Privacy is an increasingly important word in the tech industry, with consumers now less likely to agree to share their data with apps they use. Regulations have helped ensure that tech companies now provide more transparency over how consumer data is used, and Apple has taken this a step further with its iOS 14.5 update. The new update includes a special feature known as app tracking transparency which gives users more control over how their apps behave.
Many apps depend on consumer data for revenue, so this may affect how they operate. Already, some companies such as Meta have stated that this change is likely to cost them billions of dollars in revenue. On the other hand, it could open up new avenues for smaller companies and startups to thrive in a space that has previously been quite uncompetitive.
What is App Tracking Transparency?
App Tracking Transparency (ATT) is a new feature for iOS 14.5 that requires apps to ask permission before tracking your activities when using apps or websites from other services. Apple devices include a unique number called the “advertising identifier” that can be used to identify the user’s device for ad targeting and tracking purposes.
Using the advertising identifier, app developers have been able to create precise records on how consumers use their iPhone or iPad, including in other apps and on the web. This information is particularly valuable to marketing companies, which make use of the data in order to better understand consumer habits. According to Gustav Andersson, founder of AWISEE, many companies can benefit from tracking enabled advertising, as it gives them a more effective way of reaching a specific target market.
After downloading iOS 14.5, Apple requires all apps to ask for permission to track each user within the new app tracking transparency framework. One thing to note is that this change doesn’t prevent apps from tracking your activity within their own app. It only affects apps and websites owned by other companies. For example, Meta can still track user data across Facebook, as well as Instagram and WhatsApp, because it owns those apps. However, it must now ask for permission to track activity anywhere else.
How Will This Affect the “Big Tech” Companies?
The big tech companies (FAANG), now MANGA, have been profiting from consumer data for many years, selling it or using it to provide tailored marketing. With the new changes to iOS, data tracking will still be possible, but it will be much more difficult. Mobile advertising will be particularly affected, with targeted ads being powered by consumer data tracking. For Meta, formerly known as Facebook, this has been its main business model since it first launched in 2004. Over time, the creation of its app has allowed it to collect more data than ever from users and deliver better advertising as a result.
Without being able to track user data across other apps and websites, Meta anticipates losing a significant amount of money. In fact, the company reported that it could lose up to $10 billion in yearly revenue. “We believe the impact of iOS overall is a headwind on our business in 2022,” Meta CFO Dave Wehner said on a call with analysts after the company’s fourth-quarter earnings report. “It’s on the order of $10 billion, so it’s a pretty significant headwind for our business.”
Other companies such as Google and Amazon could also be affected, especially as up to 62% of users were reportedly opting out of sharing their info. While these companies will definitely feel the pinch, it’s unlikely that it will have any serious implications. FAANG companies are considered too big to fail, and even losing $10 billion a year in revenue is unlikely to affect them too badly. In fact, it’s likely that companies such as Meta will simply find ways around the system, or look for new ways to encourage users to share their data willingly.
Startups benefiting from privacy benefited by changes
As well as having an impact on major tech companies, the app tracking transparency feature will also affect smaller companies and startups. Many small businesses rely on digital marketing and social media marketing to reach their target markets online. With less effective data collection, these companies may struggle to produce the same marketing ROI as before. However, it’s unlikely to change things too much, as lots of data can still be collected within the app.Startups that are focused on privacy and improving the ethics of data collection could be positively affected by this change. As Apple has shifted the topic of conversation towards privacy, more consumers are becoming aware that they don’t need to sign their data over to tech giants. Loyall is a startup that focuses on GDPR-compliant data collection, tracking data from consumers in an ethical way, and ensuring that companies can still develop targeted advertising campaigns without encroaching on user privacy. For a privacy-focused social media platform, Mastodon is a great alternative to sites such as Meta and Twitter.
