People complain about negative advertising, but it never goes away. That's because it works.

PayPal has taken this conventional wisdom to heart, launching an attack ad against its latest and most formidable competitor, Apple Pay, before the new service even lands in the hands of consumers. Appearing in multiple newspapers, the full-page spread is meant to sow distrust in Apple by reminding the world of this month's massive iCloud celebrity selfie hack.

PayPal

The ad may or may not be fair. It might not even have the desired effect. But it indisputably shows what happens when Apple muscles into a new market: the incumbents immediately become the underdogs. And how they react becomes a measure of how powerful Apple really is. In the case of the payments business, PayPal has clear reason to be worried.

When Microsoft made Internet Explorer the default Windows web browser, it quickly shot to the top of the list of most popular browsers, where it stayed for years, despite the existence of other, arguably better browsers that came before it. Apple has the power to do the same for payments with Apple Pay, but with notable differences that put it in an even better position than Microsoft. First, Apple controls the hardware as well as the software. Second, Apple's demonstrated design chops suggest a company that will never let its products sink into the kind of user-experience decrepitude that sank IE.

The analogy also breaks down a bit around the sheer duration of PayPal's incumbency. PayPal has been synonymous with online payments for more than a decade, while the web was still in its infancy when IE came out. Integrating Apple Pay across the online and offline retail worlds will take time. PayPal users wouldn't be able to make any kind of full-time switch even if they wanted to go all-Apple. PayPal has reason to be hopeful. But in the long run, the threat is real.

Apple Isn't the Other

If any company has the power to hasten its own ubiquity, it's Apple. Apple Pay will spread quickly once the iPhone 6 and iOS 8 are released this week. Even PayPal's own Braintree division has released a way for developers to integrate Apple Pay into their online apps. And Apple is restricting the use of the iPhone 6's NFC chip to Apple Pay, which means PayPal won't be able to take advantage of the new phones' power to act as in-store credit card substitutes.

Those factors leave PayPal with little choice but to seek to undermine Apple's advantages through marketing. The new PayPal ad tries to sound a populist note: "We the people want our money safer than our selfies." Aiming at Apple's apparent negligence in locking down iCloud is the obvious target. If Apple can't be trusted with photos, can it really be trusted with credit card numbers?

A crucial difference, however, appears to be that Apple Pay's tokenization system doesn't appear to store a user's credit card number at all, locally or online, once that card is scanned. If nothing else, that makes Apple Pay more secure than physical credit cards themselves.

Even granting that Apple has yet to make up the trust deficit the iCloud hack incurred, however, portraying Apple as the overlord aligned against the "people" seems unlikely to succeed. In polls, Apple consistently ranks near the top among the world's most trusted and admired brands. And Apple users relate to their devices. However much control they really have, people who carry their iPhones everywhere they go feel like the devices belong to them. Apple isn't the Other. Apple is what's in your pocket, a digital extension of yourself.

The Omnivore Dilemma

That closeness users feel to Apple hints at a broader problem for PayPal: it's a niche platform, while Apple is an omnivore. Apple has the power to try to absorb nearly any function or feature into itself. To escape Apple's predations, PayPal could make itself another omnivore's prey.

Last week, trading in PayPal parent company eBay's shares spiked on rumors Google planned to buy a major stake in the company, a rumor eBay quickly shot down. But a Google acquisition might not be such a bad thing for PayPal, especially if Google decided to make it the Apple Pay of Android. In mobile, Google's reach is much broader than Apple's, if less focused. And for Google, PayPal is already a much more recognized brand than any of Google's own payment efforts.

Going with Google, another corporate behemoth, wouldn't exactly make PayPal look more populist. But when you're up against Apple, it's one of the moves most likely to help you stay popular.