By Dr Rebecca Beech and Professor Maureen Meadows
We have probably all been there: browsing the internet – maybe looking at the latest spring styles, or gadgets on Amazon – leading to a ‘deluge’ of messages on your social media platforms, reminding you of your ‘wants’ and ‘needs’. As consumers, we are becoming more informed about how our digital footprint is being tracked. Some of us are stopping notifications, blocking cookies and changing our settings to reduce reminders of our past internet searches. Still, advertisements continue to pop up on our social media platforms…
IDFA – an advertiser’s tool for tracking
Recently, we have learned a lot about IDFA, ‘Identifier for Advertisers’, which allows consumers to be tracked via cookies and tracking pixels (BBC, 2021). In summary, advertisers can ‘stalk’ users’ movements online, to understand their purchases, preferences and location. The current debate on consumer privacy has heated up with the introduction of Apple’s iOS 14.5, which offers insights into ‘who’ is tracking you and ‘how’, via the ‘App Tracking Transparency’ feature (Forbes, 2021). While this feature provides consumers with information on how they are being tracked, it may also damage the business model of firms like Facebook, which rely on advertising revenue. Apple points to business models like Facebook’s when noting: “some apps have trackers in them that are taking more data than they need, sharing it with third parties like advertisers and data brokers”; now Apple users can sign out of being tracked (Forbes, 2021a).
Is Apple protesting too much?
We have seen a rise in organisations developing marketing schemes to gain insights into consumers’ purchases; such schemes include ‘innocent’ loyalty cards for your local supermarket or coffee chain (Beauvisage and Mellet, 2019). Digitisation in the retail space has evolved as we constantly use our smartphones – for example, sharing the latest ‘must buy’ via social media platforms to gain the approval of friends and followers. This ‘datafication’ of information is invaluable to advertisers (Kitchin 2014). So, the question arises – why is Apple providing this new feature to reduce tracking, when tracking can be highly profitable? The answer is surely that Apple’s business model is different to Facebook’s; its revenues come from consumers buying their devices and making in-app purchases, rather than advertising income (BBC, 2021). Apple’s promise is to give its consumers options reflecting whether they are comfortable being tracked. In a recent interview (The Wall Street Journal, 2021), Apple’s senior vice president of software engineering claimed, “We really just want to give users a choice”. However, commentators will question whether Apple’s latest feature is another ploy to build their competitive advantage and gain new customers; how genuine is their concern for customer privacy?
What does this mean for Facebook?
Apple’s new feature can reduce the extent of consumer tracking, and hence limit Facebook’s ability to generate advertising revenue by showcasing products or services identified as a ‘best fit’ with a consumer’s needs. Facebook also claims that the change will hit small businesses which have prospered during COVID due to advertisers making well-targeted recommendations of such businesses to carefully chosen consumers (BBC, 2021). Facebook further argues that information shared with advertisers can deliver “better experiences” for consumers using online platforms (BBC, 2021). As Facebook’s business model is built on advertising, a significant decrease in the number of consumers being tracked will have a detrimental impact on its profits, and potentially lead to a subscription-based model of social media where users pay to participate (Forbes, 2021b). The latter raises important questions for consumers: would you pay to use Facebook, accepting new charges as the price of enhanced privacy? Or would you prefer to continue to be tracked (perhaps because of the ‘enhanced’ online experience) and use free online platforms based on advertising?
What next? Legitimacy, trust and ‘big tech’
These latest exchanges between Apple and Facebook mark the beginning of another battle between two ‘big tech’ giants. While Facebook argues that its activities support small businesses and advertisers, Apple protests that digital marketing needs to change, to reduce tracking and respect privacy. Critics wonder when government and regulators are going to ‘get tough’ on personal data and privacy, while some commentators suggest that a new era of privacy-friendly digital marketing is coming. One thing is for sure – the new era is not yet here. Companies such as Facebook, with business models driven by personal data, must pay attention to the negative impacts that their use of consumer data can have – in damaging user trust in their business, and tarnishing their reputation as legitimate players in a modern society underpinned by an evolving digital economy (Ferreira et al., 2019).
References
BBC (2021) Facebook v Apple: The ad tracking row heats up available from <https://www.bbc.co.uk/news/technology-56831241> [27/04/2021)
Beauvisage, T. and Mellet, K. (2020) Mobile consumers and the retail industry: the resistible advent of a new marketing scene. Journal of Cultural Economy, 13(1), pp.25-41.
Ferreira, C., Merendino, A. and Meadows, M. (2019) ‘How Big Data Can Destroy Organisations’ Legitimacy’, International Corporate Rescue, 16(3), pp. 174-176.
Forbes (2021a) Apple Issues Stunning New Blow To Facebook With iOS 14.5 Privacy Move Available from <https://www.forbes.com/sites/kateoflahertyuk/2021/04/27/apples-issues-stunning-new-blow-to-facebook-with-ios-145-privacy-move/?sh=1e9550bc1c5e> [27/04/2021]
Forbes (2021b) Apple Privacy Change May Cost Facebook, Google $25 Billion Over Next 12 Months available from <https://www.forbes.com/sites/johnkoetsier/2021/01/22/apple-privacy-change-may-cost-facebook-google-25-billion-over-next-12-months/?sh=f7ae1355695f> [27/04/2021]
Kitchin, R. (2014) The Data Revolution: Big Data, Open Data, Data Infrastructures and Their Consequences. Sage.
Wall Street Journal (2021) iOS 14.5: A Guide to Apple’s New App-Tracking Controls available from <https://www.wsj.com/articles/ios-14-5-a-guide-to-apples-new-app-tracking-controls-11619457425> [27/04/2021]
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