A Battle of Wills? China’s Tech Giants Bypass Apple’s Privacy Tool

Following several reports, the largest tech companies in China, including ByteDance (the maker of TikTok) and Tencent, plan to bypass Apple’s new privacy rules that essentially block third-party applications from tracking users’ data. Tencent and ByteDance are now testing a tool known as CAID (China Anonymization ID) that will continue monitoring iPhone users without their permission in a bid to send them targeted mobile adverts on their phones, according to the Financial Times.

A Guangzhou-based ad-tech firm called TrackingIO explained in a now-removed write-up that app developers can use CAID as a replacement to circumvent Apple’s IDFA (App Tracking Transparency) framework as it allows more flexibility to meet business needs. 

Tech companies in China now count on the government to kick Apple out of the country if it starts banning popular apps.

China’s Anonymization ID (CAID)

China Advertising Association (CAA) wants to ensure the continued ability to track iPhone users through its CAID tool after Apple implements its App Tracking Transparency (ATT) framework, allowing users to opt-out of being tracked online.

CAID uses a shared identifier that is not in cognizance with Apple privacy rules – which is the main problem.

Another concern is that if too many apps implement CAID through an ad SDK that supports it, Apple may not want to take the risk of banning them all.

“We implemented this new privacy policy which results in your fingerprint-indexed event data being sent to a Chinese server,” tech analyst Eric Seufert said on Twitter.

Meanwhile, CAA has argued that the system does not directly oppose Apple’s privacy policies.

Apple will introduce ATT with iOS14.5 in the next several weeks. ATT enables users to choose which apps can access Apple’s Identifier for Advertisers (or IDFA). Apps have been relying on IDFA on iOS to see who clicks ads and which apps have been downloaded.

Apple wanted to roll out ATT around the time iOS 14 launched last September, but the outcry of ad companies like Google and Facebook, which may lose ad revenue, delayed the update.

Apple is ensuring that they will have to ask for permission to get tracking information in the future.

“The App Store terms and guidelines apply equally to all developers around the world, including Apple. We believe strongly that users should be asked for their permission before being tracked. Apps that are found to disregard the user’s choice will be rejected,” according to a statement by Apple.

Following Apple’s privacy rules, Chinese tech companies may also count on the country’s government to back them up in this predicament. Anonymous sources told Financial Times that Apple might insist on banning major apps from its store even if its privacy rules are bypassed, and this might also provoke the Chinese government into banning Apple products and services from the country.

Battle of wills between China and Apple

The situation here is a dicey one because China is an important market for Apple. The Chinese market is already worth $44 billion USD in sales to Cupertino in 2019.

Furthermore, the China market surged in 2020, after the successful rollout of 5G tech, which raised the demand for the 5G-enabled iPhone 12. This led to a 57% increase in the sales of iPhones in China compared to the same three months a year earlier.

Considering the rapid sales and success in the Chinese market, Apple may be reluctant to antagonize its substantial market.

Apple’s weaknesses in China were seen last year when former US President Donald Trump banned Tencent’s WeChat from the App Store. Placing a ban on popular apps like WeChat from the App Store would lead to a decline in Chinese iPhones’ sales by more than 25%, said analyst Ming-Chi Kuo. Luckily for Apple, Laurel Beeler, a San Francisco judge, blocked the order by Trump’s administration before it was enacted.

According to the Financial Times report, Rich Bishop, chief executive of AppInChina, a leading publisher of international software in China, believes that Apple might “make an exception for China” since the tech companies and the government are “so closely aligned.”

But how Apple deals with all these issues during the rollout of iOS 14.5 this month remains unclear. It is easy enough to deny IDFA access to apps that don’t yet prompt ATT users.

For apps that use CAID, Apple has to take a stance if it wants to roll out the new feature in China.

Apple has denied it would grant any exceptions. This means that the Chinese market may not be spared regarding the privacy rules set by Apple.

But, if Apple turns a blind eye to CAID to avoid a debacle, this might result in a China-shaped hole in its new ATT privacy strategy, which any company can gain entry into.

Not just Chinese apps on CAID

CAID is not only an issue for Chinese app developers. Companies outside China, including a French gaming company, are interested in using CAID. Many other international companies are also showing interest in CAID through their Chinese subsidiaries.

CAID is currently in a free demo phase for selected companies in recent months. According to the Financial Times, “two people briefed on the issue” stated that Apple knows about the CAID tool and has “so far turned a blind eye to the issue.” Apple can detect and stop the CAID tool, but it might not want to cause problems the Chinese government:

“Three people with knowledge of briefings between Apple and developers also said the Cupertino, California-based company would be wary of taking strong action, despite a clear violation of its stated rules if CAID has the support of China’s tech giants as well as its government agencies.” 

Nevertheless, when iOS 14.5 is released, all iPhone apps will have to ask for permission before using an IDFA number to track your activity from app to app, which is a crucial feature that most companies like Facebook use to sell targeted advertising to businesses.

(Feature photo by Hands off my tags! Michael Gaida from Pixabay)