Regardless of your opinion about the revelations that data stored by American businesses might not be afforded the level of privacy once assumed, public technology companies have to react in order to keep customers happy.
It’s still early days, but be on the lookout for your favorite technology company to begin touting its privacy policies. They have to; the reality is that many of them use your data in order to market products and services to you. Let’s take a look at a few different tech companies and how heavily they rely on user data to generate revenue.
A social stalwart
Facebook Inc (NASDAQ:FB) is trying to be transparent about government requests for information about its users. It recently released information about national security requests, which are demands from the federal government about data that could be used to investigate a person. Some of that same data is what allowed Facebook Inc (NASDAQ:FB) to book $1.4 billion in revenue in the first quarter, as it utilizes user information to sell targeted advertising.
What’s intriguing about Facebook Inc (NASDAQ:FB) is that it is betting on mobile to increase its $1.4 billion quarterly revenue. In fact, it recently reported a 54% year-over-year increase in mobile users. Yet, there has been some backlash to Facebook Home, the company’s mobile app for Android that is ranked with three stars. And as you can see from the chart above from mobile device management specialists Fiberlink, Facebook Inc (NASDAQ:FB) is a commonly blacklisted social networking mobile app. Could that be because of possible privacy concerns? Highly likely.
Where the ads are the secret
Public opinion about Google Inc (NASDAQ:GOOG) as a company remains high. A new movie, “The Internship” featured some middle-aged characters getting a chance to gain experience at what is portrayed as one of the best places to work, Google Inc (NASDAQ:GOOG). The company wants to keep public sentiment regarding the company very positive. That’s because it utilizes its users’ browsing data in order to make money with its AdSense advertising network product.
This makes positive public relations spin for the company incredibly important. During Google Inc (NASDAQ:GOOG)’s most recent earnings call, the company reported $5.8 billion in revenue in the United States alone. Consider that the U.K. made up $1.3 billion and the rest of the world $5.7 billion of revenue for Google Inc (NASDAQ:GOOG), it helps understand how important U.S. revenue is in the face of any privacy concerns Americans might have about their surfing habits being used to sell ads.
The bulletproof company
Lost in all the hullabaloo about “PRISM” is one technology company that seems to have escaped unscathed. Apple Inc. (NASDAQ:AAPL) is, by far, the biggest technology company in the world, but its focus on selling hardware has seemingly allowed it to operate under the radar of any sort of privacy concerns.
That’s fascinating, given that research suggests that Apple Inc. (NASDAQ:AAPL) is one of the biggest cloud-based services because of its media business. iTunes revenue topped $4 billion the most recent quarter. Yet, no one is overly concerned about Apple Inc. (NASDAQ:AAPL)’s privacy policies. That can mostly be attributed to the fact that Apple Inc. (NASDAQ:AAPL)’s cloud business is based around entertainment and media. This isn’t necessarily data that the public is overly concerned about becoming compromised — unless they are putting sensitive items on iCloud.
Do you believe?
The question that needs to be answered is: how much do you believe that privacy concerns could affect any of these companies long-term?
When it comes to Apple Inc. (NASDAQ:AAPL), it has such a diverse portfolio and focuses so much on entertainment that privacy doesn’t really seem to matter. This fact seems evident although most customers do have their credit card information readily accessible via their iTunes accounts.
Google Inc (NASDAQ:GOOG)’s business is highly dependent on user information. But it gets most of its revenue from AdWords. This search-result based ad product comes from user-initiated search results. This means that the data is submitted voluntarily, broken down in this chart as “Google.com” revenue.
The biggest concern is Facebook Inc (NASDAQ:FB). Information Technology departments despise it because of potential data leaks based on the chart above. Plus, the relationship between sharing things and the company using that data to make money is not clearly defined for users to properly understand. They are making money from users, but how many of them really understand what is happening with their data as it is being sold for marketing purposes?
Time will tell, but Facebook Inc (NASDAQ:FB) might face potential backlash — which could lead to even worse stock performance for the company.
The article Which Tech Companies Win in a Time of Privacy Backlash? originally appeared on Fool.com and is written by Daniel Cawrey.
Daniel Cawrey has no position in any stocks mentioned. The Motley Fool recommends Apple, Facebook, and Google. The Motley Fool owns shares of Apple, Facebook, and Google. Daniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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