Tech titans like to snipe at their rivals in private. Still, I was surprised by the ferocity with which one attacked a rival: “Facebook’s business model is not sustainable. Your users cannot be your product. ”
As if to prove the point, Apple will soon make significant changes to iOS 14, its latest operating system, that will have a big impact on the more than $300bn digital advertising market. On average, every app downloaded from Apple’s App Store contains six trackers that can be used by Facebook, and others, to follow users around the web, collect data and target ads. This is one of the main mechanisms of surveillance capitalism, as author Shoshana Zuboff calls it, that is about to change.
Apple, which has long championed the minimisation of data gathering, customer control and security, will present users with a routine, pop-up option to choose such tracking services on apps. The assumption is that many will not, changing the game for advertisers, developers and companies that have built their services off such tools. Facebook has been leading the voluble (and self-serving) opposition to Apple’s move, arguing that small businesses will be badly hit by these new rules. It has already been warning Wall Street that it will knock its business.
It would be comforting to think that dynamic competition between the big tech companies is succeeding where laggardly regulation is largely failing. This may be only partly true, however.
If consumers care enough, they can encourage a race to the top when it comes to privacy standards by switching between services and stimulating competitive tension. But, given the opacity and complexity of the adtech market and restricted consumer choice, it is not yet clear how Apple’s move will play out. It is a bit like shooting a bullet in a crowded gallery of mirrors; no one knows where the glass will fall.
There are two concerns about Apple’s move: first, that it will not work; second, that it will work too well. As the Financial Times reported this week, Chinese companies appear to have developed a workaround to Apple’s tracking transparency initiative even before it has been launched. The state-backed China Advertising Association, boasting 2,000 members, has a new means of tracking and identifying iPhone users called CAID. Some of China’s biggest internet companies, including ByteDance and Tencent, are testing the tool.
The Chinese workaround creates a dilemma for Apple. It seems unlikely to cut off all Chinese companies using CAID given the intermingling of commercial and political power. Yet it cannot turn a blind eye to such violations without encouraging similar efforts elsewhere.
The second concern for Apple is whether the tightening of its privacy regime will only invite greater scrutiny of its market power by regulators. Between them, Apple and Google run the dominant operating systems for smartphones and the most popular web browsers, Safari and Chrome, as well as controlling their own app stores. The French authorities are already considering a complaint by France Digitale, representing more than 1,800 start-ups and investors, that Apple is itself collecting users’ data without their explicit permission.
“If Apple cripples mobile advertising, then the App Store becomes the primary discovery point for apps again, and Apple decides how people use our iPhones,” Eric Seufert, a tech analyst, told the Stratechery site. “Apple is defining privacy as what benefits Apple. ”
Regulators are also investigating Google, which has said it will disable third-party cookies used to track users’ browsing habits by 2022. This week, Texas and 14 other states added new claims to their antitrust lawsuit against Google, arguing that this latest move was anti-competitive because it raised barriers to entry and strengthened the company’s grip on the advertising market.
A balance has to be found between enhanced privacy and restricted competition. The charge against the EU’s landmark three-year-old General Data Protection Regulation, for example, is that it is already obsolete and has only made it more difficult for start-up companies to comply with privacy regulations and challenge incumbents. It is commendable that Apple wants to give users more control, but that may have collateral costs for users. It is unsettling how Apple and Google are reinforcing the corporate walled gardens that already partition the internet.
It will be a long and messy struggle to find the right balance. But given the stakes involved, it is worth persevering with this fight.