Three ways technology giant Apple benefits from the privacy controversy
We recently wrote about the impending Apple iOS 14 privacy updates which, with the goal of providing more transparency and privacy control for iPhone users, will severely limit advertiser targeting. As we prepped the blog post to publish, a colleague questioned why Apple would do this in a way that caused so much uproar, creating conflict with advertisers, developers, and other influential companies like Facebook. My answer? Why wouldn’t they?!
A refresher:
- Companies like Facebook and Google make money by selling ads; their products are free.
- Apple makes money by selling (expensive) products; they (mostly) don’t sell ads.
For Apple, a company deeply invested in the privacy controversy as a marketing strategy, the conflict is a “win” as it furthers their desired position in the minds of consumers and the marketplace. It was Apple’s Tim Cook who famously reminded us in a 2014 open letter “when an online service is free, you’re not the customer. You’re the product.”
The concept isn’t new. It’s how the broadcast industry existed for years. Unlike in some regions (the United Kingdom for one), broadcast TV and Radio have always been completely free in the US. Broadcasters made money by selling their audiences to advertisers.
Apple has tried advertising and it hasn’t worked out. But most analysts would agree they’re doing pretty well right now without it. When they do need to revisit the ad-supported model, they’ll try again, on their terms. But for now, Apple sells shiny expensive hardware and services.
Facebook and Google also sell hardware – I own some and love it, but the great waterfalls of cash that rain down on those companies come from selling all the data they have on you.
Because Apple is not terribly invested in mining your data, they can lean into the idea of privacy. They own enough of their ecosystem that building its walls a little higher can be spun into a customer-friendly innovation and market-defying differentiator. In this position, they win in three ways:
- They can adjust iOS 14 and rightly say they are handing their customers more control over their data and privacy.
- They start shining a spotlight on the business practices of their big-tech competitors, which don’t often do well in the spotlight.
- Facebook understandably throws a tantrum, giving Apple’s new privacy initiative a ton of free publicity.
There are many other fascinating and revealing dynamics, many of which are well outside my wheelhouse. For instance, tech developers have mostly lined up with Facebook, who has volunteered to go to battle for them. That’s not a small thing. Apple depends on those developers for their customer experience. But the Facebook/developer alliance presents a natural contrast to an Apple/consumer alliance. That’s a publicity win for Apple as well.
Unlike many of our blog posts, this post is opinion-based, so I’ll close with one more. I believe Apple is making the right bet and time will reveal Facebook, Google, and other free internet services to be on the wrong side of many issues. In the near future, there will be no more convincing consumers to sacrifice their privacy. In the battle over protecting consumer privacy versus collecting more personal information, the eventual winner is clear. That’s a fourth “win” for Apple.
By Grant Cassiday, Executive Director, Paid Media