Did Apple’s App Tracking Transparency Framework Harm the App Ecosystem?

Cristobal Cheyre, Benjamin Leyden, Sagar Baviskar and Alessandro Acquisti

No 10456, CESifo Working Paper Series from CESifo

Abstract: We study the impact of Apple’s App Tracking Transparency (ATT) framework on the Apple App Store ecosystem. ATT restricted app developers’ access to personal identifiers used to target ads. Promoted as a privacy-enhancing initiative, the change was controversial: various stakeholders, including Meta, criticized ATT and predicted it would harm the app ecosystem. We collect data on every app available in both the Apple App Store and Google Play Store in the eighteen months around the implementation of ATT. We use a difference-in-differences analysis to comprehensively investigate whether the introduction of ATT negatively affected the app ecosystem. We consider multiple possible downstream effects, including changes in the likelihood that developers in the Apple ecosystem create new apps, update their existing apps, adapt app functionalities (such as the use of advertising platforms or payment systems), or withdraw from the market, as well as changes in the number of ratings and average ratings—as proxies for changes in the quality of apps. We find that the number of available apps in the Apple App Store ecosystem quickly recovers after an initial drop following the introduction of ATT. The effect on ratings is nuanced. For existing apps, ATT leads to a minimal decline in the number of ratings received and average ratings. In contrast, the number of ratings for new entrants increases slightly after ATT. We also analyze Software Development Kits (SDK) data for a select number of apps and find a reduction in the use of Monetization and Ad Mediation SDKs and an increase in the use of Authentication and Payments SDKs. Our results suggest that, contrary to pessimistic predictions about the impact of ATT on the app ecosystem, by and large, developers did not withdraw from the market after ATT and instead adapted to operate under the conditions of a more protective privacy framework.

Date: 2023
New Economics Papers: this item is included in nep-pay
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