Today, the Bundeskartellamt sent Apple its preliminary legal assessment (or statement of objections) regarding its App Tracking Transparency Framework (ATTF).

Since the ATTF was implemented in April 2021, app providers in the iOS App Store have been required to secure additional consent from users prior to accessing specific data for advertising purposes. However, the ATTF’s rigorous stipulations apply exclusively to third-party app developers, while Apple is exempt from these requirements.

The Bundeskartellamt’s preliminary assessment suggests that this exemption may contravene the specific abuse control regulations for large digital enterprises (Section 19a (2) of the German Competition Act) and the EU’s abuse of dominance provisions outlined in Article 102 TFEU.

Apple maintains a vast digital ecosystem that, through its various services, interconnected devices, App Store, and Apple ID, affords the company considerable access to user data pertinent to advertising. Apple leverages this information to offer advertising space for tailored advertisements within its App Store, leading to significant revenue generation.

Personalized advertising is also crucial for other companies offering free applications, many of which compete with Apple’s offerings in the App Store. This is particularly relevant for numerous providers that, unlike Apple, lack extensive and detailed user data. However, the ATTF significantly complicates the ability of competing app publishers to access the user data necessary for advertising.

The main issue at hand is whether Apple is allowed to impose more stringent standards for user consent requests on third-party service providers than it applies to its own practices. The preliminary assessment by the Bundeskartellamt indicates that such measures could be classified as discriminatory treatment and self-preferencing, both of which violate competition law.

According to the relevant data protection regulations, app developers must secure user consent before accessing user data. The ATTF stipulates that for third-party entities, access to data is contingent upon users consenting to the use and aggregation of their data across different companies. This consent is solicited through a prompt that appears when a non-Apple application is launched for the first time, in addition to the consent already mandated by existing prompts. Access to the Identifier for Advertisers (IDFA), which Apple provides to identify devices and is crucial for the advertising sector, also depends on this consent.

However, these rules do not apply to Apple when it comes to utilizing and combining user data within its own ecosystem (first-party tracking). While users can limit Apple’s use of their data for personalized advertising, Apple is exempt from the additional requirements imposed by the ATTF.

Moreover, the consent prompts for Apple’s applications and those of third parties are notably different. The current format, particularly the language used, in the prompt for Apple’s applications tends to encourage user consent more effectively than the ATTF prompt for third-party applications.

The Bundeskartellamt has highlighted three key aspects that may lead to Apple favouring its own applications over those of third parties, thereby hindering competition among relevant market participants.

• The ATTF defines “tracking” solely as data processing for advertising across various companies. However, the current findings indicate that ATTF’s stringent rules do not encompass Apple’s own practices of aggregating user data from its ecosystem—including the App Store, Apple ID, and interconnected devices—for advertising purposes.
• Third-party applications may present users with as many as four consecutive consent prompts under the ATTF, whereas Apple’s applications limit this to a maximum of two. Additionally, these prompts do not address Apple’s own utilization of user data across its services, commonly referred to as first-party tracking.
• Apple’s consent prompts are structured to incentivize users to permit Apple to process their data. In contrast, the consent prompts for third-party applications tend to guide users toward declining data processing.

Apple positions ATTF as a measure to enhance user privacy. However, the privacy benefits for end users appear minimal, while the impact on competition and the reinforcement of Apple’s market dominance is substantial. Many observers regard the ATTF as a significant setback for third-party mobile advertising, further entrenching the data dominance of companies like Apple and limiting competition and consumer choice throughout the Apple ecosystem.