Apple is not just grappling with the government over encryption issues. The privacy bosses of the tech giant are also wrestling with what to do with its user data. If these issues are not resolved it could pose challenges to the company's long-term product strategy.

Unlike Facebook, Amazon and Google, the Cupertino-based company detests using its customer data for targeted advertisement or personalized recommendations.

Right now, any gathering of customer data needs a sign-off coming from a committee of three "privacy czars" together with a senior executive, according to the information given by four former employees who were connected with different Apple products that were privacy vetted.

There is actually no automatic approval for Apple products. This rule includes everything including the scaled-back iAd advertising network and the Siri voice command. Their features are restricted due to privacy concerns.

This state of affairs at Apple is different than the way it was in 2013. At that time, a report was published warning consumers that the computer giant is among the tech companies that should not be trusted when it comes to protecting private users' data.

In that report, the tech company got only one star out of 4 stars in privacy protection ratings. It is lumped together with Verizon, AT&T, Yahoo and MySpace as companies that can't be trusted at that time.

Today, there are three privacy czars that protect user data inside Apple, but they have different backgrounds and concepts on how to implement measures to protect their users' information.

The effectiveness of Apple in delivering service to its customers is dependent on its personalization features. And this is where privacy matters cuts in to the scheme of things.

"The value of a service is the ability to personalize it," said Bob O'Donnell. He is an analyst connected with TECHnalysis. "The only way you can personalize it is with knowledge about an individual's preferences," he added.

As it tries to promote its services, Apple must find the right balance with regards to privacy protection and generating revenues.