French antitrust complaint alleges Apple allows itself to serve personalized ads on iOS without obtaining user consent

With the release of iOS 14.5, Apple’s new application tracking transparency policies require developers to obtain explicit consent before they can share user data with third-party ad networks. A new French complaint alleges that Apple’s own advertising network is not held to the same standard, as first reported by Bloomberg.

Specifically, the complaint states that Apple itself is allowed to use data from all Apple apps to serve targeted ads, by default. Apple’s system does not technically fall under Application Tracking Transparency (ATT) rules because there is no data sharing with third parties, but it is nonetheless viewed by complainants as unfair treatment.

The essence of the complaint is that if Apple really cares about privacy, it should be honest and transparent about its own advertising policies just as much as it is forcing the App Store ad networks to do the same. However, the personalized ads system setting for Apple Advertising is enabled by default and this fact is not clearly disclosed to users.

This can be interpreted as the fact that Apple is giving its own ad network an unfair advantage, with lower barriers to entry for collecting user data which can then be aggregated to deliver higher value ad campaigns.

Users are “insufficiently informed about the use and processing of their personal data,” the association wrote in the complaint to French regulator CNIL, which was obtained by Bloomberg News.

“Apple reserves the right to choose who is a ‘partner’ and who is a ‘third party’ on an arbitrary basis, a quality that may change over time, without the user being informed of such change.”

For its part, Apple says its personalized ads are designed to maintain privacy and that user-generated demographics cannot identify individuals.

Apple personalized ads enabled by default are also the subject of a separate complaint, which considers the default policy to be in violation of the GDPR.

Regarding ATT, a group of apps from the same developer is allowed to share data with each other. ATT dialogs are only required if the developer then wishes to send this data to a third party, such as an advertising agency. For example, Facebook is allowed to share user data between Messenger, Instagram and the Facebook app without asking for the user’s permission. In Apple’s case, it is both the app developer and the ad network provider.

But small developers don’t have the resources to run their own ad platforms and have to rely on third-party ad networks for monetization. This is where the ATT dialogues will be needed. These ad networks are concerned that many users will not allow ad tracking when requested, which in turn could adversely affect the amount of revenue they can generate.

Frustrated complainants would like Apple to treat its ad network as a “third party,” so it is subject to the same rules as smaller players.

This is just the latest in a long line of lawsuits and legal battles following the announcement of the application tracking transparency rules. ATT will go into effect in the next few months, likely alongside the public release of iOS 14.5. While the upcoming changes are arguably better for user privacy and awareness, the business impacts remain unclear.

Some fear this will further strengthen Apple’s monopoly power. Facebook CEO Mark Zuckerberg said Apple was “pressured to interfere” with its business. In general, ad providers panic that they will no longer be able to generate the same amount of revenue in the hope that many users will not accept personalization and data sharing, when explicitly requested to do so.

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