By Keach Hagey and Patience Haggin
Advertising companies and publishers have filed a complaint against Apple Inc. with France's competition authority, arguing that privacy changes the smartphone maker plans to roll out are anticompetitive.
Starting in early 2021, Apple's operating software will require apps to get opt-in permission from users to collect their advertising identifier, a key number used to deliver targeted ads and check how ad campaigns performed.
The companies behind the complaint, brought through a group of trade associations, say few users will agree to be tracked, making it harder for companies from game-makers to news publishers to sell personalized ads and tough for the middlemen in those transactions.
The case is one of the first legal challenges to online-privacy measures on antitrust grounds.
"At the highest level, this is a novel case -- a truly important case -- because it deals with the use of privacy as a sort of fig leaf for anticompetitive conduct," said Damien Geradin, the competition lawyer representing the coalition of industry groups, including the Interactive Advertising Bureau France. "We think that this is the sort of thing that will arise increasingly in the future."
Apple's move has drawn criticism from others, including Facebook Inc., which said in August the changes would affect its brokering of ad sales in outside apps.
Apple said "privacy is a fundamental right," adding, "A user's data belongs to them and they should get to decide whether to share their data and with whom."
Privacy advocates say consumers should have as much control as possible over how their data is collected and used. In recent years, a push toward greater online privacy has resulted in new laws in Europe and California. The complaint centers on Apple's move to introduce its own, more "ominous," language asking users to opt-in, separate from the prompts already required by European privacy law.
Apple's new software will require apps to ask users whether they want their behavior to be tracked for the purposes of showing personalized ads. The complaint alleges that Apple's language will repel most users and render the advertising identifier useless for the vast online-ad ecosystem. In a survey by Tap Research Inc., 85% of respondents said if given the choice they would ask apps not to track them.
The trade associations also asked French authorities for interim measures -- similar to an injunction -- to block Apple from making its changes while it investigates the larger complaint.
Apple initially planned to introduce the changes in September 2020. Following high-profile criticism from Facebook and others this summer, Apple delayed the change to early next year.
Some publishers have expressed concern that they won't be able to charge as much to show ads to iPhone users who don't agree to tracking. Companies that run ads to encourage users to download an app -- a $57.8 billion global market in 2019, according to digital-ad analytics firm AppsFlyer -- rely on Apple's identifier to track how effective their campaigns were.
DMG Media, operator of the Daily Mail and MailOnline, raised concerns with the Justice Department in August that the ad-tracking prompt would be anticompetitive, said a person familiar with the matter.
The prompts asking for users' permission won't apply to Apple's own digital-ad business, which Arete Research estimated will generate between $3 billion and $4 billion in 2020 revenue. Apple personalizes ads shown in the App Store and on Apple News based on where users go and what users do in Apple's apps. To opt out of that tracking, users must find an option in the iPhone's settings.
Apple said its own data collection doesn't count as tracking because it doesn't share the data with other companies. "These rules apply equally to all developers -- including Apple," an Apple spokesman said.
Nicolas Rieul, the chairman of IAB France, said Apple's proposed changes would have a dramatic impact on the industry in France.
"Particularly at the moment of a global pandemic crisis, it's not a good time to have another hit," he said.
Write to Keach Hagey at email@example.com and Patience Haggin at firstname.lastname@example.org
(END) Dow Jones Newswires
October 28, 2020 10:15 ET (14:15 GMT)Copyright (c) 2020 Dow Jones & Company, Inc.