Apple’s Hypocrisy on Collecting Data
Nowadays most people know that their online data is being used in some way or another. Whenever you go online, whichever website you go to and whatever you do (visit a page, click a button, move your mouse) you are being tracked by someone, probably Google or Facebook (two of the largest online advertising companies), and certainly whatever website you are visiting to get more precious data on you. This fact of life is widely accepted, and understood, but as people have began to learn more about data collection, many are starting to oppose their data being collected and used without their full knowledge and understanding of how it is being used. As more and more people become cognizant of their data being collected and are working harder to reclaim their privacy online, Apple has found an opportunity to promote themselves by increasing privacy on Apple products (yay!). While Apple was publicly applauded for the work they are doing, Apple has neglected to talk much about their own advertising business, which has seen tremendous growth in revenue since their new privacy rules were enacted. Although Apple’s advertising service claims to include more privacy than other ad services, Apple is being hypocritical by passing measures to reduce competing Apps from tracking users, while collecting similar data themselves to compete with the companies they have now blocked.
As smartphones are ubiquitous in modern life, the apps we use collect a lot of information on who we are and what we are interested in online. This benefits all types of companies in many unique ways. First, this key data allows them to learn a lot about how we act, which enables them to better tailor your experience on their app to be as addicting as possible. Additionally, platforms sell a lot of your data to advertisers. With the data, advertisers can better target ads to their users, leading to them showing their ads to the most accurate audience and as a result make more sales. How did that ad on Candy Crush know you needed a new backpack? Tracking. Why are you all of a sudden seeing endless videos about cooking on YouTube? Tracking! As a result, there’s a premium on the ads and the data that fuels them, and that is where many companies make a lot of their money. For example, Google (who tracks you on their platforms and through many other apps and websites) made an astonishing $209.49 BILLION in 2021 on ad revenue (Statista). That is 81% of their total revenue (Statista). Crazy, right!? On top of ads, there’s many other ways that our data is being used that we simply do not know about such as to train machine learning algorithms and run social experiments through the design of websites. This freaks me out, and it should concern you too.
As the general public has become more conscious of how much of their data is being collected and how the data is being used, people have become much more aware and opposed to what is happening with their data. Many have also started having increased consciousness about how their data is being shared. This has led to many important discussions and movements, including the Feminist Data Manifest-No which advocates against many of these practices with the hope to make data usage more transparent and fair for everyone. The Data Manifest-No includes many refusals about how data is collected and used. For example, The Data Manifest-No asserts
“We refuse any code of phony “ethics” and false proclamations of transparency that are wielded as cover, as tools of power, as forms for escape that let the people who create systems off the hook from accountability or responsibility”. (read more about the Data Manifest-No here: https://www.manifestno.com/)
This demonstrates their stance on the necessity of more ethical and equitable data collection and usage for all, and it shows how far the public opinion on data consciousness has reached.
Recognizing the trends in the market and seeing an opportunity to make a positive statement with their products, Apple recently joined in this movement and offered a concrete way to decrease tracking and increase privacy on Apple products. So, on June 7th of 2021, Apple released iOS 15 and macOS Monterey, in which they claimed to “advance [their] privacy leadership” (Apple). This includes features such as the App Privacy Report, which shows how different apps are accessing sensors and network activity on your phone to track you. Additionally, when apps want to track you, they must ask you permission to track you across other apps and websites. All this tracking was previously done without our knowledge or consent for years. Now, a notification pops up on your Apple product when an app wants to track you, and you have the opportunity to press “Ask Not To Track” (Apple). This large overhaul of Apple’s privacy features created a lot of positive publicity for the brand. They were making data collection and usage more transparent and fair for everyone. Today, 62% of Apple users who receive the prompt choose not to get tracked, which shows how powerful and successful these new features have been(CNBC).
What is interesting about this update is as a result of the new features, many companies who for years have relied on collecting data from users are now struggling tremendously. For example, Facebook (another online advertising giant) recently estimated that Apple’s new features will decrease sales by $10 billion in 2022 alone (CNBC). With $117 Billion in revenue in 2021, that is about an 8.5% hit to their business which did not make them happy (Statista). As a result of the major hit Facebook has taken, they have tried to rebuttal against Apple. In an effort to push back against Apple, Facebook’s COO Sheryl Sandberg said that these rules will also hurt small businesses, who rely on Facebook’s advertising to drive revenue and growth. Facebook’s argument is correct to a degree, but it shifts focus away from the key privacy issues. Another company that has felt the impact of Apple’s new rules is Snapchat, who missed their revenue goals in late 2021 and blamed Apple for their issues (Tech Crunch). Even though their business took a hit, Snapchat’s CEO supported what Apple was doing to make privacy more accessible, which demonstrates how data rights has penetrated into every tech company.
So far, we have seen what Apple has done to help a data conscious movement by making privacy more accessible to their users. This has given Apple a lot of deserved recognition, but also much criticism from Apps who rely on tracking users to drive their advertising revenue. Throughout this whole story and months of publicity associated with it, there is one important aspect that has been left out, and is rarely mentioned by the news, or Apple.
At the same time that Apple introduced these new privacy features, Apple was creating a digital advertising business of their own, which has grown substantially from $300 million in revenue in 2017 to $3 billion in 2021 (10x growth!). Some financial analysts from Barrons estimate that revenue will top $7–10 billion a year by 2024 , while other analysts from the Financial Times believe the revenue will top $20 million. Apple’s quiet Ad business mainly displays Ads in the App Store under the search feature. Additionally, Apple receives some ad revenue from Apple News and Stocks. In a Financial Times article, Head of Product Marketing at Branch (an advertising metrics platform) Alex Bauer has noted that in this time period, “It’s like Apple Search Ads has gone from playing in the minor leagues to winning the World Series in the span of half a year” (Financial Times).
What is interesting about Apple’s ad business is that they do not seem to play by the same rules as its competitors. For example, data about how users interact with ads takes about 72 hours for companies to see on Apple products, while “Apple offers detailed information to anyone signing up to its ads service” (Financial Times). When an App’s chief marketing officer tried to get information regarding their advertising policies he notes “Apple was unable to validate for us that Apple’s solutions are compliant with Apple’s policy” (Financial Times). It is very interesting to see how well Apple’s Ad business has performed recently, and how unclear they are about following the policies they enact for their competitors. For me this does not seem fair, and the hypocrisy behind it bothers me. I was so excited for Apple to help make progress in the privacy sector, and now I just feel disappointed.
One important note about Apple’s business is that on any Apple device within settings, you are able to turn off Apple Advertising but it is not communicated whatsoever, unlike the other Apps where Apple immediately provides an option to prevent tracking. It is very easy to turn off in settings on your phone or computer. I did it immediately, and you should too! Another key difference for Apple is that in Apple’s policies, they make a point to “not share any personally identifiable information with third parties” (Apple’s Advertising Policy). Despite this, the rest of Apple’s advertising policy seems to be standard to the online advertising industry. They split us up into identifying groups and target ads towards us based on our preferences. I am pretty sure that is what every other advertising business does as well.
One counter argument may be that even though Apple created their own advertising business and is collecting users data, it is still much better than what the data collection giants are doing. This is definitely true. We can see above that Apple is making an effort to limit the data that third party entities can collect, even if they are collecting that data for themselves. In addition, Apple’s advertising business is tiny compared to their competitors. As previously mentioned, Google brings in around $200 Billion from advertising, almost 100x more than Apple has, even if Apple’s advertising business has grown 10x in 4 years. Also, proportionally, Apple’s dent into other companies revenues is huge compared to their recent advertising revenue. This counter argument is extremely strong. While it may not be beneficial for Apple’s large competitors, it is definitely good for the users. At the end of the day there is more privacy which is great, and I am very happy Apple has added these privacy policies. That being said, it would have been nice for Apple to be more clear about their new advertising business, and if I was a competing ad company I would certainly be upset.
Ultimately, even though Apple pushed for more privacy at the expense of their competitors, they seem to be doing well for themselves in the exact sector, where it seems they do not have to follow their own rules. Despite their strong publicity on promoting privacy, Apple is acting hypocritically by boosting their own ad businesses at the same time as they crack down on others. Although there is a net benefit for privacy as a result, I still wonder… How is this fair to us as users and to their competitors who have taken a hit? This issue is something that deserves more attention, for the better of consumers and companies within the tech space.
