A ban on using apps to collect data in order to personalize advertising would significantly reduce the spectrum of available apps and the number of updates, according to a study by the Technical University of Munich (TUM) based on the ban concerning Android apps for children. The findings can assist companies in defining their business models and policymakers when regulating targeted advertising.
Most smartphone apps are free. The providers finance them with advertising, often with what is referred to as targeted advertising: The apps evaluate data such as usage behavior and the user's location and even photos and messages in order to display advertisements custom-tailored to the individual user. This practice draws criticism as a violation of privacy, and there have been many calls to ban it. The EU Digital Services Act will tighten regulations on targeted advertising starting in 2024, and there are similar plans in the USA. Companies are objecting to restrictions and argue that without the income generated by personalized advertising, it would be impossible to continue offering many apps and there would be no incentive to develop new products.
Prof. Jens Foerderer and Tobias Kircher of the Professorship for Innovation and Digitalization at the TUM Campus Heilbronn have for the first time conducted an empirical investigation of how the disappearance of by personalized advertising would impact the spectrum of available apps. In their study they analyzed the effects of a 2019 ban of targeted advertising which Google instituted in its Play Store affecting Android apps intended for children. The researchers compared the situation one year before and ten months after the ban.
