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February 18, 2016
US smartphone giant Apple has been asked to assist the FBI in unlocking a phone at the same time as it launches Apple Pay in China.
This is a very difficult situation for Apple. In a public letter Apple CEO Tim Cook said “The United States government has demanded that Apple take an unprecedented step which threatens the security of our customers. We oppose this order, which has implications far beyond the legal case at hand.”
The reason for the request is that the FBI wants to get access to the iPhone 5c owned by one of the perpetrators of the December 2015 terrorist attack in San Bernardino, California. The FBI would like to crack the phone’s passcode by brute-force – i.e. repeatedly trying number combinations until it finds the right one, but the phone is programmed to wipe its data after ten failed password attempts.
In his letter Cook said “They have asked us to build a backdoor to the iPhone,” which in this case means creating a special version of iOS that would permit this brute-force hack without the threat of deletion. Apple’s main public opposition to this request concerns both the potential misuse of this specific tool and the broader precedent set by technology companies colluding with state security services to help hack their devices.
While not explicitly stated in the letter, a major additional concern for Apple must be the Chinese market, which currently accounts for almost a quarter of total Apple revenues and has arguably supplanted the US as its most important region, considering the growth potential still on offer there.
Apple launched its Apple Pay mobile payments system in China yesterday in partnership with China UnionPay. This deal is especially significant as China has relatively high barriers to entry for foreign companies to do business there. “For Apple Pay, given that it’s unable to get a payment license on its own under Chinese policies, the best way to penetrate China’s payment market is through cooperation with UnionPay,” said Huatai Securities analyst Luo Yi, as reported by Bloomberg.
China and the US have a fractious relationship in many areas, but especially when it comes to cyber-security. The fact that the two countries saw the need to publicly vow not to engage in economic cyber-espionage last year speaks volumes by itself and Huawei is banned from bidding for US government contracts over security concerns.
If Apple is seen to be acquiescing to the demands of the US security services then it’s not hard to imagine China flagging up iPhones and Apple in general as a potential security concern and take action accordingly. Apple may have very deep pockets but the prospect of losing a quarter of its revenue will have set alarm-bells ringing.
This is an unenviable PR position to be in as the matter it’s being asked to assist with is highly emotive. But Apple’s position that security is absolute and that a breach is a breach, regardless of context, is understandable, and it’s hard to imagine the FBI not re-using this facility once granted. US security antagonist Edward Snowden thinks this is a pivotal case and prompted Google CEO Sundar Pichai to publicly sympathise with Apple. This does look set to be a defining issue on the matter of data security and some kind of major precedent is sure to be set.
As the Editorial Director of Telecoms.com, Scott oversees all editorial activity on the site and also manages the Telecoms.com Intelligence arm, which focuses on analysis and bespoke content.
Scott has been covering the mobile phone and broader technology industries for over ten years. Prior to Telecoms.com Scott was the primary smartphone specialist at industry analyst Strategy Analytics’. Before that Scott was a technology journalist, covering the PC and telecoms sectors from a business perspective.
Follow him @scottbicheno
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