The foundation of the freemium app economy is targeted, personalized advertising. Relevant advertising based on consumers’ behavioral histories and tastes is the means by which freemium apps aggregate large audiences and sustain viable unit economics. Absent personalized advertising, the freemium app economy will evaporate, and the App Store will look much as it did at launch in 2008, when apps came with price tags at download.
The hostilities I predicted between Apple and Facebook in my 2017 piece, The coming war between Apple and Facebook, are playing out across the pages of the largest newspapers in the United States. Apple claims that its App Tracking Transparency (ATT) prompt, which it will require developers to display at some point this year and which allows users to opt into ad tracking for each app they download, provides consumers with choice around how their data is collected and used. This is disingenuous. When a mugger sticks a gun in their victim’s face and says, “Give me all your money or else,” the second option is merely rhetorical.
The wording of the ATT prompt is ominous, intimidating, and leading. But worst of all: it doesn’t help a consumer to understand what they give up if they opt out of tracking, or really what “tracking” means. Is this app developer watching me from my window? Can this app developer read my emails?
If Apple wants to provide consumers with real choice around how their data is collected and used, it should explain why their data is collected and used, and for what purpose. Would most consumers opt into ad tracking via the ATT prompt if they knew that doing so provided for their favorite mobile apps to be made available for free? The community of app developers that propelled the App Store to half a trillion dollars in revenue in 2019 deserves to know the answer to that question.
Apple insists that it is serving the well-being of consumers by instituting the ATT prompt. But Apple has self-serving motivations for wanting to disrupt the ad-driven distribution status quo on mobile. And since iOS10, Apple has provided consumers with a mechanic by which they can regulate collection of data relevant for ad personalization: the Limit Ad Tracking setting, which blocks access to a user’s unique device ID, the IDFA. Why is the Limit Ad Tracking setting insufficient for providing consumers with control over their privacy? And why won’t Apple deliver more context to consumers around what ads personalization provides to them?
The reality is that the data used to personalize ads by most ad platforms is benign, and, importantly, boring. Consumer privacy is an important frontier and should be accommodated, and the IDFA as an ads personalization tool should be replaced with something less capable of being abused; I have called the IDFA the hydrocarbon of the mobile advertising ecosystem. But ATT is a blunt instrument that throws the baby out with the bathwater and that, crucially, will take something meaningful away from consumers.
The Limit Ad Tracking setting gives consumers total control over how their data is collected and used without resorting to scare tactics. ATT will undercut the freemium app economy and deprive consumers of the free apps they love. ATT is a clumsy solution to a real problem.