Mobile Apps: There’s Something (Profitable) About Your Privacy

Why do so many companies hanker after apps? Smartphone apps, tablet apps, iOS apps, Android apps, the list is endless. 

Leave aside for a moment the techno-pubescent excitement that accompanies the launch of every new technology (if you are not old enough to remember words like “client-server”, then “SOA” will surely sound familiar enough). Every Marketing 101 course drills into its students that acquiring a new customer is way costlier than retaining an existing one. Loyal customers (leaving aside the pejorative connotation the word “loyal” carries, implying that customers who shop elsewhere for a better deal are of dubious moral character) are what you should aspire to – that keep buying from you for a longer period of time – and which allows you to refocus your marketing and advertising dollars towards the acquisition of newer customers, faster. If you spend less on unnecessary discounts and expensive retention schemes then margins from existing customers are automatically higher.

Customers can stay loyal if you can build a bond of affinity with them. You should aspire to be more like the local kirana owner (only infinitely richer), who in a perfect world knew everything about you – your likes, dislikes, which festivals you celebrated and therefore which sweets you would buy, when your relatives came over to stay and what their likes were, what exotic food items you wanted and so on. And who knew your name. Hence the marketer’s love for loyalty programs, no matter that customer loyalty is notoriously difficult to guarantee.

In the world of online retailing (actually, it applies just as well to any kind of retailing), how do you get to acquire a deep level of intimacy with your customer? Smartphone apps provide this degree of intimacy that desktop / laptop browsers cannot. This is by simple virtue of the fact that the smartphone travels with the user, the user is constantly logged on to the app, and the app knows where you go and where you are. So no wonder that in December 2011, Amazon offered a “brazen” deal to its customers in brick-and-mortar stores to do an “in-store” price-check of items using the Amazon Price Check app, and if the same product was available on Amazon, get it at a discount off the store’s price. Though termed “not a very good deal”, it nonetheless angered the Retail Industry Leaders Association, and elsewhere was described as “Evil But It's the Future”. The combination of availability – the app was installed on the smartphone that was with the user – and the integrated capabilities in the device – a camera that fed into a barcode scanner app –made this possible. The appeal of apps is undeniable.

Your best-thing-since-sliced-bread, apps are installed on the customer’s smartphone (or tablet or phablet), are always running (even when it is not supposed to be doing so), knows everyone in your contacts (from your proctologist to the illegal cricket bookie), can hear what you speak (even your TV can do this now), knows where you are, who you call, what text messages you send and receive, knows what other apps you have installed (presumably so it can see how potentially disloyal you could be), which Wi-Fi networks you connect to, access photos and videos you have taken (naughty!) and so on. All this to better hear you with, see you with and ultimately eat you with (and your wallet) – with due apologies to Little Red Riding Hood. You may want to take a closer look at the permissions your favourite app wants, when you install it – like Amazon India, eBay, Flipkart, Freecharge, HomeShop18, Jabong, MakeMyTrip, Myntra, SnapDeal. Great minds do seem to think alike, don’t they?

[Technical aside: I covered the red herrings thrown in favour of apps in the first part, but here is some more… You can store more data, more effectively and process that data better using an app than you can with a plain browser-based approach. True. But not quite. The ever-evolving world of HTML5 (the standard that underpins how information is structured and presented on the web) has progressed to make both these points moot – with offline storage and local SQL database support. Yes, there are arguments to be made about handling large amounts of data offline with browser-based mechanisms, but these are for the most part edge-cases. To be fair, there are some high-profile cases of companies switching to native apps after experimenting with HTML5-based apps (hybrid apps that wrapped a browser-based UI with a native shell), like LinkedIn and Facebook. The appeal of apps therefore is undeniable. But, as I argued earlier, the appeal of apps does not negate the utility of browser-based interfaces.]

What is all this useful for? Your app now knows that you Ram, Shyam and Laxman in your contacts have birthdays coming up, and it can suggest an appropriate gift for them. Convenient, isn’t it? While driving to work, you can simply tell your app – speak out the commands – to search for the latest perfume that was launched last week and to have it gift wrapped and delivered to your wife. The app already has your credit card details and it knows your address. Your app knows that you are going on a vacation next week (because it can access your calendar, your SMS-es, and perhaps even your email) to Sikkim; it helpfully suggests a wonderful travel book and some warm clothing that you may need. The imagined benefits are immense.

But, there is a distinctly dark side to apps – as it relates to privacy – that should be a bigger reason of concern for customers and smartphone users alike. Three sets of examples should suffice.

You get a flyer from your favourite store, letting you know that you can buy items that your pregnant daughter will need in the coming weeks. You head over to the store, furious – because your daughter is most certainly not pregnant. Later you find out that she is, and that the store hadn’t made a mistake. It turns out the truth is a little more subtle than that, and a little more sedate than what tabloid-ish coverage - with headlines like “How Companies Learn Your Secrets” - made it out to be (the original presentation made at the PAW Conference is also available online).

There are enough real dangers in the world without making it easier to use technology to make it even more unsafe. Considering how unsafe air travel can be for women and even girls, one has to question the wisdom of making it even more so. If this does not creep you out, then perhaps the Tinder app – which uses your location and “displays a pile of snapshots of potential dates in a user’s immediate area”, to as close as within 100 feet - may want you to pause for thought.

Do apps need all the permissions they ask for? No. Would they work if they didn’t have all those permissions? 99% of the time, yes – they would work without a problem. For example, an app would need to access your camera if you wanted to scan a barcode to look up a product. The app would need access to your microphone if you wanted to speak out your query rather than type it in the app. What if you don’t particularly care about pointing your camera at the back of books to scan their barcodes, or speaking like Captain Kirk into your phone? Sorry, you are out of luck. You cannot selectively choose to not grant certain privileges to an app – at least on a device running the Android mobile operating system. In other words, it is a take-it-or-leave-it world, where the app developer is in control. Not you. And wanting to know your location? Even if you are a dating app, it’s still creepy.

But surely app makers will ask you before slurping your very personal, very private information to its servers in the cloud? Yes, of course – you believe that to be true, especially if you are still in kindergarten.

A few weeks before its IPO, JustDial’s app was removed from the Google Play Store. It was alleged that the updated version of the JustDial app had “started retrieving and storing the user’s entire phone book, without a warning or disclaimer.” Thereafter, JustDial’s mobile “Terms and Conditions” were updated to include the following line: “You hereby give your express consent to Justdial to access your contact list and/or address book for mobile phone numbers in order to provide and use the Service.”

In 2013, US-based social networking app Path was caught as it “secretly copied all its users’ iPhone address books to its private servers.” Action was swift. The FTC investigated and reached a settlement with Path, which required “Path, Inc. to establish a comprehensive privacy program and to obtain independent privacy assessments every other year for the next 20 years. The company also will pay $800,000 to settle charges that it illegally collected personal information from children without their parents’ consent.” In the US, a person’s address book “is protected under the First Amendment.” When the controversy erupted, it was also reported that “A person’s contacts are so sensitive that Alec Ross, a senior adviser on innovation to Secretary of State Hillary Rodham Clinton, said the State Department was supporting the development of an application that would act as a “panic button” on a smartphone, enabling people to erase all contacts with one click if they are arrested during a protest.” Of course, politics is not without its dose of de-rigueur dose of irony. That dose was delivered in 2015 when it emerged that Hillary Clinton had maintained a private email account even as she was Secretary of State in the Barack Obama presidency and refused to turn over those emails.

So what happened to Just Dial for allegedly breaching its users’ privacy? Nothing. No investigation. No fine. No settlement. No admission. No mea-culpa. In short, nothing. It was business as usual.

Apps can be incredibly liberating in eliminating friction in the buying process. But hitching your strategy to an app-only world is needless. It is an expensive choice – from many, many perspectives and not just monetary. The biggest costs are of making you look immature should you have to reverse direction. As a case-in-point, one can point to the entirely avoidable brouhaha over Flipkart, Airtel, and Net Neutrality. In this battle, no one came smelling like roses, least of all Flipkart, which attracted mostly negative attention from the ill-advised step, notwithstanding post-fact attempts to bolt the stable door.

Let me end with an analogy. The trackpad on your laptop is very, very useful. Do you then disable the use of an externally connected mouse?

In the next column, I will take a close look at Flipkart’s biggest competitor, some leadership lessons from around the world and some two-cents of plain suggestions.

The opinions expressed in this article are the author's own​.