Privacy violations by consumer technology companies and advertising platforms create negative societal externalities that go largely uncompensated for: deteriorating trust in online properties and communities from users, a gray market in aggregated user data that can create opportunities for identity theft, and even the degradation of some users’ states of mental health. Online privacy protections have become a popular point of concern both for governments and for platform operators, and public apprehension has yielded legislation such as Europe’s GDPR and California’s CCPA. Apple’s deprecation of its device identifier, the IDFA, was also ostensibly motivated by consumer privacy concerns.
The IDFA is the hydrocarbon of the mobile advertising ecosystem: it is the sine qua non of the device-centric targeting paradigm that drives advertising performance on mobile. Just as burning hydrocarbons is integrated centrally into the world’s energy infrastructure, the IDFA is the indispensable input to mobile advertising measurement and targeting. And just as transitioning away from the hydrocarbon requires a formidable investment into new energy infrastructure and technology, so does transitioning away from the IDFA.
I have argued that personalized advertising is a public good. Personalized advertising allows:
- Advertisers to reach relevant audiences efficiently;
- Publishers to maximize the yield they generate by serving ads to users;
- Users to enjoy content for free that they otherwise would pay for.
Ahead of Apple’s decision to delay the implementation of the privacy controls that will effectively deprecate the IDFA in iOS14, I argued that the company was acting hastily and without concern for the welfare of not just advertisers and publishers but also users. Just as the entire energy economy can’t transition away from the hydrocarbon at the snap of some major company’s fingers without completely disintegrating, neither can the app economy with the IDFA.
The IDFA needs to be jettisoned systematically and thoughtfully. Advertisers will feel pain in the short term during the transition phase, but the externalities it creates exist as a sort of ticking time bomb. Consumer patience with invasive behavioral tracking has been exhausted, and rightly so. The mobile advertising industry should view this forced change as an opportunity to fundamentally transition to probabilistic models that don’t distinctly identify and track users, rather than trying to maintain the status quo using different data. And this should be done in a way that sustains personalized advertising.
Heavy-handed regulation from either governments or from platform operators is ultimately harmful for advertisers, publishers, and potentially consumers. Apple’s motivations in deprecating the IDFA are not necessarily totally benevolent with respect to user privacy. Apple operates an ad network, and the deprecation of the IDFA gives it much more editorial control over the App Store than it currently has. The deprecation of the IDFA harms Facebook, Google, et al, but does it unequivocally benefit the consumer, especially as consumers’ favorite products become economically non-viable as a result of degraded advertising efficiency?
And GDPR is a case study in unintended consequences, having granted Facebook, Google, and other large consumer technology companies with an incredible advantage over upstart challengers.
Believing that any industry will police itself in a way that constrains profits is naive and unrealistic. Further regulation of online advertising is inevitable. The negative externalities caused by privacy violations must be recognized if any sort of advocacy in that process from the advertising industry — designed to preserve the public good that is personalized advertising — is to be considered serious and genuine.
Photo by Patrick Hendry on Unsplash
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