While marketing professionals rarely simplify it to this degree, there are only two kinds of publicity: the kind you pay for and the kind you don’t.
The former is (usually) effective in proportion to the dollar amount spent on the effort. The latter — while often unwieldy to the point of being completely uncontrollable — can be infinitely more effective than paid-for PR, simply because consumers know beyond a shadow of a doubt it’s not being bought.
While Apple Inc. (AAPL) has gotten really good at getting the most bang for its advertising buck, the notoriety and public appreciation it’s won over the course of just the past couple of days has done Apple stock far more long-term good than any paid-for marketing effort.
How’s that? When the FBI asked the company to access a specific individual’s iPhone’s digital contents, the company politely refused, explaining it owes it to all iPhone owners to not set a precedent putting its users at risk of “backdoor” security attacks.
In other words, Apple is putting user-privacy rights ahead of an FBI investigators’ hopes.
A Tricky Issue
Any Apple stock holders who believe guaranteed user privacy is a key selling point for the iPhone should be impressed with the stance CEO Tim Cook has taken, as it’s not a mere request. It was a court order, from a U.S. magistrate. If Apple continues to refuse, it could lead to a very messy legal debate, and perhaps even litigation. Apple doesn’t seem to care, however.
The iPhone in question belonged to Syed Rizwan Farook — one of the two shooters in Dec. 2nd shootings in San Bernardino that claimed the lives of 14 people including the two gunmen. The FBI has been investigating Farook and his wife Tashfeen Malik ever since the shooting, believing such digging could point to other homeland threats.
The FBI was able to secure a search warrant specifically for the iPhone, as United States Magistrate Judge Sheri Pym saw enough probable cause to issue such a warrant. Her specific orders:
“Apple’s reasonable technical assistance shall accomplish the following three important functions: (1) it will bypass or disable the auto-erase function whether or not it has been enabled; (2) it will enable the FBI to submit passcodes to the SUBJECT DEVICE for testing electronically via the physical device port, Bluetooth, Wi-Fi, or other protocol available on the SUBJECT and…”
Problem: The iPhone (and newer versions of iOS in particular) were designed from the ground up to be as unhackable as humanly possible. The fact that the FBI hasn’t been able to digitally break into the phone is evidence that Apple did its job.
That’s why the agency is now turning to the manufacturer. Apple could feasibly do it … but it would need to write specific code to do so, which would effectively be a how-to guide on how to hack into a locked iPhone. That would be very bad for business, and in turn, for the value of Apple stock.
That’s one of the reasons Tim Cook is adamant about not complying with the court order.
Another reason he’s not doing it: He simply sees it as an overreach of the government, invading citizens’ (including criminals’) civil liberties by forcing one of the entities the Federal government is supposed to defend to become an arm of law-enforcement itself.
And that’s the crux of the issue, even if nobody fully understands it as such.
Bottom Line for Apple Stock
Ten years ago, public opinion on Tim Cook’s decision might have been different. That is, with the echoes of 9/11 still ringing, the public — and maybe even owners of Apple stock themselves — would have agreed the company needs to do whatever it can to thwart terrorism, or even non-terroristic crime.
A lot’s happened in that ten years, however, to suggest the Federal government (and not just the FBI) has exceeded its privileged access to information.
Like it/him or not, Edward Snowden did raise some legitimate concerns about how far was too far when it comes to eavesdropping. Also during the last ten years, it’s become clear that not only are search engines like Google tracking and retaining years’ worth of browsing history, but companies are building a digital “profile” of each of us that’s far more detailed than one might have believed possible just a few years ago, including information like where we live.
Point being, citizens are slowly losing their right to privacy, but feel powerless to do anything about it. Tim Cook just empowered them — a purchase of an iPhone is an investment in your right to privacy.
Granted, owning an iPhone will provide any real privacy protection to an owner.
Most everyone is digitally vulnerable on dozens of other fronts, and even the voice and text communications from or to a newer iPhone are subject to monitoring by law-enforcement officials (with or without a warrant).
By standing up in support of the proverbial little guy that’s slowly losing his constitutional rights, Apple just became the quintessential champion for that little guy.
And that’s a very good thing for owners of Apple stock.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.