Apple Inc. (AAPL) has become embroiled in a very public battle with the FBI over whether or not the tech firm should unlock an iPhone used by one of the shooters in the San Bernardino terror attacks.
In the days following the firm’s resistance to comply with a court order to open the phone to investigators, Apple stock has gained 3% … but as tension between lawmakers and the tech giant heats up, many are wondering how the ordeal will affect AAPL shares in the long run.
The issue at hand, according to Apple, is that unlocking the phone would require the company to design a program that would be capable of hacking all iPhone users, something CEO Tim Cook says is “too dangerous” to create. However, the fact that this program is needed to access a phone used in a terror attack on U.S. soil means that the debate over whether or not Apple should comply will be emotionally charged.
On one hand, the firm is in a precarious position as its refusal to comply with government requests for help in fighting terrorism is seen by many as an obstruction of justice and a slight to the victims of San Bernardino and their families. FBI Director James Comey issued a statement on Sunday, saying that the victims of the attack deserve a proper investigation and that Apple’s failure to comply is preventing that from happening.
Terrorism is a hot-button issue in the U.S., and the government’s request for information is seen by many as necessary to prevent future attacks and better understand what happened in San Bernardino. Microsoft Corp (MSFT) founder Bill Gates came out in support of the U.S. government, saying that because the request is to access a single phone in an isolated incident, Apple should comply.
Privacy Concerns Could Go Either Way for Apple Stock
However, Apple’s resistance to comply has been largely positive for Apple stock because it gives consumers confidence that the firm takes their privacy seriously. Cook’s response to the court order sent a message to customers world-wide saying that Apple isn’t willing to blindly hand over customer information at the government’s request, something which has helped boost Apple’s reputation among privacy-conscious consumers.
After NSA contractor Edward Snowden revealed that the U.S. government was conducting a wide-scale surveillance program without the public’s knowledge, consumers in the U.S. and abroad began to worry about the security of their data when stored with U.S. tech firms. Apple’s refusal to design a program to unlock iPhones underscores the company’s hardline against violating customer privacy and will likely give customers another reason to choose Apple products.
At the moment, the battle over the San Bernardino phone is positive for Apple stock, as it has positioned the company as an advocate for privacy rights. Several other big name tech firms like Facebook Inc. (FB) and Twitter (TWTR) have spoken up in favor of Apple’s resistance as well, and it appears that Apple’s image will benefit from the ordeal, regardless of the outcome.
However, the Justice Department has not shied away from Apple’s very public response to the court order, making its own court documents available in the spirit of transparency and accusing the firm of using this ordeal as a marketing opportunity. If U.S. lawmakers are able to shift the narrative and paint Apple in a negative light for obstructing an investigation into a terror plot as part of a publicity stunt, public opinion, especially in America, may shift and take Apple shares lower.
As of this writing, Laura Hoy was long AAPL and FB.
