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By Sebastian Herrera and Patience Haggin 

Apple Inc.'s plan to allow anonymous sign-ins on mobile apps to protect users' privacy threatens to choke off data to companies including Facebook and Google that use the information to track users and sell ads based on their habits.

When the iPhone maker releases its new mobile operating system this fall, apps downloaded through Apple's App Store that offer sign-ups through a third-party social-media account such as Facebook will have another alternative: clicking on an Apple icon to generate a random email address so that users can participate without revealing any personal information.

While the move was broadly seen as positive for consumers cautious about privacy, app developers were less happy. The feature, announced this week at Apple's annual developers conference, could disrupt the ecosystem that has evolved to support a de facto database of market research on consumers.

Facebook and Google, along with app developers, have long used the information they glean to form more robust profiles of their customers. They've used it to tweak apps based on user activity as well as for more targeted, and thus more valuable, advertising sales.

"Apps that are ad supported could see lower revenue because there could be less targeted ads," said Raj Aggarwal, co-founder of Localytics, a mobile-app analytics company.

Companies can use an email address to find that user somewhere else -- from a previous search for something on an app, for example -- and build out the user's profile.

As big technology companies are plagued by privacy concerns and consumers are increasingly aware of their vulnerability, Apple has tried to cast itself as an island of security. In March, Apple released an ad touting the privacy of its iPhone. The tagline was: "If privacy matters in your life, it should matter to the phone your life is on."

Apple's App Store and Alphabet Inc.'s Google Play dominate the marketplace, with more than two million applications for Apple and more than one million for Google. Apple has complete control over stores on its devices, including digital marketplaces, entertainment apps, food-delivery services and many others that use the third-party login system to create accounts; customers on Android-enabled devices aren't governed by the same rules.

The relationship between app developers and third parties has thrived for years on the convenience of letting users sign in through their respective social-media accounts. App developers would receive either names and email addresses from direct sign-ups, or related info such as gender from Google, Facebook, LinkedIn or other accounts.

Under Facebook's settings, a user can see what data is being shared with specific apps. On Pinterest, that could include a person's birthday, names of friends who use the app and "likes" of products or groups. On TripAdvisor, that could include a person's home town and current city.

But as tech companies have become embroiled in privacy and regulatory issues, user confidence has waned. Google and Facebook have both had highly publicized scandals with millions of users' personal data exposed, and both are under regulatory scrutiny because of their market power. The U.S. Justice Department is preparing a new antitrust probe into Google, The Wall Street Journal reported Friday, and the Federal Trade Commission could open a similar probe into Facebook.

Apple said it won't use the new sign-in feature to profile users or their activity, and it won't log or keep a record of sign-in information. The Apple sign-in option won't be required for apps that lack third-party sign-in services, such as Amazon, Netflix, T-Mobile and others.

A Google spokesman said signing in through its software provides a layer of security the user wouldn't otherwise have, specifically if hackers are trying to get information from apps. Facebook didn't immediately respond to a request for comment.

While Apple's new sign-in will give users more anonymity, it shouldn't take away apps' abilities to track overall trends and users' movement within apps, said Leighton Healey, chief executive at Bootkik, an app that creates "how to" guides.

Apple's proposed privacy revamp for apps "encourages brands to establish relationships directly to consumers and through trust," said Gabe Morazan, product director at Evidon, which says it advises companies on user consent in apps. "They're going to have to find and collect data more directly from the consumer as opposed to using third-party services like Google and Facebook. It lessens the reliance on them."

Apple, which has pioneered authentication factors like FaceID and has touted file encryption and other safety devices on its iOS devices, this week also put up another safeguard involving location sharing. Apple users, who can already opt out of continuous location tracking, now with the new feature can share their location with an app one time only to perform a specific task, and can more easily see which apps are still gathering their location when they aren't in use.

--Tripp Mickle contributed to this article.

(Dow Jones & Co., publisher of The Wall Street Journal, has a commercial agreement to supply news through Apple services.)

Write to Patience Haggin at patience.haggin@wsj.com

(END) Dow Jones Newswires

June 06, 2019 12:58 ET (16:58 GMT)

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