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 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. For this, we primarily use rich web-scraped data to compare the monetization of more than 580 thousand apps active 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 strengthens the industry trend toward more in-app payments, yet the impact is very small. However, a possible long-run impact can be inferred by more pronounced effects for apps relying on Apple and tracking along with results on the extensive margin suggesting users to experience payments more often in the future.

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

JEL Classification: D04, D22, L29, O32