Apple’s Digital ID Solution Comes at a Cost

The digital driver’s license proposed by Apple, which is finding purchase in a number of US states, will potentially come at a cost to the citizen. Adding ID documents and driver's license to the Apple Wallet app is a new iOS 15 feature, with end-users able to tap their iPhone or Apple Watch on an ID reader at any TSA checkpoint, without requiring the physical credential.

Current plans permit citizens in eight US states to store state IDs and driver's licenses inside the Apple Wallet app on their iPhone. However, Apple will retain complete control over several features of the solution, while the states involved—Arizona, Connecticut, Georgia, Iowa, Kentucky, Maryland, Oklahoma, and Utah—will shoulder the expenditure as it relates to maintenance of the solution.

Details of the relationship between state government and Apple are as follows:

• The digital ID must be offered to every new license holder or renewal at no extra cost to the person applying.
• The solution must be promoted by states to agencies such as local law enforcement or any agency involved in identity authentication.
• Apple retains control over launch timescales and device compatibility while state agencies shoulder the burden for maintaining backend infrastructure, databases, and legislative compliance.
• Apple will determine a timeline for project launch and development roadmap while state agencies must allocate staff and resources to support the project from an operational perspective.
• Not only does the contract mandate states to market the solution, but Apple has universal review and approval power of any marketing material related to the solution.

Apple retains total control over the program, and states must also agree to terms that effectively lock them into the agreement long-term, with states only able to terminate the agreement with Apple's consent or for rational cause: if Apple breaches the contract terms and doesn't correct within thirty days.

It is an unmistakable trend in recent years that there has been a convergence between two parties that have typically run apart from one another but are now becoming more and more entwined. This has resulted in a collision between technology companies and mobile original equipment manufacturers (OEMs), such as Apple and Samsung, and national and local government, two agents which tend to work on very different timescales.

Recently, there have been clashes between government and big tech as companies, such as Google and Facebook, have come under fire in relation to security violations and questionable data practices. It was somewhat inevitable that governments would sooner or later have to tackle the issue of how much influence big technology firms have on citizens lives. Now with mobile OEM’s launching digital identity integration as part of their devices, governments are tasked with answering the question of how to make the inexorable advance of big tech into the arena of citizens identity as frictionless as possible, without compromising on the security of citizens’ data.

It is a challenge to ignore the sheer practicality of permitting citizens to store their government ID on their smartphone devices as it becomes a near ubiquitous solution. Apple, Samsung, and Google began the march towards citizen identity by enabling their digital wallet solutions to store payment cards and loyalty cards for ease of access with merchants supporting these contactless payments. This convergence between private mobile OEMs and private banking institutions worked well as it was a partnership in where everyone won: OEMs can push digital wallet solutions and use them as leverage for partnerships, end-users no longer have a carry multiple cards in their wallets, and retailers gain another payment method that can be utilized.

Mobile OEMs increasingly see their smartphone offerings as a be-all and end-all solution, first by replacing a physical wallet, now by replacing citizens’ ID credentials. While the chain of logic follows well for replacing payment cards and results in a partnership which benefit all agencies, managing the relationship between public interest government and private interest big tech will be much more difficult to manage. Individual state laws will support different levels of big tech involvement in their citizen credentials and data, not to mention international organization data protection laws, such as those of the EU. The agreement Apple has struck with the aforementioned states is somewhat of a landmark, given it is a near capitulation of state government autonomy to the mobile OEM and could prove to do more harm than good in the long term.

Apple and other mobile OEMs still retain the vision of their identity solutions taking off and finding mass adoption but realistically, now that they have entered the realm of government credentials, this is not likely to be the case. Especially given the list of requirements mentioned earlier, many states and countries will see this as far too much of a concession to big tech firms, regardless of the convenience it provides to citizens.

In the arena of government and citizen credentials, new technology adoption can sometimes be extremely slow. Many governments across the globe are only in power for one term, or four to five years, the end result being that any identity program or legislation introduced by a party can easily be overturned upon a change in incumbents, as was seen with the National ID program in the UK from 2006 to 2011. Many will mistake the recent COVID-driven digital acceleration of government services as a long-term trend, but this was performed out of sheer necessity as a government always has a responsibility to safeguard citizens and, in many cases, led to a hemorrhaging of public expenditure to maintain. Governments, outside of unprecedented crises, are slow and lumbering beasts, and this will not play to the tune of rapidly developing big tech companies.

From Apple’s standpoint, the move is an intelligent and logical one. ABI Research also fully expects to see Google and Samsung follow suit in short order with Google Pay and Samsung Pay, respectively.

Ultimately, this boils down to yet another demonstration of how much benefit technology solutions can bring to citizens lives. As big tech has grown massively in influence and scale, they have pivoted away from simply launching compelling consumer products towards developing solutions that improve and streamline the day-to-day lives of their end-users. The next target for Apple, Samsung, and Google is that of how we think of and use our wallets, with a continuation of moving its end users away from the physical and towards their perspective mobile platforms. Just how governments will react to this movement, and what they will be willing to sacrifice for it, remains to be seen.