Balancing user privacy and tracking
Break things, but not if they involve user privacy
User privacy and security have become increasingly important. App developers are responsible for complying with privacy laws such as GDPR in the EU or CCPA in the US. 10 years will pass before you understand all of it. However, poor privacy practices can lead to a bad reputation and reviews that are hard to reverse. On the other hand, being privacy-conscious will help you gain the trust of your users. It can be a unique selling point, especially for sensitive apps such as those targeted at children, health, or finance. And it's not that hard.
Choosing a US-based app analytics tool in EU
US-based app analytics tools like Mixpanel, while offering great functionality, may face challenges in guaranteeing GDPR compliance. Some reasons include:
- Data storage and processing: It's difficult for US-based companies to ensure that user data remains within the EU, as required by GDPR. Data transfers between the US and EU can be subject to legal challenges and changes, as seen with the invalidation of the EU-US Privacy Shield.
- Differences in privacy regulations: US-based companies are subject to different privacy laws, which may not align with GDPR requirements. Compliance with both US and EU regulations can be complex and challenging.
- Legal jurisdiction: In case of disputes or penalties, EU customers of US-based analytics tools might face legal challenges due to differing jurisdictions.
In January 2022, the Austrian Data Protection Authority decided that the use of Google Analytics violates the GDPR as it is “subject to surveillance by U.S. intelligence services and can be ordered to disclose data of European citizens to them”. Italian, Danish, Finnish and Norwegian Authorities agreed with them. These rulings are just the cherry on top. We don't want to spread fear, uncertainty and doubt as a marketing technique. If you're targeting Europeans, you should consider how these rulings affect you and the U.S.-based services you use. Choosing a European-based tool may make it easier to comply with privacy regulations and reduce privacy concerns.
App developers' responsibilities
As an app developer, you must ensure that your app complies with privacy regulations. This includes:
- Creating a clear and transparent privacy policy that outlines how you collect, use, and store user data.
- Implementing security measures to protect user data from unauthorized access, disclosure, or destruction.
- Obtaining user consent for data collection and processing when collecting personal data for tracking purposes, and providing options for users to manage their data.
Opt-in rates and Apple's impact on user privacy
Apple's App Tracking Transparency (ATT) framework, introduced with iOS 14.5, requires apps to obtain user consent before tracking them across apps and websites. This change has led to lower opt-in rates, which are around 25% (Statista, 2022). Consequently, app developers relying on traditional analytics tools that require user consent for tracking may lose valuable insights due to the limited data.
However, analytics tools like Lumin that don't store personal information of end-users don't require user consent if no personal data is saved. This means you can still collect valuable data from all your users, including those who didn't agree to tracking. Having comprehensive insights into user behavior can help you make better decisions and ultimately improve your app's performance.
In conclusion, balancing user privacy and security is crucial for app developers to maintain user trust and avoid penalties. Ensure your app is compliant with relevant privacy regulations, choose analytics tools that respect user privacy, and remember that having access to data from all users, even those who don't opt-in, can provide valuable insights for improving your app.
Penalties for non-compliance
Failure to comply with privacy regulations can result in significant penalties. The authorities don't care how big or old the company is. They differentiate between Tier 1 and Tier 2 penalties. For Tier 1 violations (e.g. using a third party and not mentioning it in the privacy policy) 2% of annual revenue or €10 million, whichever is greater. For Tier 2 (e.g. cross-border transfer of personal data) up to 4% of annual revenue or €20 million, whichever is greater. Recent examples include:
- In 2020, the dating app Grindr was fined €10 million by the Norwegian Data Protection Authority for sharing user data without proper consent (Datatilsynet, 2021).
- In 2021, Google was fined €50 million by France's data protection authority, CNIL, for GDPR violations (CNIL, 2019).
- In 2022, the Irish Data Protection Commission (DPC) fined Instagram €405 million for breaching GDPR in relation to the handling of children’s data (Reed Smith, 2022)
- In 2013, the FTC fined Path with €700,000 for collecting children's personal information, and the negative press left a lasting mark on its reputation (CNet, 2013)