Apple v Facebook: Why I'm cheering for Tim Cook's team

Unveiling another record quarter the Apple CEO, who charges for his services, declared privacy to be ‘a human right’ in another swipe at Facebook

James Moore
Chief Business Commentator
Wednesday 02 May 2018 10:53 BST
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Facebook CEO Mark Zuckerberg and Apple CEO Tim Cook have been trading criticism
Facebook CEO Mark Zuckerberg and Apple CEO Tim Cook have been trading criticism (DSK/AFP/Getty)

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Louise Thomas

Louise Thomas

Editor

Want to know what a tech giant that charges looks like? Consider Apple.

Its biggest business by far remains selling a gadget – the iPhone – and the latter’s numbers inevitably capture the most attention when it reports. For the record, the doomsayers’ fears were not realised this time around with 52.2 million sold (up 3 per cent) in a record beating three months to 31 March that saw the unveiling of plans for a staggering $100bn (£73bn) share buy-back.

But while Apple boss Tim Cook would appear to be sitting pretty, he is alive to the danger of being a one trick pony in a fickle market and the push his company has made into selling services is yielding impressive results.

That division recorded a 31 per cent year on year increase in revenues to $9.2bn. It includes contributions from digital content, such as music, Apple Pay, the AppleCare insurance product, licensing and other bits and bobs.

While the pace of growth slowed to 8 per cent compared to the final three months of 2017, service sales are still poised to overtake the combined revenues drawn from the iPad and the Mac this year, and Apple clearly has the appetite to further buttress the division with new additions.

Back in March it bought Texture, which charges users $9.99 a month for access to more than 200 magazines via an app, including the likes of Vanity Fair, GQ and Good Housekeeping.

It is also planning to add more original content; TV and movies, to tempt people to subscribe to Apple Music, similar to the way Amazon offers a basket of services to Prime customers.

Down the road you would imagine it perhaps offering an array of packages as Amazon does. Prime, for example, has a limited selection of music. If you want the full menu you have to pay more.

Because his services are paid for, Mr Cook can declare that “privacy is a human right” on his conference calls and use it as a selling point. In so doing this time around. he was obviously taking another shot at the rabble down the road led by Mark Zuckerberg, and seeking to cement the contrast between the two in customers’ minds.

Mr Zuckerberg’s Facebook is still floundering in the wake of the data scandal that has gripped the company.

This hasn’t yet affected its revenues. The vast majority of Facebook users seem less concerned about what it has been doing than are we in the media, and advertisers are still flocking to its doors to reach those users with the assistance of the data it scrapes.

But that might simply be because regulators and lawmakers haven’t really caught up yet.

The announcement of a “clear history” function and the promise to work with them and “privacy advocates” in its construction is the latest attempt to get some control over the negative narrative surrounding the company. It remains to be seen whether that can buy off its critics.

Like Apple, Facebook has a number of different divisions: Instagram, WhatsApp etc. Unlike Apple, it is a true one trick pony in terms of its model with 98 per cent of its revenues being derived from advertisers.

The data scraping that Facebook uses to make itself so alluring to them may be part of the reason why the founders of the formerly subscription funded WhatsApp have both now left, with Jan Koum earlier this week following Brian Acton out the door.

You may remember that the latter said “it’s time” as #deletefacebook app bounced around the web, and he has invested some of the billions he made through Facebook’s buyout of his company into the Signal Foundation. Its mission is to develop open source privacy tech.

In looking at Apple and Facebook, it’s true that we are not exactly comparing like with like. They are very different beasts. What they offer is very different. Apple is a relative minnow compared to Facebook when it comes to service provision.

There are also grounds for criticism of Apple’s business model. Value, for example, is not a part of its proposition. Once in its partially closed eco system it can be hard to imagine getting out, which arguably leaves its customers susceptible to gouging.

But the point is that with a little effort, and perhaps a little external help, they should hopefully be able to get out with their privacy more or less intact.

As such, in a boxing match between the two I’d want to be in Tim Cook’s corner, and I say that as a customer of both.

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