The recent iOS 14.5 update has allowed users to prevent apps from automatically using tracking identifiers to track them. This is heralded by Apple as a “fundamental human right” and criticised by Facebook as “interfering”.

It’s tempting, of course, to see this as the latest in a long line of two behemoth American corporations arguing, each with the protection of their own brand and revenue stream foremost in their minds. They have marketing budgets higher than the GDPs of many countries, and use them to convince us that what they fight for is beneficial to us, when the truth may well be otherwise.

The use of Tracking Cookies

Well, that truth is of course more nuanced than either Apple’s or Facebook’s soundbite-friendly positions. Tracking cookies aren’t inherently evil, nor are they a panacea.

Let’s start by explaining what the argument is all about. Tracking cookies allow a third party to log what you do on certain websites and apps which integrate their technology. They can see behavioural information such as what products you browse, what you search for and what you buy. They can also find your location, though not precisely – usually down to a town or county, but often the data is not particularly accurate. And importantly, it’s all anonymous.

The data collected can then be used to help target ads to you. This is done in two ways.

1.) Advertisers using affiliate websites

Firstly an advertiser can use a spot on an affiliate website to advertise products that you have browsed on their own site. You browse hair straighteners on John Lewis; the next time you visit your favourite ad-supported news site, John Lewis will advertise those same hair straighteners back to you. This is called re-marketing. It’s valuable to sites you browse (and apps you use) because they get to advertise stuff they know you’re already interested in, so their ad revenue increases. It’s probably better for you, too, because if you’re going to have to see ads, then you might as well see ads for things you’re interested in, right?

People sometimes find this a bit creepy, though. It looks a bit like John Lewis is following you around. But what’s clever is that it’s actually all achieved anonymously. John Lewis doesn’t know who you are, the advertising agency doesn’t know who you are, and the news site neither knows who you are nor even what advert was served to you.

2.) Clever algorithms 

Secondly, given enough information over time about the sorts of sites you visit, information you consume and products you browse, clever number crunching can churn out adverts for products likely to be of interest to you. And therefore more relevant ads can be served, again increasing revenue to the site or app you use, and again all done entirely anonymously.

So what happens when you reject tracking cookies? Then none of the above is possible. In the short term that will mean you see less relevant ads (but not fewer ads). In the longer term the sites and apps you use will earn less, which could well cause them to struggle.

It costs huge sums of money to create and maintain an app. Many apps – from the most popular ones to those from small indie developers – rely entirely on advertising revenue, and this model is accepted by both producer and consumer. A world without tracking cookies is one in which this model may simply not work for vast numbers of apps.

So who is right – Apple or Facebook?

Neither. It is not necessarily coincidental that this disruption is beneficial to Apple. They make nothing from ad-supported apps, but they do take up to 30% cut on apps with in-app purchases or subscriptions, and so have a vested interest in driving apps to that model. And as for Facebook, I can’t imagine their threat of charging for Facebook / Instagram for example is in any way realistic as they have plenty of other revenue streams.

As always, it’s consumers and small businesses who lose out, not big corporations. The consumer because they have to pay for something that was previously free; small businesses because in many cases ad revenues are likely to far exceed what they can earn by charging their users. Do consider this when next deciding whether to allow tracking cookies.