The latest change in Apple IOS 5 of eliminating the use of the UDID is a huge shift for the mobile application ad market. What this move means is that Apple has changed app targeting from a 3rd party cookie model to a 1st party cookie model. The difference between 1st and 3rd party cookies is that a 1st party cookie can only be used across a single site, or in this case application, and a 3rd party cookie can track usage across multiple applications.
A UDID is a Universal Device Identifier; the most important word in that acronym is Universal, meaning that every application on a single device shares the same ID. From an advertisers or ad networks prospective, a 3rd party cookie is relevant for tracking conversions and for building deep behavioral profiles of a user. The latest wave of audience targeting relies completely on 3rd party cookies. To go one step further, this means all of the high value, hyper-targeted advertising gets eliminated.
The privacy aspect of what they’ve done is increase user privacy and security in applications. The reason is that a UDID has one major difference between it and a 3rd party cookie - a 3rd party cookie can only be read by the platform that sets it, but a UDID is the same for every platform that accesses it. Think about this subtle but significant difference as having a random ID verses a phone number that everyone knows. In the privacy world a phone number is classified as Personally Identifiable Information (PII), which is strictly off limits for ad targeting.
Apple did the right thing by eliminating access to the UDID, but they should have replaced it with functionality more closely related to a true 3rd party cookie. Regarding whether or not Apple will still have access to the UDID, I’d say "yes," and their justification will be that every carrier knows every device on their network so why can’t Apple know its devices. The difference is that carriers don’t know unique devices on other carrier networks, the way Apple will know all Apple devices across carriers. At the end of the day what Apple has done is created a very strong vertical ad network advantage for iAd, allowing them to be the exclusive provider of high value, hyper targeted advertising.
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