Privacy concerns play a less important role in Google Inc (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT). Still, both of these companies operate world class search engines and need users’ data to help improve their results. Google’s Gmail service and Microsoft’s Hotmail give both companies an intimate look at users’ personal email and communications. While neither company has a social network with the popularity or data of Facebook Inc (NASDAQ:FB), Google Inc (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT) have access to a large amount of personal data that plays an important role in product improvement.
Google’s fat EBIT margin of 25.3% and profit margin 20.9% give it billions of dollars it can spend on a good PR company to sway the privacy discussion in its favor. Also, it is encouraging to see that Google Inc (NASDAQ:GOOG) can maintain a 14.3% return on investment without Facebook’s level of personal data.
Microsoft Corporation (NASDAQ:MSFT) is in a similar position to Google. Its EBIT margin of 28.9% and profit margin of 21.6% give it a large budget to spend on marketing and public relations. With Microsoft’s profitable software business and ROI 18.5%, it has the money to wait out the current privacy discussion.
Apple Inc. (NASDAQ:AAPL) is one of the companies least exposed to the current privacy discussion. The company sells computers, smartphones, tablets and other products. It does not have access to the data generated by the world’s largest social network or the world’s largest search engines. The company has access to some users’ files through its iCloud product. Regardless, privacy concerns are a comparatively small part of Apple Inc. (NASDAQ:AAPL)’s risks.
The company is highly profitable and has billions of dollars of cash it can use to influence the media’s discussion of privacy concerns. With a gross margin of 42.5%, an EBIT margin of 31.5% and a profit margin of 23.5%, Apple Inc. (NASDAQ:AAPL) can easily pay a powerful PR companies to try and use privacy scares to hurt Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB).
Conclusion
Big tech companies collect mountains of data and governments get their hands in these databases. Polls show that 45% of Americans find this to be perfectly acceptable. Regardless, Facebook could face some damage from the PRISM program, because its data is so personal. Microsoft Corporation (NASDAQ:MSFT) and Google will face more questions about how they treat personal emails and data from their search engines, but overall they remain profitable companies. Apple Inc. (NASDAQ:AAPL) could end up benefiting from this recent media scare as it has comparatively little personal data and is very profitable.
Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Apple, Facebook, and Google. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL), Facebook Inc (NASDAQ:FB), Google Inc (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
The article Why Big Tech’s Privacy Concerns Are Overblown originally appeared on Fool.com.
Joshua 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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