The Electronic Frontier Foundation has released the fourth installment in its "Who has your back?" series. If you care about privacy at all, this is required reading every year. The Edward Snowden saga appears to have scared some companies straight lately, to the benefit of their customers. But there's still plenty of work to be done.
Two of the largest privacy attitude changes came from Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL), both of which turned relatively sorry 2013 performances into perfect 2014 scores. Others simply stayed strong: Google (NASDAQ:GOOG) (NASDAQ: GOOGL) filled in its only missing star from the year-ago report. And as you might expect, large Internet service providers scored poorly once again -- although Verizon (NYSE:VZ) made solid progress.
The EFF report measures online businesses against six criteria this year, ranging from the companies' willingness to publish transparency reports to standing up for users in Congress or courts of law. You should know that the EFF is really looking for public opposition to mass surveillance efforts when we're talking about Congress-based scores.
Here's how the publicly traded companies in the EFF report have fared over the years:
If the numbers don't seem to add up, it's because the EFF reports include plenty of non-public businesses. I counted all of those for the year-over-year line graph trends, but focused on public stock issuers in the star-by-star rundown.
Moreover, you shouldn't be discouraged by low scores or missing stars in the court battles category. Some businesses simply don't receive any court summons, and never had a chance to earn stars here. Others do appear in courts, but may have received court orders to keep the whole thing top-secret. So the true numbers are probably a bit higher, if we could only peek behind the curtain of court-ordered secrecy.
Hits and misses
The scoring table looked very sparse in previous years, but filled in quite nicely for 2014. I think it's fair to say that most online businesses take user privacy very seriously nowadays. After Heartbleed and the Snowden leaks, they'd be silly not to move in this direction.
Among the most notable improvements, Verizon had never scored a single point on the EFF's scale before, but now only misses out on two out of six points. "While Verizon has made remarkable progress in the last year, it has room to improve," the EFF said. "In particular, Verizon has yet to adopt a policy of informing users when the government seeks their data."
Yahoo! (NASDAQ:YHOO) jumped from a threadbare one-star rating to a full house. You might even call it six and a half stars. "Yahoo earns particular credit because it has repeatedly fought for user privacy in courts, including a many-year battle in the secret FISC court," said the EFF.
Google is painted as a thought leader in privacy matters. "Google has long led the way in transparency reports, creating detailed reports on government access requests long before other tech companies began doing so," the EFF said. "We are also pleased that Google is strengthening its language around providing notice to users about government data requests, and has publicly opposed mass surveillance."
Facebook may have had a few weaknesses in earlier reports, but has now filled in all the blanks. The EFF is particularly pleased about Facebook's decision to notify users when government agencies go looking for their data.
As for Apple, the five-star improvement stands out in a report full of incremental advances. "Apple shows remarkable improvement in its commitments to transparency and privacy," the EFF said. The following addition to Apple's transparency report earned special mention in the court-action category: "If there is any question about the legitimacy or scope of the court order, we challenge it and have done so in the past year."
The big takeaway: Telecoms are still dirty
As my excerpts show, there's been plenty of privacy progress in the past year. Twelve of the 26 companies under scrutiny in this year's report have joined one of several coalitions to fight back against government surveillance requests, and law enforcement guidelines with strong language are nearly ubiquitous.
But it's still disappointing to see service providers lagging behind content providers and user-friendly services in many ways. Verizon leaves its major sector rivals in the dust, and even then, Big Red is still falling short on two important criteria.
This is, of course, a self-serving strategy for everyone involved. A company like Yahoo! or Google can't live without the trust of its customers. If you don't like Google's policies and services, it's easy enough to switch to a different search engine, a new email providers, the whole shebang is replaceable. Leading the way in privacy policies only makes sense from that perspective. It pays to look good.
The service providers have no such incentive. If you don't like Verizon's service, you might have one other choice -- two if you're lucky. And most of the alternatives score just as poorly on the EFF scale anyhow. So why should the big telecoms and cable companies worry about treating their customers right, at the cost of making enemies on Capitol Hill and spending money on privacy protection?
It's good to see progress on the service provider side of things, but it'll still be years before any of the major sector players land a perfect score in this annual report. In my view, the telecoms are "sin stocks" on par with tobacco producers or casinos. They're enjoying all the benefits of selling something their users just can't quit, but I'd also feel dirty hitting the "buy" button on a company like Verizon.
Silly? Perhaps, but moral values are a consideration that many investors actually act on. That's just one more reason not to buy the big telecoms or cable providers.
Anders Bylund owns shares of Google (A and C shares). The Motley Fool recommends Apple, Facebook, Google (A and C shares), and Yahoo! and owns shares of Apple, Facebook, Google (A and C shares). Try any of our Foolish newsletter services free for 30 days.