Apple iOS 14.5: Why the new iPhone privacy update could deliver a hammer blow to insidious online advertising

Apple has released a new privacy feature that could have dramatic repercussions for the likes of Facebook and other businesses that have built empires from tracking and collating user data.

The new App Tracking Transparency (ATT) feature, which has been launched as part of Apple’s latest iOS 14.5 software update, gives iPhone owners a choice over how apps use and share their data, including browsing history, age, location, health information and spending habits among others.

Opening an app will trigger a prompt asking for the user’s permission to track their data across external apps and websites, which could be shared with advertisers and data-brokers, allowing them to either ask the app not to track or to allow the data sharing.

“These third parties use your profile to target you with ads, and they can also use it to predict and influence your behaviours and decisions,” a new explanatory video from Apple outlines.

“This has been happening without your knowledge or permission. Your information is for sale. You have become the product.”

ATT won’t spell an end to iPhone app advertising or data collection full stop, as it is limited to apps that either share information with external parties or combine their own data with data collected from other companies in order to better target adverts.

Tim Cook, Apple’s chief executive, said in January that users had been asking for such controls “for a long time”, adding that for some companies, “no piece of information is too private or personal to be surveilled, monetised, and aggregated into a 360-degree view of your life”.

The unusually-pointed comments from the generally mild-mannered Mr Cook demonstrated how starkly Apple is positioning itself against businesses driven by data collection and subsequent targeted advertising – and primarily against Facebook.

The social network has built a $70bn (£50.4bn) business on the back of ads and has made its disdain towards the ATT feature well-known. Mark Zuckerberg, Facebook’s chief executive, accused ATT of affecting the growth of millions of companies worldwide in January, claiming the change would prevent small businesses from being able to target customers with adverts.

“Apple’s latest update threatens the personalised ads that millions of small businesses rely on to find and reach customers,” Facebook wrote in December on a standalone site designed to encourage small business owners to add their voices to an anti-Apple backlash.

“Apple’s policy will make it much harder for small businesses to reach their target audience, which will limit their growth and their ability to compete with big companies.”

While Mr Zuckerberg is more likely to be concerned about Facebook’s bottom line than scrappy start-ups and fledgeling side-hustles, the feature could spell disaster for marketers, data companies, publishers and other companies that rely on optimised ads to draw in new users.

The changes also stand to benefit Apple’s own advertising network given how it stands to disadvantage the likes of Facebook, and could facilitate a mass movement towards in-app payments and away from ads, which will be rendered less effective should users opt out of sharing their data.

Consequently, apps and businesses that were previously free and propped up by advertising could start charging users upfront to make up the shortfall. Critics have also pointed out that the expense of Apple devices makes them undemocratic guardians of privacy.

With mobile advertising analysts estimating that fewer than one in three users are likely to opt into granting permission for the app tracking, it’s clear that Apple and Facebook are unlikely to be on each other’s Christmas card lists any time soon. But how big an effect ATT will have on online advertising – given that there are more than 1bn active iPhones in the world – cannot be underestimated.