Not a Google or Facebook bigshot in sight.

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Apple Can Afford to Love Privacy

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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Apple’s Tim Cook has been on tour, telling people who are worried about online privacy that he understands their angst. 

“I feel very close to the Germans,” he told the German tabloid Bild am Sonntag in an interview published Sunday. “We don’t read your emails, we don’t read your messages, we find it unacceptable to do that. I don’t want people reading mine!” 

“We all have a right to privacy,” he told the U.K. Telegraph a few days earlier. “We shouldn't give it up. We shouldn't give in to scare-mongering or to people who fundamentally don’t understand the details.” 

He presumably said similar things in private visits with German Chancellor Angela Merkel and members of the European Commission last week. A couple of weeks earlier and closer to home, at the White House cybersecurity summit on the Stanford campus that the heads of Google and Facebook made headlines for skipping, Cook elaborated on this stance: 

We still live in a world where all people are not treated equally. Too many people do not feel free to practice their religion or express their opinion, or love who they choose. A world in which that information can make the difference between life and death. If those of us in positions of responsibility fail to do everything in our power to protect the right of privacy, we risk something far more valuable than money, we risk our way of way of life.  

I don't doubt that Cook believes all these things he’s saying. He has made pretty clear over the past few years that he will share the information about himself that he wants to share when he wants to share it.  But in a happy coincidence -- I guess you could even call it a win-win -- Cook also happens to run a company whose business model is entirely compatible with these views in a way that the business models of several of Apple’s competitors are not. Cook isn't shy about pointing this out. Here he is again in that Stanford speech

We have a straightforward business model that’s based on selling the best products and services in the world. Not on selling your personal data. 

Apple can take this stance because it’s able to make more money than any company ever just by selling high-end devices and relatively expensive services. Most of its technology rivals have to grub about for other means of paying the bills. Google and Facebook in particular have business models that are based almost entirely on (1) learning about the preferences and needs of their users and (2) selling that information to advertisers. 

There is a school of thought that holds that this way of doing business is somehow sinister, underhanded and consumer-unfriendly: “If you’re not paying for the product, you are the product” is the slogan. In Europe this may well be the majority school of thought. And as Internet veteran Derek Powazek convincingly and entertainingly argued a couple of years ago, it’s kind of simplistic and silly. Powazek: 

It has a stoner-like quality to it (“Have you ever looked at your hands? I mean really looked at your hands?”). 

More to the point, Google and Facebook’s model of giving the product away and making their money through ads means that their products are available to billions more people than the relatively elite crowd that can afford to buy into Apple’s world. 

It also often means they can deliver better products. I was walking down the street one recent frigid night when my finger inadvertently tapped the Apple maps app on my smartphone instead of Google’s. I spent about five minutes getting totally unhelpful results and thinking the world had gone mad before I realized what I had done and switched back over to the Google map app, which thanks to years of investment and improvement and knowledge of customer habits (including my habits) was able to direct me where I needed to go in about 10 seconds. 

Don’t get me wrong. It’s pretty awesome that Apple’s business model allows its chief executive officer to be an outspoken advocate for consumer (and citizen) privacy around the world. We need powerful people making that case. It wouldn’t be awesome, though, if he were ever so successful in his lobbying campaign that we rewrote our consumer privacy laws in a way that only allowed technology companies to make money the way Apple makes money. 

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor on this story:
James Greiff at jgreiff@bloomberg.net