Federal Cartel Office has concerns about Apple's iPhone tracking protection
The tracking transparency framework forces iOS apps to ask users for permission before tracking them for ad purposes. Is this a violation of competition law?
The headquarters of the German Federal Cartel Office in Bonn.
(Image: Bundeskartellamt)
New antitrust trouble for Apple: After the Federal Court of Justice apparently also classified Apple as a “company with overwhelming market power”, which the Federal Cartel Office had decided in 2023, the German competition authority has now also raised concerns about App Tracking Transparency (ATT). Since 2021, the technology and the corresponding framework have forced app providers to ask users who are being tracked across individual software for advertising purposes for permission – which many naturally do not do. The German Federal Cartel Office had already formulated an “initial suspicion” in 2022. Apple has now been informed of this in an official letter with a legal assessment.
Apple's “broad and deep treasure trove of data”
The main reason for the concerns is that the “narrow requirements” of the ATT system only apply to other app providers, but not to Apple itself. “In the Bundeskartellamt's preliminary view, this could constitute a violation of the special abuse provisions for large digital companies (Section 19a (2) GWG [Act against Restraints of Competition]) as well as the general abuse provisions of Article 102 TFEU [Treaty on the Functioning of the European Union],” the authority said in a press release on Thursday.
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The assessment was sent to Apple USA and Apple Germany. Apple now has the opportunity to respond to the allegations. Apple is the operator of a comprehensive digital ecosystem, said Andreas Mundt, Head of the Cartel Office. With “numerous services and connected devices, the App Store and the Apple ID, the company has extensive access to advertising-relevant data” of its customers. Apple uses some of this data to offer spaces for personalized advertising in the App Store “and generates high revenues”. However, personalized advertising is also of great economic importance for other companies. However, they do not have a “broad and deep treasure trove of data” like Apple. “Access to the relevant user data is made significantly more difficult for competing app publishers [by ATT].”
A question of consent
One of the Bundeskartellamt's criticisms is that Apple only records tracking within the meaning of ATT as “cross-company data processing for advertising purposes”, but not Apple's own approach of “combining user data across the ecosystem – from the App Store, the Apple ID and connected devices – and using it for advertising purposes”. However, it is possible to switch off personalized advertising in the App Store and other services, for which Apple provides a separate settings menu.
The Bonn antitrust watchdogs also criticize the fact that Apple makes the queries for ATT less user-friendly than those for its advertising measures. With ATT, users are shown up to four consecutive query windows [for consent], whereas Apple apps show “a maximum of two”. First-party tracking is also not named as such by Apple. Finally, the Bundeskartellamt believes that the current queries encourage users to allow Apple to process their data. “In the case of third-party apps, on the other hand, the user is steered towards refusing data processing by third parties.” Apple now has the opportunity to respond to the allegations. The German Federal Cartel Office emphasized that it is working “closely with the European Commission and other national competition authorities” on the investigation. Several parallel proceedings are underway there.
Apple has commented on the matter to Mac & i. The statement states that the company is a pioneer in the development of technologies that offer users “great features without compromising privacy”. ATT gives users more control over their privacy “through a required, clear, and easy-to-understand prompt about one thing: tracking”.
“Strong support” for the feature has been received from consumers as well as privacy advocates and data protection authorities around the world, Apple states. The company believes that it holds itself even to a higher standard than it requires of any third-party developer “by providing users with an affirmative choice as to whether they would like personalized ads at all”.
Apple has also designed services and features such as Siri, Maps, FaceTime and iMessage “such that the company cannot link data across those services”, even if Apple wished to do so, according to the company. “We firmly believe that users should control when their data is shared.” Apple will now “continue to constructively engage” with the Federal Cartel Office “to ensure users continue to have transparency and control over their data”, according to the statement.
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