Many of the biggest tech firms have long insisted that consumers care more about free services than the privacy they surrender to use them.
Companies like Facebook pointed to their own exponential growth and insisted that consumers were voting with their feet.
Turns out, that was nonsense.
When offered an actual choice in the new operating system that runs iPhones, Americans are all in on privacy.
Just 6 percent of U.S. daily users of Apple’s latest mobile software are opting to allow companies like Facebook and its many affiliates to hoover up data about them and sell it to advertisers, according to Flurry Analytics. (The figure is higher globally, at about 15 percent.)
Facebook tracks users everywhere online because it can sell ads at a higher rate to marketers when it has highly detailed personal information, known as targeted advertising. That’s why advertisements on Facebook are often creepily specific — a Google search for jeans might later yield ads for Gap jeans in the style, fit and colors you like. Facebook and others can inform advertisers how effective the ads are and whether your personal traits will match well with subsequent ads for charcoal grills, Barbie dolls, gardening equipment or Billy Joel tickets.
Since late last year, Facebook has been carrying on a very public fit over Apple’s new privacy option, arguing that it hurts small businesses. The logic is that without the extensive personal information users provide back to Facebook for dispersal to data brokers and marketers, mom-and-pop shops simply cannot successfully hawk handbags, burger seasoning or plumbing services.
Of course, the social network’s objections are really about Facebook’s ad sales business, which generated $25.4 billion in the first three months of 2021 alone. Anything, Facebook professes, that threatens its ability to trail users as they browse retail, travel, news and other sites could threaten the company’s ability to offer its social media sites “free of charge.”
“Facebook is really saying: What can we do to protect our business model?” said Jonathan Mayer, an assistant professor of computer science at Princeton. “It’s entirely unsurprising that they would oppose a change that introduces more control to consumers and less opportunity to collect data that can be fed back to advertisers, even if that’s what consumers are saying that’s what they want.”
Early data shows that consumers overwhelmingly want more privacy. Apple’s new operating system for phones forces each app to ask permission to track users across the internet — a choice that was previously available but difficult to find.
Almost all users opted out.
Clay Gendron, an analyst at Southern New Hampshire University, said the choice to opt out of tracking was an easy one for him. Apps “are asking me to opt in to being tracked so I can have better ‘curated’ ads,” he said. “It is like they are telling me I should be grateful and want them to sell my data to be a better target to advertise to. It’s just a comically terrible value proposition.”
Other app companies including Etsy and Pandora try a different approach by reminding users in mobile pop-ups that their free services are supported by targeted advertising. The Weather Network implies that tracking users helps it save lives. Twitter and Nextdoor simply want customers to have the most “relevant” ads.
But customers shouldn’t be guilted into helping people sell them stuff. Without knowing that a user spent 20 minutes browsing cooking gadgets on Sur La Table, advertisers can do a pretty good job of guessing who is most likely to want to see meal kit ads, through a type of marketing known as contextual advertising. That relies on clues they can more easily glean, such as general age, gender, location and income level.
Advertisers are willing to pay much more for ads targeted based on users’ behavior. But there’s evidence that websites don’t see much of a revenue bump from that upcharge. According to a 2019 study, sites may reap only a 4 percent reward for targeted ads after middlemen take their cut, belying app developers’ arguments that their business is reliant on tracking.
There’s the very real likelihood that marketers could use the savings from lower advertising prices on Apple devices to reach customers in more creative ways than just sticking ads on Facebook and Twitter. That might include traditional media and other apps — a potential benefit to smaller developers.
Consumers have no federal rights to privacy, leaving tech companies to put in place policies as they see fit. And critics allege Apple may be coming out with the changes to get ahead of regulatory pressure and an ongoing antitrust lawsuit over its app store. Advertising is only a small part of Apple’s business, meaning it can afford to take a cut in revenue while sticking it to competitors.
Ironically, Apple will have to act even more like a regulator itself to ensure that app developers are following the rules of its new software. Snapchat’s parent, for instance, reportedly studied ways to circumvent Apple’s rules about tracking users, as did an industry group for Chinese app developers.
Users should have more control over their data, and Apple’s solution is a step forward. Between phishing, robocalls and texts, malware and nagging pop-ups, there is enough manipulation online already without eerily specific ads that follow you around the web.
Google, which like Facebook has a huge part of its business in advertising, took baby steps this week toward adding privacy features to its Android mobile software, including options to obscure precise location data and show more detail about the information that apps are collecting. But it needs to get serious about consumers’ rights or risk losing customers to Apple.
Companies did just fine for decades marketing to consumers without access to their every movement or keyboard and mouse click. And with 94 percent of Americans saying they liked it that way, it’s time for advertisers to listen.
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