Economic Impact of Opt-in versus Opt-out Requirements for Personal Data Usage: The Case of Apple’s App Tracking Transparency (ATT)

Abstract

Major privacy initiatives allow users to either opt-in or opt-out of a firm’s use of their personal data. This article examines one of the world’s largest privacy initiatives, Apple’s App Tracking Transparency (ATT), introduced with iOS 14.5 in April 2021, to understand the differences in tracking and economic outcomes between both approaches. ATT requires each app to obtain explicit consent to track users across other publishers’ apps (tracking if users opted in); before ATT, Apple permitted tracking under implicit consent (tracking unless users opted out). Our analysis of three proprietary daily-level data sets—corresponding to billions of ad impressions (“traffic”) across 19 countries—outlines that ATT reduced the share of trackable (versus untrackable) Apple traffic in the United States by 55 percentage points, from 73% to 18%. Given the observed 51% higher prices for trackable (versus untrackable) ad impressions, this decline translates to a 21% fall in ad revenue from Apple users for publishers. In other countries, the decline in tracking rates ranged from 24% to 59%. Cultural differences account for differences in the tracking rates across countries.

Keywords: Apple, App Tracking Transparency, Privacy, Online Advertising, Targeting, Personal Identifiable Information (PII), Identifier for Advertisers (IDFA)

JEL Classification: k20, m30, d80