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Google Follows Apple in Plan to Limit Tracking on Smartphones – Tech News Briefing

This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.

Zoe Thomas: This is your tech news briefing for Thursday, February 17th, I’m Zoe Thomas for the wall street journal. We’ve talked a lot on this show about the privacy changes that apple made to its iOS operating system and how they’ve upended the digital ad industry. Well, now Google plans to adopt new privacy restrictions on Android. Is it another nail in the coffin for mobile advertising as we know it? On today’s show reporter Tripp Mickle who covers Google will be here to discuss what we know about Google’s plans, how the changes could affect other big tech companies and why privacy advocates may not be celebrating just yet that after these headlines
Yesterday, lawmakers put forward a new measure that could hold social media companies responsible for harm their platforms caused to children. A bipartisan build dub to the kids online safety act would require social media platform to give miners options that would protect their information and disable potentially addictive product features like algorithmic recommendations. It would also prohibit companies from collecting data on teens 16 and younger. Right now the age limit is 12. And it would give parents new controls to help them spot harmful behaviors. The bill was introduced the same day in independent panel. The future of tech commission released its own report calling for some of the same measures. Our tech policy reporter John McKinnon says the panel’s proposals are part of its calls for a broader national tech policy.

John: At one level, this commission really appreciates that technology innovations of the last 30 years or so have been a just tremendous boom to the US and to the US economy. But they do have this concern that the US edge might be slipping away not because of a lack of innovation, but because of a lack of oversight and regulation. And when the excesses of the current internet landscape get to be too severe then other countries are going to take over the job of regulating.

Zoe Thomas: You can hear more from John on yesterday’s am edition of our sister podcast. What’s news. Some big tech earnings are still coming in. Airbnb reported record revenue for last year. The home rental giant benefited from a travel industry that was battered by the pandemic as consumers sought out suburban rentals as getaways. Here’s CEO Brian Chesky on the company’s earnings call.

Brian: Remote work has untethered many people from the need to be in an office. And as a result, people are spreading out to thousands of towns in cities, staying for weeks, months, or even entire seasons at a time.

Zoe Thomas: Airbnb also said it expects ongoing growth as pandemic restrictions continue to lift and it projected revenue in its current quarter to reach nearly one and a half billion dollars. DoorDash saw orders climb and revenue reached nearly 4.9 billion last year. That’s up 69% from the year before when the company benefited from high delivery demand during the early stages of the pandemic. DoorDash is the biggest food delivery company by sales in the US and it’s expanded its offerings beyond takeout meals to include groceries, alcohol and pet food. It’s also been working on ways to cut costs by increasing efficiency. Yesterday, we talked about some of those efforts. So if you haven’t heard that yet, be sure to cue it up next.
And semiconductor maker at Nvidia posted record quarterly sales as it moves on from its fail takeover bid for chip design specialist, Arm. Semiconductor makers have continued to see strong demand as the chip shortage persists. Nvidia said it had over $7.6 billion in sales and $3 billion in profit last quarter, more than double the same period a year ago. All right, coming up. What could Google’s planned privacy changes mean for the mobile ad market we’ll discuss after the break
For years, every time you opened an app on your phone, you are identified behind the scenes by a string of unique numbers and letters that allowed tracking technology to learn more about you. That knowledge of course, is what advertisers use to target you with specific ads, but their ability to do that is getting cut back. Some regulators and privacy advocates want to see less tracking online. And the makers of smartphone operating systems are getting on board too. Apple has already changed its system, giving users the choice to opt out of being tracked by apps on their iPhones. And on Wednesday, Google said it plans to introduce new privacy restrictions to cut back on tracking across apps on Android phones. So what could this mean for advertise and users joining us to discuss this is our tech reporter Tripp Mickel. Hi Tripp. Thanks for being here.

Tripp Mickel: Thanks for having me.

Zoe Thomas: So can you start by explaining what exactly is Google proposing?

Tripp Mickel: You know, that’s the tricky thing about this. Google is proposing that in two years time, it will overhaul essentially kind of the underpinnings of the digital ad industry on Android smartphones, which account for about 85% of the smartphones in the world.

Zoe Thomas: Apple already took steps to reduce tracking for iPhone users. How are Google’s plans or its perspective plans different?

Tripp Mickel: Google’s taken very different approach from apple. When apple made its decision it said, “Here’s what we’re doing. We’re going to introduce a feature that essentially asks you each time you kind of begin using an app. Do you want this app to track you when you’re not using the app or not?” And that gave people to opt in or opt out of tracking by apps for advertising purposes. Google hasn’t said at all, what they plan to do. In fact, what they’ve said is that much like a federal agency, they’re in a phase of rule making where they’re going to introduce a concept, they’re going to collect feedback from privacy advocates, regulators and app developers, and then by the end of the year, they plan to have a beta version of the changes that they want to introduce to limit app tracking.

Zoe Thomas: What’s the reasoning behind this? Why are the makers of smartphone operating systems taking these steps?

Tripp Mickel: The industry’s been kind of pushed in this direction largely by Europe, which has raised a lot of concerns about the way that apps and kind of the advertising industry, covertly gathers information and data on users, particularly on smartphones and of this. And because of this and because of some of the efforts by lawmakers in Europe to suspend or at least bring some better understanding and some consumer protections to users out there, the two big mobile operators, apple and Google are having to make adjustments to what they’re doing,

Zoe Thomas: Given that Google hasn’t come out with a ton of specifics, how likely is this to alleviate any of those regulatory concerns?

Tripp Mickel: What they’re saying is that their aim is to address and curtail the way that apps gather information covertly right now. If you take them at their word on that, then in two years time, we’re going to basically have an advertising industry that’s going to have to operate and function in a totally different fashion than what it did over the past decade or so.

Zoe Thomas: Yeah, let’s talk about that. Because there are a lot of potential impacts here. What reaction has there been to these plans from the broader online ad industry?

Tripp Mickel: The ad industry, the kind of shrugged at this in part, because it’s going to take two years for it to be introduced. And so, I think the reaction was largely like, “Well thank you for the heads up. And also thank you for giving us time to continue to operate exactly as we’ve been operating.” I think as we get closer and as Google reveals more about what it plans to do, whatever it introduces will be evaluated for how far reaching the repercussions will be for the industry. What apple introduced was Calamus, essentially 80% of people opted out of being tracked on apps.

Zoe Thomas: Do we expect that the ad industry will have any input or that its reaction will affect the rules that Google does come up with?

Tripp Mickel: It will have input. Google said we are going to seek their input. So certainly they’re going to weigh in and provide some feedback. How Google deals with that is to be determined. I mean the other tricky thing that Google has to navigate here, unlike apple, apple the lion share of its revenue comes from selling iPhones, Google 80% of its revenue comes from digital ad sales. So it faces not just the concern of others in the ad industry that it could be self-serving but also the concern of antitrust regulators who could and probably will be watching this for whether or not they’re self-serving and anti-competitive in anything they introduce.

Zoe Thomas: Right. It’s interesting when alphabet Google’s parent gave its earnings last fall, it didn’t seem to be particularly hit by apples changes. And I wonder if that’s feeding it all into its decision to kind of move forward with some privacy changes?

Tripp Mickel: Really, this has far less to do with how apples changes affected Google. It really has to do with like the regulatory environment and the privacy environment and the awareness that has kind of quietly bubbled up over the last several years about how this ad industry on mobile phones worked, the information it was collecting and the consequences of that. For me as a reader of the wall street general, it was really interesting. The work that Sam sheer did on this, where he said some light on how Facebook had written some code that would be embedded in apps like flow ovulation tracker. And that would then feed information back to Facebook, which then could deliver ads that were micro-targeted to a woman who might be pregnant or something like that. And I think that just opened everybody’s eyes to just how this industry can work.

Zoe Thomas: We’ve talked about what this might mean for Google, what it might mean for advertisers. What about for users? Does this fundamentally change the way that they use their mobile phones or the way they see advertising?

Tripp Mickel: We don’t know, unfortunately with Android, what this means because they simply haven’t told us. It’s going to be a long protracted process in which the whatever solutions it comes up with could change multiple times before they actually get to the finish line. That being said, we already know from watching what’s happened for iPhone users, that their experience of using apps is different. If you open an app for the first time, you’re delivered a prompt that asks if you want this app to track you all the time sometimes or never. And you get to select and click which of those three options you want for that particular app and that can affect how that app functions. So if you look at that, there is a possibility that depending on what Google does, that users experience on Android phone could change and that their kind of quote unquote user experience may be different.

Zoe Thomas: All right. That’s WSJ tech reporter Tripp Mickel. Thanks for joining us Tripp.

Tripp Mickel: Thanks so much for having me.

Zoe Thomas: And that’s it for today’s tech news briefing. If you want more tech stories, check out our website, wsj.com. And if you like our show, please rate and review it. You can do that wherever you get your podcasts. I’m Zoe Thomas for the wall street journal. Thanks for listening.