Apple has customers who use their products. Google, Facebook, and others have users who use their respective products, but who are not customers in the traditional sense. Particularly, Facebook and Google’s customers are not their user base. They bet their future on users while Apple bets on customers. Is Apple losing money by not using customer data the same way?
Customer vs. User
Others may disagree with the premise here, but I see a distinction between customer and user. Square’s former CEO and co-founder of Twitter, Jack Dorsey:
During a Square Board meeting, our newest Director Howard Schultz, pulled me aside and asked a simple question.
“Why do you all call your customers ‘users’?”
“I don’t know. We’ve always called them that.”
There is a difference, but even at the highest levels of a company, sometimes a user is different than a customer.
It wasn’t something I’ve thought about for some time. The term “user” made its appearance in computing at the dawn of shared terminals (multiple people sharing time slices of one computing resource). It was solidified in hacker culture as a person who wasn’t technical or creative, someone who just used resources and wasn’t able to make or produce anything (often called a “luser”). And finally, it was made concrete by Internet companies whose business models depended on two discrete classes of usage, a paying customer (often purchasing ads) and a non-paying consumer (subsidized by viewing the ads). Along the way only a few criticized the term, calling it abstract at best, and derogatory at worst.
Google and Facebook have customers. Those who buy advertising and collected data. Apple has customers. Those who buy Macs, iPhones, iPads, Watch, AirPods, Beats headphones, Apple Music and so on. They use Apple’s products, yes, but they are first and foremost customers and seldom considered users in the traditional sense.
Google and Facebook have users. Billions of them. Those users help both companies create their products– private information culled from using Google’s apps and Facebook’s website– but those users in no way should be considered customers.
Apple collects customer information, too, and some argue they collect as much as Facebook and Google, which I doubt, but any entity with a billion customers has the opportunity to collect and use plenty of customer data. Apple admits to exactly that in public statements and its various privacy policies.
What Apple does not do is monetize customer data the same way Google and Facebook monetize user information. That is by executive choice.
Is Apple leaving money on the table? Yes. Think of the strategy behind Apple’s customer privacy policies as a bet that privacy is worth something to a customer— certainly far more so than privacy is worth to one of Google or Facebook’s users.
I pay more for Apple’s products and services knowing the company does not capitalize on data it gathers from me the same way as Google and Facebook. I use the latter two services less and less because of how they treat me as the user vs. how Apple treats me as a customer.
Apple is making a bet that losing money on customer data collection is the right thing to do. It is.
If we monetized our customer, if our customer was our product, we could make a ton of money. We’ve elected not to do that.
That perspective and restraint is typical of Apple, dating back to then CEO Steve Jobs scolding Facebook’s Mark Zuckerberg over privacy. Here’s what Jobs told Walt Mossberg:
Privacy means people know what they’re signing up for, in plain English, and repeatedly. I’m an optimist; I believe people are smart, and some people want to share more data than other people do. Ask them. Ask them every time. Make them tell you to stop asking them if they get tired of your asking them. Let them know precisely what you’re going to do with their data.
Apple is leaving money on the table. That’s Apple’s history, philosophy, and policy. Today. What happens in a few years when Apple’s customer base swells to 1.5-billion humans but revenue stalls and profits languish and the executive suite occupied by CEO Tim Cook gets a new occupant?
Things change. An Apple bet against something today could become a newfound source of revenue and profits in the future.