When it comes to data collection, Apple is on the offensive… and, perhaps, the defensive.
There’s no need to read between the lines of Tim Cook’s attack on the data monetizers of the world. As the Apple CEO stated in an open letter posted on Apple’s website Wednesday night:
“We don’t build a profile based on your email content or web browsing habits to sell to advertisers. We don’t ‘monetize’ the information you store on your iPhone or in iCloud. And we don’t read your email or your messages to get information to market to you.”
Although Cook’s communique ostensibly addresses consumers – Cook doesn’t actually mention Google, Facebook or any other of its other big rivals – it seems pretty clear who he has in mind.
“On the first level he’s addressing Google and on the second level he’s addressing folks like Facebook and Amazon,” said Rodger Desai, CEO and co-founder of remote processing payment service Payfone.
Cook also categorically states, once and for all, that advertising simply isn’t all that important to Apple, noting in his letter that only “one very small part of our business does serve advertisers, and that’s iAd.”
He went on to say that the only reason Apple even built iAd in the first place was “because some app developers depend on that business model and we want to support them, as well as a free iTunes Radio service.” (In a very Pandora-like move, Apple will reportedly add targeted local ads to iTunes radio.)
While there’s certainly truth to Cook’s statements – he has mentioned in the past that Apple got into mobile advertising to help developers make money, which, in turn, drives Apple’s lucrative app business – it’s also arguable that he’s being a bit disingenuous. When Apple launched iAd back in 2010, the baseline buy-in for brands was $1 million. Considering Apple ultimately dropped the minimum spend on iAd to a mere $50, it’s possible that there’s a bit of sour grapes going on here.
Apple’s always been very focused on hardware, and advertising might just have been a nut it couldn’t really crack.
“Mobile advertising isn’t easy and it’s a relatively small amount of revenue for Apple,” said PulsePoint SVP Julie Preis, who previously was SVP of product management at mOcean Mobile. “You don’t really hear iAd come up in conversation anymore. It might not be worth the trouble for Apple.”
What is worth the trouble for Apple is selling product. Even Apple Pay, the company’s long-awaited, recently announced and soon-to-be-released mobile payments solution, is really just about selling more product – and sticking it to Google. (Apple Pay is tied directly to iPhone 6, iPhone 6 Plus and the new Apple Watch. The Google Wallet app is available for both iOS and Android.)
“Apple makes so much money off hardware that they can afford to be a little less interested in ad dollars, whereas with Google it’s the other way around,” said Alex Rahaman, CEO of StrikeAd. “Google has to think about what advertisers want because they’re its big important clients.”
And that divide is getting ever wider.
“Apple can say, ‘Advertisers aren’t our customers. Our customers are the people who buy our kit,’” Rahaman said. “Google can’t really say that.”
Apple unsurprisingly also has no interest in monetizing health data derived from HealthKit or transactional data from Apple Pay. As Eddy Cue, Apple’s SVP of Internet software and services, noted during Apple’s iPhone 6 release on September 9: “We’re not in the business of collecting your data. If you go to a physical location and use Apply Pay, Apple doesn’t know how much you bought, what you bought or how much you paid for it. That’s a relationship between you, your merchant and your bank.”
Cook put it more succinctly: “A few years ago, users of Internet services began to realize that when an online service is free, you’re not the customer. You’re the product.”
That one was for you, Google.
“Everything Google has done in the past in the payment space is about mining data,” Desai said. “But when you think about how much money would come from the Apple Pay business model it’s going to be nothing compared to product sales. For Apple, it’s about locking people into buying more Apple products. Tim Cook doesn’t need personal data, he just needs to make sure Apple has great services.”
Of course, one could take a slightly different perspective on the motivation behind Cook’s criticisms: defensiveness.
“It sounds like it’s a fear-based approach to the strength and growth of Android, and it’s a bit odd because Apple historically never had to worry about that,” Rahaman said. “But they’re clearly afraid of Google and Android if they have to position themselves this way.”
Jamie Gallo, president of Wunderman New York, had a somewhat different perspective on the matter.
“Tim Cook is reassuring and protecting the consumer brand/relationship between advertisers and consumers, as well as between Apple and its users,” Gallo said. “That’s the difference between a premium proposition like Apple, and an open source one, like Google. It’s a contract that the public, for the most part, understands that they are making.”
