Apple's iPhone Bias
It's time to understand what does it mean to own an iPhone, for you and for the future of Internet.
If you are an iPhone user, you should definitely read this. If you are an Android user, then you should read this too since Apple taking a stance will eventually force Google to follow suit. The point of discussion here is Privacy. Apple made a small change in the way it allows any app on the iPhone to identify you the user, restricting the app’s ability to show you targeted ads. The small change was the addition of this particular dialog whenever an app requires your identity.
On the face of it, this does not seem like a bad decision. Apple’s stance is - “We are giving users a choice”. And choice is always good, right? Well, it’s more complicated than that. Especially when there is a bias involved and when as a company, you are basically dismantling a multi billion dollar ad industry plus also hurting Facebook’s revenue in a big way.
The Multi Billion Dollar Ad Industry at Risk
There are four pieces to understand when talking about the ad industry in discussion here.
App Owners - They want to make money from their apps. There are two ways to go about it. You either keep it paid (subscription or in app purchases) or you show ads. Majority of apps end up being free. Lets call it App A for simplicity.
Businesses - These are companies (a company can be just another mobile app as well) who want to reach out to you. Let’s say you are interested in Soccer, and a particular soccer mobile gaming company wants to reach out to you to try out its new gaming app. Lets call this App B.
Facebook - Facebook is the platform who might “know you” if you are on the platform (and a lot of users are on Facebook). Facebook’s system would know if you are interested in Soccer if you have posted about it or your bio is updated accordingly. Facebook thus has the ability to connect, you the user, with the soccer mobile gaming company we discussed above.
Apple - Apple allows companies like Facebook to uniquely identify a iPhone user. Facebook can then tie your iPhone identity with your Facebook identity. This identifier on iPhone has a name - IDFA (Identifier for Advertisers). FB as a result can also identify, if you are browsing the App A (dependent upon if App A decides to share the identifier with FB). As such, when you are using App A, it can show you ads of App B (if they match your FB profile) essentially making those ads more relevant, leading to high chances of you clicking it (after all you are interested in soccer!).
This ad network discussed above is worth billions of dollars. The reason its so successful is because Facebook’s system is able to identify you, connect you to a relevant business (App B) anywhere in the world while also making money for App A (sharing ad revenue from App B). If we just think about it for a second, this is very useful and effective. No more irrelevant ads or lost money. Facebook even allows the business to effectively measure once the user clicks on the ad, opens the app and starts using it (since it can know that you used the app by using the IDFA). Overall, this is very useful for all the parties and the user. Now, you might be skeptical about that and say, “its tracking me and not respecting my privacy”'. But if we think about it for a minute, there is no real person involved here meddling with your data. It’s all automated, happening through bits of code and through the sheer power of internet. Ben Thompsan explains it excellently here -
All of these changes, in fact, are about exceeding human scale via technology and the Internet, and is it any surprise that advertising has gone through the exact same transformation? When I write a post on Stratechery, I am not driving to your door and reading these words aloud to you; in fact, I don’t have any idea who you are. Computers take care of moving these bits from my computer to yours. It’s the same thing with an app developer creating in-app purchases, or an e-commerce site selling grilling implements: the entire reason their businesses are possible is precisely because they don’t know who I am, and have no need to. And yet they can sell me exactly what I want just the same.
The fact that a soccer mobile gaming company anywhere in the world is able to reach you, who is interested in soccer, is a feature, not a bug! Also, even though a huge credit goes to Apple for providing that ecosystem, sadly the company is trying to control this flow. The dialog we saw in the picture above, will basically present a friction point and even though users can still say “Yes” and they probably should; unfortunately not many people will see it that way. Especially when you think about the tone of the message and power of defaults. Let’s talk more about Apple’s bias and its motivation.
Apple’s Bias
There are two essential reasons why Apple is restricting the free flow of user identity. The reasons clearly show the company’s intentional sabotage against Facebook.
The iPhone Plateau
Apple is definitely worried about the maturation of iPhone sales (or smartphones for that matter) and the dependence of it’s bottom line on iPhone. The direct result of that is an obvious shift towards leveraging existing iPhone user base to increase revenue from it’s services business. App store is a critical part of that growth and there are different ways Apple earns money from the same; developer fees, in app purchase cut, app promotions etc. One of the primary ways to keep App Store relevant is by being the top choice for people to explore new apps and earn money through app promotions and direct ads. This is where Facebook is a threat.
Facebook is a threat
As explained above, FB has become the primary player when it comes to how people discover new apps. This means that App Store in itself is not the first or the default choice for users. Clearly explained in this article:
I think Apple very much recognizes the role that it (Facebook) plays in the app ecosystem, which is the distribution engine for apps, and I think that’s what Apple doesn’t like. I think Apple sees that the App Store has basically become irrelevant as a point of content discovery. It’s basically this kind of frictional, annoying moment between clicking an ad and installing an app. Almost all discovery happens via ads or word of mouth and I think what Apple is doing in this, in recognizing the power that Facebook has in terms of influencing which apps become big, which apps are popular, how people are using their iPhones essentially.
As such, Apple does want to regain control of this app discovery business by pulling Facebook down. Restricting the ad network model by introducing a friction point (the dialog) directly hurts FB and benefits Apple.
Apple’s Hypocrisy
What’s more evident is the way company has decided to go about its show of power. Apple talks about giving people the choice but it does not follow the same approach or messaging when it comes to their own way of identifying users. If we look at these two messages below, we can clearly see the tone of messaging and its impact.
On one hand, for third party apps, Apple chooses to highlight the part which gives the impression that the business is “tracking” your data. On the other hand, when it comes to their ad tracking option for users, it chooses to highlight the positive side of the same message. It’s actually a huge difference when you come to think of it. Any user reading the first message will end up clicking the “Not to track” button unless they are clearly aware about the benefits.
On top of it, Apple’s stance in China has been a complete reversal of their approach in US. Privacy is an after thought for Apple when it comes to China and it readily accepts Chinese government’s oppressive rules. For instance, reported in this article
Now, according to Apple, for the first time the company will store the keys for Chinese iCloud accounts in China itself. That means Chinese authorities will no longer have to use the U.S. courts to seek information on iCloud users and can instead use their own legal system to ask Apple to hand over iCloud data for Chinese users, legal experts said.
Also, reported here
The Chinese government already widely surveils citizens' digital habits via other means. Apple acknowledged that a person's IP addresses, and therefore their locations, are also shared with Tencent if they land on a malicious site. In a statement, Apple’s spokesperson said the “actual URL of a website you visit is never shared with a safe browsing provider and the feature can be turned off.”
China is a huge market for Apple and it all makes sense if we consider the decisions above in light of that. Although, this point doesn’t directly relate with the discussion here, it does goes to show the motivation behind decisions made by Apple. You don’t become a trillion dollar company by playing nice or in this case; by being fair.
If we were to conclude this article and try to summarize why is Apple doing it; one can say it’s all about the bottom line. But the point is, even though its the same for every other company out there, in Apple’s case, the bias and the hypocrisy of the approach is clearly evident which makes it look awful.