Apple Defends Opt-Out Privacy Policies in Letter to Congressmen
With Apple's entry into the advertising business have come questions about the company's policies regarding the collection and use of personal data. Two members of the U.S. House of Representatives queried the company following its acquisition of Quattro Wireless, and so far, they appear to be satisfied with its 13-page response. Still, privacy advocates are critical of Apple's opt-out method of obtaining consumer consent.
Jul 20, 2010 10:26 AM PT
As if it didn't already have enough problems explaining why the iPhone 4 has reception issues, Apple also finds itself trying to convince two high-ranking members of the U.S. Congress that it's not invading its customers' privacy.
Apple's in the Advertising Business
"Apple is now in the advertising business," Elkin told MacNewsWorld. "Using location-based information is one of the best ways of delivering targeted ads. But using that information means Apple now faces the same issues related to customer privacy as any other advertiser."
Knowing the precise location of a device in use allows advertisers to send specific ads that the device owner might find useful at that precise moment, such as coupons for nearby restaurants.
That's Life in the Digital Age
The difference between Apple and other advertisers is that Apple has a large ecosystem -- with its iTunes Store and large network of application developers -- that offers easy access to information about customers that other advertisers might have trouble collecting, Elkin said.
When users open an iTunes account, for instance, they typically are asked to fill out demographic information such as age and gender, as well a provide data about their shopping preferences. That information, coupled with the location of a device at any given moment, makes it easier to target ads for specific users, even if their names aren't known.
Trading personal data for enhanced service is an inherent part of life in the digital age, said Michael Gartenberg, a partner with Altimeter Group.
"People should be aware of privacy policies," Gartenberg told MacNewsWorld, "but for most people, it's a non-issue; it's not something they are terribly concerned about."
No Harm to the Brand
Congressmen Markey and Barton appear to be satisfied with Apple's explanation for how it protects customer data.
"As more Americans rely on location-based services as part of their everyday lives, it is imperative that consumers have control over how their personal information is used, transmitted, and stored," Markey said. "Apple's responses provided additional information about how it uses location data and the ability of consumers to exercise control over a variety of features on Apple's products, and I appreciate the company's response."
Not everyone believes allowing consumers to opt out of having data collected is enough.
"The most-important standard to be applied to the collection of information should be a default setting where no information is collected," Kurt Scherf, vice president and principal analyst with Parks Associates, told MacNewsWorld. "The only way that a company should be able to collect information is by a conscious opt-in by the user."
Regardless of how Apple handles this situation going forward, it's doubtful that it will harm sales of its mobile devices.
"People simply want Apple products," eMarketer's Elkin concluded. "There have been congestion issues on the AT&T network for the entire life of the iPhone, and that has not stopped people from buying it. I don't think having certain information collected -- or having to opt out of that -- will stop them either."