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Some Tech Firms Capitalize On Privacy

ROBERT SIEGEL, HOST:

It's time now for All Tech Considered. Google, Facebook, Twitter - many of the most popular services on the Internet are free of charge ,but we do pay for them. We pay with our personal data. These companies gather as much information as they can about us. And they sort it, dissect it and study it. And they use their knowledge about us to target us with advertising. In recent weeks on All Tech, we've heard differing opinions about this dominant internet business model. Some like Omri Ben Shahar, a law professor at the University of Chicago, defend it as a bargain.

OMRI BEN SHAHAR: For many people the bargain is a great bargain. They don't really care that much about hypothetical dignitary effect of having their information stored by someone. And at the same time, they like very much that they don't have to pay.

SIEGEL: And we've heard an apology from a tech guru had who had a hand in creating this business model - Ethan Zuckerman wrote the code for the original pop-up ad.

ETHAN ZUCKERMAN: If you want to start a new advertising-based web business, you have to somehow demonstrate you're going to find out even more about your user than Facebook does.

SIEGEL: Zuckerman who's now at MIT has some regrets.

ZUCKERMAN: And we need some commendation of new business models and probably a certain amount of regulation to protect our online behavior and identities - to really get us out of what looks like an increasingly complicated trap.

SIEGEL: Well, we're going to hear now about some new businesses that are trying to do things differently. They're trying to capitalize on privacy as a selling point. Steve Henn of NPR's Planet Money team joins us now. Hi, Steve.

STEVE HENN, BYLINE: Hi.

SIEGEL: Steve Henn, Ethan Zuckerman says free is hard to compete with, but I gather you say there are some alternatives to the pay with your data model out there.

HENN: Well, we're beginning to see some crop up. One is called Open Whisper Systems. This is a nonprofit company started by a hacker who goes by the name Moxie Marlinspike, and its building opened source encryption tools for messaging and phone calls. What's interesting about what Open Whisper Systems is doing is that they're giving the code away to other companies for free, and they already have millions of adopters. There are also for-profit businesses that are betting that security and privacy will sell. Silent Circle offers a fee-based text messaging system. There's a company that makes something called the Blackphone which is a secure Android phone, and Wicker which offers more secure-base text messaging and the ability to delete and wipe old messages. All of these businesses have been able to raise money from large investors including someone prominent ones.

SIEGEL: So there are investors, but does investment translate into consumers?

HENN: Well, you know that's interesting and there hasn't been a big consumer market for privacy in the past. But that may be beginning to change, and what all of the businesses I just mentioned are doing - they're targeting people who handle lots of sensitive information - Wall Street bankers, executives. And I think that generally people who have very sensitive information are more receptive to the pitch that privacy and security are worth paying for. But what I think is really fascinating is how this attitude is beginning to trickle into the consumer market. Here's Tim Cook speaking on Charlie Rose a couple of weeks ago. Cook, of course, is Apple CEO.

(SOUNDBITE OF ARCHIVED RECORDING)

TIM COOK: We try not to collect data. So we're not reading your e-mail. We're not reading your iMessage. If the government laid a subpoena on us to get your iMessages, we can't provide it. It's encrypted, and we don't have the key.

SIEGEL: So the challenge to companies out there is to make the consumers value that security, that privacy so much that they'll be willing to pay for it.

HENN: Right and this is actually a pitch to consumers that Apple is making aggressively right now. A week after Tim Cook spoke on Charlie Rose, Apple announced that its new operating system for iPhones and iPads would encrypt all the data on your phone or device at rest. So if police or someone else served Apple with a warrant to open a locked phone, they wouldn't be able anything off it. Now secure researchers I've spoken to have pointed out that Apple actually does have public keys for Imessages, and theoretically at least, it could decrypt those messages. Apple denies it does that, but others have found ways to get data off blocked iPhones. Still the thing is Apple systems are really getting better and the company is aggressively competing on privacy. And it's forcing other companies to compete as well. Just a few hours after Apple made its announcement about encrypting data on phones, Google's Android said it would do the same thing. So Google is apparently worried people will choose other products based on privacy which is interesting. When Google competes on privacy, you know something has changed.

SIEGEL: Thank you, Steve.

HENN: Thank you.

SIEGEL: That's Steve Henn of NPR's Planet Money team. Transcript provided by NPR, Copyright NPR.