Internet Consolidation Can Be Good for Privacy

There's been a lot of hand-wringing lately about Google's recent acquisitions of Teracent (ad-personalization) and AdMob (mobile ads), as well as Apple's response, buying AdMob's rival Quattro Wireless. Jeff Chester, true To form, quickly fired off an angry letter to FTC Chairman Jon Leibowitz, ranting about how the Google/AdMob deal would harm consumer privacy with the same vague fulminations as ever:

Google amasses a goldmine of data by tracking consumers' behavior as they use its search engine and other online services. Combining this information with information collected by AdMob would give Google a massive amount of consumer data to exploit for its benefit.

Yup, that's right, it's all part of Google's grand conspiracy to exploit (and eventually enslave) us all--and Apple is just a latecomer to this dastardly game. It's not as if that data about users' likely interests might, oh, I don't know... actually help make advertising more relevant--and thus increase advertising revenues for the mobile applications/websites that depend on advertising revenues to make their business models work. No, of course not! Greedy capitalist scum like Google and Apple don't care about anyone but themselves, and just want to extract every last drop of "surplus value" (as Marx taught us) from The Worker. (Never mind that in 4Q2009 Google generated $1.47 billion for website owners who use Google AdSense to sell ads on their sites--up 17% over 4Q2008--or that Apple has a strong incentive to maximize revenues for its iPhone app developers.) Internet users of the world, unite! You have nothing to lose but all those "free" content and services thrown at your feet!

Anyway, the letter lambastes AdMob's current privacy policy, claiming that it "provides inadequate notice and little ability to opt out of its data collection and targets children 13 and over" and asserts that things are only going to get worse once Google takes over. By contrast, our far more reasonable friends at PrivacyChoice raise some very fair questions about Teracent's current privacy policies, decrying "The worst consumer opt-out"--but unlike Chester, an anti-advertising zealot, the PrivacyChoice folks realize that, when big companies like Google and Apple buy small companies like AdMob, Teracent and Quattro Wireless, they face enormous pressure bring their new acquisitions privacy practices up to their own standards. And where the new acquisitions are operating in a new area, like location-advertising, big players will likely decide on higher, not lower, privacy standards. As PrivacyChoice notes:

No doubt Google is working to assimilate Teracent into its own (much better) consumer privacy practices. But Teracent's shortcomings provide a good reminder of the chasm in quality between the best and worst consumer privacy practices of ad-targeting companies. Until websites and advertisers start to attend to these matters in their own choices, this disparity in commitment to best practices will remain a central challenge to effective self-regulation.

Much as it annoys the Big-is-Bad crowd, consolidation can often reduce that that "privacy practice chasm" by raising the bar for all players. Google and Apple have spent years (in Apple's case, decades) building trusted brands, which gives them a much stronger incentives to protect users' privacy than a scrappy start-up under intense pressure from VCs to make their investment work--and quickly.