Rico's rants: What Tim Cook overlooked

The New York Times has an article by Farhad Manjoo about Apple:

Timothy D. Cook (photo), Apple’s chief executive, delivered a speech last week that raised some eyebrows in the technology industry. “I’m speaking to you from Silicon Valley, where some of the most prominent and successful companies have built their businesses by lulling their customers into complacency about their personal information,” said Cook, who was being honored by the Electronic Privacy Information Center, a privacy watchdog group.
His blistering defense of privacy, which he and other Apple executives repeated at the company’s developer conference this week, was notable. It isn’t every day that you hear a tech executive admit there is an opaque trade-off at the heart of his industry. We users give digital giants access to our most private information, and they shower us with technology we can’t do without. It is an arrangement baked into every decision made in every boardroom in Silicon Valley, and it is a bargain that many of us are uneasy about. Now, finally, here was the leader of the world’s most powerful company asking whether that deal is worth the trouble.
But while Cook raised awareness for digital privacy, his speech glossed over two main issues. For one, he neglected to mention that Apple also collects a great deal of data about how we use technology. While it has more protections for that data than many rivals, the company plainly states in its privacy policy that it does use private data in many ways, including to build and market its own products, and to build its own advertising network. Apple’s most profitable devices sit at the center of a tech ecosystem teeming with businesses that collect our data and if those social networks, search engines, and other free apps didn’t exist, Apple’s products would be far less useful.
Cook also failed to fairly explore the substantial benefits that free, ad-supported services have brought to consumers worldwide. Many hundreds of millions of people now have access to more information and communication technologies because of such services.
An Apple spokeswoman declined to comment.
The fact that Apple goes out of its way to include free services like Google search in its iPhones and iPads suggests that it agrees with the rest of the tech industry and many users that ad-supported services can, on balance, be good for the world. The question to ask is not whether we should ever use those free services, but rather whether, when we do use them, we are given enough information and disclosure to be able to make those decisions rationally.
“There are timeless principles around fair dealings with consumers,” said Nuala O’Connor, the president and chief executive of the Center for Democracy and Technology, a tech-focused think tank. “And the first and main thing is, does the customer know what’s happening to them?” She argued that, if companies were transparent and honest about how they use people’s data, customers could freely weigh the benefits and costs of online services.
In his speech to EPIC, Cook offered a much starker, and less practical, view of privacy. “We don’t want your data,” he said. “We don’t think you should ever have to trade it for a service that you think is free but actually comes at a very high cost.”
That bold pronouncement got me wondering whether Cook uses a different iPhone from every iPhone that Apple has ever sold me. On my iPhone, Google is right there in the search bar, by default. Microsoft’s Bing is built into Siri, and Facebook and Twitter beckon me from the sharing menu.
If Apple really didn’t think that its customers should trade their data for free services, you’d guess that it would build its own ad-free web search engine for its devices. But Apple does not do so. Instead, it sells off the search bar to ad-supported search companies. Analysts at Goldman Sachs say that Apple’s current deal with Google is worth billions; at least indirectly, then, Apple benefits financially from Google’s ad-gotten gains.
And that’s not all. When I go to Apple’s App Store, I’m presented with a bevy of free apps that are supported either in whole or in part by ads. This vibrant marketplace works in Apple’s favor: the more free apps there are, the more useful the iPhone becomes. That dynamic explains why, in 2010, Apple created iAd, its own advertising network meant to foster the ad-supported app marketplace. iAd lets marketers target users of Apple’s devices based on their purchases from the iTunes store, purchases that Apple of course tracks by default. (You can use an ad-supported search engine like Google to find instructions for opting out.)
There’s nothing terribly wrong with any of this. Yes, there are downsides to the ad-supported tech industry, and, yes, privacy advocates and tech insiders like Cook should continue to push the entire industry to more stringently protect our data. But it would be insane to argue that we haven’t seen benefits in return for this data. Anyone who uses devices like the ones Apple makes can see that ad-driven businesses like Google, Facebook, and Twitter have improved people’s lives in major ways.
Among other things, ad-supported services give us instant access to more information than was ever stored in the entirety of the world’s libraries just a few decades ago. They also create systems that allow for instant communication and organization between more than a billion people. They are helping to provide life-changing miniature computers, also known as phones, to people in developing nations for about fifty dollars each. They’ve given us artificial-intelligence supercomputers that can instantly translate languages or recognize speech. And, indirectly, they’re creating upcoming wonders like self-driving cars and balloons that wire up the globe in Internet access.
Cook is fond of arguing that “when an online service is free, you’re not the customer; you’re the product”. That view is simplistic because it overlooks the economic logic of these services, especially the idea that many of them would never work without a business model like advertising. Services like social networks and search engines get substantially better as more people use them, which means that the more they cost to users, the worse they are. They work best when they’re free, and the best way to make them free is to pay for them with another business that depends on scale, and advertising is among the best such businesses.
Cook is right to promote Apple’s privacy policies. Apple places more restrictions on the use of data than other tech companies. This has been especially true recently after Apple moved to institute more rigorous security measures after an embarrassing hacking last fall in which female celebrities’ photos were stolen from their iCloud accounts.
Apple’s newer privacy and security initiatives, including its decision to encrypt your iPhone data by default in a way that makes it virtually inaccessible to the government, are laudable. At its developer conference this week, executives made the case that they could create services based on data about how you use your phone without sending that data into the Cloud for analysis. This, they argued, was far safer than Google’s practice of combining all your activities into a single dossier housed online, that could be used to create more services but also to help advertisers.
“I’m not saying Apple is perfect, but I think on privacy Apple does compare favorably with Google,” said Marc Rotenberg, the executive director of EPIC, the group that honored Cook. Rotenberg pointed to a number of areas in which ad-supported Internet companies have played loose with users’ privacy; Google, Facebook, Snapchat, and Myspace have all signed settlements with the Federal Trade Commission after misbehaving with data.
But it is also worth noting that Google and Facebook do not actually sell people’s data to advertisers, as Cook suggested they did in his EPIC speech. (As with Apple’s ad system, they allow marketers to target you based on your profile.) In many areas of security and transparency, Google has been ahead of Apple. For instance, Google offered two-factor authentication of cloud-bound data before Apple did.
Apple’s business model also comes at a cost. Services that are sold as part of its hardware are usually hampered by lock-in and limits of reach. iMessage and FaceTime promise end-to-end encryption, which will prevent anyone from ever snooping on your conversations. But iMessage and FaceTime work only with other Apple devices because Apple has little business interest in building encrypted chat for people who can’t afford iPhones.
So what to do if your friends can’t afford privacy? You’re not out of luck. Apple has made it easy for you. If you’re okay taking the risk, download an ad-supported messaging app from the iPhone’s App Store.