Have you ever been at a dinner party when a newcomer enters a heated conversation and completely changes the mood around the topic? Well if privacy was the hot topic, Apple, through its launch of App Tracking Transparency notification, would be that intriguing newcomer.

App tracking transparency (ATT) is a new privacy protection framework for Apple device owners which the company first teased last summer. With ATT, when an Apple device owner downloads or opens an app, a notification pops up asking if the user wants to be tracked across third party apps and websites. Apple announced last week that the ATT feature is included in its latest operating systems: iOS 14, iPadOS 14 and TVOS 14.

ATT is meant to make the process of privacy protection more intuitive to consumers. APIs have always had a specification detailing what data is accessed between two applications. But consumers didn't have easy access to those technical details. Providing a notification like ATT is similar to a nutrition label for grocery shoppers. But instead of knowing the health benefits of a certain food, Apple device owners learn who has their data, allowing a comparison on what apps are best protecting their privacy.

App Tracking Transparency: The Implications for Analytics

Analytics practitioners are realizing their role in the privacy debates mirrors that of developers. Because analytic SDKs are considered third party sources, practitioners must comply, raising some operational needs downstream. For example, a data framework required with ATT will restrict, aggregate and delay event reporting. This will impact analytic dashboards reliant on that data.

App developers or startups building a business model around an app will need to track what percentage of customer traffic is accessing the app through an Apple OS. This can guide an operation team on prioritizing platform support. With Apple controlling 40% of the smartphone market, developers would be wise to compare their customer base to that share to understand the degree their business model is exposed to the potential changes ATT will usher in.

The ATT framework also serves as a strong reminder of how app developers and analytics practitioners must map data protection and privacy compliance. Applying quality assurance processes to data flows from user permission will highlight risks, describe collection methods, and clarify data usage.

Related Article: How Clean Data Supports Consumer Privacy Efforts

A Continuation of Steve Jobs' Privacy Legacy

Apple's framework represents a significant marketing moment: a computer manufacturer is influencing how regulatory actions should exist within the advertising industry. In the history of advertising, most regulatory mandates came from either government agencies, such as the Federal Trade Commission, or industry agreement through self-established standards. 

Now compare Apple's announcement to a TV manufacturer telling ABC, NBC or Disney Plus what ads they can serve on your TV — and the magnitude of this change is clear. Apple has the role of TV set maker, exerting a caveat emptor responsibility for consumers who may not have been making effective choices for themselves.

Apple taking on this role is not entirely new. The strategy reflects a continuation of the privacy philosophy that Apple founder Steve Jobs often expressed. During the 2010 Wall Street Journal D8 conference, Jobs explained how Apple considers data privacy with a more conservative view than its Silicon Valley neighbors. He shared a warning notice as an example — an example that predates today's ATT by over a decade!

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Learning Opportunities

Why the Privacy Fight Pits Facebook Against Apple

The framework is not without its critics, Facebook being the highest profile example. Facebook asserts that ATT positions it as a third party, preventing its users to view ads based on their past online activity. Facebook's advertising ecosystem, the crown jewel of its financial strength, would be threatened.

Facebook also warns that ATT could hurt small businesses who rely on Facebook advertising to promote their offerings. Facebook notes that 90 million small businesses use it to sell products and services.

Facebook CEO Mark Zuckerberg called Apple a "serious" future competitor during a recent quarterly earnings report. His statement follows a series of full-page ads in which Facebook claimed it was standing up for small businesses.

While not exactly altruistic, Zuckerberg's point has some merit. Businesses have increasingly turned to ads rather than sharing posts to reaching audiences on social media platforms. Attention to the spread of misinformation on social media platforms has also amplified the need for ads, not posts, to gain the attention of potential customers. Many small app startups rely on in-app advertising as part of their business model. Just imagine the developer of a new communication app or the next Among Us sensation being unable to effectively reach an audience. These concerns remind everyone of how technology trends — particularly among the behemoths of the industry — alter market opportunities and business models.

Some industry insiders predict a legal battle may come from this debate. But it is more likely to remain a war of words. Apple is on a current successful run of strengthening revenue. The iPhone, along with wearables and services, has set a new sales record. With $200 billion dollars in cash reserve, Apple has the financial backing for any legal fight with ad tech industry giants like Google and Facebook. Moreover a strong cash reserve provides the wherewithal for expensive product development, even if creating devices and supporting market entries cause high initial costs. Apple's successful forays into music, movies and smartphones is proof of its resilience. 

In contrast, Facebook warned of revenue uncertainty into 2021, despite strong ecommerce performance. Facebook certainly has a substantial cash reserve and the capability to develop products. But the current evolution of adtech away from cookies, combined with fierce public scrutiny for the tech industry means Facebook may opt to remain focused on product innovation rather than legal pursuits. As another signal of its intentions, Facebook has issued guidance webinars for implementing the Apple protocols to small businesses using its platforms.

In the 2010 Wall Street Journal D8 interview, Steve Jobs said Apple always held a different view of privacy. Customers will experience that difference this spring when the company will roll out App Tracking Transparency in its updated operating system.