Apple’s ATT faces competition probe in Italy

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

Italy’s competition watchdog said today it’s concerned Apple may be creating an unfair advantage for its own ‘personalized’ ads which are not subject to the same permission pop-up it requires for third parties to track iOS users.

Apple launched the App Tracking Transparency (ATT) feature just over two years ago, requiring third party apps obtain opt-in consent from users to be tracked for ads. The move was decried by the ad industry — and quickly led to a number of complaints being filed with competition authorities. So Italy is by no means the first to probe Apple’s privacy measure.

In a press release today the Italian AGCM announced the launch of an investigation into Apple for alleged abuse of a dominant position in the app market — saying it suspects the company of applying a more “restrictive” privacy policy to app developers than the one it applies to itself. This in turn means 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 relating to the effectiveness of their ad campaigns on iOS.

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

“The availability of data relating to both user profiling and the measurement of the effectiveness of advertising campaigns — while in compliance with privacy protection regulations — are essential elements for the attractiveness of the advertising spaces sold by app developers and purchased by advertisers. For this reason, according to the Authority, Apple’s alleged discriminatory conduct may cause a drop in advertising revenue from third-party advertisers, to the benefit of its commercial division; reduce entry and/or prevent competitors from remaining in the app development and distribution market; benefit their own apps and, consequently, mobile devices and the Apple iOS operating system.”

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

Apple was contacted for comment on the AGCM’s investigation.

Since the Apple-imposed iOS limit on third party tracking rolled out a number of studies have also suggested the move lifted Apple’s own ad business and boosted its market power. While ATT has also been credited with blasting a $10BN hole in Facebook-owner Meta’s revenue.

Back in March 2021, soon after launching ATT, Apple was accused of privacy hypocrisy by a French startup lobby group which filed data protection and competition complaints but failed to get the country’s antitrust watchdog to block the feature at that time. Although the French competition authority said it would continue to investigate.

Antitrust watchdogs in Germany and Poland have also announced probes of Apple’s approach since ATT launched. While the UK’s Competition and Markets Authority raised substantial concerns about Apple’s market power generally, in a wide-ranging mobile market ecosystem review towards the end of 2021 (and again in a final report in June 2022). And it has an open investigation into Apple’s App Store following complaints of unfairness by developers.

Back in the EU, antitrust action by the bloc’s competition commission against Apple in recent years has focused on the music streaming market, Apple Pay and in-app payments-related conditions. But one thing to note is that self-preferencing is set to be banned in the region for tech giants designated as so-called Internet “gatekeepers” under a major ex ante competition reform that’s aimed at curbing Big Tech’s market power.

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

Apple’s App Store is a likely candidate for falling under the DMA regime. If that happens, requirements against self-preferencing and fair dealing with third parties will apply — and could, potentially, affect how it can operate ATT (which is a feature of the App Store).

That said, the bloc’s data protection rulebook (GDPR) also applies so any moves to impose conditions on Apple with the goal of enhancing competition would need to avoid causing privacy harms for consumers in the process, requiring a balance of considerations.