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The latest iPhone update brings tighter privacy rules for iOS in-app advertising

Apple's latest iOS update gives iPhone users to choice of whether or not to opt into cross-app data tracking, a decision that bolsters privacy but could spell trouble for in-app advertisements.

Apple's latest update for iOS changes the way advertisers can gather data from iPhone users, bolstering the platform's privacy offerings for users but potentially limiting advertisers' ability to effectively deliver ads in apps on the platform.

It's a straightforward change, but one game developers that rely on ad-based revenue should be keeping an eye on given that analysts already predict the change could trigger a short-term drop in ad revenue for the next few years.

Starting with iOS 14.5, Apple will start prompting iPhone users to opt-in whenever an app or game wishes to access their IDFA: a unique code that essentially allows advertisers to track user behavior across apps and websites and deliver personalized ads based on that behavior.

Moving forward, iOS devices will display a dialogue box for any apps requesting access to the IDFA, a notice that the "data will be used to help [the app] build a more customized experience tailored to your interests", and the option to either "ask app not to track" or "allow".

The feature was originally due to launch with iOS 14 last fall, but Apple opted to delay the launch for a few months in order to give developers time to make any "necessary changes" ahead of the rollout. Some companies like Facebook were vocal about the potential negative impact of the change and used that additional time to build their own privacy explainers into the app, displayed ahead of Apple's official popup.

In its own testing from last Fall, Facebook cautioned iOS advertisers and said it saw a 50 percent drop in Facebook Audience Network publisher revenue once building ads using personalized data from IDFAs was removed as an option. Meanwhile, research from analysts at Omdia predict that this change could cause the in-app advertising market could take a 17 percent hit during 2021.

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