Behind the new Apple IDFA regulations, who has the user data?

As user portraits and personalized recommendations become more and more common, it poses a challenge to personal information protection. If the anonymous behavior information of users is included in the category of personal information, ensuring the user's right to know and refuse in user portraits and personalized recommendations is one of the important issues for personal information protection.

Apple will enable stricter protection of user privacy in the new version of iOS 14. App needs to obtain user permission through the AppTrackingTransparency (ATT) framework before it can mark users or access the advertising identifier of their device, and require the App You cannot use fingerprint characteristics or signals from the device to try to identify the device or user.

This regulation will seriously affect the profitability of Internet advertising manufacturers. Facebook has publicly opposed Apple's IDFA policy adjustment on multiple occasions. Many Internet companies, including Bytedance, Baidu, and Tencent, are testing the CAID program launched by the China Advertising Association to adapt to Apple's New Deal. According to the "Financial Times" report, ByteDance hinted in the 11-page guide sent to app developers that if the user's IDFA is not available, advertisers can use CAID as a substitute.

How to find a balance between the protection of personal information and the development of Internet advertising is a game and balance of legal compliance, technological protection, and Apple rules.

1

1.65 billion Apple devices

After Apple launched touch-screen phones, huge changes have taken place in the shape of mobile phones around the world. As a representative of high-end smartphones, in February 2020, Apple announced its financial report for the first fiscal quarter of 2020, showing that Apple has 1.5 billion active devices worldwide, and the active device statistics include iPhone, iPod touch, iPad, Mac, Apple TV, Apple Watch and other familiar products,The number of active iPhone devices is 900 million.

On January 29, 2021, Apple's fiscal 2021 first quarter results showed that more than 1.65 billion Apple devices are used worldwide, of which more than 1 billion active iPhone installations. In just one year, the number of iPhone installations increased by 100 million. It is foreseeable that the scale of the Apple ecosystem will soon surpass that of the Windows ecosystem.

There is currently no exact data showing how much Apple’s mobile phone holds in the Chinese market, but the latest data released by the market research organization IDC shows that the news on January 28 benefited from the help of the newly launched 5G version of the iPhone series. Revenue pushed up to a record level and triggered a 57% surge in revenue in China.

Apple’s user stickiness is also increasing. In 2020, the number of paid subscribers for Apple's service business reached 620 million. This data will increase with the increase of Apple users, and paid services such as wearable products, Apple TV and iCloud have also become an important part of Apple's product ecology . Apple cars are also on the way.

Apple officially launched its App Store in July 2008. Based on Apple's unique IOS ecosystem, Apple does not allow users to install any app store other than its own app store on the iPhone. In 2019, the number of apps available for download in the App Store exceeded 2 million. Critics said that the success of the App Store obscured the reality that Apple is using its huge market power to bully, blackmail or even destroy competitors and business cooperation. Partners, its hidden monopoly power is gradually becoming prominent.

2

IDFA is a headache for application developers

With the widespread use of the Internet and the popularity of mobile devices, the connection between networking and big data has become closer.The market share occupied by mobile advertising is also growing. Using big data for personalized marketing can better transform advertising into user consumer behavior, so that both advertisers and advertisers can get good business returns. However, as user portraits and personalized recommendations become more and more common, personal information protection also faces new challenges.

According to Apple's "User Privacy and Data Use" regulations, starting from iOS 14.5, iPadOS 14.5 and Apple tvOS 14.5, the App needs to obtain the user's permission through the AppTrackingTransparency framework before it can identify the user or access its device The advertising identifier.

About advertising identifiers: Apple will change the advertising identifier IDFA from default on to default off. After the new regulations take effect, the App needs to explicitly obtain user permission in a pop-up window to obtain IDFA. If the user refuses to authorize, or the App does not obtain the user's permission through the pop-up window, the App will not be able to obtain IDFA.

About other identifiers: App must use AppTrackingTransparency if any of the identifiers (including but not limited to device advertising identifiers, session IDs, fingerprint IDs and device graphic identifiers) are received or shared for the following purposes Framework to obtain user consent: used to combine the data in the App with third-party data (including the SDK used in the App) for advertising or advertising measurement purposes or to share with data agencies.

At the beginning of March, Apple updated the Q&A related to common problem types, and clearly required that the use of other ID identifiers must pass through Apple’s AppTrackingTransparency framework (the default authorization pop-up window of Apple’s system) after obtaining user consent.In order to identify the user. This shows that Apple pays close attention to the detailed interpretation of the rules, which also shows Apple's determination to maintain the effects of its rules.

IDFA (Identifier for Advertising) is a combination of letters and numbers unique to each iOS device. IDFA does not directly identify the user itself, but to identify the user's equipment. In IOS14, if the advertising platform fails to get device information, it will cause the device identification code (IDFA and IMEI) to be missing, and it will not be able to display personalized advertisements through its own user portrait advantages, so the advertising exposure conversion efficiency will decrease. This means that the attribution effect has deteriorated, making the value of traffic unable to be accurately measured.

Due to the significance of IDFA in personalized push and advertising effect evaluation, Apple’s move will have an important impact on the post-link advertising targeting and attribution chain of the Internet advertising industry. It is expected to affect the global advertising industry, affecting 14% of the Auction revenue.

3

curb Internet company data analysis capabilities

Apple does not allow developers to obtain IDFA, nor does it allow developers to identify users or devices through device fingerprints and other schemes. If advertisers and apps want to return Because of this, I can only use Apple's SKAdnetwork to obtain and analyze data. This further deepens the dependence of advertisers and advertising platforms on Apple.

SKAdNetwork is Apple’s official program to evaluate the effectiveness of advertising campaigns. In the context of IDFA's adjusted access rights, SKAdNetwork is an official Apple program to evaluate the effectiveness of advertising campaigns. SKAdNetwork is embedded between the advertising platform and the Apple Store, and can know which advertisements caused the expected operation.

But SKAdNetwork cannot solve the industry dilemma without IDFA,There are many problems in operation, such as timeliness, functional limitations, data accuracy and many other operational problems. In addition, Apple's SKAdNetwork attribution program is opaque, and it does not publicly explain the handling of user data in the privacy policy or other documents. This is also an important reason why developers are unwilling to access SKAdNetwork 2.0 and want to seek other solutions.

Apple’s SKAdNetwork attribution program is also tracking users. On the one hand, apps are not allowed to track users without their consent. On the other hand, they provide developers with a service to track users through the SKAdNetwork attribution program. That is, Apple turns on tracking by default for itself and turns off tracking for developers by default. Perhaps this is Apple's desire to take a share in the field of advertising attribution and prepare for a larger advertising business in the future.

While strictly tightening developers and advertisers, Apple has made it clear in its privacy policy that Apple will collect user device information, devices, App Store searches, App News, and the stock market to provide users with Advertising Services. Data is becoming more and more important in Apple's own business. Apple's practice of modifying its system rules in the name of privacy has restricted the ability of competitors.

Although Apple reads that its SKA+ATT model "provides a level playing field for all players who rely on the application economy", it also makes its Apple account have similar "super administrator" permissions, relying on its unique Some data advantages, based on the SKA+ATT model, increase restrictions on Internet companies, and continue to weaken the big data analysis capabilities of Internet companies.

Facebook has publicly opposed Apple's IDFA policy adjustment on multiple occasions. "We have seen in tests that when mobile advertising campaigns lose personalization, the revenue of Audience Network advertisers will drop by more than 50%." Facebook has said that Apple's iOS 14 may cause more than half of its Audience Network revenue loss.

Facebook CFO David Wehner also emphasized,"Facebook's advertising platform is very important to small businesses, because Facebook and targeted advertising are the lifeblood of small businesses. Anyone can easily promote their products and services to millions of people. But we are worried that radical platform policies will cut off. This lifeline, in the era of the epidemic, is critical to the growth and recovery of small businesses.

Some analysts believe that this is Apple's use of its dominant position in the market to unilaterally change its business strategy to destroy the trust and interests of the market and the industry. Disrupting the normal order of the market should not increase transaction costs.

The industry’s concern about IDFA is even more serious. If the device ID is missing, iOS users may be false traffic users, which will lead to a hotbed of “black production”.

4

Both advertising and data Apple

Apple’s revenue is gradually diversifying and no longer mainly depends on the sales of iPhone products. An important source of income is the various Internet services provided, such as Apple Fitness, AppleNews+, Apple TV+, etc. From the perspective of Q1 revenue growth in the past four years, with the expansion of service revenue, Apple’s service gross profit margin has reached 68.4%.

The ambition to expand advertising has never stopped. Apple has tried the advertising business. Apple has an iAd mobile advertising business that can insert advertisements in applications developed by third parties. But in mid-2016, Apple completely shut down mobile Advertising business. Foreign media believe that this is a big setback for Apple in the Internet market. In June 2016, Apple launched a competitive search advertising business at the WWDC conference, and search and download is the most important method of application discovery and download.

JP Morgan Chase predicted in 2019 that Apple’s advertising revenue is expected to double 5 times in the next 6 years.Reach 11 billion U.S. dollars per year. In a research report, JPMorgan Chase analyst Samik Chatterjee believes that Apple has huge potential for online advertising revenue and can use users who search its app store and Safari browser every day to create a similar Facebook And Google's huge growth in the advertising field. Chatterjee said: "When investors try to determine the next big area of ​​Apple's services business, we believe that what is underestimated by most people is the advertising opportunity within Apple's reach."

There is another possibility that Apple It has been encountered that the IDFA solution will make advertising efficiency lower, advertising relevance worse, and advertising revenue decreased, so developers can only switch from the advertising charging model to the APP service charging model. Since 2019, Apple has announced multiple service plans such as news, games, videos, credit cards, and launched the "Apple One" at the 2020 autumn conference to integrate music, TV, news, games and other content services.

In the iOS system, APP service charges need to be realized through in-app purchases. Apple takes a 15% to 30% commission on the sales of virtual goods in the developer's App. This is the "Apple tax" in the industry. However, Apple has not changed the rules on the commission. Apple mobile phone users must download software through the App Store and use Apple Pay to pay. Many domestic and foreign users and software developers have sued Apple for alleged monopoly in the court on this basis.

5

Can CAID become a new technical solution

In addition to IDFA, do app developers and relevant parties in the mobile internet advertising industry have the right to seek new alternative technical solutions on a legal basis? ? On March 16, a report in the Financial Times stated that the CAID program initiated by the China Advertising Association is trying to bypass Apple's IDFA rules.

Internet Advertising Technology Lab (CDA Tech Lab) established by China Advertising Association and China Academy of Information and Communications Technology,The CAID (CAA Advertising ID, China Advertising Association Internet Advertising Identifier) ​​program was launched to cope with the impact of Apple’s system changing the IDFA authority on China’s Internet advertising market.

CAID is based on collecting device startup time, system version, device model, physical memory, hard disk capacity, system update time, operator, time zone, country, language, IP address, device through App or SDK A string of identifiers generated by 12 user equipment data fields such as names, which are inferred by its algorithm, are used in advertising, security and other scenarios. CAID is designed to uniquely identify users, and can only serve as a high probability identification function, but actually cannot uniquely identify users.

According to Article 1.2 of the "Apple Developer Program License Agreement", Apple's IDFA is a unique identifier, which means that IDFA has the nature of uniquely identifying users or devices. At the same time, Apple clearly does not allow "uniquely identifying" users or devices in the "User Privacy and Data Use" Q&A. Unlike IDFA, CAID is a string of identifiers generated by algorithm speculation, which can only serve as a high-probability identification function, and CAID will be periodically updated in the background, and does not have a unique and permanent identification function. Therefore, it does not belong to the "uniquely identifying" prohibited by Apple's "User Privacy and Data Use" Q&A.

According to the "Network Security Law", "Civil Code", "Consumer Protection Law" and other relevant regulations, the collection, generation, and use of CAID must follow the principle of minimum necessary data fields, and at the same time clearly inform users and obtain user consent And refer to Apple’s IDFA compliance practices to provide users with switches to protect users’ right to choose.

At present, the CAID solution has not been formally implemented. App products are already testing the CAID solution. According to a report in the Financial Times,Bytedance implied in the 11-page guide sent to application developers that if the user’s IDFA is not available, advertisers can use CAID as a substitute.

But Apple has issued a warning to at least two Chinese app developers. Apple previously stated that its app store would reject any apps that "ignore user choices." Apple wrote in an email to Chinese developers: "We found that your application collects user and device information and creates a unique identifier for the user's device." Later, Apple asked the developer to make improvements within 14 days. To comply with the regulations, otherwise their apps may be removed from the app store.

Why does Apple continue to pay attention to China CAID and strictly warn? The main reason is that China is Apple's third largest market. The China Advertising Association stated that the solution will not object to Apple's privacy policy and is actively communicating with Apple. However, Apple clearly believes that the data collected outside the App (which has nothing to do with the App) is not within the scope of Apple's permission, which means that the CAID must be explicitly authorized by Apple's ATT framework and the user to obtain the tracking permission. Then CAID has no living space as an alternative solution.

China Advertising Association President Zhang Guohua emphasized that in the context of persisting in expanding domestic demand, stimulating market vitality, and stimulating consumption, we must handle the relationship between data security, personal privacy protection and legal use of data to promote the development of the Internet advertising industry. Relations, give consideration to the three, do not neglect. The China Advertising Association and the China Academy of Information and Communications Technology will coordinate the implementation of OAID, CAID and other mobile Internet advertising signs to promote the healthy and scientific development of China's Internet advertising industry and inject more vitality into my country's digital economy.

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