Do you want to be tracked? This is the question at the centre of a privacy battle between Facebook and Apple.

Key points:

The question is being asked of millions of iPhone and iPad users who have installed the latest update of the Apple operating system (iOS 14.5).

When they open an app like Facebook for the first time after the update, they receive a pop-up notification informing them that the app wants to track them across the internet, but they can refuse permission to do this.

If they say no to tracking, they’re effectively turning off the tap of data that Facebook and other companies use to deliver micro-targeted ads.

When compiled, this data on where people go on the internet can be used to build a model of consumer behaviour that’s so scarily accurate many people think their phone must be listening to their offline conversations.

So why is Apple introducing this feature now and what does it mean for the future of Facebook?

How does tracking work?

At the centre of tracking for iPhones is an acronym: IDFA (Identifier for Advertisers).

Introduced in 2012, the IDFA is a number assigned by Apple to a user’s device, for example: EA7583CD-A667-48BC-B806-42ECB2B48606.

Think of it like an ID. When you click on an ad or download an app, the IDFA allows the advertiser to be notified that you (or someone using your phone) has taken this action. The IDFA can be used to both target and measure the effectiveness of ads. 

Over time, this generates a comprehensive and detailed picture of an iPhone or iPad user’s internet activity. 

IDFA (and the equivalent technology on Android devices, as well as cookies on browsers) has transformed the internet and underpinned the economics of the boom in online advertising and app development.

App developers build apps that gather data, which they can then sell to advertisers who are able to deliver increasingly more finely targeted ads to users.

“Your phone isn’t listening to you — it doesn’t have to because it’s already getting enough information through everything that you’re doing,” said Daniel Angus, an expert on digital communications at the Queensland University of Technology (QUT).

“For the longest time apps have been largely free and users have been blasé about the personal data they’ve been giving away for them to be able to enjoy and use these apps.”

Users have been able to opt out of IDFA-based tracking before, but the new update puts the choice front and centre.

If they click “Ask app not to track”, then that app developer can’t track customers using their data in that app, or sell that data to other companies. 

Does this mean I won’t get ads anymore?

No.

You’ll still get just as many ads on Facebook or other platforms, but they’ll be less targeted than before.

How much less? According to Facebook, the difference will be obvious enough that it’s warned of a 50 per cent drop in revenue in its Audience Network advertising business, which provides in-app advertisements targeted to users based on Facebook’s data.

But that may be an exaggeration. Facebook has already amassed a huge amount of data on users and can continue to track users within the app itself — i.e. what groups you like or what friends you interact with.

The update also doesn’t stop Facebook from continuing to track its users across the internet when they switch from iPhone to laptop.

Does this only affect Facebook?

No.

This affects any app using your data for advertising purposes or selling it to advertisers.

Facebook is simply the company that will be most affected.

If 80 per cent of users opt out of tracking, Facebook may lose 7 per cent of it revenue, according to some estimates. That’s about $US2 billion per economic quarter.

Apple has also singled out Facebook in its PR material introducing the change.

Why is Apple doing this now?

According to Apple, it’s all about privacy.

It sees privacy and safety as big issues for consumers and is trying to distance itself from Facebook, which has been hit by a series of privacy scandals, from Cambridge Analytica and “election hacking” to the recent revelation that 500 million users had their data stolen.

In a speech given a few weeks after the January 6 attacks on the US Capitol, Apple boss Tim Cook said personal information collected through tracking by Facebook can sometimes push people toward more misinformation and hate speech as part of the efforts to show more targeted ads. 

“What are the consequences of not just tolerating, but rewarding content that undermines public trust in life-saving vaccinations?” Mr Cook asked.

“What are the consequences of seeing thousands of users join extremist groups and then perpetuating an algorithm that recommends more?”

Supporters of President Donald Trump gather in front of the US Capitol Building in Washington on January 6, 2021.

Reuters: Leah Millis

This is also a commercial position: the company is gambling that people will be willing to spend $1,000 on a phone if it will protect them from the perceived harms of the internet, including advertisers’ data-gathering.

Dr Angus from QUT said Apple’s move points to a general increase in public consciousness about tracking, privacy and social media.

“I think it shows that conversations are maturing,” he said.

“We are getting better and consumers are getting more savvy and demanding more in terms of safety and privacy.”

The tech giant may also be worried about US President Joe Biden introducing the type of monopoly-busting regulation it’s already facing in the EU.

“It could be a pre-emptive move against regulation,” Dr Angus said.

According to Facebook, Apple’s position is more about profit than privacy.

It says the move is designed to force more apps to charge for their service, instead of relying on ads.

Apple takes a 15 per cent to 30 per cent cut on most payments processed through an iPhone app.

“The truth is, these moves are part of Apple’s strategy to expand their fees and services business,” Facebook said in a blog post.

What does this mean for the future of Facebook?

The anti-tracking feature isn’t a mortal blow to Facebook, but it shows where it’s vulnerable.

If companies such as Apple or Google decide to turn off the flow of data that fuels its core advertising business, Facebook can’t do much about that.

“It’ll be interesting to see whether Android [owned by Google] replies in kind,” Dr Angus said.

“Consumers may force their hand a bit and say, ‘I can do this on an Apple phone, why can’t I do it on an Android phone?'”

Facebook CEO Mark Zuckerberg arrives to testify before a joint hearing of two Senate committees

Getty Images: Jim Watson

What’s at stake in the Apple-Facebook privacy battle is two competing models of the internet.

Apple’s is a “walled garden” approach in which only approved apps are allowed to operate and users retain at least some of their privacy. In this model, users pay a premium for Apple devices and products.

Facebook’s approach has fewer rules, but is cheaper. They can offer their products for free because the cost is paid for with advertising.

In return, advertisers are given greater access to user’s data, which they then use to deliver more targeted ads.

In the words of Apple when it introduced the anti-tracking feature, “you have become the product”.

What if I have an Android phone?

The iOS update obviously won’t affect you, though expect similar changes soon.

Google is reportedly mulling over whether to introduce a similar anti-tracking feature, though given advertising makes up most of the company’s $US181 billion revenue, it’s in danger of shooting itself in the foot.

Google has already taken steps to phase out third-party cookies (which allow websites to track users across the internet, similar to the way IDFAs work on iPhones) on its Chrome web browser, and is working on tools that allow advertisers to target groups of users, instead of directly targeting individuals.

Dr Angus pointed out that Apple’s move puts the onus back on Google to show it’s not exploiting its dominance of both the mobile phone operating system market and the online advertising business.

“The company that profits the most from the use of trackers also controls the dominant mobile product in the marketplace,” he said.

“There’s a clear conflict there and significant questions to be asked around concentration of ownership.”

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This content was originally published here.