8/5/2016

Microsoft (MSFT) and Google's (GOOG) new pact could signal the beginning of the end for personal privacy Quartz

BIGGER BROTHER

Microsoft and Googles new pact could

signal the beginning of the end for personal
privacy
Robert Epstein

May 04, 2016

Always with you. (Reuters/Robert Galbraith)

The recent peace pact between Google and Microsoft, rst reported in the Wall Street Journal on April 23
and then with a bit more are in The Guardian on May 2, might someday be seen as a turning point in
modern human history. Over the past decade, Microsoft has been the largest and most determined agency
on earth intent on keeping Googles growth in check, waging an unrelenting battle against the company
through lobbying, lawsuits and regulatory complaints. Now Microsoft is backing down.
Last year, largely as a result of a change in leadership at both companies, the tech giants agreed to drop
about 20 patent lawsuits they had led against each other over the previous ve years. And now they have
truly buried the hatchet. Microsoft is even dropping its support for the various organizations it helped to
create to lobby government ofcials, such as FairSearch and ICOMP, which in turn helped set in motion
the recent anti-trust actions brought against Google by the European Union.
When two large monopolies that have been butting heads for a decade suddenly cozy up, that cant be a
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Microsoft (MSFT) and Google's (GOOG) new pact could signal the beginning of the end for personal privacy Quartz

good signat least not for us. So how might the new pact hurt the average person, and how might it even
be a turning point?
To understand what has happened here, you need to rst look at Googles unusual revenue model. Google
didnt invent the search engineby some accounts theirs was the 21st, not the rst. But it did invent a
brilliant new way of monetizing the search process. Make your search engine the gateway to all
knowledge, let people use it for free, track and catalog all their search activity, and then auction off that
information to the highest bidder. On the surface, the company looks like an extremely generous, potsmoking librarian; beneath the surface, it is little more than a gloried advertising agency, now bringing
in almost all of its $75 billion in annual revenues by selling personal information about people like you
and me to advertisers. Its a deceitful business model, but it works.
The model works so well, in fact, that it has been spreading like wildre in recent years. Both Vizio and
Verizon have gotten on board, and now, it seems, staid old Microsoft is moving that way too.
A few years ago, over lunch with a friend who works for Microsoft, she shut me down fast when I made
the mistake of comparing Microsoft to Google. Microsoft makes money by selling products, she said
proudly, not by tricking consumers into revealing their sexual fantasies and then selling that information
to sex toy manufacturers.
She was right, of course. But then last year, word began to spread about the various ways in which the
new Windows 10 operating system tracked user behaviorlistening in continuously to everything people
said, for example, supposedly so that Cortana, Microsofts version of Apples Siri, would know when
people were addressing it. Windows 10 was also reported to log everything people typed.
The company defended itself by asserting that the tracking features could be disabled, but more recent
reports suggest that some core tracking functions cant be turned off. In any case, because virtually all the
tracking is opt-out rather than opt-in, the vast majority of people will be tracked by default, and that
tracking is aggressive. According to Forbes, the Home version of Windows 10 is allowed to control your
bandwidth usage, install any software it wants whenever it wants display ads in the Start Menu send
your hardware details and any changes you make to Microsoft and even log your browser history and
keystrokes.
All this is allowed under the Windows End User License (WEUL), to which one assents when one uses
Windows 10. The WEUL, in turn, incorporates both Microsofts Privacy Statement and Services
Agreement, which, between them, allow Microsoft to track pretty much everything users do and to share
that information with just about everyoneafliates, subsidiaries, vendors, legal authorities, or anyone
else if the purpose is to protect the rights or property of Microsoft.
Aggressive tracking and a no-boundaries terms-of-service agreementthose are two of the key elements
of Googles business model. When Microsoft started aggressively peddling a free Windows 10 upgrade on
a massive scale worldwide, I knew we were in trouble; free is how Google justies all the tracking. I had
to install third-party software on my laptop to stop it from pestering me every ve minutes about
installing the upgrade; most people just gave up and transformed their laptops and desktops into the Eyes
and Ears of Microsoft.

Weekend editionUnderestimating Elon, the tortilla challenge. All this and more in today's Daily Brief.
Microsofts prots have been declining in recent years, in part because it missed the boat on the shift
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Microsoft (MSFT) and Google's (GOOG) new pact could signal the beginning of the end for personal privacy Quartz

toward mobile devices. It has also invested untold millions trying to keep Bing, its second-rate search
engine, aoat. Because Bing indexes only about 14 billion web pages (as opposed to 45 billion for
Google), it cant help but give you inferior results, which is why it has at most a 20% share of the search
market in the US, and less than 5% in the rest of the world (compared to 90% for Google internationally).
Whats a software company to do?
The answer is The Pact. And with Microsoft shifting in the direction of Googles surveillance model of
business, two of the worlds most powerful companies will henceforth be mutually invested in making
sure neither regulators nor legislators interfere with that model.
Here is how historians might someday look back at the year 2016: It was the year Googles biggest
corporate enemy threw in the towel and many privacy-promoting organizations shut down for lack of
funding. It was the year public ofcials, citing safety and security concerns, began defending the idea of
the truly transparent society, where everything is known about everyone. It was the beginning of the end
of human freedom.
Follow Robert on Twitter at @DrREpstein. We welcome your comments at ideas@qz.com.

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