Apple a Day Keeps the Ads Away: Apple Set to Limit Personalised Advertisements.
What’s the story?
Apple look set to be on another collision course with developers as the tech giant looks to ban developers from using advertising identifiers (IDFA) without obtaining each user’s consent. For those who are unaware of what an IDFAs are, these are random device identifier assigned by Apple to a user’s device. Advertisers use this to track data so they can deliver customized advertising.
This ban will come in the form of January’s iOS update, upon which users will be presented with the option to turn off tracked advertisements (as seen below).
The move has come under attack, most notably by Facebook. With the social networking giant running a recent full-page newspaper ad stating the feature in iOS 14 will hurt small businesses. They then claimed the new policy is ‘more about profit than privacy.’
But how exactly would this change damage small businesses? In essence, developers receive revenue from advertises who post adverts onto their apps. Limiting personalized apps means that app users will see a random assortment of adverts and are therefore less likely to click the advert and buy the product. Facebook described the effect of this as ‘devastating for small businesses.’
Perhaps more interestingly is Dan Levy, who oversees Facebooks ads and business products, said the following during a press call:
‘Apple is behaving anti-competitively by using their control of the App Store to benefit their bottom line at the expense of the creators and small businesses. If services turn away from ads and start charging a subscriptions fee or in-app payments, Apple benefits because the company makes money from fee charged to developers.’
This is particularly interesting as Apple has been marred by allegations of anti-competitive behaviour. For example, Epic Games brought a lawsuit against Apple in 2020 in the United States District Court for the Northern District of California. Closer to home, both Spotify and Rakuten have complained to the EU that the app store represents a monopoly power, as developers have to accept Apple’s terms, including a 30% commission on in-app purchases.
How will this affect law firms?
Apple could find itself subject to litigation by developers as previously seen with Epic Games. Good news for the firm’s go-to lawyers at Gibson Dunn & Crutcher, who have been retained by Apple in the fight against Epic Games and their previous battle against Samsung.
Should this policy have the predicted detrimental impact on small businesses, this may catch the attention of the European Commission. Previously, the Commission opened formal antitrust investigations into Apple to assess whether their rules for app developers on the distribution of apps via the App Store violated EU competition rules. However, it will be trickier here as, on the face of it, Apple’s policy strengthens user’s privacy, so the Commission may have a hard time balancing competition rules and privacy rights.