Scott Cleland of the Precursorblog.com argues that Apple and Google have different incentives to respect the privacy of their customers. He correctly points out that Google makes its money from advertising, while Apple thrives on selling trend-setting gadgets like iPhones and iPads (Note to self: Did someone forget to mention iTunes?). It thus follows, in Cleland’s view, that Google’s first allegiance is to its advertisers. Apple, by contrast, sees the care and feeding of gadget buyers as Job One. The upshot, Mr. Cleland believes, is that Google faces “privacy conflicts of interest” while Apple does not.
Clever, but a tad shaky. Google operates in a “two-sided” market in which both advertisers and users of Google services are needed to make money. Without eyeballs on Google pages, the space is worthless to advertisers. But without advertising, Google couldn’t afford to give away services ranging from Google search to gmail to Google Docs.
Google, moreover, is in no position to take its rank-and-file users for granted. While the Don’t-Be-Evil company still garners the majority of Internet searches, Microsoft’s Bing (and its ally, Yahoo!) have picked up about 30 percent of all search traffic in the United States. And there’s no reason to believe Google’s dominance would survive a serious decline in consumer goodwill, since the quality of the Bing search engine is plenty good enough – and sometimes better — than Brand G.
So, while it’s true Apple’s special place in supercool-gadget-loving hearts gives it very good reasons not to alienate the public, Google’s behaviour is also constrained by the market. We’re not claiming that either company’s incentives to balance gross commerce against high minded principle are perfectly disciplined by Adam Smith’s invisible hand. But neither are the incentives of those who would regulate them. For now, anyway, we think it makes the most sense to insist that all Internet companies make their privacy policies very clear, and let consumers decide what they think of them.