Both Tencent and ByteDance, among other Chinese tech giants, are currently testing a new mobile identifier, dubbed CAID, developed by the state-backed China Advertising Association, per The Financial Times. This comes as a very public blow to Apple: It has already been facing a ton of scrutiny over its upcoming Identifier for Advertisers (IDFA) privacy updates and has a lot to lose should it come to a row with China. As of February, iOS held only 20.4% of the mobile market in China, compared with Android’s 78.3% share, per StatCounter. That means there’s plenty of room to grow. Amid its record-breaking fiscal Q1 2021 (the three-month period ending December 31), Apple saw a 57% increase in iPhone sales year over year in China, pulling in $21.31 billion. For context, the company generated $65.5 billion in total smartphone revenues for the quarter.
Apple doesn’t have a sparkling record when it comes to holding Chinese companies accountable to its App Store policies, and those same motivations could create a wider issue when it comes to CAID. Apple, of course, wants to maintain relationships with Chinese companies—much of its hardware is manufactured in the country, and the most popular app in the country, WeChat, is optimized across both Android and iOS. This has led Apple to allow WeChat certain privileges other apps are not permitted: WeChat hosts lite apps called Mini Programs within its own larger app, presenting an ecosystem of social media, messaging, ecommerce, ride-sharing, and other functions that users don’t have to go through the App Store to access. Phillip Shoemaker, app approval chief at Apple from 2009 to 2016, put it this way: “Apple gives a special exception to WeChat that they grant nobody else in the world. That’s puzzling. ... That is like rule No. 1, you can’t have an app inside of an app. They [WeChat] are the only ones allowed.” He further went on to point out that Chinese consumers judge iPhones based on how well they run WeChat, showing just how vital it is for Apple to cooperate with the platform. Perhaps that privilege has emboldened developers, convincing them that the region is too important to Apple to be effectively cut off.
While CAID creators claim the option doesn’t break Apple’s rules, it seems like a stretch, and the implications of yet another form of personal identification on mobile would extend beyond just China. Those testing and backing the new software say it doesn’t uniquely identify the user. However, it technically allows for device fingerprinting—essentially a way to compile specific device attributes (OS, type and version of the browser used, language, and the IP address) to create a profile—which does violate Apple’s new policies barring apps from collecting user information for cross-channel tracking without explicit consent. Apple has already said, “We believe strongly that users should be asked for their permission before being tracked. Apps that are found to disregard users’ choice will be rejected.” However, Apple may be stuck in a muddy situation should Chinese developers take to CAID. As Eric Seufert, analyst at Mobile Dev Memo pointed out, these companies would be banking on Apple not wanting to ban every app coming out of the region.
Still, the issue is that a mobile tracking software like this would not necessarily function only in China—after all, many apps run everywhere. For instance, The Financial Times pointed out that a French gaming group was also encouraged to apply for use of CAID, along with several other international organizations. Apple is already climbing Mount Everest with app tracking transparency, and a loophole this wide would mean the policy starts off with no teeth. As of now, some speculate that Apple might try to work with the CAID developers, since tech companies and the government are so closely aligned in China. But the question remains of how the company could move forward with a geographical exception to privacy when it’s been pushing this campaign as a centerpiece of its brand identity, promising that consumers will get stricter privacy settings.