Apple and privacy

Just before I start, I’m going to put some ideas out there – not in a ‘here is a grand unified theory’ but rather a collection of observations that I’ve come across and I’ll let you decide what are worth considering vs. worth throwing away.

Not too long ago I wrong an article (link) and I was heading back home tonight having an internal debate in my mind regarding the issue of privacy particularly when you consider how businesses like Facebook, Twitter, Facebook and others rely on collecting user telemetric data to then use it to deliver services, target ads etc. Just before I start I have to disclose the fact that I use separate logins for all my services with the only link existing between accounts are between this WordPress account and Twitter so that when I make a post on WordPress that it is automatically syndicated to Twitter so all my followers can also see what I’ve just recently blogged about. Other than that sort of arrangement I keep all my accounts separate which stops the sort of situation in the case of Facebook and third party access hence the reason why Apple doesn’t allow such integration with iCloud and why Microsoft stopped doing it a few years ago back in the days of Microsoft Passport.

Apple have carved out a niche for themselves over many years as the company that cares about your privacy (side note, I’ll be writing a blog post tomorrow about Apple and their sales decline and what their new direction appears to be vs. what direction they should take) as a point of differentiation when compared to an organisation such as Google whose primary source of revenue is the collection and monetisation of data. Apple talking about privacy isn’t new given that Steve Jobs talked about the importance of asking the customer for permission before getting access to sensitive data and for the customer to know what they’re signing up for ‘in plain English’.

From a pragmatic point of view it is easy for Apple to play the privacy card as a point of differentiation given that the primary engine of their business model isn’t the accumulation of data and the monetisation of that data but rather selling physical products along with services such as Apple Music, upgrades to iCloud storage along with sales of software and subscriptions via the App Store where each transaction Apple takes a cut so there is no need to do what Google or Facebook does.

This strict approach however, as some have argued, has resulted in Siri lagging behind the competition because it restricts the ability to use large data sets stored in the cloud where as Apples approach is to do as much of the processing on the device itself and keep the least amount of data in the cloud. In the case of Google it allows the AI system too not only learn from the information for that specific user but to also use learn using data from all the users that use the particular service which allows the AI to be refined by feeding it more information. Then with that more information then you have demographic such as sex, age, location etc. that can can be used to predict not only based on your own patters but also the patters of people of similar backgrounds and behaviours as well.

So at the moment there is a tug of war between sticking firm to the idea that AI can be completed locally without compromising user privacy but will it always lag when compared to an AI system sitting in the cloud that is able to suck up huge amounts of data and learn at a faster pace simply by the share volume of information? I ask that because customers have a strange habit of saying in surveys that they care about something but when push comes to shove, what they say is important isn’t necessarily translating to a change in behaviour. For example, scandals surrounding Facebook where in the United Stats the number of daily active users has flatlined at 185 million users and in Europe there has been a modest decline from 282 million down to 279 million but that doesn’t include its other ‘properties’ that it owns such as WhatsApp and Instagram, so if there is a concern about privacy it certainly isn’t translating into a major drop off in users (disclosure: I’m on WhatsApp – I’d prefer to use something else like iMessage but my brother and mum use Android phones so here we are). I guess only time will tell to see whether it pays off in the long run – will consumers be happy to sacrifice the the strengths of Google’s approach to AI learning for the sake of privacy or is the whole concern over privacy something that is created by the media (clickbait, column inches and headlines on television) rather than genuine concern beyond “I’m shocked but I’m going to go back to what I was doing before”.

With that being, things may end up start tipping in favour of Apple especially if governments start cracking down on the very behaviours that impact their business model but are concerning to privacy activists. Personally I think that in the case of Google, the impact would be disruptive but Google does have the benefit of having something beyond simply collecting data to serve up ads to provide a given service. For example, there is Google Cloud platform (aka ‘utility computing’ as it was referred to back when Sun Microsystems was talking about it being the future of computing) which recorded a 29% growth in the most recent quarter then add on top of that there is G-Suite, YouTube Premium, the newly launched Google One and I’m sure if Google wanted to then I could imagine them turning other services into subscription – $50 for a wall to wall ad free experience from search through to video etc. would make for an interesting conversation as to how far users on the internet are willing to pay for services if it means zero ads and companies collecting less data for the sake of monetisation. There is also the various other divisions such as selling physical products such as the Pixel phone, tablet, laptop etc. with the capacity to push sales harder than they are especially with the availability to run Linux applications on Chromebooks which opens up the possibility to third party applications thus making them more widely useful.

Facebook however is going to have a tougher time – yes, they have a corporate collaboration platform called ‘Workplace by Facebook” that is $3 per month per user but I don’t see it gaining much traction in the enterprise marketplace. That being said, as of November 2017 there was a filing with the SEC that Facebook was generating $5 revenue per user so that makes me wonder whether there is the capacity for Facebook to offer a privacy centric ad free version for maybe NZ$10 per month butMark Zuckerberg, when asked by members on the Senate Judiciary and Commerce committees  about the idea of having a paid for ad free version – he avoided answering the question by making a statement that was irrelevant to the question  then later admitted that it could be possible. The Washington Post claims (link) that the cost would be closer to $18.75 which is even more stupid because it assumes that a paid version would have the same overhead costs as a free version where the platform service is not only delivered but also all the cost of delivering ads along with the analytics that occur behind the scenes. Wouldn’t it be better to generate less revenue but at a higher margin from regular paying customers than higher revenue with lower margins involving the very things that’ll bring your company under scrutiny and make life for you more difficult in the long run?

Tim Cook has talked about delivering more services this year so it’ll be interesting to see what they are and whether they’re going to be services that are open to all platforms or whether it’ll require an entry point to the platform via owning an Apple device of some sort (such as in the case of setting an iCloud account with an email address). It’ll also be interesting to see how Apple monetise them – will they be happy by having a small subscriber count if it means that it is a more profitable venture (see Apple Music and the direction of preferring paid only options rather than the ad supported model that Spotify use as a gateway to pump up the user base numbers) without the privacy worries? Time will I guess.

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