August 31, 2020
Apple is upgrading its operating system with privacy controls that reportedly have some advertisers worried. Set to debut in the fall, Apple’s iOS 14 will require apps to ask its users if they want their Internet activity tracked. Many digital publishers are concerned that most users will opt out, which would prevent them from personalizing ads and thus result in a slump in revenue. Facebook has spoken out, pointing out that it will no longer be able to collect a users’ advertising identifiers (IDFA) without their permission.
The Wall Street Journal reports that Weather Company global head of consumer business Sheri Bachstein “estimated that the price advertisers are willing to pay to advertise within iPhone apps could decline by as much as 40 percent as a result of the change.”
“When every publisher is fighting for every last advertising cent, this couldn’t come at a worse time,” said DMG publisher Martin Clarke. Apple stated that it won’t prohibit tracking, “but will simply require app makers to obtain permission from their users to do so.” Google also plans to “implement similar restrictions in its market-leading Chrome browser by 2022,” to comply with the European Union’s General Data Protection Regulation (GDPR).
The new privacy controls come at a time of tension between Apple and publishers. A trade group representing publishers (including WSJ, The New York Times and The Washington Post) recently “pushed for better terms that would allow them to keep more money from digital subscriptions sold through Apple’s App Store.”
Clarke reported that, although the EU left it up to publishers to come up with language alerting users about privacy rights, “Apple is forcing everyone to use what he called a ‘harshly worded prompt’.” TapResearch surveyed users about the prompt, and 85 percent of respondents said they would opt out of tracking. “This seems aggressively aimed at getting people to opt out,” said Clarke. “For Apple to interject itself like this into our relationship with our readers is outrageous.”
Elsewhere, WSJ reports that, “Facebook fears many users will reject tracking, if given the choice, affecting not only its business but also any app that uses its services to sell ads, from game-makers to news publishers.” The company also noted that the operating system upgrade will impact its Audience Network business, “which facilitates ad sales in outside apps.” Jounce Media estimated that, before the coronavirus pandemic, “Facebook Audience Network would bring in $3.4 billion in 2020.”
Likewise, iOS 14 will “hit Google’s AdMob unit, which facilitates ad sales in apps, as well as several ad-technology companies that rely on tracking iPhone users.” For its part, Google is on track to block the use of “cookies,” which track user behavior, in its Chrome browser by 2022.
“Apple’s policy change is accelerating a paradigm shift — that was already well under way — towards consumers having rightful ownership and control over their data,” said Lootcakes co-founder and chief executive Matt Littin.
Facebook, which “acknowledged the changes on its July 30 earnings call,” said it is still in communication with Apple for “guidance and might revisit the way it handles the advertising identifier if Apple provides it.” In early testing, Facebook said it saw “a 50 percent drop in publisher revenue when personalization was removed from advertising.”