Tim Apple vs. Mark Facebook

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S1: I want to actually start by going back three years ago to this moment when Tim Cook, CEO of Apple, goes on MSNBC,

S2: we’re looking at every hour in detail. What is it doing? Is it doing what it’s saying it’s doing? Is it meeting the privacy policy that they’re stating? Right.

S1: And so we’re you’re nodding. So I know you remember this. Yes. That’s Mike Isaac. He covers tech for The New York Times. He knows this moment well because in this interview, Tim Cook does something unusual. He’s talking to Chris Hayes and Kara Swisher about privacy. This is just after people’s personal data from Facebook was exposed in the Cambridge Analytica scandal, big scandal and says, what would you would you do?

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S2: What would I do? I wouldn’t be in a situation, would it?

S1: What did you think then? Because I was like, whoa, that is aggressive for a CEO to say.

S3: I mean, you know, you and I have been carrying business stuff for a long time and it feels really out of the norm for a CEO to just lob a grenade that aggressively at another CEO. You know, that is not necessarily, at least at that time, a direct competitor.

S1: What Cook was doing was starting a fight between Apple and Facebook and by extension between himself and Mark Zuckerberg over privacy.

S3: I think Tim Cook does actually believe at least some of this philosophy around privacy and that how some of the ad tech companies work in particular, is more invasive than he would ever want his own company to be.

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S1: This fight came to a head this week when Apple released its new operating system, a system that could begin to change the Internet that we’ve all largely given into the one where we trade our personal data for free services, you know, the one that is Facebook’s business model. So this is both a clash of Internet philosophies and just a good old fashioned brawl.

S3: I was talking to an executive at a different company a little while ago when the Apple Facebook stuff started going on. I was like, what? What is this like? Why are they fighting? It seems like out of nowhere. And this person was saying, look, it’s just business. When your competitors are on the ropes, like Facebook is throwing a few punches at him is just the way to go

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S1: today on the show, which version of the Internet do you want? Apples where you pay a premium for privacy or Facebook’s where everything is free but you are constantly tracked. I’m Lizzie O’Leary and you’re listening to What Next? TBD, a show about technology, power, how the future will be determined. Stick with us. To understand how the fight between Apple and Facebook started, we have to talk about advertising, specifically advertising technology, ad tech, Facebook and a lot of other companies make money by selling targeted advertising based on your data. Data gathered when you’re using their sites or apps. And then crucially, data gathered when you’re not when they track you to other places on the Internet.

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S3: They’re ad tech companies that are out there outside of or adjacent to Facebook that essentially follow your footprint around the Internet when you’re using Facebook, but then leave to go do something else and try using another app.

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S1: They’re still watching you. They’re still registering what you’re interested in.

S3: One hundred percent. Basically, there’s never enough data to satisfy how much advertising companies want to know about you for a long time on operating systems like iOS, you’ve been able to turn this off, but it was really buried in a feature deep in some submenus and most people never even tried to get that.

S1: And this week, after months of preparation, Apple rolled out an operating system update that makes it a lot easier to opt out of being tracked.

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S3: Now, what’s happening is essentially this prompt, this little window can pop up in new apps that you downloaded and essentially say, do you want to opt out of being tracked? Do you want to be tracked or on the Internet or not?

S1: Yeah, I put the new iOS on my phone and it’s just like this little box of text. Yeah. And yet I feel like somehow that little pop up encapsulates several years of fighting between these two companies and two pretty distinctly different versions of what the Internet should be.

S3: Mark Zuckerberg is this guy who has created an app and company that is completely founded on the idea of it being free. And you’re not paying up front for using it like you would going to go in to see a movie or something. Your very presence is your payment. And the thinking behind that is essentially the Internet information should be free because the more access that people have to information and different parts the Internet, the better society is. That’s a thesis that I think could be challenged. But at the same time, that’s for better or worse, that’s his point of view. Apple essentially takes a much more conservative approach to it and saying essentially for this premium paying up front, you know, if it’s an iPhone for a thousand bucks, twelve hundred bucks or whatever, we’re going to give you something which is much more tailored and a better experience for you, meaning you’re going to be able to use the Internet on safari or use different apps on your phone without the level of invasive tracking that other apps do to you outside of here.

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S1: Essentially, these philosophical differences weren’t always so pronounced for a while. Apple focused mostly on hardware, Facebook and social media. They were more coexisting than competing

S3: years ago when Steve Jobs was alive and Zuckerberg was younger and not the like sort of powerhouse that Facebook is now. It was more of a collegial sort of relationship. You know, they’d gone the the the the walks in Silicon Valley under the apricot trees sort of thing. That very sort of trite activity that a lot of CEOs started doing. And jobs could give Zuckerberg advice. And they saw each other more as peers, but not ones that were up against each other.

S1: But over the years, things changed. After Steve Jobs died, Tim Cook took over and Facebook stumbled again and again in a series of public scandals.

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S3: Tim really doesn’t care for Facebook’s business model, I think. Twenty seventeen after learning that Facebook was essentially a clearinghouse for misinformation that really bothered people at Apple and really, Tim in particular.

S1: And that’s genuine.

S3: I do think it’s real. I think there are other strategic business reasons for doing what they’re doing. But I do think he actually believes what he’s saying. At the same time,

S1: you wrote about the relationship between Tim Cook and Mark Zuckerberg, but also the relationship between these two companies. How would you describe how the companies interact? Like I think of Apple primarily as a hardware and device company and Facebook as a social media company. And yet they do lots of other things like, oh, these companies rivals, are they symbiotic? What are they

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S3: totally? I think frenemies is probably the word I keep landing on. And I feel like that’s really like every tech company does something slightly different, but all seem to be going in the same direction as far as competing for whether that’s user attention, advertising dollars, purchasing devices, just sort of mind sharing general for people. And for a long time, Apple was hardware and devices company still primarily is obviously they make billions of dollars selling high end phones and computers to everyone around the world. They are starting to reach a point now where everyone already has an iPhone. You can’t grow quarterly if everyone is already saturated with these expensive devices. So there’s services division is essentially where they’re sort of pointing Wall Street to as like the future of their company. We’re going to not just be a hardware company. We are going to be a software company. We’re inviting you into the whole Apple universe, whether that’s listening to Apple Music and Spotify on your iPhone, whether that’s watching Apple TV instead of Amazon Fire TV. And so there’s this convergence over time where companies are going to be competing for the same things.

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S1: You have this anecdote in your story about this media mogul summit that happens in Sun Valley, an annual thing. But at this particular one, Mark Zuckerberg asked Tim Cook how he would have handled the fallout from Cambridge Analytica. And Tim Cook basically says, yeah, you got a business model to lead any any personal information like that.

S3: Right. But I think that I think what is exactly the reaction that folks at Facebook probably had. So this year, this moment was. Allen and company have this annual thing called Sun Valley, it’s sort of billionaire retreat. You see, all the folks like you and me are like like peering over the fence trying to see what all the billionaires are doing with our grubby journalism.

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S1: They’re like walking around and having

S3: a good time. Yeah. So this is their little enclave to, like, do what they do. Right. Talk about the one percent version of the world. And Facebook and Apple for a few years now have been using this retreat as like a catch up moment. And over the past few years, this was getting tense. Right. The pot shots were now public. So, Mark, as a matter of conversation. Yeah. What would you do? Like just sort of the offhand comment, I think. And so Tim responds with. Yeah. Essentially delete half of what you’ve been doing for the past 15 years or whatever, and and just start anew or only collect data in your in your main app. And I think Facebook, when they hear that they’re like this guy has no idea what we do or has a complete distaste for what we do. But clearly we’re not going to get anywhere there. So they tried to move on. The meeting did not go well. If anything, it got worse over the past two years. Basically, this thing that was supposed to be a come to Jesus moment ended up being more of a falling out.

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S1: When we come back, what Apple stands to make financially from pushing privacy. Apple for a while now has said privacy is its thing. I mean, I think back to the 2015 San Bernardino shooting when the FBI said, we would like you to unlock this suspect’s phone for us and Apple said no.

S3: Yeah, that was crazy to

S1: me in the face of a lot of criticism. And yet they have said privacy is our calling card to some extent.

S3: I was living in New York at the time and the reactions to Apple’s position were so polarized. Like everyone I talk to in tech in California were like Apple. You know, they’re doing the right thing. They’re standing up for user privacy. And everyone I talked to in New York was like, Apple is siding with terrorists. What is going on? Right. Like this is not the way to go. That’s the thing, though. Like there are ways to do that sort of deal where you sort of acquiesce to the FBI without telling people. Right. Like you’re just sort of letting it happen under the table. And, you know, a lot of companies submit to data requests on users all the time that we don’t hear about. So Apple coming out strong undercook and saying we’re not going to do this and we are publicly blowing it up like that was absolutely a statement.

S1: It’s tempting to see this battle between two tech giants as privacy good, Facebook bad. But plenty of online businesses rely on advertising and therefore ad tech to exist.

S3: I mean, look, I think I mean, ad supported businesses are key to how a lot of the current Internet functions for most of the Internet’s existence or at least the past 20 years, I’d say a lot of how people consume things was buttressed by advertising. Right. And so whether you hate advertising or love it, it was just sort of part of the value proposition between viewing something or using something for free and and being able to monetize it. Facebook’s argument around, you know, keep the Internet free for customers sounds a little bit duplicitous from them. But there is a there is an undercurrent of truth in that. Like, this is how we’ve kept things free for a long period of time. Companies were able to collect unlimited amounts of information on users, and that’s starting to change. And people are going to the more they learn about it, then they can decide how they feel about it. And I’m very curious what people do at that point and if they do care about privacy in greater numbers or not.

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S1: Yet each of these companies are saying kind of, oh, we’re here to defend consumers or we’re here to defend small businesses. They are companies. They do exist to make money. I notice that the opinion side of your newspaper sort of laughed at that and said, like, this is not, you know, a tiny farmer against a mega corporation called Goliath versus Goliath.

S3: That’s exactly right. Look, like a great deal of this is posturing and marketing and making it a selling point based on each company’s business model. There’s a reason that Apple has leaned into we care about privacy so much over the past few years. It’s a selling point. Like they have this on posters and ads. Now, this was part of their last W-W DC developer conference presentation at Apple. We believe privacy is a fundamental human right. It’s literally into how they sell the phone. Now, all of our product work is grounded in a set of privacy principles. We use innovative technologies and techniques to minimize the personal data we or anyone else can access. Second and same with Facebook. Facebook has Sheryl Sandberg, who’s going to be on Facebook’s earnings call this week, will hammer the point that small businesses are crucial to Facebook and selling your stuff online, especially during a pandemic. We are here for that. Facebook is here for that. And you should do that here. Yeah, I mean,

S1: look, our business is small business. We put free tools out there and we sell advertising. And we should think a little bit about the role of personalized ads in this.

S3: These beliefs don’t come from nowhere. Like I do think that at their core, both CEOs of both sides of executives believe in what they’re doing. It’s just how it manifests in the real world is also obviously beneficial to their businesses.

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S1: I’m going to go back to another moment in your story where Mark Zuckerberg is asked about Apple on an earnings call and he says, We increasingly see Apple as one of our biggest competitors. And Tim Cook in an interview with The Times is like, yeah, if I was asked about their biggest competitors, they wouldn’t be listed so good. And I know that someone on Twitter said this to you, but it is very reminiscent of that moment in Mad Men.

S3: I don’t think about you at all.

S1: Yeah. Ginzberg says to down on the elevator, I feel bad for you. And Don says, I don’t think about you at all.

S3: That’s why I didn’t even put that together. But that’s really good. I think that’s I mean, it’s a power move, right? I disagree with him because I do think there are a lot of places they compete. I do think they are competitors, even though it’s not as obvious to maybe most of us. But but, yeah, that’s that’s really just him trying to win the fight and doing it pretty well, I think.

S1: You think Apple wins this fight?

S3: There are a zillion companies right now trying to figure out workarounds to what Apple’s doing, and it might be just whack a mole, Apple might find those. And if they violate the spirit of what Apple is doing, they might ban them or something. But again, you know, for as much as Facebook has been pilloried for the past five years, let’s say people are using the apps more than ever. Right. Like Instagram, people are glued to Instagram. WhatsApp is indispensable in most of the countries outside of the US. Both companies still kind of win. But Facebook’s job is probably going to be much more difficult in some ways, in some ways that it hadn’t been in the past.

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S1: McIsaac, thank you very much.

S3: Thank you. Thanks for having me.

S1: Mike Isaac reports on tech for The New York Times. All right. That’s the show. TBD is produced by Ethan Brooks and edited by Allison Benedikt and Tori Bosz. Alicia Montgomery is the executive producer for Slate podcasts. TBD is part of the larger one next family, and it’s also part of Future Tense, a partnership of Slate, Arizona State University and New America. And I want to recommend that you take some time to listen to Thursday’s episode of What Next? It is an absolutely crushing look inside India’s covid crisis from desperation in the wards to how the data barely even tells a fraction of the story. What next will be back on Monday. Have a good weekend. I’m Lizzie O’Leary. Thanks for listening.