. As a result, Apple announced recently it has delayed its implementation until “early 2021,” it says, to give developers time to adjust and modify their processes.

Most recently, Apple responded to an open letter from privacy advocates that expressed concern over the iPhone-maker’s delay. Jane Horvath, Apple’s senior director of global privacy, sent a letter to nine groups explaining the company’s commitment to ATT, the feature that requires permission.

In that letter, Horvath spared no words in differentiating Apple's stance from Facebook's, stating:

By contrast, Facebook and others have a very different approach to targeting. Not only do they allow the grouping of users into smaller segments, they use detailed data about online browsing activity to target ads. Facebook executives have made clear their intent is to collect as much data as possible across both first and third party products to develop and monetize detailed profiles of their users, and this disregard for user privacy continues to expand to include more of their products.

The two companies disagree over whether collecting "as much data as possible across both first and third party products to develop and monetize detailed profiles of their users" can be done in a way that doesn't disregard user privacy. In fact, I've heard them disagree over that very subject.

I was in the room at the beginning of the year when Horvath was on a panel at CES with Erin Egan, Facebook's VP of public policy. During the panel, Egan told the audience that Facebook "adds value to users in a privacy-protective way." Apple wasn't the only one that disputed this assertion - the audience in the room actually laughed out loud.

Facebook previously responded in a statement to Business Insider in November:

"The truth is Apple has expanded its business into advertising and through its upcoming iOS 14 changes is trying to move the free internet into paid apps and services where they profit," the statement said. "As a result, they are using their dominant market position to self-preference their own data collection while making it nearly impossible for their competitors to use the same data. They claim it's about privacy, but it's about profit. This is all part of a transformation of Apple's business away from innovative hardware products to data-driven software and media."

There are two things to address here:

First, Apple's approach to its services business, arguably what Facebook might be referring to by "data-driven software and media," is very different from a social media network. Apple Music, iCloud, Apple TV+, and Apple News+ are all services that users pay for, as opposed to Facebook's model of making the service free to users in exchange for collecting information and showing them targeted ads.

Second, it's true that Apple has an advertising business within the App Store and Apple News+, however, it reflects such a small portion of Apple's overall business that it's almost insignificant. According to reporting by Reuters, Apple generated about $2 billion in ad revenue in 2019, compared with $46 billion in total services revenue and $260 billion in total revenue.

It's also true Apple collects data, but not by tracking your activity. Instead, according to Horvath's letter, it groups users based on demographic information:

"We target ads by grouping together users who share similar characteristics, such as apps downloaded, age, country or city of residence, and gender, into segments so that a given campaign or set of campaigns can't identify a given user. No sensitive data is used to place users in such segments, and ads are only delivered if more than 5,000 people meet the targeting criteria. Apple does not access or use the IDFA on a user's device for any purpose."

That last piece is the most important, and it's the one causing the fraught consternation on the part of Facebook. The IDFA is Apple's Identifier For Advertisers, and it's the tool that allows apps and ad platforms like Facebook to track user activity across apps and the web. The change in iOS 14 will require apps to request permission before using it to track you.

Facebook isn't even claiming that it doesn't track data - it's their entire business model. What Facebook claims is that Apple is making it harder to advertise in iOS apps because Apple is, itself, becoming an advertising platform. That is, I think, absurd when you consider that Apple's advertising product is both inconsequential and very different in that it's not based on tracking what users do in both apps and online.

It also misses a much larger point: Apple's move isn't about ads - it's about how users interact with technology.

Facebook and Apple have fundamentally different approaches to the products and services they offer. Facebook's approach is essentially that everything should be free to users in exchange for the opportunity to show ads. Those ads provide value to users because they're so highly targeted that they represent products that a user is likely interested in or searching for anyway.

And those tools that Facebook uses to collect and track user data to show relevant ads are the same ones that make it such a powerful and effective place for small businesses to reach customers. I'm not sure you can argue there's a more effective way for a business owner to reach their target customer with so little effort or cost. In that sense, Facebook has one of the most effective advertising models ever.

It's even worth mentioning that Apple benefits from that model. Most of the ads that will be impacted the greatest are for App installs, or ads that appear within an app to get you to download another app. The IDFA allows Facebook to track whether a user saw a specific ad for an app, clicked through to the App Store, and then downloaded that app. Obviously, when a user does, Apple benefits since it takes a commission from App Store purchases.

The problem, however, is most people pay no attention to the fact that their data is being used in this way. When it's brought to their attention, however, that's a different story. It seems likely that a non-zero number of people will choose to opt out when faced with a dialogue box that says something along the line of, "This app wants to track you and send information to third parties."

If the argument is that requiring permission before tracking will kill the advertising model that supports the internet, there's something wrong with the model. I'm not suggesting it's immoral, I'm simply pointing out that if it depends on people to be uninformed about how their data is used, it's probably not sustainable.

If your model will break because people will easily be able to opt out of tracking, that's a problem, and it isn't Apple's fault.

Apple's view is best represented in this statement, again from Horvath's letter:

What some companies call "personalized experiences" are often veiled attempts to gather as much data as possible about individuals, build extensive profiles on them, and then monetize those profiles. We are not against advertising, we simply think tracking should be transparent and under user control, which will engender user trust that will benefit all. 

Apple believes that privacy should come first. It builds products that it can charge a premium for, but it doesn't try to monetize the way people use those products by tracking them and showing them ads. Instead, it's happy to sell them more services and products at high margins. In exchange, it provides a great user experience that doesn't raise questions about privacy or whether a user has to give up their personal information to take advantage of the services.

That isn't inherently bad, it just means that users should know exactly what it means and have a choice. Some users will decide that the value of the personalized experience is worth it. Some won't. Both should have a choice.

That hasn't been the case with technology up to this point. Until now, however, most people have never even known what they were giving up, never mind been given a choice. If nothing else, the fact that it's changing is very good news for users, and could be the most important thing at stake in this battle.

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