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James Martin/CNET
Facebook co-founder and CEO Mark Zuckerberg apparently disagrees with Apple CEO Tim Cook’s claim that free services which are supported by ads turn people into products.
“A frustration I have is that a lot of people increasingly seem to equate an advertising business model with somehow being out of alignment with your customers,” Zuckerberg told Time in a feature published Thursday. “It’s the most ridiculous concept. What, you think because you’re paying Apple that you’re somehow in alignment with them? If you were in alignment with them, then they’d make their products a lot cheaper!”
In September, Cook said in an open letter posted on Apple’s Privacy page that “when an online service is free, you’re not the customer. You’re the product.” The letter was part of Apple’s response to privacy concerns following a hack where several private, nude images of celebrities pilfered from Apple iCloud accounts.
Apple’s Privacy page also attempts to provide transparency into how it handles user data. The company argues that, save for iAd, it has no interest in engaging in advertising and it has built a business model around that idea.
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Companies — and privacy advocates — arguing over free vs. paid services is nothing new. For years, there has been a debate over whether online services should be free — supported by ads — or paid. Facebook, along with Google, Yahoo and other companies that provide free Web services, rely on advertising for the bulk of their collective revenue. For users, the tradeoff for a free service is that they are subjected to targeted ads based on key data — such as age, sex, location, likes and dislikes — gleaned from their use of the service and activities around the Web.
“Our business model is very straightforward: We sell great products. We don’t build a profile based on your email content or Web browsing habits to sell to advertisers,” Cook wrote in the September letter. “We don’t ‘monetize’ the information you store on your iPhone or in iCloud. And we don’t read your email or your messages to get information to market to you.”
Those in Zuckerberg’s camp — likely including Google, the leader in digital advertising in the US — see things differently. The companies believe free services benefit the most customers and advertising is a way for their offerings to continue to provide value. They argue that their free services are simply taking a different route to arriving at the same goal: generating revenue.
Zuckerberg’s comments could also be aimed at a newcomer to the social space, Ello. The social network came onto the scene earlier this year to be the anti-Facebook, leaving advertising to the world’s largest social network and promising that it won’t collect user data for revenue.
“Your social network is owned by advertisers,” Ello says on its site. “Every post you share, every friend you make and every link you follow is tracked, recorded and converted into data. Advertisers buy your data so they can show you more ads. You are the product that’s bought and sold.”
Ultimately, the answer to which company is right won’t be solved now or anytime soon. It is, after all, a debate that’s been raging for years. If you examine the revenue Google, Facebook and Apple are all generating, it would be easy to argue that both methods work — at least for the companies.
