Last Updated Jul 12, 2010 11:52 AM EDT
This big issue is more serious than Apple's tendency to pretend its product problems don't exist. Consumer privacy has become a major topic for regulators and politicians -- to say nothing of consumers. It's not a concern for just Apple. Such companies as Google (GOOG), Microsoft (MSFT), Facebook, Twitter, and AT&T (T) have all dealt with major privacy issues. Unless the industry finds better ways to handle customer data, tech firms may find state and federal governments beginning to set policies and make decisions for them.
In Apple's case, the iTunes incidents seem due to insufficient fraud prevention tactics. It was clearly an egregious mistake to copy data from one customer's phone to another. I spoke with several Apple store representatives who said an iOS 4 upgrade is supposed to reset the phone and wipe clean all data -- the store is to add nothing to the device. In short, all the incidents were due to sloppy business practices.
But let's not demonize Apple. Plenty of high tech companies have made a hash of customer privacy and data security:
- During the rush of iPhone 4 orders, many AT&T customers (T) found themselves logging into the accounts of strangers.
- AT&T systems also enabled the noted iPad data breach.
- Microsoft (MSFT) lost data from T-Mobile Sidekick customers.
- Someone got into the attendee list of a Cisco (CSCO) conference and gained access to the personal data of a fifth of those people.
And yet, there is a difference between high tech and other industries. Companies in the former category make a living from enabling electronic data storage and use. They are the ones that argue data can be safe -- only to offer proof that it is not. And when companies in other industries fail, it's still generally because of technology, so high tech becomes the indirect target for consumer anger.
As data breaches continue, they will slow user acceptance of new business tools -- and encourage oversight from government regulators and elected officials who have already become wary of how well companies protect consumer information. Given the high tech track record, maybe that is necessary. The industry has had years to improve its practices. Perhaps it needs some arm-twisting help. European-style privacy laws, anyone?
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