Apple Inc. (AAPL) shareholders are well aware of the contentious back-and-forth going on right now between Apple and the Federal Bureau of Investigation.
The FBI wants Apple to help it access one of the San Bernardino shooters’ iPhones, Apple says it’s a slippery slope that could compromise the security of millions of Americans, yada yada yada.
I immediately regret using the phrase “yada yada yada.” This is actually a monumental confrontation, and one that will likely have repercussions on how government and big business cooperate with each other for years to come when it comes to the delicate and ever-present balance of privacy vs. national security.
While this doesn’t have immediate repercussions for the AAPL stock price — which could use some help, it’s down 22% in the last year — it very well could have a longer-term impact on Apple shares. People like to know that someone’s sticking up for them, and given the current distrust of the government, Apple has an opportunity to make its pro-privacy stance known.
The top brass in Cupertino certainly have been making their stance known, and have effectively used the media to try to show their allegiance to users. But one recent revelation throws Apple’s supposed allegiance to users in doubt — and that could end up coming back to bite AAPL stock in the long run.
Is AAPL Really a Steadfast Privacy Advocate?
Apple enjoyed a big judicial win on Monday, when a Federal judge in New York ruled that the government doesn’t have the legal authority to force AAPL to help the Drug Enforcement Administration break into a drug dealer’s phone. It’s one of the 13 instances across the country in which the government is seeking Apple’s help in accessing user phones.
And although on the face of it that’s a win for Apple, a footnote in the case could come back to bite the iconic company.
The Department of Justice claims that AAPL originally agreed to help the Feds access the drug dealer’s phone. Per a CNN Money report published late Monday:
“‘Apple … only changed course when the government’s application for assistance was made public by the court,’ the department said in a statement on Monday, implying that Apple is merely doing this to save face and seem protective of customers’ privacy.”
The piece was specifically referring to a statement from the DOJ made on Monday.
Apple, in response, copped to offering its help to the DEA, but claims it was only willing to do so if Uncle Sam made a lawful request.
In any case, the optics aren’t great, and it raises doubts as to AAPL’s true intentions. If the government continues to raise issues like this in the other cases, Apple could come across as just another insincere company playing media games to bend public perception to its will.
Time will tell how this issue plays out, but suffice it to say there is no great resolution here: Even if ultimately most users feel Apple is honestly trying to protect their privacy, there’s been a meaningful amount of backlash from people who feel AAPL is being anti-American by refusing to help Feds access the San Bernardino shooter’s phone.
It’s true that shareholders have bigger things to worry about, like stagnating iPhone sales and consistently declining iPad sales, but this privacy debate is another storyline that doesn’t do much good for AAPL stock.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
