Everybody wants a piece of Apple these days. And I’m not talking about iPhones, iPads, Macs or any other device consumers love them for. The folks coming for Apple aren’t folks, it’s companies like Facebook and Google because of the changes Apple is making to allow consumers of apps running on their Apple devices to have more control over the data that gets created from them using these apps.
In response to this move, companies providing ad platforms that use that data collected by mobile apps to connect businesses to prospective customers are feeling the heat, and reacting in a variety of ways. Google announced earlier this week that it will stop collecting Identifier for Advertisers (IDFAs) for the iOS apps that currently use it for advertising purposes, once Apple’s new policy goes into effect. This will allow Google to avoid showing Apple’s tracking permission prompt in its iOS apps.
But it’s Facebook that has been the most visible and vocal proponent of Apple’s policy change, taking out a full page ad in the New York Times, stating that this move would adversely impact millions of small businesses who use digital advertising platforms that run off of the data created by consumers using apps to connect with prospects in a cost-efficient manner. There is even speculation that Facebook might eventually sue Apple for anticompetitive practices.
But are these moves by the tech titans about protecting customers? Or protecting small businesses? Or their own profits and business models? Considering roughly 98% of Facebook’s revenue comes from advertising, where pretty much all of Apple’s revenue comes from selling devices and services. Or does the reasoning behind their positions and moves even matter, considering what’s at stake in terms of how customer data is used?
With all that hanging in the balance, I had a really interesting conversation on what Apple’s move (and Facebook’s response to it) could really mean for small businesses and the consumers they seek to engage with. Raju Vegesna, Zoho’s Chief Evangelist and a leading proponent of customer data privacy rights, and marketing technology expert and industry analyst Anand Thaker, joined me to discuss the issues at length on a recent LinkedIn Live conversation. Below is an edited transcript of a portion of our conversation. To hear the full conversation check out the embedded SoundCloud player.
Raju Vegesna: When I first saw the ad, ironically on New York Times, the first thing that hit me was, “Damn, these guys are endorsing Apple. This is a testament to Apple doing the right thing.” That was the first thing that I felt, because now when an advertising company, and of course Facebook is an advertising company, complains that the new rules imposed by their platform restricts their advertising, then the privacy side of it is done right.
So, there are two angles here. Facebook is taking the small business angle, but Apple is taking the consumer angle. And the consumer is also the consumer for small businesses. Which means, I think Apple is doing certainly the right thing here. It’s actually a simple choice. You pay them for when you buy a product or service, you’re paying with money or you’re paying with data, in either case you’re paying.
Now, what Apple is doing is forcing the apps to ask users to decide how they want to pay. “Do you want to pay with your data or do you want to pay with money?” Currently users don’t have a choice. Apple is saying they need a choice, and I like that option better. Currently it has been an open season of tracking, and now the restrictions are coming in. And the restrictions never existed on the website back in the day. Thanks to GDPR and others, now the vendors or website owners are asked or required to ask users permission on whether they can accept certain cookies, mandatory cookies versus tracking cookies and whatnot. But that option never existed to apps, it was restricted to websites. Now Apple is taking that, bringing in the new option of asking the user whether they can be tracked within the apps. The entire concept is the right move.
I would go one step further and say, every vendor should do it, even for web apps. And currently it is an open season when it comes to web app tracking. And I fully support that model of providing, of letting the user pick the way they want to pay, pay with money or pay with the data. And I think we’ll have to see how this evolves, but end of the day, it is about giving users the choice, that choice that they never had in the past.
Anand Thaker: It’s an incredibly complex situation and not just because of the companies, but how do we as a society decide that we want to dictate that engagement. And there are a lot of stakeholders involved that we can all empathize with. We can empathize with the coffee shop owner that spoke about, “We’re just trying to survive. We’re trying to figure it out.” Facebook happens to be a platform that works for us. And if Apple restricts or creates some gates that we have to follow or maybe more overhead, it could be a challenge.
Apple has been around for decades, and they have always built around what their community wants from them. And they have learned over and over again, what backlash feels like, particularly days of when Jobs departed Apple many years ago, and then he returned, and there was some of the culture they set up from the beginning. But that’s one of Apple’s greatest strengths, is ensuring that people adore Apple because they recognize the consumer or the customer’s preferences in how they do things.
Normally Apple is one to be, “Let’s go for what makes it easier for people to do,” whereas they’re taking a very much of an approach, “We’ll, take something… We’ll add some gates in here because we believe the statement of the importance of privacy regarding customer data.” But again, those numbers really tell everything about why each has taken the stance that they’re taking, even with Facebook heading right into what will potentially be more political and policy discussions they’ll have in front of Congress as they start to settle in and after COVID starts to navigate its way into some level of normalcy, whatever that might look like.
And Apple has already taken that stance some time ago, and now they’re starting to institute this over time. So, it’s not… I just want to share with everybody, this is not easy because there’s so many very important people who are involved, and that’s not including Facebook or, and Apple shareholders or the people that work there, it’s really these consumers and how we want to engage ourselves. What’s important to us to do that.
Brent Leary: Does it matter that Apple may have ulterior motives? If the end goal or the end result is better protection for customer data privacy, does it matter if Apple tends to benefit more than, and may even hurt their competition? Or is it just, it’s the right move to do it because it’s the right thing? Whoever wants to take that.
Raju Vegesna: I think if you’re listening to Apple’s maybe alternative motives and whatnot, end of the day, Apple knows their customers. Take me, I pick Apple because I respect the fact that they respect privacy. And that is the reason I stick with a Mac or an iPhone, and I don’t use any other browser other than Safari. Again, all of these because there’s a privacy angle in there. That doesn’t mean that Apple is right all the time. In fact, I sometimes question their privacy stance itself because they cannot run an ad network like Search Ads that they do, and then claim privacy because inherently, that conflicts with the business model. The moment you do ad network, while it is completely based on tracking an app, you cannot say they are privacy friendly and they respect user privacy, and then run an ad networking [inaudible 00:07:03], and try to make money.
So, Apple is no saint either, but at least among the vendors that currently exist, they have a customer base that is picking them based on their privacy stance. And this is yet another move that helps them keep that current status.
Anand Thaker: Yeah. Their future growth is defined by their culture and what they prioritize. We live in a day where, how you publicly stand as a company, defines whether, what kind of audience you’re going after. And there’s no necessarily good versus evil kind of situation. It’s more of what kind of choices, again, back to the choice of where, which audience are you going to go after? I want to remind folks, I’ve been spending a lot of time trying to empathize what it’s like to be a small business, to try to start up a store, start up a website, honestly it’s been a while. And I’m a bit embarrassed that I’ve had people certainly hired who were far better at it than I am, do a lot of stuff for the ventures I’ve had in the past. But I think it’s incredibly important that there’s going to be so many people who really need to be able to go online. And one of the reasons that so many people can start businesses today is because it is easy to do so.
Brent Leary: Oh, so let me take the other side and say, what about Facebook and their stance from the small business perspective? We heard from the small business guy, particularly in the current time where a lot of small businesses are struggling to survive. Is this the right time for Apple to make a move like this? Because it is already a tough thing right now, small businesses are going through, adding this onto it at this particular time. Is that something that we should take into consideration and say, “Hey, this might be a good thing in the long run. Maybe we shouldn’t try to do it right now”?
Anand Thaker: I’m sure there’s going to be research from Apple that says Apple’s route is the better way to go. Right, quality over quantity. And then there’s going to be Facebook’s research, which will generalize to say, quantity is better than quality. But I don’t think we really know which way will really enhance a small business who is struggling. Again, Apple has been very good at making things incredibly easy, regardless of what new gates or new obstacles, not obstacles, but new policies that they put into place. Yes, they get criticized, they address them, and they push forward. So, if Apple does make it straightforward in a way for small businesses to provide that permission-based capacity, if you were in love with the brand and you’re in love with your local coffee shop, you’re probably going to go through those no matter what. And if anything, you’re probably building a level of trust in that capacity.
Now, is that the same if a business decides to go to Facebook? Are you bad business because you go to Facebook? It’s not necessarily the case because you could still treat the data that you have in a certain way. So, I almost take it as, is it the platform’s responsibility or how much of the responsibility falls on the platform to enable these small businesses to address their customer data privacy, the way that they would like them to. Is Facebook going to even offer opportunities for someone to say, “You could opt in or out,” and by default maybe say, “Well, you just assume you’re on the Facebook platform, trust Facebook”? And then obviously vice versa with Apple where, “Hey, we’ve got these permissions that you’re required as a developer, but if they love your stuff, they’re going to get through it and we’ll try to make it as seamless as possible while still informing your user base about what’s being collected and how it’s being used.”
Raju Vegesna: And make no mistake, this is not about Facebook standing up for small businesses. It is about money, period. It is about them keeping their revenue and increasing their profits, period. And if that means using small businesses to communicate that because it resonates well, and that’s essentially what’s going on, let’s cut to the chase. Okay. And then it is not about free as in freedom, it is about free as in a business model. And that is also what the discussion was about in the ad in the New York Times. They seem to confuse between the both frees, and maybe deliberately so, but that is the direction Facebook is. And also, there are a lot of businesses that will also claim that the ad prices went up. And interestingly, during the same time, the state of Texas files a lawsuit against Facebook and Google about colluding, and that may have resulted in prices.
Then I’m sure you can find a lot of case studies about advertisers who are paying a lot more and who may have lost business because of those increasing online digital advertising, because of probably monopolies that are there in the industry. So, there are other aspects of it we should not ignore in here as well.
Anand Thaker: If I could respond real quickly to that, right. Not to say that I defend Facebook by any means, right, by stating this, but again, as a small business owner, and I know you know this as well, just because I know I’ve heard you evangelize, I’ve read many of your things. And obviously empathizing with small business or people who are not even ready to be in small business who need to survive on being able to leverage technology. Sometimes it needs to be achievable to even accomplish that. And if unfortunately, or fortunately, if Facebook is an easier route, yes, you’re right. Perhaps Facebook is using that as a business model choice and growth choice with their positioning and Apple’s doing the same thing. And that’s where the war is happening with this that’s coming up.
But a lot of small business users, they don’t really have a lot of understanding about all of these, the nature of a lot of these things. And it’s unfortunate that they’re using small business as an example about why their position matters, but at the same time if we look at the flip side of the coin, they really don’t know. And so, are you going to really fault a company or a small business or a solopreneur or someone potentially surviving or growing to not use Facebook because of their choice or not use Apple because of their choice. They’re going to pick what’s going to be best for them in how they approach moving forward, so. But, yeah. Yes, all of this is about money, right?
Again, go back to those numbers which were striking. You’ve got one company that makes money off nothing but ads, and then, almost nothing but ads. And then you’ve got another company who produces products, which certainly has data components to it. And Apple has had its shellacking for data matters in the past, perhaps why they’re taking these positions as well, but they’re just different business models. And Raju, to your point right there, it’s the way that they’re going to decide to make money while being able to create a competitive situation for the other party.
Brent Leary: So, what role does Apple have in … Let me rephrase it. So, small businesses, we know, we just, part of the survey, you’re looking at just the small business segment, a lot of them don’t have customer data privacy policies to begin with, let alone enforced them and really deal with it. I don’t think customer data privacy has been one of the things that they have focused on in building a business. A lot of them right now is just survival. And I think you see that in some of those testimonials. It’s like, “Hey, we’re trying to survive over here, forget about the customer data privacy stuff.”
What role does the government need to play in this to help put some structure around this? Or what role does a company like Apple have in helping businesses make this transition to this opt in model? Because I think in the long run, yeah, this has to happen, but how many companies have to get hurt or left behind? Is there a way that that doesn’t have to happen? Is there a way to minimize that, so that yes, customer data privacy is withheld up, but small businesses in particular don’t have to be martyrs for it?
Raju Vegesna: The regulation comes through later. Does the government has a role to play? I believe so. And as you’ve seen in the past, it comes in at a later point. Just like you’re seeing a, do not call list, pop up, we need a, do not track list, that consumers should have an option to be there. And once it is there, everyone, but no matter who it is, should respect that do not track list. And that is something that, end of the day, gives the power to the consumer. And now, we know that it doesn’t exist. And now, without that, now it is up to vendors to take a stance on this. And over a period of time, when enough vendors take a stance, and the government will eventually come with it. And of course, there are some governments that are more proactive than others, but, so government certainly has a role to play.
And because there has been significant abuse on the privacy and the tracking part of it, it is important for vendors like Google, in this case, Apple, or others to step up and show the path. Otherwise, it becomes… It goes to a stage where the success of the tracking companies or maybe the technology companies will lead to the detriment of the internet. People will no longer trust the system. And that will hurt us all in the long run, if we don’t put things in place.
Anand Thaker: Yeah, I agree. Government’s going to have to … Once you impact everyday lives, and it’s kind of accelerated because of the elections that have occurred, particularly in the United States where a lot of the data models, the customer data usage has been … That trust has been broken severely and very publicly, right. And impacting publicly in a way that was very shocking. A lot of people did not realize that maybe your loyalty card that you might be signing up for has an incredible amount of data, or maybe we knew it and we didn’t care because it didn’t matter because we got something for it, or we got something useful out of it. But now, when people feel like data is being used in a way that is manipulative, or trying to influence us ways that we don’t like, then that’s when it … Obviously that’s going to become a problem.
And that’s when governments typically step in, or government entities, or watch out groups, or different types of groups like this will start to step in. And we’re going to see that even more so, especially in the coming years. When Facebook and Google decided to fight some of the antitrust laws that are coming on, I guarantee you, straightforward of that is going to be all deflected into the data of it because both of them, well, Facebook more so than Google, certainly has a challenge with that … They’ve backed themselves into, “Advertising is where we make all of our money.” So, they’re going to defend that position to a degree. We’ll end up finding a middle ground, somewhere where consumers will be happy with it and/or be content with it, or have to be happy with it.
And businesses, or the platforms will come to some level of agreement about what the right gates, or privacy matters that you would need to… Policies you would need to implement will satisfy any kind of mandate. So, usually governments play sort of a referee in a lot of this, or watch guard groups tend to do this. And we’ll see some sort of middle ground that no one’s going to be happy with, 100% happy with, but it’s going to take, as I see it and as you follow technology, we always do this in waves, right. We come in and we see someone push the boundaries, then obviously someone has to step in and take it. So, we’re in another round of that from robocall days as well.
This is part of the One-on-One Interview series with thought leaders. The transcript has been edited for publication. If it's an audio or video interview, click on the embedded player above, or subscribe via iTunes or via Stitcher.
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Facebook is obviously trying to protect their advertising revenue stream, which is based heavily on the targeting they provide. Apple is trying to position themselves as “the privacy-first device company” which means they’re also trying to make money. The difference is that Apple gets their money up-front in the device purchase where Facebook gets their money over time as you use the platform. Two ways to earn revenue that are at odds with each other.