German Group Lodge Antitrust Allegations Over Apple's Privacy Update

A group of Germany’s major media, tech, and advertising companies slapped antitrust allegations against Apple Inc’s AAPL iPhone privacy settings changes citing negative ad market repercussions, the Financial Times reports.

What Happened: Today, ZAW, the German Advertising Federation representing nine industry associations, on behalf of companies including Facebook Inc FB and Axel Springer SE AXELF AXSPY, the owner of Bild, Die Welt and Insider, complained with Germany’s competition regulator.

Apple is likely to roll out iOS 14.5 software update with a feature called ATT, or App Tracking Transparency, later today, CNBC reports.

The update will compel every app to seek user tracking permission for advertising purposes. A swarm of likely declining users could jeopardize the mobile advertising market.

Apple has justified the changes citing user privacy improvement. Last week, the company seemed to be planning its advertising business boost.

The complaint estimated a 60% decline in advertising revenues for app developers by making it difficult for third parties to gather the requisite data for ad assignment.

The complaint representative, Thomas Hoppner from law firm Hausfeld, expected more apps to shift to a charge-based model against the current advertising-based model.

The change will lead to incremental transaction costs and more time for searching relevant offerings, added Hoppner.

Why It Matters: Allegedly, Apple has eliminated every competitor from processing commercially relevant data in the Apple ecosystem, the complaint read. Tim Cook-led company has also excluded its advertising services from the planned changes and procured significant amounts of user data itself, added the complaint.

The change will decrease the efficiency, profitability of targeted ads and affect online advertising business, jeopardizing online advertisement reliant companies like Facebook.

France advertisers lodged a similar complaint last October. France Digitale, representing most of the country’s venture capital firms, also complained in March.

Apple emphasized previous statements justifying the change as a fundamental human right and emphasizing user discretion regarding data sharing. The rules applied equally to every developer, including Apple, assured the company. The company also acknowledged strong backing from regulators and privacy advocates for the update.

Price action: AAPL shares traded flat at $134.32 on the last check Monday.

Image Courtesy: Wikimedia