Bring on the Privacy-Arms Race!

Yoav Simchoni


Vertically-integrated tech companies compete vigorously across multiple product lines to try and capture market share. A large part of this competition revolves around marketing and branding campaigns, by which companies try to capture the loyalty of their target audience. These campaigns have traditionally involved bids to make products or services seem “cool” or useful, but recently this competition has fanned into a new arena of battle – user privacy. Technology consumers are increasingly concerned with privacy issues as a result of the huge amount of information they share online. Just how much users care is unclear, but some companies have begun distinguishing themselves from competitors by advertising their heightened privacy restrictions and lax privacy regulations of their competition.

The appearance of privacy issues on the “playing field” of corporate advertising may be a significant step towards a market-based solution for privacy regulation. It may prompt a “race to the top” in which companies compete to offer consumers better privacy controls, and make consumers aware of privacy risks posed by competitors. This may seem like a welcome development, but critics warn that privacy based campaigns may also be problematic. The term “privacy” is often vague, and the meaning of byzantine privacy policies is poorly understood by most internet users. Consequently, advertising campaigns can easily be set up to incite panic or concern where it should not exist. These advertising campaigns could serve as a template for smear campaigns and weaken consumers by increasing the amount of misinformation related to privacy issues.

Microsoft’s recent “Scroogled” campaign highlights how these two views interact. The new campaign is the largest advertising campaign to date that specifically targets privacy conduct. In the “Scroogled” campaign, Microsoft accuses Google’s Gmail service of sifting through user emails to target users with specific advertisements. The campaign also suggests users sign a petition to protest Google’s use of personal user information. The petition informs that Google reads through “every word of every email”. It then insinuates that private emails aren’t safe by stating that “email between a husband and wife, or two best friends, should be completely personal”. The campaign also provocatively asks the user if they “feel violated yet?” and clarifies that Microsoft’s mail client, Outlook, does not “go through your email to sell ads”. So far, this campaign has done little to disrupt Gmail’s dominance in the e-Mail market, but the significance of the campaign has not gone unnoticed.

Microsoft is hitting where tech companies have traditionally considered off limits, raising the privacy issue is considered by many alarmist and populist. Are Microsoft’s claims even justified? Microsoft’s message seems to fall, like most advertising, between reality and hyperbole. Microsoft argues Google doesn’t care about privacy, and is willing to monetize user data by violating privacy without scruple. Google’s scanner, however does not involve a human reading any emails, it merely let’s an algorithm scan your mail for keywords that might trigger relevant ads, arguably providing the user with more relevant online experience. This algorithm activity, however, might still be problematic. In 2004, Mark Rasch wrote for Security Focus stating scanning practices could set a “dangerous legal precedent” for law enforcement being able to collect data on users in the same way.  But if this is the case, Microsoft is no less a troublemaker, they also use algorithms to scan the content of user mail. Microsoft’s own terms of use state they “may occasionally use automated means to isolate information from email, chats or photos in order to help detect and protect against spam and malware or to improve the services with new features that makes them easier to use.” Accordingly, both companies seem to be scanning e-mail, but only Google is monetizing that data through targeted advertising. Does that make Microsoft any better? Are its descriptions of what Google is doing bordering on the disingenuous? Further dampening Microsoft’s critique, Google offers users to opt out of the demographic categories Google’s advertising algorithms have placed them in, Microsoft does not have these features on Bing.

These incongruities lead most critics to believe that Microsoft’s campaign is less about altruism, and more about money. Microsoft has been desperately trying to capture market share from Google in both Search and e-Mail and has been drastically less efficient in monetizing advertising on their search platforms. They have been phasing out Hotmail and converting its user base to and in a push to try and pull away some market share from Google, critics argue, they have chosen to inflammatorily target privacy concerns – ironically – because down the road, they want to do just what they accuse Google of doing overzealously, advertise. Supporters of Microsoft argue that it does not earn its money through advertising, and is more interested in users turning to Outlook because it is a better quality product. As a vertically integrated company, the use of one product is a segue towards purchasing more software and hardware devices. Accordingly, Microsoft claims they have the incentive to respect privacy more, because their money does not come from selling user data.

It is unclear whether the critics or supporters of Microsoft are closer to being on the money. What is clear is that no tech-company is above privacy scrutiny. Microsoft itself has been criticized for privacy policies relating to its Skype product. In late 2012, an open letter signed by 45 privacy-focused organizations demanded Microsoft and Skype clarify their hazy privacy policy. The letter accused Microsoft of using “persistently unclear and confusing statements about the confidentiality of Skype conversations,” regarding what access Microsoft was willing to provide governments to user and conversation data. Microsoft has also been criticized for recent changes to its services agreement which allow it to aggregate customer content from one product, and apply it to another. This means user use patterns from one product, say Windows, can be used to engineer another device, such as the Xbox. Previously, Microsoft limited data use to one product at a time.

It seems that even if one accepts that Microsoft is a moral exemplar in its war with Gmail, their own privacy lapses suggest they too are willing to “cut corners” when there are big financial ramifications. Despite this fact, two wrongs just make a right when it comes to consumer privacy concerns. If one can stomach hypocrisy, Microsoft’s campaign can be useful to consumers. Arguably, any dialogue that isn’t populist or smearing and that brings privacy issues to the fore and educates the public is welcome. For instance, a Mozaic Group survey found that 70% of Gmail users did not know that their data was being screened. Will those users now switch to Outlook? Doubtful. But at least they will be more educated as a service consumer, and if they day comes when a flagrant violation is highlighted, will be educated enough to move to another service. Perhaps this war of attrition between large technology companies, and the reputational damage they suffer will leave the consumer as the only true benefactor as we become more aware of privacy issues, and have more products to choose from. So bring on the privacy arms race.


My Sources:

Clash of the Titans: Google vs. Microsoft