Facebook’s Promiscuity, Apple’s Hypocrisy and the Truth about Market Dominance

The world is mad at Facebook. Reactions range from anger at the company’s “failure to keep our data safe” to outright outrage at their willingness to compromise user data for the sake of their own profit. But one reaction stands apart from the rest for it’s sheer outlandishness and hypocrisy, if nothing else: Apple’s.

Apple CEO Tim Cook wasted no time in bashing Facebook for infringing on it’s users’ privacy. “Privacy is a human right”, he said, adding “we could make a ton of money if we monetized our customer — if our customer was our product. We’ve elected not to do that."

Leaving aside the fact that Apple does in fact make “a ton of money”, with revenues that dwarf those of Facebook by a factor of nearly 6X, the hypocrisy behind these statements is hard to ignore for several reasons:

  • Apple did not in fact “elect not to turn their user into their product”. Rather, it simply failed in its attempts to do so. Apple launched it’s iAd mobile advertising platform in 2010 and even though it never really took off, the company kept investing in it for years before finally shutting it down in 2016. In fact, the launch of iAd was unique in its industry-changing levels of greed. Originally, advertising on iAd required paying a 40% share to Apple and making a minimum investment of $1MM. This was then dropped to $500K, $300K, $100K and, eventually , to $50 (!). Talk about beating a dead horse… Clearly, Apple not making their users into their product wasn’t for lack of trying.
  • The implication that Facebook was overly greedy in their decision making, prioritizing their own profits over their user’s rights is out of place coming from Apple, a company that has perfected the art of corporate greed. We have already seen the incredible terms surrounding the launch of their iAd product, but that’s just the tip of the iceberg. Apple sells a premium product and is the most successful company in the world based on market cap. Its cash reserves are in the hundreds of billions of dollars. Yet all this wealth and success have not shielded the company from accusations regarding poor working conditions in their associated factories, dozens of suicides included. Nor has this success driven the company to repatriate the over $250 Billion in cash it holds offshore, funds that would surely drive social wealth and wellbeing if they weren’t being hoarded for the sole purpose of evading taxes. Apple may be many things — a great product company, an innovator, a company that excels at reinventing itself — but altruistic it is not.
  • Another thing that Apple is not: A customer rights advocate. Apple’s business is radically different than Facebook’s. Apple sells hardware and software, while Facebook sells user data to advertisers. Claiming that one is more ethical than the other is absurd, especially given Apple’s attempts to also sell user data to advertisers. The reality is that Apple simply trades in other user assets to drive its profits. Whereas Facebook sells user data, Apple limits user choice. Much has been written about Apple’s wars with publishers, 3rd party app stores or 3rd party payment processors. The simple truth is that Apple prioritizes its profits over user rights, just like Facebook does.

So are Facebook and Apple evil? Not really. Or rather, not any more evil than any other company out there. Personally, I own MacBooks, iPads, iPhones and even an Apple TV. Some even accuse me of being an Apple fanboy. I am a heavy user of Facebook. Why am I a customer of both companies, given everything I just said about them? Because I understand the tradeoffs and am willing to accept them. I accept the limits Apple places on my choices because I get rewarded for them with an exceptional customer experience. I accept Facebook’s prostituting of my data because in return I get to interact with friends and family around the globe in ways that I could not otherwise do. Would I prefer that both companies tweak the balance a bit in my favor? Sure. But given the options, I accept their terms.

Public companies are hardwired to focus on short term profits and are generally willing to sacrifice quite a bit to achieve their targets. The level of abuses companies engage in is generally correlated to their ability to perform these abuses rather than to their moral compass. And those companies that enjoy a dominant market position simply have more ample opportunity to abuse their users’ rights. We’ve touched on some of Apple’s and Facebook’s abuses in this article, but examples abound across the board: Whether it’s Google’s privacy violations surrounding it’s failed Google Buzz product, Amazon’s anti-competitive practices and poor warehouse working conditions, Audi’s emissions defeat devices or the entire financial services industry’s push of subprime mortgages — there is a common thread uniting them all: a willingness to do whatever it takes to drive profits, sometimes within the confines of the law, sometimes not so much.

What does this tell us about human nature? About where our world is heading? I’ll leave that to more philosophical minds to ponder. For now, I will focus on how I believe we, as consumers, should act given this reality. I believe it is our responsibility as consumers to understand the transactions we are engaging in. There is no such thing as a free lunch, and we must explicitly understand the tradeoffs we are making in dealing with the different corporations we interact with. If a service is free, we are paying for it with our data, i.e. our privacy. If we are unwilling to do that, we should seek alternatives or discontinue our usage of the service.

Expecting Facebook to respect our privacy would be tantamount to expecting Apple to sell us iPhones for $100 or to allows us to install whatever we wanted on our devices. Anybody that is shocked at their data being misused by a company that generates almost 100% of its revenues from selling our data is simply in denial, or lacks the most basic understanding of how an advertising-driven business operates. This is to be expected from unsophisticated users, but is less understandable when coming from consumer advocate organizations such as the Electronic Frontier Foundation. Here is an organization that makes a habit of bashing any company trying to turn a profit, using mostly populist claims that are void of meaning when examined in context. The lopsided views held by this organization (and others) ignore reality and leave little room for corporate profits and growth. From the EFF’s perspective, consumers hold all the cards. Their rights are to be protected at all costs. That is simply an unrealistic, and therefore unhelpful, approach. The EFF should understand the tradeoffs between free services and user privacy rather than trying to make users believe their rights are absolute. Their approach to this matter is reminiscent of their approach to Digital Rights Management technologies in the entertainment space. From the EFF’s perspective, anything that limits the rights users have to their acquired content is a non-starter, because after all user rights are absolute… except they aren’t. Failing to acknowledge the tradeoffs on both sides of the equation — the users and their service providers — does nobody any favors and does not get us any closer to a solution.

Personally, I believe that the market will evolve to a place where these trade-offs are more explicit. Perhaps there will be paid alternatives that ensure customer privacy, or maybe the regulator will force service providers to be more clear and explicit in their communications. But while we wait for this to happen, we should try to focus on understanding the transactions we engage in as consumers, especially as they relate to free services. We need to remember that we will always pay for the services we are provided, be it with cash, data, choice or other assets. And based on that understanding, we should decide whether we accept the terms being offered to us or not.