Apple, having survived the vicissitudes of the tech economy, may understand the potential risks better than its erstwhile rival.
It is sending a message that, in order to protect its own brand and franchise, it is perfectly willing to sacrifice others.' JL
Christopher Mims reports in the Wall Street Journal:
While Apple hardly has a monopoly in the smartphone market it has extraordinary sway as gatekeeper of the closed internet (the App Store): It can turn off whole chunks of the internet for its entire user base. Facebook’s practices regularly make a mockery of Apple’s efforts to protect the privacy of those who use its devices. By bringing a gun to a knife fight, Apple reminded the world what power it has over not only other major companies, but anyone using a phone, tablet or computer bearing its famous logo. When the combatants control massive tech platforms, it isn’t just about one company fighting another.
Apple delivered a disciplinarian smack to two of its biggest rivals this week. Facebook Inc. FB +0.37% and Google soon won a reprieve, but it’s unlikely to end there.
The battle is, at least on the surface, about protecting our privacy. So why does it feel like we, the consumers, will continue to get caught in the crossfire?
The latest fighting erupted after news that Facebook was distributing a market-research app through a program Apple intended only for developers. Users opted in and were paid to give Facebook access to everything on their phones, from encrypted chats to what other apps they used.
Apple’s retribution was swift and arguably disproportionate: It temporarily shut off all of the developer iPhone apps at both Facebook and Google, which has a similar research app. The move wreaked havoc at Facebook and disrupted work for Google employees.
By bringing a gun to a knife fight, Apple reminded the world what power it has over not only other major companies, but anyone using a phone, tablet or computer bearing its famous logo. When the combatants control massive tech platforms, it isn’t just about one company fighting another.
Apple and Facebook have been engaged in a cold war for years over the treatment of user data. While Facebook is lately changing some of its ways, it has long made money off of its users’ information. Google, a subsidiary of Alphabet Inc., GOOGL -0.93% collects potentially even more data about its users to fuel its ad business, but is more easily given a pass because of the utility of its services, from Gmail to Google Maps.
Meanwhile, while Apple hardly has a monopoly in the smartphone market—only half of all active smartphones in the U.S. and a fraction of devices world-wide run its operating system—it has extraordinary sway as gatekeeper of the closed internet (aka, the App Store), not just over other companies: It can in theory turn off whole chunks of the internet for its entire user base.
Tech giants regularly harm consumers in the course of battling each other. When Amazon refused to carry Google’s Chromecast and Google Home smart assistant, Google retaliated by blocking access to YouTube on Amazon’s Fire TV streaming devices.
“We’re entering this world where sellers can so deeply interfere with users and their devices that we may live to regret that,” says Chris Hoofnagle, a professor at the University of California, Berkeley, who teaches information privacy law.
Sheriff Cook
Chief Executive Tim Cook may have thought he was doing the world a favor by playing top cop to Facebook’s data-harvesting practices. Some have even suggested that Apple should go one further, and boot the Facebook app from its App Store.
Mr. Cook has been largely silent on similar practices at Google. An analyst at Goldman Sachs estimated that Google paid Apple around $9 billion in 2018 for the privilege of being the default search engine on the iPhone’s web browser. (Apple does not collect any revenue directly from Facebook.)
Had Apple not penalized Google in the latest skirmish, it would have risked appearing grossly hypocritical, especially in light of its own updated App Store rules, rolled out in June, aimed at limiting future data collection and ad targeting.
But Apple is an uneven protector of our privacy. The App Store remains full of apps that aren’t nearly as careful as Apple is with the use of our data. For example, vague permissions on at least one app, WeatherBug, allowed developers to gather location data and sell it in ways that were obscure to users. (The city of Los Angeles is currently suing the maker of the Weather Channel app over a similar issue.) Will Apple clean out more apps in the coming months?
As much as Apple has a right and even a duty to police what runs on iOS, exerting too much control may hurt the company in a class-action lawsuit currently before the U.S. Supreme Court, which alleges the App Store is a monopoly. While the lawsuit focuses on pricing and the fact that customers can’t buy apps for iPhones anywhere else, Apple probably doesn’t want to cultivate the image of an autocratic ruler. Determining what its users can and can’t download is unlikely to help its case.
Privacy Please
As early as 2014, Mr. Cook said in an interview, “Our business is not based on having information about you. You’re not our product.” The company has been beating the privacy drum ever louder since then.
Last spring, news of the Cambridge Analytica scandal—where Facebook user data was leaked to third-party developers—brought the two companies into direct conflict. Mr. Cook criticized Facebook’s data collection and buildup of detailed profiles without users’ knowledge. Mr. Zuckerberg defended his business as “the only rational model” to serve an audience that includes people who can’t afford to pay. Facebook has never offered a paid version of its service.
The challenge for regulators is that every time there’s a new revelation about how Facebook handles user privacy, it risks delaying prosecution by the FTC. As each development arises, it adds a potential wrinkle to the FTC’s case against the company.
“I think it’s as complex as the Mueller investigation,” says Mr. Hoofnagle.
“We know we still have a lot of hard work ahead of us,” Facebook Chief Operating Officer Sheryl Sandberg said in the company’s earnings call Wednesday. “Protecting people’s privacy and showing them relevant ads are not at odds,” she added.
For several years, an app called Onavo was available in Apple’s App Store. It was offered as a tool to protect users from snooping, yet like other similar virtual-private-network apps, it gave its creators the ability to monitor all of the internet traffic coming and going from the user’s device.
Onavo was originally a market-research app that sold data to any group that could use it—from tech companies looking to understand competitors to hedge funds looking for signals that might move markets. Then Facebook bought the Israeli startup in 2013 and subsequently used it to discover just how popular Whatsapp was, which lead to its acquisition of the company.
Although Facebook’s use of Onavo wasn’t a secret, Apple only banned it from the App Store last August, after its new rules were in place.
Last month, Apple went so far as to splash a giant billboard across the side of a building in Las Vegas to let attendees of the annual CES tech conference know that “What happens on your iPhone, stays on your iPhone.”
But as Mr. Cook has implied, Facebook’s practices regularly make a mockery of Apple’s efforts to protect the privacy of those who use its devices. And Apple has far more to lose than Facebook, says Stephen Beck, founder of cg42, a management-consulting firm that helps companies deal with privacy and related issues. In its most recent survey of more than 2,000 people, only 24% of respondents said they trust Apple to protect their data, down from 40% in March 2016.
This could reflect an overall climate of mistrust of Big Tech, but since Facebook has long polled in that range, it shows that while users largely accept that Facebook is an ad-powered data harvester, Apple must continue to earn users’ trust.
The story isn’t over. Apple will continue to grit its teeth over Facebook, and Facebook will continue to extract valuable data from iPhone users.
Yet the complete vacuum of public input or regulatory oversight on both companies’ influence should be a reminder that in wars between great powers, it’s everyday citizens who stand to lose the most.'
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