Last week, Apple was fined for privacy violations in France, making it clearer than ever--if any more clarity had been needed--that App Tracking Transparency (ATT) is nothing but an abusive money and power grab by an aftermarket monopolist. The macroeconomic damage is huge, and entire product categories such as hypercasual games are on the verge of extinction as a result of Apple's actions and the impact on the Android ecosystem.
I'm no fan of cartels as I've made abundantly clear in the Licensing Negotiation Group (LNG) and Journalism Competition and Preservation Act (JCPA) contexts. However, it's a question that must be answered case by case, and on Friday the European Commission was notified of a proposed joint venture between four major European mobile carriers that I believe should be cleared because its procompetitive effects will benefit the EU economy and European consumers.
Deutsche Telekom, Orange, Telefónica, and Vodafone have told the European Commission's Directorate General for Competition (DG COMP) that they "plan to create a jointly controlled [with each party owning an equal share], full-function joint venture [...] via their respective subsidiaries [...] [which] will offer a privacy-led, digital identification solution to support the digital marketing and advertising activities of brands and publishers" (PDF). This is how it will work:
User consent must be provided to a brand or publisher (opt-in),and can be revoked via "a user-friendly privacy portal".
The new network then generates " secure, pseudonymized token derived from a hashed/encrypted pseudonymous internal identity linked to a user’s network subscription which will be provided by participating network operators." The network operators can do this without needing anything from Apple. They don't have to run their apps by Apple's arbitrary, self-serving, and inconsistent app review. They simply have this information by virtue of providing the expensive infrastructure without which Apple's gadgets would be as useless on the road as a piece of scrap metal. And with the token that the networks generate, targeted ads can be served, which would revive in-app advertising on iOS after Apple killed it.
There are some ways in which the Evil Empire could theoretically strike back:
It could threaten the network operators with not letting them resell iPhones and potentially even with disabling the use of those networks with iPhones. In the U.S. I believe Apple's market power would make that kind of foreclosure illegal. In Europe, Apple's market share is lower, but given high switching costs and low switching rates, the threat would hurt. A joint venture of multiple major network operators, however, would be in a structurally better position to discourage such blackmail in the first place--and if Apple engaged in such conduct anyway, its market power (because of customer lock-in) would be shown more clearly than if it acted like this against a single carrier.
Apple could block apps (also including updates to existing apps, of course) that use the new advertising network. But that would raise antitrust issues for sure (as Apple wouldn't even have a privacy pretext)--and once the EU's Digital Markets Act (DMA) really requires Apple to allow alternative app stores, such stores could then distribute apps that would make use of the new network.
In theory, Apple could also block communications with the new ad network, but that would be so crazy that I don't even want to discuss its implications. Suffice it to say it wouldn't be a good idea for Apple to do that.
The only thing I'd like the Commission to ensure is that other network operators will also have a chance to join that network on fair terms. Other than that, I'm all for this initiative. The EU should let those carriers join forces against abusive platform makers.
