Apple’s Noble Stand Against the FBI Is Also Great Business
Apple CEO Tim Cook has vowed to fight a court order demanding that the company help the FBI unlock the iPhone belonging to one of the San Bernardino shooters. The move is, to say the least, polarizing.
Whistleblower Edward Snowden slammed the FBI on Twitter. The Electronic Frontier Foundation has vowed to back Apple in its legal fight, and Google CEO Sundar Pichai tweeted support. Republican presidential candidate Donald Trump, meanwhile, took to Fox News to call on Apple to help the FBI.
You may see Tim Cook as a champion of privacy or as an enabler of terrorism. Either way, it makes good business sense for Apple to stand up to the FBI.
Apple has been trying to position itself as a protector of privacy, a kind of anti-Google, since long before the FBI’s court order. In 2014, Tim Cook claimed on Charlie Rose that Apple has no way to decrypt messages sent through iMessage (at least as long as you don’t back them up to iCloud). And at last year’s Worldwide Developers Conference, the company’s speakers repeatedly emphasized that although apps like Siri store your data, that data stays on your device and isn’t shared with Apple.
That positioning stands in stark contrast to Google, which is heavily dependent on advertising revenue and has an incentive to gather as much user data as possible. Yes, Apple runs the iAds network, so there’s a bit of spin involved in the Cupertino company’s positioning, but it’s true that Google and Apple have very different business models overall. That, combined with the way Apple makes it dead simple to encrypt the data stored on your iPhone or Macbook, has given Apple products a reputation of being secure yet easy to use. Complying with the FBI’s request would jeopardize the company’s image as the paragon of easy security.
Of course there’s also a risk in taking on the FBI. Even as some users take to Twitter to threaten a boycott of Apple if the company complies with the FBI’s request, others are threatening to do the same if Apple doesn’t help the agency. It’s impossible to predict how this will play out, especially in the fickle US consumer market, but there’s reason to think consumers will support Apple’s stand.
“My research on this suggests that users are in fact deterred from using digital products with confidence if they feel that their actions are being tracked by the government,” says Catherine Tucker, a professor of marketing at MIT Sloan School of Management. “From a marketing standpoint therefore, I believe Apple stands to benefit from taking a stand against legally mandated encryption backdoors.”
A Global Disadvantage
Meanwhile, some of Apple’s most crucial buyers may be seriously put off if Apple complies with the FBI’s request, namely large corporate customers and consumers outside the US. The consensus among security researchers is that building a back door for law enforcement will make Apple’s products inherently less secure, says Gartner analyst Peter Firstbrook. “The iPhone is the preferred mobile phone for security,” he says. “I’m not sure if this particular move would affect enterprise sales, but anything they do to reduce security would be negatively appreciated.”
That goes double for overseas markets. There’s already a degree of mistrust between the US and foreign firms and governments thanks to Edward Snowden’s disclosures of the National Security Agency’s digital dragnet. Last year the European Union nuked a provision that allowed US firms to transfer data in and out of the EU, a policy change that could have serious ramifications on US companies’ ability to do business in Europe. Just as the US government is skeptical of doing business with Chinese technology companies like Huawei and LTE, meanwhile, many foreign governments are equally dubious of US firms. Knowing that Apple cannot and will not turn data over to the US government could be an important selling point as iPhone sales level off and Apple pushes to sell more of its flagship device in countries like China and Russia. Forcing companies to build backdoors into their products could undermine what trust US companies have built. The US government would be putting US firms at a disadvantage globally, Firstbrook says.
Who will prevail? It’s a tough call when the world’s most valuable company goes up against the world’s most powerful country. But so far, Wall Street likes Apple’s chances: The company’s stock was up by more than one-and-a-half percent when the market closed on Wednesday.