In mid-March, the French competition watchdog reached an unusual decision in its investigation of a new Apple privacy feature. The tool, which stops advertisers from tracking iPhone users across apps without their consent, had been challenged by developers, entrepreneurs and Apple’s long-time nemesis, Facebook, who jointly called for its suspension.
The investigators who led the review also pushed for the feature to be suspended. Their preference was to pause the roll-out while they determined if Apple was using the tool to favour its own services, in what they described as a potential act of “privacy washing”. But having consulted with her colleagues at the French privacy regulator, the watchdog’s director, Isabelle de Silva, concluded the feature complied with the EU’s data laws. Although the probe continues, de Silva said she had no choice but to defy her investigators’ wishes.
The incident illustrates a powerful new dynamic at the heart of the tech industry. After the EU’s General Data Protection Regulation (GDPR) came into effect in 2018 – and other regulators adopted similar rules – tech firms have raced to introduce new features that provide consumers with more control over how their data is used. Firms such as Apple say these features are necessary in order to comply with the regulations. But their critics contend they harm ad-funded competitors, further tip the balance of power towards the digital gatekeepers, and amount to a weaponisation of privacy.
Like Apple, Google also stands accused of turning privacy legislation to its advantage. The US search giant, which alongside Facebook dominates the online advertising market, has taken the decision to remove cookies – the digital trackers that follow you around the web – from its Chrome web browser. While Google has said the move will protect the advertiser-funded web, it will have a major impact on the advertising ecosystem and is already attracting scrutiny from competition regulators, including in the UK.
In the wake of a series of privacy scandals, it might seem odd to question efforts to give consumers greater control of how companies track them. Apple and Google’s rivals argue, however, that these decisions won’t bring an end to targeted advertising; they will simply facilitate such practices in a way that further reinforces the two tech giants’ market power.
Google’s overhauled ad-tracking service “is trying to replace an open and interoperable technology with one that is Google-controlled”, said a spokesperson for Marketers for an Open Web, a consortium of news publishers and tech firms opposed to the move. “This will force marketers into their walled garden and will spell the end of the independent and open web.” Google denies the claim and says the feature will boost competition.
While the company would stand to benefit from building ever higher walls around its online advertising business, Apple wouldn’t – or at least, not in the same way. It runs an online ads business through the App Store, but, compared to Google, advertising represents a tiny proportion of its revenue. Nevertheless, the company’s critics have argued that the new rules won’t apply to Apple’s own ad sales business, and Facebook has argued that Apple will benefit in a more devious way. By making it increasingly difficult for app developers to build businesses through advertising alone, they will instead have to turn to subscriptions, of which Apple takes a 15-30 per cent cut.
This is a smart argument from Facebook, which has been locked in a long-running war of words with Apple over the ethics of its own ad-funded business model, and is currently facing criticism for not doing enough to crack down on ad-tracking. Given Apple has faced significant scrutiny over the fees it charges developers simply for using its App Store, Facebook’s charge is likely to resonate with developers and regulators alike.
Of course, so long as businesses comply with regulations, they can do so however they see fit. Many in the industry argue that responsibility lies instead with Brussels. Entrepreneurs have argued for some time that GDPR risked strengthening the tech giants, which were expected to find it easier to comply with the new regulations.
The European Commission itself has accepted the legislation has had unforeseen consequences. The Digital Markets Act (DMA), a new bill introduced to the European Parliament at the end of last year, aims to increase competition in the tech industry. But it acknowledges that the online advertising sector is “considered to have become more non-transparent after the introduction of new privacy legislation, and is expected to become even more opaque with the announced removal of third-party cookies”.
This absence of transparency reduces competition, the legislation says, by making it harder for advertisers and publishers to switch providers. It aims to address this by introducing new transparency rules.
Pinar Akman, a professor of competition law at Leeds University, notes that privacy is now a double-edged sword for policymakers. “It starts with GDPR but the issues are broader than GDPR,” says Akman, who wrote a paper paid for by Google in 2016, but is not currently financially engaged with the tech industry. “The relationship between privacy and competition is a difficult one to get right and depends a little bit on your objectives. There may not be a perfect equilibrium where you have as much privacy as you would like and as much competition as you would like as well.”
In the coming months, regulators and policymakers will need to decide whether they value privacy or competition more highly. But the DMA is proof that Brussels is concerned that it is yet to strike the right balance. Until it does, the debate over the weaponisation of privacy will continue to rage.