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A Look at Apple's War on Big Data and Far Beyond

10. 15  PA  XTRA NEWS


A new report published today notes that Tim Cook has launched an assault on Google and Facebook's Big Data model, even as most consumers remain in the dark about how companies use their personal information. Two different reports and two different privacy centric surveys were recently conducted on the matter with results that provide us with an insightful overview of the matter. The first report is pro-Apple and is titled "Why Consumers Should Care about Apple's War on Big Data." The second report, while not being Apple centric, is one that provides us with a better understanding of the overall issue with in-depth data that we can sink our teeth into. Combined, the two reports provide us with a little more ammunition in understanding the data war that's now in full bloom.


In recent remarks to the Electronic Privacy Information Center, Apple's CEO Tim Cook declared that "people have a fundamental right to privacy." He has begun an assault on the business model of Big Data as currently shaped by Internet giants Google and Facebook.


Apple's War on Big Data began in 2014 when they published "A message from Tim Cook about Apple's commitment to your privacy." Apple quickly followed-up with another Apple website page titled "We've built privacy into the things you use every day." And more recently we noted in a report that "Apple & 140 Tech Companies Sign Letter Urging Obama to Support Encryption."


The Daily Beast report titled "Why Consumers Should Care about Apple's War on Big Data." notes that "It was Eric Schmidt, while CEO of Google, who famously pronounced the death of online privacy in 2009, telling people "if you have something to hide, maybe you shouldn't be doing it in the first place."


The report further noted that "Under Schmidt's watch, Google launched Gmail in 2005, perfecting the business model of providing a free service in exchange for access to user data.


With Mark Zuckerberg at its helm, Facebook has pushed the boundaries of using data collected from its users, such as personalizing advertising copy by including images of your friends, and pushing automatic posts to your social network when you play a song on Spotify."


The Daily Beast report then shifted gears and noted that Apple's Tim "Cook may already have found an ally in University of Pennsylvania's Anneberg School for Communication. A survey managed by the School and released in June found that about 90 percent of consumers do not consider it fair to trade personal data for benefits such as targeted ads and discounts. The researchers produced evidence that the majority of consumers felt resigned to the status quo in which they did not feel in control of their own data.


The UPenn story was picked up by mainstream media, such as the New York Times and Fortune. Natasha Lomas of TechCrunch, a leading online news website that tracks the tech industry, reeled off an invective article titled 'The Online Privacy Lie is Unraveling,' calling the collection of data a "heist of unprecedented scale."'


It was evident that The Daily Beast report clearly sided with the study conducted by the University of Pennsylvania in contrast to the one that was conducted by "Frog" and presented in the May issue of the Harvard Business Review. The Daily Beast stated, "Surveys are not all created equal. In this instance, I find the frog study less credible for a number of reasons.


The frog analysis was based on 900 people across five countries. That is a depressingly small sample, marginally sufficient if analyzed in aggregate. Drawing country-level conclusions with an average of fewer than 200 responses is far below standard statistical practice. By contrast, the UPenn study had 1,506 respondents, all within the U.S., which means it is almost eight times the size of the frog sample."


While I appreciated the Daily Beast's report, their view of the Frog-based survey methodology drove off-course. The Frog Survey states that " in 2014 we surveyed 900 people in five countries—the United States, the United Kingdom, Germany, China, and India—whose demographic mix represented the general online population." I read it as 900 people in each of five countries, not 900 people in five countries. I don't think the Harvard Business Review would have even considered the smaller sampling suggested by the Daily Beast which is absurd. And contrary to the Beast, I found that the Harvard Business Review article to have been much more insightful – though in combination they both provide us with a better overview of the privacy matter.


The Harvard Business Review (HBR) article made some interesting observations and commentary as well. The article noted that "Though some companies are open about their data practices, most prefer to keep consumers in the dark, choose control over sharing, and ask for forgiveness rather than permission. It's also not unusual for companies to quietly collect personal data they have no immediate use for, reasoning that it might be valuable someday.



The HBR report further noted that "To find out whether consumers grasped what data they shared, Frog asked, "To the best of your knowledge, what personal information have you put online yourself, either directly or indirectly, by your use of online services?"


While awareness varied by country—Indians are the most cognizant of their data trail and Germans the least—overall the survey revealed an astonishingly low recognition of the specific types of information tracked online. On average, only 25% of people knew that their data footprints included information on their location, and just 14% understood that they were sharing their web-surfing history too.


It's not as if consumers don't realize that data about them is being captured, however; 97% of the people surveyed expressed concern that businesses and the government might misuse their data. Identity theft was a top concern (cited by 84% of Chinese respondents at one end of the spectrum and 49% of Indians at the other).


Privacy issues also ranked high; 80% of Germans and 72% of Americans are reluctant to share information with businesses because they 'just want to maintain [their] privacy.' So consumers clearly worry about their personal data—even if they don't know exactly what they're revealing.


To see how much consumers valued their data, Frog did conjoint analysis to determine what amount survey participants would be willing to pay to protect different types of information. (Frog used purchasing parity rather than exchange rates to convert all amounts to U.S. dollars.) Though the value assigned varied widely among individuals, Frog was able to determine, in effect, a median, by country, for each data type."



The report further noted that Frog "also examined three categories of data use: (1) making a product or service better, for example, by allowing a map application to recommend a route based on a user's location; (2) facilitating targeted marketing or advertising, such as ads based on a user's browsing history; and (3) generating revenues through resale, by, say, selling credit card purchase data to third parties."


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Frog later noted that their surveys revealed "that when data is used to improve a product or service, consumers generally feel the enhancement itself is a fair trade for their data. But consumers expect more value in return for data used to target marketing, and the most value for data that will be sold to third parties."



While Google isn't seen as the good guy when it comes to protecting our data, the vast majority of those in the study thought that Google deserved a trust worthy rating of 68%. While no data was revealed as to how many in the survey were confessed Android users vs. iOS users, voting Google's trustworthiness at 68% would strongly suggest that there were far more Android users in the study, knowingly or not.




In respect to Apple, the HBR report stated that "Apple has had its share of data privacy and security challenges—most recently when celebrity iPhoto accounts were hacked—and is taking those concerns ever more seriously. Particularly as Apple forays into mobile payments and watch-based fitness monitoring, consumer trust in its data handling will be paramount. CEO Tim Cook clearly understands this. Launching a 'bid to be conspicuously transparent,' as the Telegraph put it, Apple recently introduced a new section on its website devoted to data security and privacy. At the top is a message from Cook. 'At Apple, your trust means everything to us,' he writes. 'That's why we respect your privacy and protect it with strong encryption, plus strict policies that govern how all data is handled….We believe in telling you up front exactly what's going to happen to your personal information and asking for your permission before you share it with us.'


On the site, Apple describes the steps taken to keep people's location, communication, browsing, health tracking, and transactions private. Cook explains, 'Our business model is very straightforward: We sell great products. 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. Our software and services are designed to make our devices better. Plain and simple.'


Its new stance earned Apple the highest possible score—six stars—from the nonprofit digital rights organization Electronic Frontier Foundation, a major improvement over its 2013 score of one star.


In the end, the HBR report concluded that "There is an opportunity for companies in this defining moment. They can abide by local rules only as required, or they can help lead the change under way. Grudging and minimal compliance may keep a firm out of trouble but will do little to gain consumers' trust—and may even undermine it. Voluntarily identifying and adopting the most stringent data privacy policies will inoculate a firm against legal challenges and send consumers an important message that helps confer competitive advantage. After all, in an information economy, access to data is critical, and consumer trust is the key that will unlock it."


This is clearly understood by Apple and it's why the EPIC's Champions of Freedom event in Washington applauded Apple's CEO for his leadership on this matter and why the Electronic Frontier Foundation gave Apple the highest possible rating.


The only thing we didn't learn from either report is how the government should step in with laws to protect consumer's private data from being used without their express permission and to stop many forms of data collection ever begining all together.


While some Republicans will express concern about this issue, they're highly unlikely as the Republican Party to ever vote in legislation that would ever stop their business contributors from collecting data on their customers.


So it will be up to schools to educate students on the dangers of sharing too much personal data with tech companies who are giving them free apps in exchange for their personal data and up to the press to continually expose data mining practices that we should all be aware of. It's a topic that has to be continually debated and our information about this war updated as frequently as possible as this is an issue that will be with us for the foreseeable future.


Yet for now, it's crystal clear that on the issue of privacy, Apple is on the right side of history.


For more on this interesting and important topic of privacy and selling data, read the full Harvard Business Review article titled "Customer Data: Designing for Transparency and Trust."


If this subject matter interests you, then you can also review a report that we published last year titled "Why Privacy Matters."  Why privacy matters is a question that had arisen in the context of a global debate enabled by the revelations of Edward Snowden that the United States and its partners, unbeknownst to the entire world, had converted the Internet, once heralded as an unprecedented tool of liberation and democratization, into an unprecedented zone of mass, indiscriminate surveillance. The report added a TED video presentation by Glenn Greenwald who talked about the flippant remarks made by Eric Schimdt and Mark Zuckerberg about privacy. 


10. 16 PA - Bar - Xtra News

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