Saturday, January 28

Apple prides itself on protecting our privacy better than anyone else. And it’s going gold with that message

Apple protects users’ privacy more and better than any other technology company. We do not say it: it is that that seems to be at least the popular belief. One that the company has been able to instill in us and that it insists on over and over again in its product presentations. Self-proclaimed champion of our privacy, Apple certainly does it better than many others. But while he’s doing it and bragging about it—because his business doesn’t depend so much on it—he’s accomplishing something even more important: destroying his rivals.

sticking out chest. “At Apple, we design our products to protect your privacy and put you in control of your information.” That is one of the clear messages from Apple on its official website. Tim Cook does not stop talking about the subject: in January 2021 he described privacy as “one of the great problems of our century”.

More recently, he visited the United States Congress and pushed for new laws to protect privacy. The speech sounds laudable, but 1) it comes from a company that can afford to do it, and 2) it’s addressed to a country known for its allergy to privacy—indeed, almost every country in the world is—and its taste for throwing balls out in this matter.

Apple and the fallacy of privacy: how to protect it is the perfect excuse to earn more and more money with its products and services

Apple’s business is not data. Contrary to what it seems with companies whose business model is that of advertising —Google, Facebook/Meta, Twitter, etc—, at Apple, revenues come from its hardware (iPhone, Mac, iPad, Apple Watch) and from the services created around them, whether or not they are exclusive to those devices (Apple TV+, iCloud, App Store, Apple Music, etc).

These devices and services collect information from users, of course, but as explained in Fossbytes, the use that Apple makes of them is different from that made by Google, for example. In addition to taking advantage of this data to improve their software and services, they use it to show advertising, yes, but it is very limited advertising: one that appears only in the App Store, in the News application and in the Stocks application.

In Cupertino they collect data, yes, but much less. A recent study revealed how Google, Twitter, Amazon and Facebook collect far more types of user data than Apple, while a slightly earlier study showed how Android sends 20 times more data to Google than iOS sends to Apple. Once again the reason is clear: the business model of the Cupertino company is very different from that of those competitors.

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how to sell burgers. Apple does not sell this data to third parties, although it has had problems with it in the past. The company only takes advantage of this data to show advertising in its own ecosystem, but Google does not do it either: both companies collect data to show contextual and targeted advertising without sharing that data with third parties.

Fossbytes’s example was clear: If McDonald’s wants to advertise a new hamburger, it will want to show those ads to users searching for recipes on Google or reading about food blogs on Apple News. What McDonald’s does is pay Apple and Google to show those ads to those users: these companies know who they target, but they don’t share that information with others. Thus, these data are not sold directly, but they do sell the fact that you are one of their users, and, therefore, a target for advertisers.

Apple doesn’t know who you are. Although Apple collects data, Apple and many others say that the data does not allow the identification of specific users. Here the well-known concept of differential privacy is handled. Apple brags about it, but it was Microsoft who created it and Google who also uses it.

Differential privacy is a statistical system that allows data to be collected and analyzed without compromising the identity and privacy of those who provide it knowingly or unknowingly. For this, techniques such as data hashing (to encrypt them), subsampling (which takes only part of them) and noise injection (which adds, for example, random data that obfuscates sensitive or personal data) are used. That technique helped to strengthen his message, but the turning point was due to another reason.

App, I forbid you to track me. In April 2021, iOS 14.5 arrived, and it did so with a critical change: the so-called App Tracking Transparency (ATT). This feature allows the user to decide whether or not the applications installed on their device can track their activity in other applications and on the Internet in order to display targeted advertising.

The introduction of this feature sparked a war of words between Tim Cook and Mark Zuckerberg, who harshly criticized Apple, arguing that the company was taking advantage of its position of dominance. In fact, on Facebook they ran full-page print ads in several American newspapers. He did not care: Apple has kept it and even Google has taken steps to offer a similar option on Android.

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Take the money and run. Apple’s pro-privacy argument falls a bit under its own weight when you learn that Google paid Apple $15 billion in 2021 to make sure it’s the default search engine in Safari on iOS.

That is another proof of how much our data is worth, and as my colleague Antonio Sabán reminded me, it is true that putting another default search engine such as DuckDuckGo or Bing would be 1) complicate things for many users and 2) in the end most would change to Google in any case. So when the latter puts that money on the table, Apple seems to have no problem taking the money and running.

Google, Amazon, Facebook and Apple want a better world, but one that does not affect their business

Publicly destroying its rivals. Just a few months after offering this option —it is the users who decide at any time whether to deactivate this tracking— the impact for various companies was evident. Meta confessed that his income would have grown in the fourth quarter of 2021 if it had not been for that change.

Others affected were Snap or Peloton, and while Cook, without mentioning his rivals, indicated that what he was doing is giving control to users. “We don’t make that decision, we just ask users if they want to be monitored in their app usage or not. And of course, many are deciding not to.”

Oops, wait: Apple Search Ads grows like foam. The other consequence, as CNBC pointed out last year, is that Apple Search Ads’ advertising business has become a benchmark. Shani Rosenfelder, head of content at AppsFlyer, an online advertising analytics firm, explained how Apple “has become the number one player and they’ve overtaken Facebook, which was dominant on iOS in the past.” Zuckerberg’s company also did it with highly questionable methods.

For now, Apple greatly limits where it shows advertising, but experts believe that the presence of advertising will end up being greater and greater and will be spent in other scenarios. They have already started testing Apple TV+ in the US during broadcasts of baseball games, for example. The company failed with its attempt to offer ads in third-party applications (it tried with iAd when it launched the service in 2010), and although it seems unlikely that something like this will end up coming soon, control of its ecosystem means that Apple could finish getting much more out of this area.

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The success of using privacy as a marketing strategy. Our colleagues at Applesfera already remembered how in the past some analysts seemed concerned about this apparent lack of ambition in data collection. That, they said, could hurt them and cause Apple to miss out on the “machine learning revolution.”

The truth is that disassociating itself from its competitors allowed the company to take advantage of privacy. Not only with initiatives such as ATT, but with those wise decisions to make their devices no longer need a connection to the cloud for certain areas that previously did: the facial recognition system of Photos is carried out “on-device”, in the own device, locally and without connection to the cloud, for example. The same with Siri, which in iOS 15 gained abilities without the need for a connection to data networks.

Suddenly privacy was no longer just privacy: it was a marketing strategy. One that has allowed Apple to boast that they are the ones that protect the privacy of users the most.

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Control and ecosystem. These measures are one more element of Apple’s clear philosophy aimed at control and strengthening its ecosystem. In this case, that privacy-based marketing strategy also helps sell more iPhones, iPads, or Apple Watches, which in turn helps sell more services, apps, and games (and more advertising embedded in those services). And while, of course, to apply the famous and controversial Apple tax that allows Apple to take its 30% commission (half in some cases) for those sales.

Brilliant Tim. Sparkly.

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