How the latest iOS update changes the economics of app development

Photo by Christopher Burns on Unsplash

iPhone and iPad users were met with an alert earlier this week from their devices: time to update your software! iOS 14.5 dropped from Apple on Monday with the usual list of upgrades—bug fixes, UI adjustments, performance optimizations, enhanced features—but also included was a novel change. One many users and privacy advocates have been clamoring for: robust tracking protections.

An organizational commitment to Privacy

Apple has for quite some time marketed themselves as a tech company committed to user privacy and security—a strong way to differentiate them from rivals like Google. In many aspects, Apple is way ahead of the industry, making security features standard in a way that users don’t even see—features like automatic data encryption on their devices, end to end encryption of their messaging service, iMessage, and having devices activation locked with their Apple IDs to disincentivize theft.

There are some elements of Apple’s products that are misleading in their security claims: most data stored in iCloud is encrypted but the encryption keys are held by Apple so the only thing stopping the company from opening your files and handing them over to an interested party is their benevolence and image.

But then there was a glaring privacy hole in Apple devices: their platform for third party applications. As the tech industry tightened over the last decade and users became accustomed to getting digital services for free, app developers needed to find sustainable ways to monetize their products. This was, of course, through ad sales. And as an increasing number of apps competed for ad revenue, developers needed to offer the greatest value to advertisers by incorporating trackers that could allow them a fuller profile on their users than they could get from data on their platforms alone. The marketplace perfected a cross-tracking system to a point where ad brokers had an incredibly granular profile of users—people would see ads for items they did a web search for in an unrelated app.

While there’s nothing specifically immoral about targeting ads, the issue many consumers have with this reality is the lack of choice and transparency — not knowing who is tracking you, the extend to which you are being tracked, who is getting the data you are unknowingly generating, and not having any way opt out. These issues are specifically what Apple has most recently addressed.

Apple’s new tracking opt out notification

With the software update comes the requirement that an app ask permission before they can access the unique device identifier on every iPhone and iPad and Apple has strict rules against finding back-door ways to identify a device without user consent. This provides users with more agency over how their data is shared.

Enacting this common sense privacy policy does come with a cost. With cross tracking disabled targeted ads will only be possible to enact on platforms that collect enough data on their users to do it all in-house. This will incentivize some tech companies to try to collect more user data for their own use. For app developers that can’t or choose not to collect unnecessary data on users, their ads will be less targeted. For these apps, the benefit advertisers get per view goes down which will drive down the price they’re willing to pay to run them. These app developers will need to find a way to make up for that decrease in revenue either through running ads more frequently and disrupting user-experience, or in charging their users. While there may be growing pains, this is the ethical way to move forward.

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