Apple is rolling out new updates for its iOS operating system, along with new privacy controls that aim to limit digital advertisers from tracking the activity of iPhone users, according to a new blog post on Apple's official website.
For the more than 1 billion iPhone users, the new change will pop up in a notification in some apps asking for permission to gather data — and the "opt-out" option is subtly placed in the primary position. For many users, this might sound great — but for businesses that rely on the nearly $100 billion in mobile advertising, it could mean unprecedented changes in the mobile advertising market, should the majority of iPhone users refuse to allow data collection.
The ultimate impact of this potentially sweeping change remains up for debate, but, for better or worse: this could fundamentally alter the digital reality we came to know, love, or hate in the twenty-teens.
Apple's new iPhone update could reduce ad revenue
Starting Monday, Apple will require developers interested in gathering digital advertising identifiers from iPhone users to display a pop-up declaring that the app "would like permission to track you across apps and websites owned by other companies," in addition to a longer explanation from the app developer explaining why it wants your permission. Early results from advertising analysts suggest the rollout could see as few as one in three users grant permission.
Of course, there's also a "tracking" menu in an iPhone's privacy settings where users may opt-out of tracking from all installed apps — and users can opt-in or -out of tracking from whichever apps they want. But this raises the question: why do apps track at all?
In short, many websites and apps are only free because of advertising — which is often customized to optimize appeal to each user, which, without a daily verbal survey of what's on users' minds, means the apps and websites need to know what customers are doing online to offer interest-appropriate ads. For many apps and websites, this is how they're able to afford to exist, pay employees, and offer improvements to service. For example, Facebook views users as part of its product — selling data on user behavior to advertisers for a premium. Not counting Mark Zuckerberg's bank account, this exchange is why Facebook doesn't charge users for their profile.
In contrast, Apple thinks the future of the internet looks different. Without advertising revenue, platforms, websites, and apps (social media included) could turn to paywalls to supplement profit loss. Apple's idea of the internet is one where people pay for products, instead of being part of the product. This would make advertising less effective — an industry that has collected data about people's behavior on the net to sell them cars, clothes, music, or whatever they're interested in.
With fewer people opting-in to user tracking, advertising sales might fall for brands, with ad revenues also dropping for publishers and mobile apps. And to be frank, for a lot of websites and apps, this might happen. Apple's move comes as the latest rift between the company and Mark Zuckerberg's Facebook, which in protest has said the shift will damage small businesses, since it will reduce their capacity to find and leverage local customers in a cost-effective way with ads.
Facebook's 'open' versus Apple's 'closed' models
Apple, on the other hand, thinks this will give its customers more control over how and when apps and websites share their browsing habits with third parties. But if only one in three iPhone users opt-in, the results could be more complicated. Many people simply can't or won't pay their way through paywalls for access to websites, apps, or other online services. Alternatively, some social media users might prefer a paywall, to exclude internet mobs and thus increase the quality of online experience (whether for numbers of followers, personal, or political reasons).
For businesses, this could likewise create a new and unique market gap — reducing the possibility for smaller businesses of launching a new venture for relatively scant expenses on the front-end, while leaving legacy services, websites, apps, and news services untouched by the change — since much of their revenue already comes from direct user payments.
This seems bad, but it's hard to deny the rationale for mandating opt-out offers for iPhone users. For years, Zuckerberg's social media company was under heavy scrutiny from lawmakers, regulators, and executives — including CEO Apple Tim Cook — for allowing information from more than 50 million Facebook users to be seen by a voter-profiling firm called Cambridge Analytica, without asking for user consent. During the data privacy scandal, Zuckerberg asked Cook what he would do in his situation, and the Apple executive told the founder and CEO that he should delete all information gathered about users beyond Facebook's core apps.
This exchange stunned Zuckerberg, but it perfectly encapsulates the different models of offering online services to consumers. Cook and Apple prefer users to pay a premium — typically to Apple — in exchange for a more private and safe internet experience. This "closed" model places Apple in the driver's seat of its users' experience of the web. On the opposite side of the spectrum, Zuckerberg believes in an "open" internet where services like Facebook are essentially given a free hand to source their income from the market — which puts advertisers in control of what they choose to endorse, or not.
In short, both sides have pros and cons.
Is the internet of the twenty-teens due for a change?
About Apple's new privacy standards, the company said: "We simply believe users should have the choice over the data that is being collected about them and how it's used," according to a New York Times report. But Facebook sees Apple's latest feature as a plain, simple profit motive — in the guise of privacy concerns. "Free, ad-supported services have been essential to the growth and vitality of the internet, but Apple is trying to rewrite the rules in a way that benefits them and holds back everyone else," argued a spokeswoman.
Obviously, the internet, social media, and smartphones literally reshaped the fabric of society. Unlike the things you buy online like clothes or furniture, the ability to access free information or social networks at a glance in the privacy of your laptop or phone has changed the world forever. But while it's not exactly private when your browsing habits are silently tracked and leveraged for maximum profit, compared to being priced out of crucial hubs of internet activity, some people may prefer the "open" market model. Time will tell whether people agree with Apple or Facebook's preferred models, but the coming years will see the internet of the twenty-teens transform in meaningful ways with far-reaching implications for the entire human race.