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Apple Defends Opt-Out Privacy Policies in Letter to Congressmen

Apple Defends Opt-Out Privacy Policies in Letter to Congressmen

With Apple's entry into the advertising business have come questions about the company's policies regarding the collection and use of personal data. Two members of the U.S. House of Representatives queried the company following its acquisition of Quattro Wireless, and so far, they appear to be satisfied with its 13-page response. Still, privacy advocates are critical of Apple's opt-out method of obtaining consumer consent.

By Sidney Hill MacNewsWorld ECT News Network
07/20/10 10:26 AM PT

As if it didn't already have enough problems explaining why the iPhone 4 has reception issues, Apple also finds itself trying to convince two high-ranking members of the U.S. Congress that it's not invading its customers' privacy.

Reps. Edward Markey, D-Mass., and Joe Barton, R-Texas, are co-chairs of the House's Privacy Caucus. They asked Apple CEO Steve Jobs, in a letter dated June 24, to clarify recent changes to Apple's privacy policy that "suggest Apple is collecting and sharing data containing the precise geographic locations of consumers using iPads, iPhones and other Apple devices."

Apple's in the Advertising Business

On Monday, the congressmen released Apple's 13-page response to their query. The gist of Apple's response is that it is not collecting information that would directly identify the user of any device being tracked and that users can choose not to have their device tracked by selecting that option when reviewing the privacy policy.

Apple has been using location-based data tracking since 2008, but its use of this technology warranted a change to the company's privacy policy when it purchased Quattro Wireless, a mobile advertising company, early this year, according to Noah Elkin, a senior analyst with eMarketer.

Apple launched the iAd mobile advertising network, a service that feeds ads to devices running its iOS 4 software platform on July 1, just days after updating its privacy policy.

"Apple is now in the advertising business," Elkin told MacNewsWorld. "Using location-based information is one of the best ways of delivering targeted ads. But using that information means Apple now faces the same issues related to customer privacy as any other advertiser."

Knowing the precise location of a device in use allows advertisers to send specific ads that the device owner might find useful at that precise moment, such as coupons for nearby restaurants.

That's Life in the Digital Age

The difference between Apple and other advertisers is that Apple has a large ecosystem -- with its iTunes Store and large network of application developers -- that offers easy access to information about customers that other advertisers might have trouble collecting, Elkin said.

When users open an iTunes account, for instance, they typically are asked to fill out demographic information such as age and gender, as well a provide data about their shopping preferences. That information, coupled with the location of a device at any given moment, makes it easier to target ads for specific users, even if their names aren't known.

Trading personal data for enhanced service is an inherent part of life in the digital age, said Michael Gartenberg, a partner with Altimeter Group.

"People should be aware of privacy policies," Gartenberg told MacNewsWorld, "but for most people, it's a non-issue; it's not something they are terribly concerned about."

No Harm to the Brand

Congressmen Markey and Barton appear to be satisfied with Apple's explanation for how it protects customer data.

"As more Americans rely on location-based services as part of their everyday lives, it is imperative that consumers have control over how their personal information is used, transmitted, and stored," Markey said. "Apple's responses provided additional information about how it uses location data and the ability of consumers to exercise control over a variety of features on Apple's products, and I appreciate the company's response."

Not everyone believes allowing consumers to opt out of having data collected is enough.

"The most-important standard to be applied to the collection of information should be a default setting where no information is collected," Kurt Scherf, vice president and principal analyst with Parks Associates, told MacNewsWorld. "The only way that a company should be able to collect information is by a conscious opt-in by the user."

Regardless of how Apple handles this situation going forward, it's doubtful that it will harm sales of its mobile devices.

"People simply want Apple products," eMarketer's Elkin concluded. "There have been congestion issues on the AT&T network for the entire life of the iPhone, and that has not stopped people from buying it. I don't think having certain information collected -- or having to opt out of that -- will stop them either."


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