Facebook hates Apple's new privacy feature — here's how App Tracking Transparency works

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Apple (AAPL) is gearing up to launch a new privacy feature in the next version of iOS 14 that is generating quite a bit of anger from the likes of fellow Silicon Valley titan Facebook.

The feature, called App Tracking Transparency, has become such a flashpoint between the companies that Facebook (FB ) is, according to The Information, considering filing an antitrust suit against Apple over the matter. That comes as the social media giant is already supporting Epic Games’ own antitrust suit against the iPhone maker.

So what is App Tracking Transparency, and why does Facebook hate it so much? I’ve got you covered.

What is App Tracking Transparency?

Let’s start with the basics. Your iOS and iPadOS devices have what’s called an Identification for Advertisers software tracker, or IDFA. An IDFA is Apple’s randomized identifier that allows advertisers to track your activity across apps and the web without pulling in your personal information.

Tracking your activity is important for advertisers, because it enables them to send you targeted advertisements and determine how successful their advertising campaigns are. So if you are looking at a lot of pet-related websites, IDFA can help advertisers send you ads related to pet food or toys.

ARCHIVO - En esta fotografía del 25 de octubre de 2019, el director general de Facebook Mark Zuckerberg en el Paley Center en Nueva York. (AP Foto/Mark Lennihan, Archivo)
Facebook and CEO Mark Zuckerberg have been pushing hard against Apple's new privacy feature, saying it will hurt advertisers and businesses. (AP Foto/Mark Lennihan, Archivo)

Apple, however, has been pushing privacy as part of its product line for the last few years, and previously made moves to limit the ability of companies to track certain user activities via its Safari browser.

That’s where App Tracking Transparency comes in. The feature, when made available with the next version of iOS 14, will provide users with a pop up when they launch an app that wants to track their activities. The feature also keeps tracking turned off by default, and will only let you be tracked if you tell the app to.

Currently, app tracking is turned on by default, though users can disable it via the iOS and iPadOS settings menus. Facebook fears that keeping tracking off by default and asking people to turn it on will result in large numbers of users rejecting being tracked.

Why is that a problem for Facebook?

Facebook generates the vast majority of its revenue through, you guessed it, advertising. If companies can’t target ads, they may not buy as many ads. What’s more, according to Facebook’s own research, companies that advertise with Facebook could see their revenue drop by as much as 50% when App Tracking Transparency is implemented.

Facebook has fired back, though, in a big way. The company, according to reports, is considering filing an antitrust lawsuit against Apple over App Tracking Transparency, claiming that Apple is only making the move to fill its own coffers.

Facebook says that if people choose not to be tracked, the effectiveness of targeted ads will plummet. That, according to Facebook, would force app developers who offer their apps for free by subsidizing them with ad sales to begin charging for their apps and in-app purchases.

Apple charges a 30% fee for apps purchased through its App Store, the only way to get apps on iPhones or iPads, meaning, according to Facebook, Apple would benefit from those new app charges.

What does this mean for you?

Nothing yet, but Apple’s update that includes App Tracking Transparency will be available soon, the company says. Whether you want to be tracked or not is entirely up to you. You’ll still be served ads regardless. What changes is whether the ads are something that appeals to you or not.

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