Apple vs. everyone – A simple solution

A way out that no one seems to want.  

  • As Apple now requires user consent for apps that use tracking for advertising targeting, developers are fretting and looking for workarounds but strangely seem to be ignoring the one solution that will most certainly work.
  • When iOS14 was announced at WWDC during the summer of 2020, Apple stated that it would require that all apps that track users for the purpose of monetisation via targeted advertising had to get user consent before tracking.
  • This was met with consternation and Apple gave developers until December 8th to implement the change or face having one’s updates denied and one’s app deleted from the store.
  • For companies like Facebook, this has serious implications as targeted advertising on mobile devices makes up 90%+ of its revenues of which I suspect at least half comes from iOS.
  • Faced with a straight choice, almost every user is going to deny developers permission to track them, because, at the moment, there is no downside for the user to do this.
  • This is exactly what happened on the desktop with the advent of adblocking on web browsers and it is here where I suspect that the solution to this problem lies.
  • It is worth noting that none of Google’s iOS apps have been updated since December 7th implying that Google has also not yet worked out how to deal with this change.
  • There are other ways of tracking users outside of the explicit way that it is done today (such as device fingerprinting), but these already contravene Apple’s rules although they are very difficult to detect.
  • It is these alternatives that developers are considering but these are dangerous as they run the risk of being discovered and removed from the app store.
  • However, there is a reasonably simple alternative which would solve this issue for developers and also act to force the quality of apps to improve.
  • On the web, many websites will not allow the user access to content without choosing to disable the ad blocker or subscriber to access the content.
  • In effect, this is giving the user a simple choice of paying with personal data or paying with cash and I see no reason why something similar cannot work for many developers on iOS.
  • When the user fires up the app he could be presented with a simple request which is to consent to tracking in order to able to use the app.
  • The app could also grant a free period so that the user can assess its quality and utility before consenting to agree to be tracked (pay with personal data).
  • This would have the added benefit of forcing app quality and utility to improve because only the apps that users want to use will be given consent for tracking.
  • Facebook’s engagement is strong enough for almost all users to consent to be tracked, but it there is a risk that users decide that Facebook is actually not that useful after all.
  • Developers appear to be unwilling to take this risk at the moment which is why they are seeking alternative methods of tracking their users.
  • However, I suspect that at the end of the day, they may have no choice as this looks like one of the few solutions that might work and work well.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.