Lawmakers Press Apple, Google on Privacy

Apple Inc. (AAPL) and Google Inc. (GOOG) defended their handling of user location data and said they do not track individual smartphone customers in response to questions from U.S. lawmakers about how the companies protect consumer privacy.

“Apple is deeply committed to protecting the privacy of our customers,” said Guy “Bud” Tribble, Apple’s vice president for software technology in testimony before a Senate Judiciary subcommittee today in Washington. “Apple does not track users’ locations -- Apple has never done so and has no plans to do so.”

Representatives of Apple and Google, makers of software used in millions of smartphones, appeared in Congress today as lawmakers consider new online privacy rules that could alter how they operate. The hearing was called by Senator Al Franken, a Minnesota Democrat, to review whether use of location-based data violates consumers’ privacy.

“Consumers have a fundamental right to know what data is being collected about them,” Franken said as the hearing began. “They have a right to decide whether they want to share that information, and with whom they want to share it and when,” he said. “And yet reports suggest that the information on our mobile devices is not being protected in the way that it should be.”

New Era

Lawmakers are trying to determine what rules are needed in the new era of mobile devices that are as powerful as earlier personal computers. The iPhone was introduced in 2007 and Google’s Android software is used by companies including Samsung Electronics Co. Ltd. and Motorola Mobility Holdings Inc.

“Smartphones are only becoming more and more popular,” Franken said. “This is an urgent issue that we will be dealing with.”

Apple, Google and other companies use location data to deliver targeted advertising and help customers find nearby businesses. The U.S. market for location-based services, including applications and advertising, is expected to increase to $4.7 billion by 2015 from $1.6 billion in 2010, according to ABI Research, an Oyster Bay, New York-based research firm.

“The rapid growth of mobile products and services creates many opportunities for consumers but also raises serious privacy concerns,” including “invisible sharing of data with multiple parties,” said Jessica Rich, deputy director of the Federal Trade Commission’s consumer protection bureau, said at today’s hearing.

Apple Data Collection

Apple, the world’s largest technology company by market value, was called to testify following an April 20 report by two computer programmers that said the operating system used in iPhones and iPad tablet computers logs users’ coordinates.

Apple responded on April 27, saying that it doesn’t track iPhone users’ locations, while acknowledging that it collects data on Wi-Fi hot spots and wireless towers near the device. The Cupertino, California-based company issued a software update to limit how much location information was being logged or let users turn off the feature.

Concerns raised by the programmers’ report have led to investigations by regulators in Germany, France, Italy and South Korea. The attorneys general of Illinois and Connecticut also have sought explanations from Apple and Google on how the companies collect and store location information.

Franken questioned today how the user data collected from smartphones by application makers or other companies is shared.

Cybercrime Target

Jason Weinstein, the deputy assistant attorney general of the Justice Department’s criminal division, said that while laws restrict what information can be shared with the government, there are no restrictions that keep companies from sharing information with other businesses.

“The line between mobile devices and personal computers is shrinking every day” and mobile devices represent “another platform for cyber criminals to target,” Weinstein said.

Outside developers of applications for Android bear responsibility for how their software “collects and handles user data and the privacy disclosures” to users who opt into the service, Alan Davidson, Google’s director of public policy, said in prepared testimony.

“Google does not control the behavior of third-party applications or how they handle location information and other user information that the third-party application obtains from the device, even though Google strongly encourages application developers to use best practices,” Davidson said.

Android Software

The company, based in Mountain View, California, gives away Android software to boost revenue from services such as mobile advertising and expand the market for its search engine.

Google’s Android operating system accounted for 35 percent of global smartphone shipments in the first quarter of this year, followed by Apple with 19 percent, according to a report this month from technology research firm Canalys.

A small amount of “location information” is kept on the devices regarding nearby Wi-Fi access points and cell towers to ensure that the device can keep providing location services when there’s no connection to Google servers, Davidson said. The information is not tied to a specific user, he said.

If users change their minds about location share, they can later turn it off, according to Davidson.

Both Google and Apple cited increased consumer demand for location-based services that help wireless users find nearby businesses, such as restaurants. “These services offer many benefits to our customers by enhancing convenience and safety for shopping, travel and other activities,” Tribble said in his prepared remarks.

Privacy Policy

Makers of applications that customers download to their smartphones share information including location data with downstream advertising and analytics companies, said Ashkan Soltani, an independent researcher and consultant. Disclosure about those practices is often inadequate or absent, he said.

Apple does not share “personally identifiable information for their marketing purposes without our customers’ explicit consent,” Tribble told lawmakers. The company requires third- party application developers to accept restrictions aimed at protecting consumer privacy, he said.

Users of Apple devices are covered by a single privacy policy that applies to all of the company’s products, including its iTunes and App stores, Tribble said. The handsets also let customers turn off location-based services with a single switch, and the company plans to release new iPhone software to encrypt data on users’ whereabouts, he said.

“We give our customers clear notice of our privacy policies, and our mobile products enable our customers to exercise control over their personal information in a simple and elegant way,” Tribble said.

Requiring Disclosures

Lawmakers focused on the idea of requiring further disclosures for consumers about how location information is used, particularly by developers of mobile applications.

Franken asked Apple and Google about the possibility of requiring apps that run on its operating systems to have privacy policies that spell out clearly what they do with consumers’ location data. Senator Sheldon Whitehouse, a Rhode Island Democrat, likened mobile apps to pharmaceuticals and consumer products, which require safety warnings and disclosures to consumers.

“We build an arena in which the market can work but we can make sure the boundaries of the arena are the boundaries of safety,” Whitehouse said. “We need to really be working on those boundaries.”

To contact the reporters on this story: Eric Engleman in Washington at eengleman1@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editors responsible for this story: Allan Holmes at aholmes25@bloomberg.net; Tom Giles at tgiles5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.