Apple risks consumer fallout from FBI hack – USA TODAY
Representative Darrell Issa (R) California weighs in on the U.S. Government dropping its case against Apple over encryption. He speaks on “Bloomberg Markets.”
SAN FRANCISCO âÂ The good news: Apple vanquished the FBI in its bid to crack the iPhone of a terrorist.
The bad news: The FBI cracked that phone without the companyâs cooperation, raising questions about the security of its most important product.
“There will be fallout,â says Norman Guadagno, chief evangelist at cloud data-protection company Carbonite. âIt heightens the awareness of consumers who have believed for years that iPhones are completely secure. Nothing is completely secure.â
On Monday, the FBI dropped its legal effort requiring Apple to bypass a security feature on its smartphones to unlock a device used by one of the killers in the shootings in San Bernardino, Calif., saying it was able to access the phone’s data without Apple’s help.
“This case should never have been brought,” said Apple in a statement.
Apple may have won its sharp-elbowed skirmish with the FBI, but the broader business and legal implications of that victory are murky. The FBIâs ability to gain access to the phoneâs content raises questions about Appleâs encryption and underscores the companyâs efforts to tighten the security of its devices, say cybersecurity experts.Â Â For years, Apple and its customers have extolled the security of its products.
The case’s outcome âgets Apple out of the problem of being compelled to assist the government, but it creates a new problem of widespread knowledge that thereâs a way of both the government and at least one third party to access an iPhone running the most recent version of the operating system,â saidÂ Kristen Eichensehr, a professor of cyber law at UCLAâs School of Law.
Apple had no comment when asked about whether the FBI’s hack makes its products appear less secure. But in its Monday statement, it noted, “we will continue to increase the security of our products as the threats and attacks on our data become more frequent and more sophisticated.”
Apple shares rose 2%, to $107.68Â Tuesday, continuing an upswing since early February while the government has pressed its case and alongside a broad market rebound.
Because the FBI has not shared what methods it used to get into the phone or the name of the “outside party” it worked with to get in, itâs hard to gauge the ramifications of the FBI’s hack on iPhone security in general. The agencyÂ only disclosed it didn’t try making a digital copy of the iPhone’s chips, FBI Director James Comey said last week.
Some, like intellectual property strategist Raymond Hegarty, wonder if Apple would have ultimately been better served by cooperating quietly and âmaintained the pretense of iPhone security,â he says.
And even if the case causes a temporary blip in consumer confidence, that may pale beside Apple’s prowess in winning the hearts and minds of consumers, an ability that was vividly on display as CEO Tim Cook and other senior Apple executives made their case against the U.S. government.
Larry Downes, project director at the Georgetown Center for Business and Public Policy, says the âshadow playâ of the governmentâs storyline wonât have any effect on Apple. âThey simply lost to the worldâs greatest-marketing company,â he says.
A CNBC survey of 806 Americans shortly before the DOJ dropped its court order revealed 57% said privacy concerns exceeded the wishes of law enforcement in the case.
With this court battle behind them, Apple has more room to focus on its core business: designing and selling consumer electronics. Sales of the main revenue driver, the iPhone,Â have slowedÂ in recent months followingÂ the launch of the iPhone 6S and 6S Plus last fall.
Last week, Apple unveiled the iPhone SE, a smaller version of the smartphone with a 4-inch touchscreen, in an effort to drum up sales. The devices start shipping to consumers March 31.
During its first quarter, sales of the iPhone were up 1% compared to the same time last year. Cook warned the fiscal second quarterÂ will show a year-over-year decline in shipments. Apple is expected to release resultsÂ April 25.
What’s likely is that coming devices will have increasingly complex security.
Newer iPhones, post-iPhone 5S, contain TouchID and Secure Enclave, features that keep personal information private in an updated security document within a microsite on the iPhone.
âApple continues to improve its ability to encrypt,â says Scott Vernick, head of the data security and privacy practice at law firm Fox Rothschild. âThey have been down that path, and will continue. It underscores that Tim Cook has a long track record, a personal history, for strong encryption and privacy.â
Contributing: Brett Molina in Tysons Corner, Va., and Elizabeth Weise in San Francisco. Follow USA TODAY San Francisco Bureau Chief @jswartz andÂ Brett Molina on Twitter: @brettmolina23.