The Impact of Apple's App Tracking Transparency on App Monetization

Abstract

Recent years have been characterized by privacy regulations amid concerns of exploitative data collection and use, thereby setting boundaries to the data economy that fuels today's ad-funded Internet. An example is Apple's App Tracking Transparency (ATT), which necessitates explicit consent for tracking users outside of an app and potentially undermines advertisement revenues. This paper studies whether and how app developers turn to payments as an alternative revenue source in response to a more privacy-preserving environment. Specifically, we use rich web-scraped data to compare the monetization of more than 580 thousand apps on Apple before and after the privacy change and across platforms with apps on Google in a difference-in-difference setting. The results suggest that the ATT brings back paid apps and reinforces the industry trend toward more in-app payments. However, the small short-run effects suggest that the ATT did not shift the relative benefits much between payments and ads. Yet, more pronounced effects for apps relying on Apple and tracking as well as those newly entering the market, may shed further light on the possible long-run impact.

Keywords: monetization, apps, privacy, tracking, advertisements, payments

JEL Classification: D04, D22, L29, O32