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The app industry’s reckoning with privacy, control, and consumer empowerment

For the first 12 years of its existence, the app industry, like many nascent markets, pursued growth by focusing primarily on investor-pleasing metrics such as user acquisition and revenue generation — oftentimes at the expense of the trust and confidence of the very users that fueled its growth.

But the events of 2020 have left the industry shaken and ready for change.

The year started out innocuous. In the first quarter alone, investors pumped more than $ 700 million into gaming startups, while a number of acquisitions north of the $ 100 million mark — including one for more than half a billion dollars — left us all feeling woozy with confidence. Not even rumors of IDFA deprecation could pose too much concern, as options like SKAdnetwork were floated as alternatives and the assumption was that a solution would present itself.

The first of several seismic shifts to the industry would strike in March, when the coronavirus pandemic sent us all sheltering in place and caused us to start using apps in new and sometimes unexpected ways. Overall app usage increased 40% year-over-year in Q2, and consumer in-app spending surpassed $ 27 billion, a record high. And yet certain segments — like travel, real estate, and mobility apps — suffered enormous losses in traffic and revenue. This was one of the first signs that the new normal would be dictated by consumers’ preferences, not the industry itself.

To their credit, many brands shifted their marketing strategies during COVID-19 to focus on messages of humanity and kindness. Companies across the automotive, finance, health care, consumer packaged goods, and other sectors practically tripped over themselves trying to associate their brands with hope, community, safety, and support. While many of these brands grew their market share thanks to their revamped campaigns, companies that put profits ahead of their customers faced severe backlash and even boycotts as consumers once again flexed their muscles.

Meanwhile, Congress started ratcheting up its pressure on the Big Four tech companies of Apple, Google, Facebook, and Amazon. Among the issues concerning Congress was the tech companies’ mishandling of personal data and their inclination towards anti-competitive strategies — two developments that posed clear threats to consumer interests. These issues would move even further into the limelight in July when Congress called the CEOs of the Big Four into antitrust hearings so they could address concerns that they were merely out for themselves, with dangerous disregard to their end-users’ interests.

Also in July, California started enforcing a privacy law that entitled consumers to more control over their personal information. The California Consumer Privacy Act (CCPA) gives every consumer in the state the right to see all the information a company has saved on them, as well as a list of all the third parties that data is shared with. Much like the EU’s General Data Protection Regulation (GDPR), the CCPA represented a clear shift toward giving consumers their power back. Many believe that the CCPA has paved the way for a national privacy law.

Both the Congressional hearings and the CCPA stem from the ideals that all human beings are deserving of respect, privacy, and control over their digital lives — ideals that should carry the app industry forward into its next growth stage. For years now, the industry’s modus operandi has been to extract as much value from users as possible. It has built algorithms to maximize in-app pricing strategies, inserted too many ads into the app experience, and occasionally crossed the line that safeguards user privacy in order to meet its growth goals. Some tactics were downright illegal and unethical, while others were simply poor judgment. But in either case, a correction was inevitable.

If the events of 2020 have taught us anything, it is that individual rights matter. And the way we treat people matters. Whether it’s something as important as our country’s law enforcement tactics and mask-wearing policies or as relatively inconsequential as our app growth strategies, we need to treat people with the same level of respect that we’d want for ourselves and our families.

This isn’t some holier-than-thou argument, either. This is very much a practical argument. The best way to drive profit in the new economy isn’t to raise prices or churn through users, but to show consumers that you care. The old adage that “consumers vote with their wallets” has never been more true: They will invest their time and money into those apps that they’re confident have their best interests in mind.

Privacy and security are two great places to start. The events of this year have shown that consumers care deeply about these two issues. A survey revealed that two out of three consumers are willing to uninstall an app if it collects information unrelated to the app’s core function unless they receive real value in return. But the industry must go further than that. It must also demonstrate respect for consumers’ time, intelligence, and general humanity.

That means no more SDKs that collect user data for unknown reasons. No more sneaky subscription offerings. No more misleading advertisements. And for Pete’s sake, no more selling user data to third parties. It means providing genuine value at every turn: in how you communicate your value proposition with honesty and transparency, in how you deliver on that value, and in how you keep the promises you make.

The correction is probably long overdue. Innovation that focuses too narrowly on driving revenue and user growth is shortsighted. But when we innovate with a focus on the user experience and keep user rights top of mind, the possibilities are practically endless.

Corporate social responsibility is nothing new. Throughout history, organizations that contribute to larger societal goals have reaped benefits ranging from greater brand recognition and better reputations to increased sales and customer loyalty. But in this day and age — and in an industry that has lost consumer confidence for its past misdeeds — social responsibility is the only way it can regain that confidence.

The winds of change have come to the app industry. The events of 2020 have shown that consumers are in the driver’s seat. From the platforms and their measurement partners to app developers and all of the ad networks, monetization companies, and SDK providers that support them, the time has come to put consumer interests before their own.

Benjamin Chen is the EVP & GM, global developer relations, at Tapjoy, a leading mobile advertising and app monetization company.


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