Apple is turning privacy into a business advantage, not just a marketing slogan – CNBC

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Apple is turning privacy into a business advantage, not just a marketing slogan – CNBC

Apple unveiled new versions of its operating systems on Monday which showed that the company's focus on privacy has taken a new turn. It's not just a

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Apple unveiled new versions of its operating systems on Monday which showed that the company’s focus on privacy has taken a new turn. It’s not just a corporate ideal or a marketing point anymore. It’s now a major initiative across Apple distinguishing its products from Android and Windows competition.

Apple has positioned itself as the most privacy-sensitive big technology company since Apple CEO Tim Cook wrote an open letter on the topic in 2014. Since then, Apple has introduced new iPhone features that restrict app access to personal data and advertised privacy heavily in television ads.

But Monday’s announcements showed that Apple’s privacy strategy is now part of its products: Privacy was mentioned as part of nearly every new feature, and got stage time of its own.

Privacy-focused features and apps announced by Apple on Monday for forthcoming operating systems iOS 15 or MacOS Monterey included:

  • No tracking pixels. The Mail app will now run images through proxy servers to defeat tracking pixels that tell email marketers when and where messages were opened.
  • Private Relay. Subscribers to Apple’s iCloud storage service will get a feature called iCloud+ which includes Private Relay, a service that hides user IP addresses, which are often used to infer location. An Apple representative said it’s not a virtual private network, a type of service often used by privacy-sensitive people to access web content in areas where it’s restricted. Instead, Apple will pass web traffic through both an Apple server and a proxy server run by a third party to strip identifying information.
  • Hide My Email. iCloud subscribers will be able to create and use temporary, anonymous email addresses, sometimes called burner addresses, inside the Mail app.
  • App Privacy Report. Inside the iPhones settings, Apple will tell you which servers apps connect to, shining light on apps that collect data and send it to third parties the user doesn’t recognize. It will also tell users how often the apps use the microphone and camera.

Leveraging Apple’s chip chops

With its focus on privacy, Apple is leaning on one of its core strengths. Increasingly, data is being processed on local devices, like a computer or phone, instead of being sent back to big servers to analyze. This is both more private, because the data doesn’t live on a server, and potentially faster from an engineering standpoint.

Because Apple designs both the iPhone and processors that offer heavy-duty processing power at low energy usage, it’s best poised to offer an alternative vision to Android developer Google which has essentially built its business around internet services.

This engineering distinction has resulted in several new apps and features that do significantly more processing on the phone instead of in the cloud, including:

  • Local Siri. Apple said on Monday that that Siri now doesn’t need to send audio recordings to a server to understand what they say. Instead, Apple’s own voice recognition and processors are powerful enough to do them on the phone. This is a major difference from other assistants like Amazon’s Alexa, which uses serversto decipher speech. It could also make Siri faster.
  • Automatically organizing photos. Apple’s photos app can now use AI software to identify things inside your photo library, like pets, or vacation spots, or friends and family, and automatically organize them into galleries and animations, sometimes with musical accompaniment. Many of these features are available in Google Photos, but Google’s software requires all photos to be uploaded to the cloud. Apple’s technology can do the analysis on the device and even search the contents of the photos with text.

Apple’s privacy infrastructure also allows it to expand into big new markets like online payments, identity, and health, both from a product and marketing perspective.

It can build new products while being sure that it’s following best practices for not collecting unnecessary data or violating policies like Europe’s strict General Data Protection Regulation (GDPR).

In addition, users may feel more comfortable about features that deal with sensitive data or topics — like finance or health — because they trust Apple and its approach to data.

Features introduced by Apple on Monday show how the company is using its user data position to break into these lucrative markets.

  • Monitoring walking health and sharing medical records. Apple’s health app can now use readings from an iPhone, such movement when the user is walking, to warn them that they might be at risk for a harmful fall because they’re walking unsteadily. Apple will also enable users who connect their iPhone to the health records system to share those records with a doctor, friends, or family. Health data is among the most heavily regulated types of data, and it’s hard to see Apple introducing these features unless it was sure that it had a good reputation among customers and internal competence with handling sensitive data. “Privacy is fundamental in the design and development across all of our health features,” an Apple engineer said while introducing the feature.
  • Government IDs, keycards and car keys in the Wallet app. Apple used the trust it’s built in privacy and security when it launched Apple Card, its credit card with Goldman Sachs, in which users sign up for a line of credit almost entirely inside the app. Now, Apple has introduced several new features for the Wallet app that are most attractive for users who believe Apple’s security and privacy are up to the task. In iOS 15, Apple will enable users to put in car or home keys in their wallet app, which means all someone needs to get inside is their phone. Apple also said, without a lot of details, that it is working with the Transportation Security Administration to put American ID cards, like a driver’s license, inside the Wallet app, too.

Cook has said “privacy is a fundamental human right” and that the company’s policies and his personal stance doesn’t have to do with commerce or Apple’s products.

But being the big technology company that takes data issues seriously could end up being lucrative and allow Apple more freedom to launch new services and products. Facebook, Apple’s Silicon Valley neighbor and vocal Apple critic, has increasingly dealt with challenges launching new products because of the company’s poor reputation on how it handles user data.

Americans also say that privacy is factoring into buying decisions. A Pew study from 2020 said that 52% of Americans decided not to use a product or service because of concerns over data protection.

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