Apple Should Win Its Intensifying Battle With Facebook

This article was originally published in The Information.

Facebook says Apple will change the internet as we know it. Good!

The brewing battle over the soul of Silicon Valley has finally hit a breaking point. Apple, which sees individuals as its customers, is advancing iOS users’ privacy with the choice to opt in to ad tracking. Facebook, which sees individuals as its raw material, is fighting back, supposedly in the name of its small business customers. The two perspectives—product focused versus ad focused—have been challenging each other for some time. But Apple has now drawn a line in the sand, saying that user data is owned by the user, while Facebook is fighting to maintain its free access to that data so it can boost its sales to advertisers.

If nothing else, this battle should make every individual question whether they are underestimating the value of the data they give away with every click. It’s time for Facebook to prove the value of what it gives users in return for their data. It’s time to see what kind of innovation could result from restricting access to user data. It’s time to design artificial intelligence to help humans, not use humans to help the AI.

In an upcoming iOS update, Apple is shifting from an opt-out to an opt-in system for ad tracking. The new system, called App Tracking Transparency, will prompt users to allow or disallow apps to track “activity across other companies’ apps and websites.” This means app developers will still be allowed to track activity within their apps and websites, but might be disallowed from tracking user activity across other companies’ apps and websites. Disallowing this broader tracking may reduce the accuracy of Facebook’s ad targeting given the benefit it gets from tracking online behaviors beyond those in its own apps and websites. Facebook has responded by taking out multiple full-page ads in newspapers claiming that Apple’s update will change the internet as we know it and that it will hurt small businesses’ ability to reach consumers.

Facebook’s position is bold—and tone deaf. The company is currently embroiled in an antitrust lawsuit that in part charges that Facebook has limited competition for exactly the small business customers it is claiming to support. By systematically buying or crushing competition, Facebook has become virtually the sole social media platform through which small businesses can reach customers. In the ultimate plutocrat move, Facebook now says it is standing up for the small businesses it has controlled through its monopoly, which has given Mark Zuckerberg a net worth of over $100 billion.

Facebook has over time increased advertising accuracy through persistent surveillance, allowing it to create what Tristan Harris calls “voodoo dolls” for everyone who uses its products. As Harris, co-founder of the Center for Humane Technology, explained, “We have these artificial social systems that have hijacked and overpowered human nature, combined with overwhelming AI that have, again, overwhelmed human weakness by building these voodoo dolls, combined with an extractive attention economy, built on getting attention from people.”

Facebook has claimed that its personalization and targeting algorithms lead to more meaningful interactions. But the act of filtering the information that billions of people see and controlling how they interact with each other effectively influences what they choose to do, whether it’s what sneakers to buy, what politicians to vote for or whether to trust in a vaccine.

Using its voodoo dolls and filtering our experiences, Facebook can better predict our future choices. Shoshana Zuboff, a Harvard professor emerita, describes selling these predictions to advertisers through ad targeting as “a new kind of market that trades exclusively in human futures.” Facebook has used its free, monopolist access to raw material—user data—to make its trading in this human futures market highly profitable. This is exactly the kind of abuse of power that antitrust regulators are trying to prevent.

Facebook’s aggressive response to Apple will make things worse with regulators. It’s just too simple for everyone to see that Facebook’s argument reinforces the antitrust complaint. Facebook says that reducing tracking will increase costs for small businesses because these advertisers will need to buy more ads to generate the same sales. This seems to assume that the cost per ad will remain the same despite lower accuracy. That ability to maintain prices while providing lower value is the definition of monopoly power. Facebook is fighting to retain unrestricted access to user data while Apple is providing choice and control to its customers—something antitrust regulators think highly of. Apple is not stopping the free internet; it is asking customers to opt in to data tracking to get things for free.

Critics claim that Apple’s intentions are not pure. They argue that Apple is advocating for its own subscription-based business model and that it will benefit financially if app developers shift from generating revenue through advertising to subscriptions. That may be true. But a very significant number of app subscriptions would need to be purchased to make this battle worth it to Apple financially—and that assumes a lot of consumers would even want to pay for what is now free.

Apple critics also complain about the high fees the company charges app developers through the App Store. While I agree that developers have a valid complaint, despite Apple’s recent reduction in fees for small developers, that’s a separate problem. If Apple is charging too much, that should be solved through negotiation, competition from Android or regulation—not by sacrificing user privacy.

Finally, critics claim that Apple has different rules for its own ad network than those for app developers, which they say is unfair. This is the hardest claim to analyze since, as always, we don’t know everything about Apple’s future product plans. My bet is that Apple will not risk incurring more antitrust issues and developer rage by allowing its own ad network to flout the privacy requirements of its developers. If Apple does do so, however, we should hold it to account.

In the end, this battle is exposing the tension between selling products to consumers and selling predictions to advertisers. On one end of this spectrum, Apple is in the business of designing and selling the best products. It is the benchmark for human-centered design, with a heritage grounded in designing products that solve customer needs and desires. On the other end, Facebook is in the business of selling the best user predictions. It is the benchmark for human-futures design, using explicit and implicit user data to predict who each user is today and who they will be tomorrow.

What might happen if Facebook wins this battle? Facebook will continue to improve its personalization, harvesting more user data to provide more accurate predictions for higher fees to its advertisers. The company’s prediction machine will seek not only to make the most accurate predictions but to make them more predictable. This is what my partner, Helen Edwards, describes as the paradox of personalization: The best way to personalize a person’s future is to make that future less personalized. Rather than solving for what a user might want or need, the prediction machine may influence users to want or need what it has predicted in order to increase the accuracy of its own prediction.

We know this is possible. A Facebook experiment showed that it could manipulate our moods by changing what posts it shows us. Can and will Facebook prevent its algorithms from manipulating users if that manipulation optimizes for ad clicks? And will Facebook forego the value that can be gained? As with any tradeable commodity, if you know the future—and especially if you can create the future—you have the greatest opportunity to make money. The intensity of Facebook’s response to Apple’s changes is signaling that our data are worth a lot more than most people understand.

What might happen if Apple wins this battle? Apple will shift the ownership of user data to the user. We will have the right and choice to trade our data. We can retain our data—and its option value—until some point in the future, if we feel the value of our data will increase. Given the ever-expanding value of the Facebook ad platform, betting that the value of user data will increase seems like a good wager to me. App developers like Facebook will need to make the case to us that the value of their products is worth our data. We might work less for the machines and have more machines that are working for us—fulfilling Steve Jobs’ vision of building bicycles for the mind.

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