Brief:

• Apple was accused of violating European law in two complaints about its use of a tracking technology that advertisers use to measure the effectiveness of digital ads and to improve targeting. Nonprofit group Noyb filed the complaints in Germany and Spain, claiming that Apple's Identifier for Advertising (IDFA) is stored on Apple devices without user consent, CNBC reported.
• The tech giant's use of IDFA "constitutes a violation of the so-called 'cookie law' … which prohibits the installation of trackers of any sort without the user consent," Stefano Rossetti, a data protection lawyer at Noyb, said in an interview with CNBC. The organization didn't accuse Apple of violating the General Data Protection Regulation, a European Union law enacted in 2018 to protect consumer privacy.
• Apple disputed Noyb's complaints, saying in a statement that they were factually inaccurate. The company also said it complies with European law and the latest version of its mobile operating system, iOS 14, gives customers more control over ad tracking. An Apple spokesperson said the company doesn't access or use IDFA for any purpose, CNBC reported.

Insight:

Apple is caught between privacy advocates like Noyb that want the company to give consumers opt-in consent to install or create device identifiers, and companies that depend on its IDFA technology to help buy and sell digital advertising space in apps. Apple already delayed its plan to show a pop-up notice when apps requested IDFA amid criticism from marketers, publishers, app developers and ad-tech companies.

The tech company faces a formidable legal opponent in Noyb, which is led by Max Schrems, a privacy activist who rose to fame as a law student with complaints against Facebook that resulted in a landmark 2015 ruling about data transfers between the EU and U.S. The European Court of Justice this year ruled in favor of a Schrems complaint that a privacy framework called Privacy Shield didn't provide adequate privacy measures for Europeans. After the enactment of GDPR in 2018, Schrems created Noyb with a promise to "look for bigger cases" with the biggest effect on consumer privacy, Bloomberg reported.

It's too early to tell how Noyb's complaint against Apple may affect mobile marketers, given that the iPhone maker already had planned to update its mobile operating software to give customers greater control over how they share the IDFA with third-party apps. That move may be more consequential to mobile marketers as soon as early 2021, while Noyb's complaint may take years to resolve. A key distinction about Noyb's complaint is that it argues Apple never should have put an IDFA on a device in the first place without obtaining opt-in consent from iPhone users.

Whether Apple will be compelled to seek that consent from iPhone users remains to be seen. The company planned to update iOS 14 to let iPhone users opt out of sharing their IDFA, which is a randomly generated code assigned to devices. With the change, iPhones will show a pop-up notice that gives users a choice to stop device tracking after they download or update an app, making it more difficult for advertisers to target them. Noyb claims the change won't make much of a difference in addressing its other concerns about IDFA, CNBC reported.

Social media giant Facebook warned that the updated privacy settings would trigger a 50% drop in revenue for its Audience Network that lets developers use the social network's detailed consumer data for in-app ad targeting. Advertising companies and publishers in France last month filed a complaint with the country's competition authority against the iPhone maker, arguing that few users of Apple's products would consent to be tracked. Their concerns reflected the findings of consumer surveys, including a study by Tap Research that found 85% of consumers would opt out of tracking, making Apple's device identifiers nearly useless.

More than half (56%) of marketers expect to see a negative effect from Apple's planned changes to IDFA settings, an October survey by AppsFlyer found. In addition, 33% of marketers said they were somewhat likely to cut mobile ad spending because of the change, while 19% said they're likely to shift ad spending within mobile, per the study.