On Daring Fireball, Gruber comments on Eric Schmidt’s response to Tim Cook’s latest Charlie Rose interview where Tim contrasted Apple vs. Google regarding protecting privacy. Eric’s response was that Tim Cook is misinformed about the security measures Google takes to protect user information from the government and crooks. Actually the issue Tim was talking about was Google’s business model which sells user’s private information to advertisers. Gruber wondered if Eric was being deliberately obtuse. I believe so because it is much easier to try to frame the issue as a security fix than it is to address a fundamental difference in business models. It is not the level of security that is the issue. The problem is Google’s business model like FaceBook’s is driven to share more and more user information to their advertiser customers to generate more revenue.
Apple also announced and was experimenting with getting into mobile advertising, which is a tempting source of revenue, but I suspect they will back off on that because they want to use privacy as a differentiator between them and Google who they consider their biggest competitor. Apple’s main business model is for their customers to explicitly pay for their hardware products. This has the merits of being transparent. Customers know what they are paying for and are clear about the cost. This has been quite successful so far but will consumers continue to support a pay for product value model or will they increasingly be tempted by products/services that appear to be free? Google and FaceBook are taking the approach that consumers will opt for the allure of free and not think too much about how money is being made from users private information.
Both Google and FaceBook lure users with free services while hoping the users remain unaware of the high price they are paying for the privilege by having their personal information sold. Google and FaceBook privacy features further confuse users by suggesting that their information is being protected while in reality the deal documented in fine print buried deep in agreements nobody reads is that Google and FaceBook assert their rights to sell user data to advertisers (based solely on the criteria of advertisers willingness to pay).
True privacy is when your information is not shared or sold without your informed consent. Google and FaceBook take the Big Brother approach which is “trust us to decide to sell whatever of your information we see fit to whoever pays”. How much can users be confident that these services will have their best interests protected when this goes against large corporations maximizing their revenue? This is a definite conflict of interest and it is not hard to guess that the corporation’s revenue interest will take precedence especially when many users are not even aware of the consequences of their information being sold. Eric and his colleague in the interview further confuse the issue by only mentioning how sharing information with service providers can help them provide better service to users. They conveniently leave out that they go beyond using the information to provide services and that their main revenue source is selling the information to companies so these companies can more effectively target selling of products to you.
I am deeply suspicious and skeptical of trusting corporations whose business model success is based on deception and keeping people ignorant on how the company really makes money. A confusing business model that inherently deceives users about what the relationship is with them, what they are paying, and is a conflict of interest (selling to the highest bidder with no regard to the interests of the person whose information it is) cannot be a good thing. The question is, will people become informed enough about privacy to care?