Does Apple dominate in apps? The Antitrust investigates
Apple, the US giant with a net turnover of 358 billion euros in 2022, is under the scrutiny of the Italian Antitrust. According to the Authority, Cupertino has adopted a more restrictive privacy policy for third parties. Furthermore, they would also be disadvantaged due to the quality of the data made available
The Competition and Market Authority has launched an investigation against the companies Apple Inc., Apple Distribution International Ltd, Apple Italia Srl to investigate the possible existence of a situation of abuse of a dominant position in the platform market for the online distribution of apps for users of the iOS operating system.
APPLE CONDUCT THAT THE ANTITRUST DOESN'T LIKE
In particular, the Italian Antitrust focuses on the fact that, starting from April 2021, Apple has adopted a privacy policy for third-party app developers that is more restrictive than the one the company applies to itself. The different treatment is mainly based on the characteristics of the prompt that appears to users to acquire consent to the tracking of their "navigation" data on the web and on the tools adopted to measure the effectiveness of advertising campaigns.
In fact, the Authority explains, Apple only requires competitors to use a prompt for requesting consent in a more prominent position than the option to deny consent and uses a dissuasive linguistic formulation of tracking. "In particular – reads the document penned by the Agcm – , the formulation of the prompt that Apple has imposed on third-party app developers: a) visually places greater emphasis on the hypothesis of denial, in requesting users, in order, to "deny" or "grant" the consent; b) uses the expression “agreement to track (emphasis added) the activities performed in apps and on other companies' sites” without giving any explanation of the term “track” which could easily be an element of concern and deterrence for the user; c) does not highlight the advantages for users associated with personalized advertising".
Furthermore, third-party developers and advertisers appear to be disadvantaged in terms of the quality and detail of the data made available by Apple regarding the effectiveness of advertising campaigns on their applications. This happens, the Antitrust explains, due to the technical characteristics of the programming interface they can access – SkadNetwork – which appears much less effective than Apple Ads Attribution, the tool that Apple adopts for itself. "Where – the text continues to read – these are apps developed directly by Apple, the "positive" consent option is placed in the foreground in the related prompts and, furthermore, the object of the consent becomes the "personalized services" and no longer the "keeping track" of users' browsing activity".
The availability of data relating to both user profiling and the measurement of the effectiveness of advertising campaigns – while complying with privacy protection regulations – are essential elements for the attractiveness of the advertising spaces sold by app developers and purchased by advertisers.
THE DOUBLE CONSENT
"Even in the event that the consumer gives consent to "tracking", the app developer (other than Apple) will still not be able to share the same data to allow customization and measurement of effectiveness (hereinafter, also "attribution ") of the announcements on another app", motivate the Italian Authority. "Apple's ATT system requires the so-called "double explicit consent" (double opt-in), which requires the consumer to consent to tracking for each access to the different apps, even if they are connected to each other", he explains the Antitrust which underlines that “The double explicit consent is not foreseen in relation to the apps developed by Apple. In fact, if a user gives his consent to Apple's "personalized ads" prompt, the latter will be able to use the data on purchases made within all third-party apps for purposes of personalization and measurement of ads, regardless from the fact that the developers of the third-party apps have requested or obtained the users' authorization to "track" through the ATT system".
Also with regard to the measurement of the effects of the campaigns, the Antitrust “highlights a substantial difference in treatment which determines a disadvantage for third-party operators in favor of Apple. In particular, SkadNetwork, the programming interface (API) made available by Apple to allow advertisers and third-party app developers to measure the effectiveness of their advertising campaigns, has technical characteristics which make this tool absolutely useless and in any case much less effective than Apple Ads Attribution, the tool that Apple adopts for itself. The limits attributed to SkadNetwork, even in the most updated versions, are as follows: i) it allows delayed access to conversion data3 (after a minimum time of 24-48 hours), while access to data is immediate with the adoption of Apple Ads Attribution; ii) the data is also limited and too aggregated and therefore unable to reveal the actual tastes of users, while Apple Ads Attribution provides advertisers with data on the country or region, on the date and time of the click, on the ad associated with the installation of the app.”
For this reason, according to the Authority, Apple's alleged discriminatory conduct may cause a drop in advertising revenue from third-party advertisers, to the benefit of its commercial division; restrict entry and/or prevent competitors from remaining in the app development and distribution market; benefit their own apps and, consequently, mobile devices and the Apple iOS operating system. According to the Antitrust Authority, the alleged reduction of competition in the relevant markets and the consequent strengthening of Apple's digital ecosystem could reduce the incentives to develop innovative apps and hinder the transition of users towards competing digital ecosystems.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/apple-domina-nelle-app-lantitrust-indaga/ on Thu, 11 May 2023 08:20:30 +0000.