Why Mark Zuckerberg Is Taking the Wrong Approach Against Apple
By now, most people already know Facebook and its CEO, Mark Zuckerberg, are hell-bent on capturing user data and making money off of it (the subject of at least two popular documentaries about it on Netflix). And now, in a bold demonstration of force, Apple CEO Tim Cook has come charging in atop his noble white steed (also available in Space Gray™ and Rose Gold™) to protect consumers. His weapon of choice to defend all of us from Zuckerberg’s big brother empire is a pop-up message in the upcoming update to the iPhone’s operating system that asks users if they want to opt out of Facebook’s creepy cross-app data tracking.
As you can imagine, Zuckerberg isn’t happy about this. He’s battling back with a series of scathing newspaper ads and blog posts criticizing Apple’s tactics as being monopolistic (he might have a point) and bad for small businesses (a more debatable point). The conflict is like watching an episode of HBO’s Silicon Valley that was inspired by Game of Thrones and Mad Men, which would probably be entertaining if not for the very real implications for millions of consumers.
At stake in the war between these two tech titans is our fundamental right to digital privacy. At least, that’s how it’s being portrayed by Apple, which is arguing that tracking our activity to serve us targeted advertising without our direct consent is a violation of user trust and corporate responsibility.
That’s a logical argument for Apple to make since its business model doesn’t rely on advertising. What’s confusing, though, is that Facebook is fighting its privacy battle against Apple by focusing on small businesses. This allows Apple to position itself as the “good guy” protecting us consumers from Facebook while painting Facebook as the “bad guy” who only cares about increasing revenue.
The only real difference between the two companies is their approach to generating revenues.
If I were in Zuckerberg’s position, I’d be making a very different argument. Instead of justifying why infringing on consumer privacy rights is necessary for small businesses, I’d make the case that small infringements on digital privacy are a necessary sacrifice for giving everyone equal access to the internet. Not only is it a more appealing argument because it positions Facebook as protecting consumer interests over business interests, but, from both a business and human rights perspective, it also has the enormous benefit of being true.
As I’ve been reminding my entrepreneurship students for years, the creators and pioneers of the internet and World Wide Web — people like Vint Cerf and Sir Tim Berners-Lee — passionately believed that in order for these digital connectivity technologies to thrive, they had to be accessible to everyone. That’s why someone like Alan Emtage, the man widely credited with having invented the concept of internet searching, sacrificed billions of dollars in future royalties when he chose to not patent his invention in order to make the internet more accessible. And it’s why someone like Jean Armour Polly, one of the first internet evangelists and the woman who coined the term “surfing the internet,” spent her career working to get internet access into public libraries, rural schools, and Native American reservations. These people wanted the internet and web to be accessible to everyone. If any company is guilty of inhibiting that fundamental digital right, it’s Apple.
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Yes, Apple wants all of us to focus on how it’s protecting our privacy. And it’s not wrong. By allowing users to opt out of cross-app data tracking, it’s helping make our tiny pocket computers a little less all-knowing. But we have to remember Apple isn’t doing this for purely altruistic reasons. Just like tracking users and sharing that data is core to Facebook’s business model, Apple’s business model relies on data privacy. Unfortunately, that privacy comes at the expense of equal access.
Both tech giants have a fiduciary duty to their stockholders to generate significantly more money than they’re spending.
To fully appreciate this issue, let’s start by acknowledging that, despite their fermenting animosity, on a fundamental level, Facebook and Apple are similar businesses: They’re both giant, publicly traded technology companies. In fact, beyond their products, Facebook and Apple’s businesses are almost identical. By that, I mean they both have enormous global employee headcounts alongside huge operating overhead, and none of that’s cheap. At the same time, they both have a fiduciary duty to their stockholders to generate significantly more money than they’re spending. As a result, they do whatever’s necessary to keep increasing revenues and growing their respective businesses.
The only real difference between the two companies is their approach to generating those revenues. Facebook’s strategy is to give away its core services in order to get as many users as possible, then it sells user attention to advertisers. In contrast, Apple’s strategy is to charge people upfront for its core services. That’s why your iPhone costs more than what most households around the world earn in a month.
In order for Apple to charge all that money, it has to make its product ecosystem as luxurious and exclusive as possible. Doing that relies on data privacy.
To be clear, I don’t mean Apple is selling privacy as a core feature. After all, as plenty of Facebook employees will remind you, Apple does lots of business in China, a market known for forcing privacy concessions from businesses. Instead, data privacy gives Apple a big competitive advantage within its own ecosystem. That’s because Apple actually collects enormous amounts of user data — probably more than Facebook could ever dream of. It’s just that Apple doesn’t share its data with other companies. Within its own ecosystem, Apple gives its own products a big competitive advantage by keeping data internal and using it to develop more streamlined, premium services. For evidence of this, the next time you’re running out of memory on your iPhone, ask yourself why iCloud prompts you to upgrade your cloud storage limits (for a fee) even though you never installed an iCloud app, but Dropbox and Google Drive don’t.
Facebook welcomes anyone and everyone to its service and, in return, it charges the one thing it knows everyone has and is capable of giving — data. If Facebook wants to help itself, Zuckerberg could do a better job explaining this value proposition.
As we all know, luxury has a price. And when things are more expensive, they’re also more exclusionary. Simply put, not everyone has $1,000 they can give Tim Cook in exchange for a “privacy-protecting” iPhone. In contrast, no matter a person’s nationality, income, race, gender, or any other demographic factor, we all have user data. It’s one of the few — or perhaps even the only — truly universal currencies, something we all create simply by using the internet.
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In this sense, even though Facebook is infringing on our right to digital privacy when it takes our data in exchange for its services, it’s simultaneously supporting our right to equal access. Yes, that access comes with a cost. Servers don’t run for free. Websites don’t code themselves. Facebook has to pay for those things, and it does it with advertising. While I wouldn’t argue this makes Facebook a good company, I do think we have to acknowledge the more nuanced reality of the brewing battle with its Silicon Valley rival. Yes, Apple is protecting consumer privacy, but it’s doing so by putting a giant paywall in front of its services that most people cannot afford. In contrast, Facebook welcomes anyone and everyone to its service and, in return, it charges the one thing it knows everyone has and is capable of giving — data. If Facebook wants to help itself, Zuckerberg could do a better job explaining this value proposition.
Is there a better business model than either Apple or Facebook’s that supports both user privacy for everyone and equal access for everyone? Perhaps. But centuries of entrepreneurial efforts have yet to produce one. Until we find that better business model, the question we need to be asking ourselves as we take sides in the battle between Apple and Facebook is which fundamental digital right do we value more: access or privacy?