Digital privacy is the next value frontier

Apple’s recent announcement that they will allow users to stop apps from tracking their behavior across iOS devices will be the biggest showdown in digital business models since the creation of the internet.

The opportunity of digital advertising was always the reach and specificity of the ad targeting capability. Instead of buying a rough audience segment, with lots of people who didn’t care at all about your offering, the internet could offer you 1 impression to 1 person who had a better chance of caring about your offer. As a result, advertisers have naturally gravitated toward the players with the most eyeballs and the best targeting – Facebook and Google take over 50% of all digital ad revenue.

So, with Apple’s decision to allow for users to define their own tracking parameters, they have committed to cutting revenue for ALL advertising businesses, and pushing more consumers into subscription paths across all digital channels. This will have lasting effects for years to come.

Moving forward, companies that sell eyeballs will not push to see their audience everywhere, like Facebook has done with their Like button, the Onavo acquisition, the WhatsApp acquisition, and many other moves. They won’t be able to see all the other sites and apps that you are visiting, so they won’t even try.

This opens the possibility for many companies to build a deeper and more unique value proposition with their customers, including an opportunity for privacy and control to be at the heart of the customer experience.

Once you have the trust and confidence of your customer, you can find myriad new ways to deepen the relationship. Look at Apple itself, who has a famously loyal customer base because of the trust it has built for usable products. They have been able to successfully extend the iPhone ecosystem with Apple Watch; and build a fast-growing services business with their iCloud, Music, and TV offerings…now conveniently available as a bundled service, Apple One.

Technologists often describe Apple’s push into services as a concerning return to the “walled garden” approach, where AOL and Facebook “curated” what you saw on the internet, and therefore the user was under their control. This is not Apple’s approach at all. You can go anywhere online and do whatever you want with their products, but often that means wading through hundreds of low quality YouTube yoga videos. Apple Fitness offers the convenience of high quality curation.

Apple has built the trust of that convenience because they have been staunch advocates of privacy for their customers from the beginning of the company, and they have worked hard to maintain that privacy. Famously, their spat with the FBI, where they would not access the iPhone of a terrorist, cemented AppleĀ  as a privacy-first company. In the 4 years since that case, their market cap has tripled.

Is Apple’s valuation growth all because of their focus on privacy? No, of course not. But it is a meaningful differentiator that underpins all of their work, and it’s one that customers have come to appreciate – and pay for.