Apple’s ATT faces competition investigation in Italy

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Apple is facing another antitrust investigation in Europe over privacy rules it applies to third-party apps running on its mobile platform that affect their ability to track iOS users to target them with ads.

Italy’s competition watchdog said today it is concerned that Apple is creating an unfair advantage for its own “personalized” ads that aren’t subject to the same consent pop-up that third parties need to track iOS users.

Apple launched the App Tracking Transparency (ATT) feature a little over two years ago, which requires third-party apps to get users’ opt-in consent to be tracked for ads. The move was frowned upon by the advertising industry and quickly led to a number of complaints being filed with competition authorities. Italy is therefore certainly not the first to investigate Apple’s privacy measure.

In a press release today, the Italian AGCM announced the start of an investigation into Apple for alleged abuse of a dominant position in the app market. The company suspects it applies a more “restrictive” privacy policy to app developers than the policies it applies. To himself. This, in turn, means that third parties are likely to be at a disadvantage when it comes to the “quality and detail” of data made available to them by Apple, it suggested, including with regard to the effectiveness of their ad campaigns on iOS.

“This happens because of the technical characteristics of the programming interface they access – SkAdNetwork – which appears to be much less effective than Apple Ads Attribution, the tool Apple uses for itself,” the AGCM wrote in a statement. [NB: this is a machine translation of the original Italian text].

β€œThe availability of data related to both user profiling and measuring the effectiveness of advertising campaigns – while complying with privacy protection regulations – are essential elements for the attractiveness of the ad spaces sold by app developers and bought by advertisers. For this reason, according to the Authority, Apple’s alleged discriminatory behavior may lead to a decrease in advertising revenue from third-party advertisers, to the benefit of the commercial department; reduce entry and/or prevent competitors from remaining in the app development and distribution market; benefit from their own apps and therefore from mobile devices and the Apple iOS operating system.”

The AGCM added that it is concerned that Apple’s behavior may reduce incentives to develop innovative apps and create barriers for consumers to switch mobile ecosystems.

Apple has been contacted for comment on the AGCM’s investigation.

Since the Apple-mandated iOS limit on third-party tracking rolled out, a number of studies have also suggested that the move has lifted Apple’s own advertising business and increased its market power. While ATT has also been credited with blowing a $10 billion hole in Facebook owner Meta’s revenue.

In March 2021, shortly after the launch of ATT, Apple was accused of privacy hypocrisy by a French startup lobby group that filed data protection and competition complaints but failed to get the country’s antitrust watchdog to block the feature at the time . Although the French competition authority said it is continuing its investigation.

Antitrust watchdogs in Germany and Poland have also announced investigations into Apple’s approach since the launch of ATT. Although the UK Competition and Markets Authority raised significant concerns about Apple’s market power in general towards the end of 2021, in a comprehensive review of the mobile market ecosystem (and again in a final report in June 2022). And it has an open investigation into Apple’s App Store after complaints of developer unfairness.

Back in the EU, the bloc’s antitrust actions against Apple in recent years have focused on the music streaming, Apple Pay, and in-app payments market. But one thing to note is that self-preference will be banned in the region for technology giants referred to as so-called internet “gatekeepers” under a major ex ante competitive reform aimed at curbing Big Tech’s market power.

The pan-EU Digital Markets Act (DMA) applies to “core platform services” managed by gatekeepers.

Apple’s App Store is a likely candidate to fall under the DMA regime. If that happens, requirements against self-preference and fair dealing with third parties will apply – and this could potentially affect how it can use ATT (which is a hallmark of the App Store).

That said, the bloc’s data protection rulebook (GDPR) also applies, so any move to impose conditions on Apple with the aim of increasing competition should avoid harming consumer privacy, which requires a balanced consideration .

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