A platform aggregator like Facebook, Amazon, iOS etc. serves as the market hub for other unit businesses to thrive and in return collect “tax” in form of charges. In summary they are regarded as the modern day government buoyed by their innovative product.
In Jonathan Taplin’s “move fast and break things”, we saw how during the internet boom Napster was being crucified for its breach to content providers. It was easy for Sean to lose the battle as his product was a messiah to this new tech regime or perhaps a scape goat.
Now amazon, Facebook, Uber, Google by giving an alternative value i.e. google search has found ways to reiterate Sean’s earlier product offering, but are smartly compensating the content providers although meagerly in comparison to their huge profit.
The interesting thing is that while some early content developers, book publishers, etc. had tackled the business strategy of these platforms i.e. amazon monopsony which for instance dictate the market price of a book while collecting a commission in exchange for a large consumer market, or google which in exchange for providing an audience get mostly free content which is then used for ad placements in exchange for a small content fee.
The circle is the same, but as businesses begin to thin, these large techs need to find ways to squeeze more profit. Which is why it wasn’t surprising when Microsoft azure introduced its new cloud policy which was aimed at increasing its Market dominance to the irritation of Amazon AWS. But it was pleasantly done within the confines of the law and anti-trust regime.
Sincerely, I believe amazon would have done the same, after all they are still collecting commissions today lol, but all is fair in business when done within the confines of the law, arguably the world is capitalist.
Now Apple has taken the same Giant swing on ad enabled and tracking platform or apps on its application, through its intended launch of apptracking transparency policy feature in IOS 14.
For those who are unaware Apple IOS 14 beta would have some of the following features:
- The new privacy features will enable users to see the apps which have requested to track its data and make changes;
- It moves from the previous opt out model to opt in model, which requires a user’s permission before tracking or sharing its identifier for advertisers (IDFA);
- You can now toggle IDFA on an app by app basis unlike before where a single toggle is a general permission to all apps.
- A user can even entirely prevent all apps from tracking its data by turning off the feature entirely.
- Apple will enforce this feature on third-party data sources including data sharing agreements, but of course platforms can still use first party data for advertising as per their terms of service.
- Developers are required to check the respective API and STK configuration and their data processing procedure backend as same measures will be applicable to it.
- Apple claims that it will apply the same rules to its own apps as well and will present the dialog and follow the ‘allow apps to request’ toggled its apps using tracking (most do not at this point).
- One important feature to note as explained in a techcrunch post is that the Personalized Ads toggle is a separatesetting that specifically allows or does not allow Apple itself to use its own first party data to serve a user
Frenemies at War
However, Facebook and other ad sales data dependent platforms have termed this policy as anti-competitive and monopolistic in a recent post, maintaining that the aim was for profit and not to incentivize the users.
Although I believe that their outcry is a bit hypocritical, I am concerned of the overarching effect that Apple new policy may have on users as well as SMEs.
For instance, with absence or reduction of data tracking and ad targeting, most content providers would have to change their earning strategy which relied mostly on ad fees to content subscription.
Secondly, SMEs may be forced to advertise blindly due to lack of personalized ad targeting, which would further decrease their conversion rates while increasing their overheads.
In truth what this means is that platforms like google and Facebook value proposition for iOS based ad targeting would drastically reduce while Apple will gain the upper hand, as apps would rely on subscription fees which would invariably lead to more fees or commission to Apple as the platform aggregator.
Although Apple has argued that this a necessary shift to change its technology from an advertiser-centric model to user-centric privacy model, as the users would have more control, pointing out that there are over 65 third party data brokers embedded in each application.
Although this is commendable, we are all aware that Apple is no robin-hood lol, in fact that term raises an eyebrow considering the recent Reddit and GameStop saga (pun-intended).
From a legal perspective, I believe that most data practitioners would commend apple’s approach as users ought to be king and while it’s within the legal confines of data privacy, however what would be the anti-trust regulator’s view? How would the impact of this new policy affect other SMEs business? My bet is that the law would favour Apple; for one it has not entirely withdrawn the IDFA feature but has allowed the users to make their choice.
The downside is that if apple succeeds perhaps other platform-based providers may begin to consider this move to the detriment of Facebook, considering that google is safe since they own the android os.
While I understand apples position, I for one, have a problem with Apple being the lawmaker, police, judge, jury and executioner in determining the best data privacy approach.
Lastly, my concern would be that Apple should not get confident of its market position because as content/content creators is to social network, so is app developer/app is to an OS, but Apple has the upper hand as they own the device (well tell that to blackberry). Currently, I see no legal infringement, may the best man win.
About the author:
UGO Nwaokike is a Finance & technology Subject Matter Expert; Associate at PUNUKA Attorneys & Solicitors. He can be reached via [email protected]