Apple Warns App Makers: Don't Even Think About Unauthorized Tracking

Apple Inc. AAPL is warning Chinese app developers and tech companies not to circumvent its new privacy rules that are expected to roll out this spring, according to a report by the Financial Times.

What Happened: The new feature will require apps to obtain permission from users before tracking them, according to Apple.

However, tech companies in China are testing multiple workarounds for the new feature so as to continue tracking users without their permission, as per the FT report.

Apple has reportedly sent warnings to at least two Chinese app developers who were testing methods to circumvent the feature. One of the app developers used a system called CAID, developed by the state-backed China Advertising Association.

Five of China’s biggest tech companies, including Baidu Inc. BIDU, Tencent Holdings Ltd. TECHY and ByteDance are testing or implementing CAID to identify users in the future, according to FT. Other proposed workarounds use a process known as fingerprinting.

Why It Matters: Apple’s upcoming privacy changes will give users more privacy from mobile advertising but is unpopular with app developers, many of which are small businesses.

Facebook Inc. FB too has heavily criticized Apple’s proposed privacy changes, taking the stand that it is against small businesses. Earlier this month, the company’s CEO Mark Zuckerberg claimed that the privacy changes would make it harder for small businesses to reach customers using targeted advertising.

Facebook said in August last year that it observed a 50% drop in Audience Network publisher revenue in its testing. The social media giant is the second-largest recipient of advertisement revenues after Alphabet Inc. GOOG GOOGL.

Price Action: Apple shares closed about 3.4% lower on Thursday at $120.53.

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