(CNN Business)Apple rolled out a major privacy feature on Monday that will allow iOS users to decide how they want their personal data handled — a move that has worried some companies, including Facebook.
iOS users must now give explicit permission for apps to track their behavior and sell their personal data, such as age, location, spending habits and health information, to advertisers. While many apps have allowed people to manage or opt-out of this for years, it’s typically buried deep in user settings and wordy privacy policies.
The new App Tracking Transparency feature, now available as an iOS 14.5 software update, will usher in a wave of privacy awareness, especially as permission requests start coming in from apps people never thought were tracking them.
Developers are now required to ask users via a pop-up alert if they can “track your activity across other companies’ apps and websites.” People who opt-out will see fewer personalized ads. The app developer controls when the prompt appears. And once a user makes their choice, they can change their mind in the settings.
Although some data can help users map their runs, tag photos or track locations so a store nearby can offer up discounts, “some apps have more trackers embedded in them than they need,” Apple said in a video posted to YouTube on Monday. “They collect thousands of pieces of information about you to create a digital profile that they sell to others. These third parties use your profile to target you with ads, and they can also use it to predict and influence your behaviors and decisions.”
“This has been happening without your knowledge or permission. Your information is for sale. You have become the product,” Apple said in the video.
Apple’s effort has roiled some businesses that rely on data tracking to target users with personalized advertising. Facebook (FB), which makes almost all of its revenue from advertising, warned investors in August that Apple’s software changes could hurt its business if people start opting-out of tracking.
“People are going to have a bit of a fire inside them and jump to opt-out of Facebook selling their data,” Mike Audi, founder and CEO of TIKI, a service that allows users to see what data and how companies are tracking them online. “The result is that brands we’d actually want to share our data with may no longer get the data they rely on to provide you with a seamless, hyper-personalized customer experience.”
In December, Facebook took out ads in The New York Times, Wall Street Journal and Washington Post framing its objections around how the change will cause “devastating” harm to millions of small businesses that advertise on its platform, many of which are grappling with the fallout from the pandemic. It also held a press event to trot out small businesses opposed to the change and debuted a new hashtag to discuss it.
Apple teased the requirement at its Apple’s Worldwide Developer Conference in June. The company has worked to position itself as a defender of consumer privacy, describing the changes as stemming from its belief that “privacy is a fundamental human right.”
Apple (AAPL) added new labels in December to its App Store that explain what kind of user data is collected and shared for each app, from financial and location information to browsing and purchase history.
The business impact
Data experts say large companies like Facebook and other well-known brands will have to work to navigate the changes, but it’s the small to medium-sized businesses that may not have certain resources, such as dedicated analytics teams and engineers, that could struggle more to reach potential customers.
“Many small businesses take advantage of data sharing to target and measure ads on Facebook and Instagram,” said Eric Schmitt, senior director analyst at market research firm Gartner. “It is fair to say that the benefits of digital advertising to some of these businesses will decline.”
Facebook has tried to tout the benefits of data collection ahead of Apple’s privacy change. “Agreeing to these prompts doesn’t result in Facebook collecting new types of data. It just means that we can continue to give people better experiences,” it wrote in a blog post in February.
Meanwhile, Google (GOOG) announced changes to its ad policies ahead of Apple’s new feature earlier this year, noting it will no longer use certain identifiers for advertising — such as showing you an ad for a bike that you’ve previously searched for. “We are working hard to understand and comply with Apple’s guidelines for all of our apps in the App Store,” the company said at the time.
Various studies show that when given the opportunity to opt-out of their data being sold or shared, many people will take that route. But companies will likely adapt.
“I’m confident businesses, especially Facebook, will come out just fine after the app tracking transparency functionality rolls out,” said Daniel Barber, CEO of data management firm DataGrail. “Change spurs innovation, and I expect Facebook, ad-tech companies, and any other businesses impacted by this to find innovative new ways to communicate with their audiences.
He said heightened awareness around data privacy could also put more pressure on government officials to develop a federal bill to protect user privacy.
Still, Apple’s iOS change marks the start of a more transparent future, as consumers will be even more aware about how apps handle their data. “The most exciting part is users will start to expect and demand more control over their data,” said Audi. “The fastest way to get a company to make a change is for their users to get upset.”
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