Friday May 06, 2011

✦ Google vs. Apple vs. Privacy

I’ve had these thoughts in draft form for a while now, but after reading this post on the latest Google Chrome ad I figured now’s the time to share. I agree, the ad is kinda creepy. It’s trying to mimic the emotional-family appeal that Apple is known for, but it draws strange attention to how much information Google stores on its servers about your life.

The consolidated.db “scandal” that hit Apple a couple weeks back provoked an impressive (if misguided) flurry of discussion about user privacy. When you have congressmen calling you out for tracking young children, you’ve hit quite a nerve. As the dust settled, the public realized that this is par for the course for all kinds of products and services.

Apple and Google both know a lot about you. But their sources of revenue affect how they view your privacy.

For Some Values of “Free”

Google works hard to subsidize it’s products with revenue streams that don’t come from the user. They leverage this well1 and provide a lot of value. I’m a Gmail user and a big fan of their two factor authentication scheme. Users love their services and who can beat the price?

But, while their products come free or insanely cheap by comparison, this isn’t a zero-sum game. It’s only “free” in a monetary sense for the end user. The advertisers are Google’s direct customers. They pay Google to know as much about you as possible. You’re a resource that Google uses to attract customers by giving you—your information and attention—to them.

You Paid How Much?!?

It’s vogue to ridicule Apple for their high prices2. But they charge what they think their products are worth, and people pay with enthusiasm. They leverage this well and provide a lot of value.

As Horace Dediu points out, Apple’s profits are impressive. They’ve figured out how to make money in an industry that is declining (PC’s), how to drive interest in a new area (tablets), and be the most profitable player in the hot smartphone market—while holding a meager market share.

But more significantly, there’s no abstraction layer here. The revenue stream comes straight from you and me. We pay the hardware price and 30% of app store and media sales. Apple’s users are their direct customers.

Don’t Track Me Bro!

Google’s gaff with Buzz and their pushback against the California do-not-track bill follow from their revenue goals. And to date, they are the only major browser vendor holding back on the new cookie blocking standard. Google is at war and it doesn’t make sense to undermine a strong revenue stream.

Apple doesn’t have the incentive to gather the kinds of information about you that Google does. I don’t think their rules for opt-out are at all surprising. As developers, we’ve long wanted access to the customers who buy our apps, but Apple keeps that data locked up.

I’ve heard a lot of people calling for Apple to provide their new “iCloud” service completely free. Can you imagine Apple subsidizing it with ads? Of course not! They may figure out some way to subsidize it with other parts of their business, but I wouldn’t be surprised at all if they offer some level of service as a subscription. They are very good at making the user the direct customer.


I’m not trying to make a case that Apple is a company driven by goodwill or that Google has finally turned evil. There are much more primitive forces in play. The direct customer—the one who pays—calls the shots.

I think Google does care about privacy. Of course they do, because they know that people will stop using their services if they push the information gathering too far. But where is “too far”? They push past what is comfortable and then back off. Apple isn’t above reproach, but their source of revenue pressures them to hide user data from outside commercial interests better than Google.3

  1. There’s good debate about whether Google can keep this up given the shift away from search toward apps and social discovery, but that’s not necessary to evaluate here.

  2. Ignoring for the moment that the iPad is one of the most competitively priced tablets on the market.

  3. This assertion, of course, assumes that their business models remain the same. Google is charging for things like business accounts and Apple is trying out iAds, but these experiments haven’t played out and aren’t affecting the bottom line yet.