One of the biggest changes in iOS 14.5 is App Tracking Transparency. This is both a consumer-friendly and controversial feature that ensures that developers must ask users for explicit permission before tracking them on apps and websites for ad targeting.

Apple has a dedicated support page for developers who have questions about how this feature should be implemented and what is allowed.

Developers of free apps are bracing themselves for this change, as it could seriously shake up their ability to monetize. When faced with the choice of allowing or blocking tracking, the majority will choose the latter; according to AdWeek, up to 68% of users are expected to take advantage of this feature once it is launched, potentially dealing a serious blow to the free app economy.

This analysis is from mobile marketing firm AppsFlyer, which tracked 300 apps on 2,000 devices, clearly a small fraction of the roughly 2 million apps and ~900 million iPhones in active use. Dating app Bumble said in its S-1 filing that it expects opt-ins to be less than 20%.

In a January report to Mobile Dev Memo, analyst Eric Seufert estimated that Facebook could take a 7% revenue hit from Apple's App Tracking Transparency feature.

However, the actual revenue impact of this change is unknown; a report by Advertiser Perceptions suggests that about 58% of companies are shifting budgets from the Apple ecosystem to Android and connected TVs. It is important to note, however, that App Tracker Transparency is not the same as ad blocking.

Ads are still allowed, but they are not personalized based on history on other apps or websites. The impact on click-throughs and eventual revenue depends on how clever the contextual ads are. Just because an app doesn't know the websites you visit doesn't mean it can't infer your preferences and interests based on the apps you use.

In any case, the long-term impact of this change is not clear. It is possible that the decrease in revenue will encourage more app makers to incorporate in-app purchases or make their apps paid from the start.

A release date for iOS 14.5 has not yet been confirmed, but we do know that a release is imminent, as Apple has begun rejecting apps that do not follow the new tracking rules. It is likely to be released this month, but it may take time for app designers to adapt to the new tracking preferences of iPhone users.