Much of the talk surrounding Apple (NASDAQ:AAPL) of late has centered on the expected slowdown in high-end smartphones in 2016 and the impact on its highly profitable iPhones. Nearly 70% of Apple's record $18.4 billion in profit in fiscal 2016's Q1 was derived from iPhones. It's no wonder investors and pundits took CEO Tim Cook's forecasted slowdown in smartphone sales to heart.
But even concerns about Apple's bread-and-butter business have taken a backseat following Cook's recent letter to iFans. The senseless tragedy in San Bernardino, CA in Dec. took a strange twist following the attack. The FBI not only asked Apple to supply data on the shooter to assist in the investigation, it requested the development of a new iOS that would essentially bypass "several important security features." The result would be a "backdoor" to the assailant's iPhone to access encrypted data.
Cook's letter left no doubt as to Apple's position on the matter: no. Naturally, that wasn't the end of the matter from the FBI's perspective.
Didn't see that coming
With so much talk surrounding privacy issues of late, particularly as the world continues to shift toward all things digital, it may come as a surprise to learn how U.S. adults feel about the Apple-FBI showdown. Pew Research conducted a survey recently asking iPhone owners, other smartphone owners, and non-smartphone owners what side of the fence each group stood on.
Collectively, 51% of adults in the U.S. think Apple should provide the FBI with the means to access the criminal's iPhone, compared to just 38% that side with Cook. The disparity in favor of assisting the FBI among non-iPhone owners, and those without a smartphone at all, was even greater.
A full 53% of owners with a smartphone from a non- Apple manufacturer agree with the FBI, vs. 39% that said "no." A mere 33% of U.S. adults that haven't joined the smartphone crowd think Apple is right to deny the FBI's request, while 52% said it should. The results were closer for iPhone owners, but still leaned toward assisting the government, 47% want Apple to develop the backdoor, 43% disagreed.
Apple is certainly not the only tech titan that routinely supplies the U.S. government with data to assist in criminal investigations. Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), among others, provide information on literally thousands of users. But the FBI's request, and its subsequent rebuke, raises privacy concerns far beyond that of sharing which website an alleged criminal has visited. Something Facebook recently learned first-hand.
After a day in a Brazilian jail, Facebook vice president for Latin America Diego Dzodan was released on March 1. His "crime?" Dzodan disputed a court order "demanding" Facebook release data from its WhatsApp messaging property to assist with a drug investigation. The fact that WhatsApp's employs end -to-end encryption specifically so it cannot monitor messages didn't dissuade the Brazilian government from fining Facebook $250,000, and jailing a senior exec. The judgment was overturned in appeals court, and Dzodan is now free.
New York, New York
The current back-and-forth with the FBI following San Bernardino isn't the first time Apple has pursued its privacy concerns in a courtroom.
The FBI made a similar request of Apple in a Brooklyn, New York drug case in which the government demanded it unlock an iPhone to assist investigators. Apple took a similar stance as Cook's letter following the San Bernardino shootings, and the New York judge ruled in favor of consumer privacy, denying the FBI's "request."
The New York ruling could have serious implications for Apple in its existing stand-off with the FBI. Regardless of which side Americans take, the recent run-in with the FBI has instigated a much-needed debate on where U.S. consumers draw the privacy line. With the advent of the cloud, Internet of Things (IoT), and big data, the sheer volume of data amassed is growing almost exponentially. With so much data and consumer's privacy at stake one thing is certain: Apple's denial of the FBI won't be the last run-in with authorities.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Tim Brugger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.