Zuckerberg attacks: If Apple really cared about customers, iPhones would cost less

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Photo: John Brownlee
Facebook and Apple have generally had an amicable relationship, with occasional blips. Photo: John Brownlee

Facebook CEO Mark Zuckerberg has lashed out at Tim Cook’s privacy policy, calling it “ridiculous,” and knocking Apple for pricing its products as highly as it does.

Zuckerberg’s rebuttal follows comments made by Cook in September, in which he noted that, “When an online service is free, you’re not the customer. You’re the product.” While the message was most likely meant for long-time rival Google, Facebook’s head honcho definitely took it personally.

Read Zuckerberg’s impassioned response after the jump:

“A frustration I have is that a lot of people increasingly seem to equate an advertising business model with somehow being out of alignment with your customers,” Zuckerberg commented. “I think it’s the most ridiculous concept. What, you think because you’re paying Apple that you’re somehow in alignment with them? If you were in alignment with them, then they’d make their products a lot cheaper!”

Tim Cook’s original comments followed shortly after what was then thought to be an iCloud breach, resulting in the leaking of dozens of nude images of celebrities. In the aftermath, Cook used the talking point of privacy as a way of differentiating Apple from its rivals —  many of whom rely on the mining and monetizing of user data as their primary source of revenue.

In his new TIME interview, Zuckerberg describes the necessary evil (he doesn’t use those words) of online advertising, saying that, “Our mission is to connect every person in the world. You don’t do that by having a service people pay for.”

While Apple and Facebook have generally had a good relationship over the years, there have been previous blips. Steve Jobs, who Zuckerberg has often credited as a major source of inspiration, allegedly once referred to the Facebook founder as a “****ing a**hole” after a heated spat.

Last year, Zuckerberg passed Tim Cook in approval ratings on the employee job rating site Glassdoor. Cook currently holds 93 percent approval, next to Mark Zuckerberg’s 96 percent.

Source: TIME

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  • Scott Landis

    Zuckerberg sounds very defensive and the quote really isn’t all that coherent.

    • CelestialTerrestrial

      Zuckerburg doesn’t know how to run a hardware based company OR a company that has decent NetProfits to Gross Sales.

      Apple Gross Sales 2014 (Dec ’13 to Sept ’14 quarters) $182,795,000,000
      Apple Net Profits 2014 (Dec ’13 to Sept 14 quarters) $39,510,000,000
      Apple Net Profit margin? About 21.3%

      Facebook Gross Sales 2014 (Dec ’13 to Sept ’14 quarters) $11,000,000,000
      Facebook Net Profits 2014 (Dec ’13 to Sept ’14 quarters) $802,000,000
      Facebook Net Profit margin? About 7.2%

      Zuckerberg needs to understand the concept of running a hardware business.

      If you have a company that makes a product and you have lines of people and you have long lead times, then the price of the unit is priced that the market accepts. Apple knows how to run a healthy, profitable business, the other people don’t. Just because Apple makes good profits does NOT mean they are overpriced, it means they know how to run a business. Obviously Zuckerberg never studied Finance, he only studied programming and he dropped out of college to over hype his company’s stock.

      • Grunt_at_the_Point

        Your margin for Apple is way off http://goo.gl/HrKLIa . Zuck is right. Apple is sitting on roughly 150 billion dollars in cash. Why not pass some of the cash to customers in the form price reductions.

        Having said that, being a supporter of capitalism, I understand Apple’s position. If customers are willing to pay why not priced the product at the max. Its not Apple’s fault there are willing suckers out there, myself included.

      • AAPL_@_$101_Is_A_Done_Deal_:)

        Most of that cash is overseas and shareholders will want first dibs if it gets liberated. I don’t care if they don’t make cheaper products with that money but I would like to see them fund some health and energy research projects with a fat amount. Even as an Apple shareholder I’d definitely urge them fund some science shows like Discovery specials or Nova. Children and adults should have plenty of shows like that to get them away from that reality show trash.

      • CelestialTerrestrial

        What’s on the Discover Channel…. Moonshiners, Fast and Loud, Naked and Afraid, Dude, You’re Screwed…. I don’t think that’s Apple’s market. Even though I enjoy Fast and Loud. Moonshiners is not my cup of tea. Aren’t these reality shows?

        I can see Nova or something on pubic TV.

        I believe Apple spends the appropriate amount of money to get a tax write off each year. They give money to RED from the proceeds of the RED products they sell, so they do give a portion of the profits to charitable things.

        It’s easy to spend someone else’s money. Just like I could tell you that you should give more money away to Charity just because I feel you should.

        I think Apple, may, at some point, buy a large IT services/software solutions company like an IBM. It would actually make sense at some point in time, it might help them go after the Enterprise business. Who knows what’s going to happen in the future. Companies like to have cash on hand so if something happens, they find themselves in a cash poor situation. Some companies go out of business for not managing their money properly.

      • Richard Liu

        Apple do need to play an active role in funding science researches, but not to those entertaining business like Discovery.

      • CelestialTerrestrial

        I used Net Profits, not Gross Profits. I could care less what the Gross Profits are, since there is such a thing as overhead, which indicates if the company has too much or not. It’s not what you Gross, it’s what you net that’s important.

        Apple is sitting on cash, for which they are taking out loans to repurchases stock or pass out dividends to shareholders.

        If, Apple brought in their $150 Billion in cash into the US, they would lose right off the top approximately $50 Billion in taxes, so that’s why it’s still in Ireland for the time being.

        So, what they have in cash is not REALLY what they have in cash. They also have racked up debt for their last stock repurchase, and dividend payment so that would come off the top if they paid their loans off. The other reason to hoard cash, IMO, is in the case of a declining market should their be some drastic losses due to whatever reason, and to hoard in order to purchase another company should they want to do that. They certainly don’t want to put themselves in a cash poor situation.

        There are plenty of things to do with the cash in Ireland, but here’s the issue. Apple has a finite amount of iPhones it can make per year. They already can’t make them fast enough when they release a new product, after the initial sales demand is over, they typically offer discounts on the product through the resellers, so they are discounted right before a replacement model comes to market. Let’s say Apple made a product that had decent profit margins but only sold for $200 MSRP for an unlocked phone, it might not perform well and be able to handle future updates of the OS because the processor was an older generation product. Apple phones typically have 4 years of OS updates, Android phones typically have only 2 years (for the most part). Only offering 2 years worth of updates means that the company ceases supporting the product and spending any money on the product, hence lowering their support costs, and forcing the customer to buy a new product should they want a new OS.

        In the Android world, they’ve been selling older, outdated Gingerbread phones that will receive no updates. That’s what these cheap $100 phones are. You want Apple to sell an older generation iPhone 3 for $100? Apple doesn’t do that. You will NEVER see Apple sell a computer device that runs an older OS the day you buy it. That is just a cardinal rule. The Android platform doesn’t live by normal logical ways of selling a product.

        The problem is that Zuckerberg obviously wants some attention, he’s like any self-absorbed celebrity that isn’t getting much media attention, so he takes the opportunity to say something against Apple because Apple is getting attention and his BS is making headlines. I think Facebook is a joke service and it STILL looks like it was designed by a bunch of kindergarteners. I’m surprised people even take Facebook seriously, or Suckerberg for that matter. He has no degree in Finance, he’s just a geek that has the psychological ineptness of a high school student.

      • macrumpton

        So Apple should reduce prices to sell more? They can barely keep up with current demand.

  • The Gnome

    Zuckerberg showing his immaturity. Then again his customers are advertisers, not the people who use Facebook.

    • CelestialTerrestrial

      Zuckerberg in many ways still has the mind of someone in high school. He needs to focus on his own business and get his own company’s net profits higher. 7% NetProfit to Gross Sales is not very good. It’s actually on the pathetic side.

      • Piyush

        Everyone *might* not have highest profit percentage as their end goal. Thanks to Steve Jobs and his devotees, everyone thinks success = money.

      • CelestialTerrestrial

        That concept was first done a LONG time ago. I like Apple’s success because it keeps Microsoft and Android from having a Monopoly. I like Apple being successful because it proves that a company does NOT have to have 90% of the market share to be successful. I like Apple having money so they can invest, purchase other companies to help them make better products. I like Apple having money because I know they aren’t going anywhere.

        Having money is ONE very easy to quantify the success of a company, etc. It’s what is commonly used as a measurement for all corporations and it’s a VERY old concept.

        Being a successful company, they are also targets for lawsuits, frivolous or not frivolous, and they are spending a of money defending themselves or paying settlements if there is a settlement. It’s part of running a business. if they didn’t have that much cash, would they be sued less? That we don’t know.

        Right or wrong, it’s also not cool to be so flippant about the money they have and what to do that simply doesn’t make business sense. Giving away money just because someone is jealous of their success is silly.

        And what gives you the right to dictate how much they should give away? I mean, we all have our own thoughts if we were in Cook’s position, but the thing is, we aren’t Cook and he’s not asking, Zuckerberg, you or I what to do with Apple’s money. If Zuckerberg asked me what he should do, I’d tell him to get rid of a stupid website called Facebook and go back to college with his money and give most of his money away to me because I would definitely have another idea to run a business that I think is better. But I know he isn’t going to listen to me. so, it’s all idol chat.

        Apple’s goal is to not have the highest profits, they just do because they know how to run their business. If you look at IBM and Compaq, they had similar Net Profits to Gross Sales before profit margins eroded because the PC industry was not as profitable. In the PC clone market, there are too many companies making too many products fighting over market share and because of this, their respective businesses are mismanaged and they don’t make as much profits, plus they have to pay Microsoft for each unit sold because these PC don’t develop the OS. That’s why HP, Dell, Lenovo, etc. can’t make any money. They are just clone builders and they don’t do much in the way of innovating. The same thing is happening in the Android world, only they don’t pay Google any money for the OS, but most of these Android phones are just knockoffs and they are all pretty much using off the shelf components and the only thing they really do is maybe the skin of what it looks like, some dumb features, and the case design and that’s the extent of it. None of those companies really do much more and since there are so many Android mfg with all of these models and they are fighting over marketshare, they end up not making much profit. Well, Apple doesn’t want to be a PC or Android clone mfg, they do their own thing and it’s good for the market to have Apple successful because it keeps these others from being monopolies. You want Microsoft and Google to have 100% market share in their respective markets? I certainly don’t.

    • CelestialTerrestrial

      People are the product? What he means is that people are whoring themselves out to Facebook so Facebook can make some money? Why doesn’t he pay people to have an account by the profits he makes from our Facebook pages? What a concept. What i hate about Facebook, Google, etc. is they use some stupid website to attract customers to use something they probably wouldn’t pay money to use just to sell ads. Look at Linkedin, they give you free access, but if you want to use the services on a more serious level, they charge you $5 or $6 a month. They don’t get as many people sigining up for the fee based service, but at least they are offering something in exchange for the minimal amount of money that people see value.

      Let me ask you a question, would you pay $5 a month for Facebook or YouTube if they removed the ads and only offered the service as a fee based service? They’d probably lose viewers or people using their service.

      I see a little, not much more, value in YouTube as there are some cool videos, but I could do without the childish amateur stuff that’s simply of no value. If they made it a fee based service for both the posters and subscribers, would the quality of content improve and the quality of the viewers improve so we aren’t having discussions with children that are signing onto YouTube that are underage? I could certainly do without those children posting comments.

      I don’t see much value in Facebook. I see it as one of the biggest culprits of wasting time. Same with Twitter. Both are HUGE time wasters.

      There’s not much on Facebook that’s educational. I wonder how many users they’d REALLY have if every account that doesn’t have any activity over the past 2 months were automatically deleted. I wonder what children would be doing if their parents told their kids to not be on Facebook and spent that time doing something else like learning a useful skill, studying or cleaning their room or helping out around the house. :-) I mean seriously. I wouldn’t let me kids on Facebook, I’d give them other things to do with their spare time that are far more fulfilling and will help them later in life that would be time well spent and certainly help them have REAL relationships with people that will add value to their lives.

    • Richard Liu

      His “customers” ? I thought they are his merchandises.

  • Martin

    Alignment? It isn’t about alignment. I buy stuff from Apple to accomplish whatever goals I seek. I’m their customer, the iDevice is the product. Facebook takes things from me, a situation I have no say in if I want to use their service, in order to accomplish their goals. I’m their product. Zuk can wrap it up in the warm and runny ‘desire to connect the world’ spiel all he wants, that isn’t the point of his business. The point is to mine my data so his company can make money. It isn’t a question of alignment–I’m aligned. It’s really about if I want to ‘align’ myself with meeting my own needs, or ‘align’ myself with meeting his company’s needs.

    • Piyush

      This is again, as Zuckerberg calls it, “ridiculous”. No, you are NOT the product. You are just a user. Earning by advertizing is nothing new, and you’ve been doing that for ages (remember TV/news papers from hundred years back?). Were people considered product then? His company only knows as much as you supply to them. Then, I’d really like to see the ads that I’m interested in, rather than looking at “singles in my area” or any such bullshit.

      • Martin

        In fact, Apple’s model is more a descendant of the TV and newspaper era than Facebook’s. In that scenario, the advertisers (Kenner, Mr. Clean, Norich Union) were on the tube trying to get you to buy their product (Star Wars figures, home cleanser, life insurance). If you did, then great. That was where the transaction ended. They didn’t want anything more from you than your money in exchange for a product (admittedly life insurance companies would have wanted more information, but they used it to gauge your eligibility, and didn’t resell it). I agree, Facebook only knows as much as you want them to know, but it is a condition of the use that starts innocently enough with your email, moves to your cell number and goes from there, often without your knowledge. You have to admit, they’re getting shadier and shadier with that. You can no longer opt out of things if you want to use their service, your mobile devices are sending them information they have no business knowing and you have no say. It’s a gray area that is built around data mining. There’s simply no argument to be made against the fact that yes, you are indeed the product. You’re what’s being sold. That’s the only way to put it. You might feel like you’re getting something in exchange for it, and if so, great. But it’s like Tim Cook said: follow the money. If you’re not giving them money or getting anything from them, then what exactly are you in this scenario, unless you’re the product?

  • TeeJay2000

    “Youth is wasted on the young.” George Bernard Shaw

    Zuckerberg is no doubt young, brilliant and successful. But he is being disingenuous in deflecting Cook’s comments about ad models and mining personal data, to questioning whether Apple should charge a premium for a premium product.

  • sigzero

    Cook was right and while he was taking a jab at Google it absolutely applies to Facebook. Zuckerberg is a child.

    • Piyush

      That child has been doing quite well in managing his business for years now. But I’m sure you can do better than him.

  • jlseattle

    Zuckerberg is just sad that he can’t be more invasive to everyone’s lives that use Apple’s products (due to their privacy policy). I personally would rather pay for a product and have some semblance of privacy than get something for “free” at the cost of privacy. IE, not a member of Facebook any more. My privacy is worth more to me then the ability to use that service.

    • jlseattle

      FYI, block Facebook servers on your network and then navigate to 95% of websites. Just see how many errors you get with each website trying to send data to FB servers.

  • RobertPerez1

    I’d debate Mark Zuckerberg on this topic any day of the week. The difference between making a great profit margin on a product and making a slim profit margin like Samsung probably isn’t much more than $50 at the unit level. It still boils down to “you get what you pay for”.

    http://www.perezonomics.com/1/post/2014/11/how-much-money-does-apple-really-make-on-the-ipad-air-2.html

  • DarthDisney

    I wish FB and Zuckerberg would both just go away.

    • http://www.feastofbeast.com DJBabyBuster

      Glad every day that I’ve Never had a facebook.

    • Piyush

      I wish the same for Apple and its products :)

      • FootSoldier

        Why?

      • Kr00

        Because it’s a troll.

  • CelestialTerrestrial

    hey Suckerburg, Apple’s not a non-profit company and a lot of those Android/WIndows phone mfg are either losing money, breaking even, or barely make much in the way of profits. You want to be some idiot trying to force Apple to lose money or to be a company that barely makes a profit? Cook would be out of a job if the Net Profits sunk below 20% to Gross Sales. Why do you think IBM, Compaq, and others sold off their PC businesses? The same thing is going to happen to Android mfg. Look at Nokia, they were losing money and had to sell off to Microsoft, because they weren’t charging enough for their phones.

  • David Stone

    “..Our mission is to connect every person in the world…” and by that Zuckerberg means that he wants to only show you what he thinks you need to see. Not what you actually want to see. That’s why Top Stories is default, and Most Recent Stories continually reverts back to Top Stories after a while.

  • moofer

    meanwhile, Zukerberg is very good to his customers. The ones that buy his users’ personal info. Users vs customers. At least with Apple, they’re one and the same. Phukerberg seems to overlook that fact.

  • stolo

    Tim Cook hit the nail on the head with that statement. f*ck Zuckerber and f*ck Facebook! where’s the innovation?? MySpace 2.0, mining user data, controlling content in your feed, pushing a shit ton of advertising on everyone. “connecting every person in the world”?? how noble of him. sounds like bullshit to me. whatever, Facebook is already on its way out. half the people I know who used it two years ago, no longer do. sell your positions NOW! Facebook is a sinking ship. hence the Instagram purchase. and Zuck, remind us all how that Facebook phone went? lol, what a joke and a hack.

  • Tallest Skil

    If you cared at all about the sanctity of privacy, you sanctimonious pile of garbage, you’d shut down Facebook and run a magnet across the servers. Get bent, freak.

  • nolavabo

    If Facebook really cared about customers, we would see less ads.

    Wait a minute. The users are not the customers; advertisers are. If Facebook really cared about customers, ads would cost less. Fixed.

  • matt

    if Facebook cared they would offer to reimburse anyone who bought a Facebook phone under a 2 year contract by offering to pay their early termiantion fee.

    Facebook lied to the government of san francisco. they said they will no longer enforce their real name policy. they said it wasn’t their intention to police people over the names they chose. they LIED AND THEY ARE CONTAINING TO DELETE PEOPLES ACCOUNTS

  • TJ

    Suckitberg

  • JJ

    And if Mark really cares for FB users, he will share some of his millions to us ;-)

  • Chuck McGinley

    Mark, Momma always said: “The truth hurts”.

  • digitaldumdum

    “Facebook CEO Mark Zuckerberg has lashed out at Tim Cook’s privacy policy, calling it “ridiculous,” and knocking Apple for pricing its products as highly as it does.”

    Since Zuckerberg doesn’t actually manufacture anything—but rather gets incredibly rich from selling… nothing—he wouldn’t know the first thing about pricing. The same capitalism and free-market economy that allows Apple, and all businesses in this hemisphere to price goods and services as they wish, and make profits (reasonable or not), also allows Zuckerberg to make •his• billions.

    And the very thought that he would be lecturing anyone about privacy issues is laughable. Facebook protects users’ privacy? Yeah… maybe… •after• they’ve already hijacked it.

    Zuckerberg’s view, or at least these pontifications, are so arrogant, and yet naive. But then, what would one expect from a kid-billionaire.

  • http://www.designstrategies.com Len Williams

    It’s no wonder Zuckerberg lashed out at Tim Cook. Facebook’s whole business model is to turn its users’ identities and personal information into profit by selling it to advertisers, which makes the users targets even more advertising. Zuck makes billions from selling this info. Attacking Apple for pricing their products too expensively is a non-sequiter and a misdirector. It’s a knee jerk response to redirect attention from Facebook’s model of making a profit on its users identities and information–and if this is called into question, Zuck’s whole business could suffer dramatically. The “connecting every person in the world” is a fine, altruistic statement that sounds so helpful and almost self-sacrificing, but the truth is that Facebook (and Google) have exposed every user to more intrusions than any other company on the planet. Apple tries to and is good at keeping its users protected from personal intrusion, whereas Facebook and Google’s business is selling your information. These are completely opposite business models, and I’ll stick with Apple’s. Apple’s products aren’t cheap, but I don’t expect them to be. I’ll gladly pay a higher price for higher quality products.

  • aardman

    It’s official. The “You are our customer not our product” meme is starting to hit home with the net busybodies. There is really no defending against it and probably the worst thing that Facebook and Google can do is call further attention to publicly deny, deflect, and weasel out of it. Streisand effect hitting at maximum intensity in 3, 2, 1. . .

  • AAPL_@_$101_Is_A_Done_Deal_:)

    Then I suppose Rolex or Cartier doesn’t care about its customers, nor Porsche or Mercedes-Benz. He’s saying that no company selling high-end products cares about their customers. That’s a pretty stupid way of thinking. I’m willing to bet if Apple customers were asked if Apple cared about its customers I believe they’d say yes. Apple probably doesn’t care about those who aren’t their customers but that’s fairly normal. I’ve bought cheap products in the past and I didn’t think those companies cared about their customers because their products were of relatively low quality. Although it doesn’t have to hold true 100%, in general, I think most of the time I get what I pay for. I’ve been satisfied with Apple products since 1984 at least 95% of the time and some products around 110% due to their longevity and ease of use.

  • lrd555

    Zuckerberg should shut up and sit down. Facebook will never make in a whole year what Apple makes in a quarter.

  • Ron Williams

    Just wondering about the number of Zuck’s customers who are actually fronts for intelligence community agencies. Online sites like FB are nothing more than part of the total information awareness effort which is still alive and well under different name tags. From the mid 60s to the mid 80s the govmt drooled at the mouth in wishing a program was available to catalogue information on the citizenry. With the expansion of the internet and the development of the WWW, those that desire authoritarian control over the world’s masses have been smiling ever since. Worst of all, they made it so easy to accomplish by having the citizens do all the work for them. FB, Twitter, MySpace, store Loyalty Cards, Instagram (100M members), dating sites, cell metadata, Flickr (87M members), Lockerz (19M members), Photobucket (50M members), Snapfish (90M members), Pinterest (11M members), Kodak Gallery (20M members-moved to Shutterfly in 2012), Webshots (32M members-moved to Shutterfly 2012, Yahoo accounts, MSN accounts, Google accounts and all associated “messenger type” accounts which are unable to be determined all play into this catalogue of information. They made it so convenient and fun for users to enable this.

  • Vjn

    Facebook wants to connect all people for “free”, and it needs to advertise to make money to support this cause. It’s not possible in any other way.

    Wikipedia connects (almost) all knowledge for FREE, and it doesn’t need to advertise or collect private data about it’s users.

    It seems to me there are other ways …

    • anirudh7

      You must be kidding me… Wiki does not host media, its only text and images available on wiki are compressed and hosted on a cloud. One can host entire wiki website on VPS.

  • John Frist

    He’s just a punk kid with far more money than sense. Everything Tom Cook said is logically and factually correct.

  • macrumpton

    “Our mission is to connect every person in the world. You don’t do that by having a service people pay for.”

    Tell that to ATT and Verizon.

    A subsidized iphone comes out to $200 every 24 months or $8.33 per month. That does not seem that bad to me for a hand held information and communications terminal with built in cameras and enough storage to hold the library of congress. You can complain about the cost of the phone line, but that is not Apples charge.