During his Wednesday night keynote at the IAPP Privacy. Security. Risk. conference in Austin, Texas, Farhad Manjoo, a tech columnist for The New York Times, painted a picture of two tech companies that may sound familiar:
One company has been hit with a pair of scandals that sent shockwaves throughout the industry. The other recently became the first tech company to be valued at over $1 trillion dollars.
Manjoo was talking about Facebook and Apple, respectively, noting the way 2018 has taken shape for both companies could result in a noticeable shift for tech behemoths' business models moving forward.
Manjooo cited Apple's business model as one of the reasons it has managed to stay strong within a "season of scandal" for the tech industry, and a reason its been able to raise the prices of its hardware without a decline in sales.
"A key reason why Apple is doing well is they have a business model that does not depend on advertising and private information," said Manjoo. "People are willing to pay a premium for Apple to protect us from the terrors of online life. Apple can promise you piece of mind, and the company is making this point aggressively over the last couple of years. I think this is a big and interesting change in the industry."
Manjoo said Apple's devotion to privacy has produced financial results. In fact, hours before Manjoo took the stage, the company announced it will launch a new privacy website that will allow users to find out all of the data the company holds on them.
It is a flipped script from where tech pundits figured Apple would be a few years back. As artificial intelligence and cloud services grew in popularity, Manjoo said tech observers figured Apple would be left behind.
"Apple has an advantage, focusing on devices and not focusing on ads," said Manjoo. "Their stance on privacy gives them this halo on all this other stuff." He added that Apple is not as vulnerable, from a regulatory standpoint, compared to some of its peers within the tech industry, and privacy has become one of the selling points for its Apple Watch, which has become the most popular watch in the world.
Apple's less ad-centric model could end up shifting other tech companies and startups to look at taking a similar approach to conduct business, Manjoo said, especially as Facebook and Google face privacy dilemmas. (Of course, Manjoo noted, Apple certainly benefits from Google and Facebook doing well, noting its $9 billion dollar deal with Google to make it the default search engine on all iPhones.)
Manjoo explained those companies may think twice about continuing in the private information space, especially as the costs of misuse rise while the benefits become less certain.
Apple's business model is one Manjoo said companies are more likely to follow at this point rather than ridicule, and Facebook and Google's ad-driven models may become relics of the past.
That doesn't mean there won't be risks.
Moving away from private information and advertising may sound good on its face. But the business model could lead to some troublesome developments down the line.
First of all, not relying on advertising and private information means there will be fewer free services to offer. Those companies will have to make up the difference somewhere, especially if they do not have Apple's $1 trillion dollar value.
More concerning, however, is the idea that privacy and security will become a luxury that only those in well-developed areas can afford, Manjoo said. Having expensive hardware designed to bolster personal privacy and security could leave a lot of people in a vulnerable state.
"In a world where Apple’s business model has ascended and people pay for protection in this world, and in this world where technology is scary, the people who are protected are the ones who can afford Apple-like services," said Manjoo. "That potentially leaves billions of people out of the loop."
Before exiting the keynote stage, Majoo left the audience with this: "It's a very bleak future."
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