The Great Privacy Fraud
Part 2: Privacy and the World's most Valuable Hypocrite
Please read the introduction to Part 1 if you want the full setup for Part 2.
Meta (because of Facebook) is at the epicenter of the disruption that is caused every time the battlefield for control over narratives changes. This has made it temporarily vulnerable, but not nearly as vulnerable as most people think.
A brief history of narrative battlefields
Each time a new medium of communication proliferates older generations (alternatively: entrenched interests) sound the alarm, warning of the inevitable collapse of civilization as we know it if said medium is not brought to heel. Two seconds of Googling found these gems:
Inside we find the following excerpt:
In recent years, as Facebook’s mistakes have compounded and its reputation has tanked, it has become clear that negligence is only part of the problem. No one, not even Mark Zuckerberg, can control the product he made. I’ve come to realize that Facebook is not a media company. It’s a Doomsday Machine.
Here’s another one.
One section of this piece quotes Shoshana Zuboff, a psychologist at Harvard Business School:
“These markets (referring to advertising on Facebook and Google) undermine democracy and they undermine freedom, and they should be outlawed…This is not a radical proposal. There are other markets that we outlaw. We outlaw markets in human organs. We outlaw markets in human slaves.”
I literally started laughing out loud as I was typing that. This Harvard Professor is comparing your local barbershop serving an ad to slave and organ traders. It sounds crazy, but this form of dementia is reliably present each time a new medium of communication takes over - what I call the changing of the narrative battlefield. Eventually, predictably, this form of dementia will go into hibernation until a new battlefield emerges and the whole cycle starts over. Shoshana would benefit greatly by taking an occasional stroll over to Harvard’s history department.
“The more things change, the more they stay the same.” - Jean-Baptiste Alphonse Karr
Vaughan Bell is a creative thinker and an excellent writer. He wrote a brilliant piece for Slate which I highly recommend reading in its entirety. I’ve pulled out the most poignant parts, which colorfully illustrate how reliably the changing of a narrative battlefield elicits dementia:
A respected Swiss scientist, Conrad Gessner, might have been the first to raise the alarm about the effects of information overload. In a landmark book, he described how the modern world overwhelmed people with data and that this overabundance was both “confusing and harmful” to the mind. The media now echo his concerns with reports on the unprecedented risks of living in an “always on” digital environment. It’s worth noting that Gessner, for his part, never once used e-mail and was completely ignorant about computers. That’s not because he was a technophobe but because he died in 1565. His warnings referred to the seemingly unmanageable flood of information unleashed by the printing press.
Worries about information overload are as old as information itself, with each generation reimagining the dangerous impacts of technology on mind and brain. From a historical perspective, what strikes home is not the evolution of these social concerns, but their similarity from one century to the next, to the point where they arrive anew with little having changed except the label.
These concerns stretch back to the birth of literacy itself. In parallel with modern concerns about children’s overuse of technology, Socrates famously warned against writing because it would “create forgetfulness in the learners’ souls, because they will not use their memories.” He also advised that children can’t distinguish fantasy from reality, so parents should only allow them to hear wholesome allegories and not “improper” tales, lest their development go astray. The Socratic warning has been repeated many times since: The older generation warns against a new technology and bemoans that society is abandoning the “wholesome” media it grew up with, seemingly unaware that this same technology was considered to be harmful when first introduced.
When radio arrived, we discovered yet another scourge of the young: The wireless was accused of distracting children from reading and diminishing performance in school, both of which were now considered to be appropriate and wholesome. In 1936, the music magazine the Gramophone reported that children had “developed the habit of dividing attention between the humdrum preparation of their school assignments and the compelling excitement of the loudspeaker” and described how the radio programs were disturbing the balance of their excitable minds. The television caused widespread concern as well: Media historian Ellen Wartella has noted how “opponents voiced concerns about how television might hurt radio, conversation, reading, and the patterns of family living and result in the further vulgarization of American culture.”
It sounds eerily familiar doesn’t it?
The printing press is widely credited as being one of the key facilitators of the protestant revolution. William Tyndale was famously burned at the stake in large part because his version of the Bible was the first to take advantage of the printing press – and hence spread like wildfire. Tyndale effectively removed the Roman Catholic Church from its position as the sole arbiter of interpreting and disseminating God’s word, and the rest is history. The following excerpt is from another excellent article which I again recommend reading in its entirety. This one by Cullen Murphy printed in the Atlantic:
The printing press took most people by surprise—it wasn’t a technology that everyone had been dreaming about for centuries, like flying machines—and its ramifications were dramatic. Printing gave rise to a “start-up” culture…Within a few decades, at least one printing press could be found in every sizable community—not just the Romes and the Londons, but also the Augsburgs and the Erfurts and the Modenas. The cost of entry was low. More books were printed in the five decades after Gutenberg’s invention than had been produced by scribes during the previous 1,000 years.
The printing press decentralized the role of gatekeeper. In a scribal culture, maintaining some measure of control over ideas and their dissemination was straightforward. In a printing-press culture, control was harder. Within their own jurisdictions, rulers tried anyway, and so did the Church. The word imprimatur is Latin for “Let it be printed”—it connoted official sanction. But more people had greater opportunities for public expression than ever before. Thwarted in Heidelberg, you could try Geneva or Utrecht.
The printing press transformed religion, science, politics; it put information, misinformation, and power in the hands of more people than ever before; it created a celebrity culture as poets and polemicists vied for fame; and it loosened the restraints of authority and hierarchy, setting groups against one another. (Emphasis mine)
Trade the word Facebook for printing press in the above paragraph and you’ll see that it sounds exactly like what Tim Cook, the media, Mark Benioff, and politicians are saying today. By now, it probably won’t surprise you that people feared home computers and shortly thereafter the internet. The below list summarizes each medium enough people were afraid of to make it into the history books:
Written language (Socrates)
The printing press
The home computer
The more things change, the more they stay the same.
I would say it’s remarkable that this pattern isn’t more widely recognized. But, we know why we are this way, so it really isn’t remarkable. See below an excerpt from Yuval Noah Harari’s excellent book “Sapiens: A Brief History of Humankind”.
Even today, scholars in this field claim, our brains and minds are adapted to a life of hunting and gathering. Our eating habits, our conflicts and our sexuality are all the result of the way our hunter-gatherer minds interact with our current post-industrial environment, with its mega-cities, aeroplanes, telephones and computers. This environment gives us more material resources and longer lives than those enjoyed by any previous generation, but it often makes us feel alienated, depressed and pressured. To understand why, evolutionary psychologists argue, we need to delve into the hunter-gatherer world that shaped us, the world that we subconsciously still inhabit.
As a hunter-gatherer the distant past was not relevant. You needed to know the location of food. Which plants were poisonous. The hunting patterns of lions. Anxiety about the impact of a new technology on societal structure would have – never crossed the minds of our ancestors. We are programmed to look around us and assume that what we see is all that has ever been, and all that ever will be. And when what we look around and see feels different from what we know best (which I define as that which we have been most exposed to in the past), it wreaks havoc on our meat-brain equilibrium.
Some of you may already be drawing analogies between investing and the chaos created by our meat brains. This dissonance is what Benjamin Graham described as the bipolar Mr. Market. The below is a quote from Warren Buffet, describing the analogy:
He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.
Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market’s quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions, he will name a very low price, since he is terrified that you will unload your interest on him.
Mr. Market has another endearing characteristic: He doesn’t mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.
So our meat brains are a double edged sword. They can result in brutal declines in solid companies, but they are also responsible for creating attractive buying opportunities.
An argument could be made that this time is different. Facebook is not a technology; it is a business. There is one “ass to kick” (Mark Zuckerberg’s) - not millions of printing presses all over the world. To that I would respond: The more things change, the more they stay the same. Now that the mechanic of social media has been created, it is here to stay. If Facebook were to disappear tomorrow something else would take its place. It is irrelevant that Facebook is a single company and not a technology. It – like the printing press – has such tremendous and ubiquitously desired utility that it or something like it will be here until the next thing comes along (the “Metaverse” obviously 😉).
Being at the center of this changing of the guard has made Meta temporarily vulnerable (especially Facebook). Like sharks smelling blood, Apple and others sensed an opportunity to attack. Because these powerful interests find themselves with a common enemy, they have formed a spontaneous (and thus far effective) alliance, and one that most people will never recognize for what it is. It’s perfect. I have to give credit to all involved parties, especially Apple, for how well they have pulled it off.
However, Facebook is far less vulnerable than most people think. From my introduction: These privacy/PR issues are very different and far less dangerous to Meta’s long-term success than if they were driven by a grassroots consumer movement against advertising. Consumer driven movements have far more staying power than smear campaigns orchestrated by entities with obvious conflicts of interest.
Now let’s take a closer look at “Privacy”.
Some of my comments below may seem a bit inflammatory but that’s not my goal. My goal is to point out that privacy as it is commonly referred to today in the media and especially by Apple is an empty branding tool. This is crucial to understand because in the long run an emperor with no clothes is not a dangerous tyrant, but a clown.
Once you realize it’s all smoke and mirrors it becomes more evident that the impact on the business – in the long run – will be minimal, no matter what it sounds like is happening in the media.
FULL DISCLOSURE: SOME PEOPLE DO CARE ABOUT PRIVACY!
To save you the time, I’ve identified them below in red:
DuckDuckGo may be the best heuristic for understanding the true number of people who care about privacy in the strictest, Apple-internet-based sense of the word. These people went out of their way to use an unarguably far worse product – to enhance their privacy. If a person is not willing to even change their search engine to enhance their privacy, then do they really care?
DuckDuckGo’s market share is .66%.
There are other services like Signal - which counts best case between 1% and 3% of mobile phone owners outside China as users - but many of those people are not there for the security, but because they have one friend who does and who has forced a bunch of his other buddies to use the app if they want to talk to him (a situation I find myself in).
Why don’t people care about privacy? Because privacy in this context is something completely different. The reality is that people care deeply about privacy, especially in the Western World. But they don’t care about what Apple calls privacy.
Now it’s time to talk about Tim Cook and Apple, literally the world’s most valuable hypocrite
FULL DISCLOSURE: I am a happy, long-term Apple shareholder. Everything I am writing about below has made me like Apple stock more, not less. And, I will likely be adding to my Apple position in the near future.
This phrasing is not a mistake. It is psychologically engineered to make you feel exactly like Apple wants you to feel: like you are at risk of being violated. “Tracking” makes our meat brain think of a lioness hunting a gazelle; a bounty hunter chasing down a murderer; a pervert following us to our house and perching high up in a tree to watch us change our underwear through the window. It also implies a 1:1 connection between the tracker and the person being tracked. It is all incredibly misleading by design.
Most people assume that when Facebook sends you an ad, it’s because someone at Facebook knows that you - John Doe who lives at 4312 Riverrun Drive, Candy Falls ID, and who is a huge Bills Fan who likes to drink Budweiser – and who is friends with Mary Jane who likes to - well, you get the point.
Let me show you what you actually are to Facebook, Google, Amazon, Apple (they have a fast growing ad business that uses the same type of targeting they hate on Facebook for), Roku, Microsoft (Bing) and any other company who serves you ads on the internet.
Yes, I just randomly smashed keys, but I’m not far off.
That’s it. That’s what you are to these internet companies. And, when they send you an ad for something, it’s not because anyone knows anything about you. It’s because they know that “19823786146132981237239812437869123” (same number from above) is likely to click on the same things as:
And in practice, “they” isn’t even a person. They is the deep neural nets that power their ad networks. The reality is that Facebook and Google would not even be able to explain why identifier X is likely to purchase the same product as identifier Y. It’s a black box. That’s why it takes time for algorithms to get better. Facebook expects it to take months if not more than a year for its algorithms to adjust to IDFA. If Facebook knew that John Smith liked Pabst Blue Ribbon beer they could just start sending John Smith ads for PBR again. But they don’t know anything of the sort. That’s just not how it works.
The prompt above is what law schools call a leading question. It is a question that isn’t unbiasedly searching for an answer. It is engineered to seek out a specific response. It is a form of marketing (Apple marketing itself). There is a reason “Leading the Witness” is prohibited in court when an attorney is questioning their own witnesses. Here are some other examples of leading/assumptive questions.
1. When did you stop beating your wife?
2. Which of our product features did you find most useful?
3. Many students think virtual learning isn’t working. Do you agree?
4. Do you want to protect your data?
Why does Tim Cook mention privacy so frequently? Because if he didn’t then the word would stop being mentioned in the context of his competitors and would revert to meaning what it meant in the past – which would be irrelevant to Apple’s competitive positioning. Remember, this is not a consumer driven movement!
What’s strange to me is how easy it has been for Tim Cook to get away with such an egregious amount of hypocrisy. The New York Times investigated Apple’s activities in China, and found that they not only made compromises in order to keep selling iPhones - they literally gave the Chinese Communist Party direct access to all information on all iPhones and all iCloud accounts in the country! The CCP has but to ask, and they can read through anyone’s texts, look at anyone’s pictures, read a list of anyone’s contacts. What’s more, they don’t even have to ask Apple! They have to ask themselves - specifically the CCP-run governing agency that now oversees the data centers on which Apple users’ information is stored. Apple won’t even know when such requests are made. See below from the article:
Tim Cook, Apple’s chief executive, has said the data is safe. But at the data center in Guiyang, which Apple hoped would be completed by next month, and another in the Inner Mongolia region, Apple has largely ceded control to the Chinese government.
Chinese state employees physically manage the computer. Apple abandoned the encryption technology it used elsewhere after China would not allow it. And the digital keys that unlock information on those computers are stored in the data centers they’re meant to secure…
Mr. Cook often talks about Apple’s commitment to civil liberties and privacy. But to stay on the right side of Chinese regulators, his company has put the data of its Chinese customers at risk and has aided government censhorship in the Chinese version of its App Store.
Anybody who knows anything about China would have assumed something like this was coming if not already in place.
Tencent – the owner of WeChat (China’s ubiquitous messaging app) – works very closely with the Chinese Communist Part (CCP) to censor speech and monitor the flow of information. They monitor what files and images are shared in their chat groups, and will pro-actively alert the police if a group begins to discuss anything that might be offensive to the CCP.
Would the CCP allow apple to be a workaround to their surveillance state? Obviously not.
The CCP and Apple are in a very mutually beneficial relationship. Apple is the greatest example China has of being a business friendly manufacturing powerhouse, and of being welcoming to Western products. Apple in return gets to sell about $20 billion worth of products in China each quarter!
Let me stress again, I actually don’t have a moral problem with what Tim Cook is doing. I also have no moral qualms with people who sell cigarettes, liquor, or pretty much anything else for that matter. Apple is a phenomenal company and should be in every person’s portfolio. That they have been able to get away with this hypocrisy is a reason to buy more of their stock rather than to sell. My objective here is only to point out that privacy issues are not consumer driven, and hence are far less potent and have less staying power than it may feel today.
More on Apple’s hypocrisy. Another excerpt from the New York Times article:
In China, Apple has ceded legal ownership of its customers’ data to Guizhou-Cloud Big Data, or GCBD, a company owned by the government of Guizhou Province, whose capital is Guiyang. Apple recently required its Chinese customers to accept new iCloud terms and conditions that list GCBD as the service provider and Apple as “an additional party.” Apple told customers the change was to “improve iCloud services in China mainland and comply with Chinese regulations.”
The terms and conditions included a new provision that does not appear in other countries: “Apple and GCBD will have access to all data that you store on this service” and can share that data “between each other under applicable law.”
Under the new setup, Chinese authorities ask GCBD — not Apple — for Apple customers’ data, Apple said. Apple believes that gives it a legal shield from American law, according to a person who helped create the arrangement. GCBD declined to answer questions about its Apple partnership.
Still the hypocrisy runs even deeper. Here is a link to Apple’s own Transparency Report on activity on the Chinese Mainland, and a screenshot below.
I’m not even sure what the point is of having this on their website given that December 2020 is the last time it was updated, but it’s one of the first things to pop up in a Google search and is incredibly misleading.
What’s so ridiculous about this reporting site is that Apple has given up control of data generated by Apple’s users in China. Again, if the Chinese Communist Party wants a piece of information off the iCloud account of an Apple user in China - they’ll just go get it without Apple ever knowing.
Apple is not different from any other company. They are profit motivated. They are executing brilliantly on maybe the cleverest psyops campaign ever concocted.
Some things are just easy to sell. Who doesn’t want more privacy? Who doesn’t want to save the environment? Who doesn’t want to save the whales?
The real reason Apple is going so hard after Facebook is because Facebook had become the defacto way most people discovered new apps on the Apple App Store, and because Apple wanted to start making some of that juicy advertising revenue Facebook was hoovering up. Apple knew they would never be able to get away with brazenly ruining other companies’ ability to serve ads (remember, thousands of companies have been hurt by Apple’s privacy push, not just Facebook) - unless they were able to create a red herring. Their implementation of IDFA is the most brilliantly executed false flag operation of all time.
Again, what is remarkable about this whole situation is how willing Tim Cook and Apple are to bold facedly lie to the public when a simple Google search so nakedly exposes them. Their lack of fear is because of the spontaneous alliance I mentioned in the introduction. When the media and both political parties are on your side, there isn’t much to fear.
More evidence of Tim Cook’s hypocrisy:
Brian Bowman, CEO of Consumer Acquisition, told VentureBeat in July that advertisers had seen revenue fall 15% to 20%, with some experiencing losses of up to 40%.
In a statement last year, Apple explained (read: LIED about) its motivations for adding an opt-in prompt for targeted ad tracking:
“We believe technology should protect users’ fundamental right to privacy, and that means giving users tools to understand which apps and websites may be sharing their data with other companies for advertising or advertising measurement purposes, as well as the tools to revoke permission for this tracking.”
Apple didn’t even wait a single quarter before diving full bore into building out their own advertising business. From the same article:
…And advertisers’ losses on other platforms are turning out to be Apple’s gains.
FT cited data from mobile marketing tool Branch in its reporting that Apple Search Ads now drive 58% of all iPhone app downloads, as compared to just 17% one year ago.
Some analysts predict Apple’s advertising revenue will top $5 billion this fiscal year, increasing to $20 billion annually in just three years.
The brand has said:
“The technologies are part of one comprehensive system designed to help developers implement safe advertising practices and protect users — not to advantage Apple.”
Doesn’t Timmy boy just make you cringe? (And, to be fair, want to buy more Apple stock?)
Thanks for all the work on Meta. I have a few questions (please excuse my ignorance on all things digital advertising).
1.) Why is ARPU so much higher in the US and Canada than the other regions?
2.) Why is ARPU continuing to grow despite Apple's rule changes - I would have thought if advertising becomes less potent via FB platforms advertisers would pay less not more?
3.) Should we be concerned that Volume of Ads (impressions) seems to have grown much faster than users - is that degrading the user experience and is limited?
4.) When does an advertiser actually pay Facebook - when somebody clicks or when they display an advert etc?
Any help on these or pointers to the answers would be greatly appreciated. Regards, Mike