If Apple is forced to comply with the U.S. government, it could bolster recent efforts by other countries such as China to curb citizens’ privacy in the name of national security.
It’s a battle that on its face appears to pit one of the biggest tech companies in the U.S. against the country’s most powerful law-enforcement agency.
But the outcome of Apple’s standoff with the federal government over encryption could reverberate across the world, giving authoritarian governments reason to expand surveillance and challenging the U.S. tech industry’s ability to compete globally, technology experts and lawmakers say.
Apple is resisting a federal judge’s order that it build software to unlock an iPhone used by one of the San Bernardino, Calif., terrorist attackers.
But if the company is forced to comply, it could bolster recent efforts by countries such as China to curb citizens’ privacy in the name of national security.
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“This completely undermines privacy overseas, and if the administration thinks this precedent wouldn’t be used by China, Russia and others, then they are in serious error,” said Nicholas Weaver, a senior researcher at the International Computer Science Institute at the University of California, Berkeley.
The Obama administration has told China it has major concerns about its new counterterrorism law, a somewhat vague piece of legislation that may require U.S. companies to hand over encryption keys and provide backdoor access to their computer systems.
“This is something that I’ve raised directly with President Xi,” President Obama told Reuters last year. “We have made it very clear to them that this is something they are going to have to change if they are to do business with the United States.”
The demand will be harder to make if the federal government succeeds in getting Apple to give up its fight, said Sen. Ron Wyden, D-Ore., a member of the Senate Select Committee on Intelligence.
“This move by the FBI could snowball around the world,” he said. “Why in the world would our government want to give repressive regimes in Russia and China a blueprint for forcing American companies to create a backdoor?”
Doing so, the senator said, would result in further suppression of people in those countries and a rise in theft of U.S. trade secrets.
“It would be the go-to option for securing information,” Wyden said of a decryption key.
Apple has already reportedly agreed to comply with some Chinese security checks to ensure that its devices aren’t accessible to U.S. authorities, but it’s unclear how far that goes.
The company, which did not respond to a request for comment, has been accused by Chinese state media of giving up user data to U.S. intelligence agencies. CEO Tim Cook remains adamant that Apple has never provided a backdoor for any government agency.
China is particularly treacherous territory for the company. It is Apple’s second-largest market after the United States — Chinese consumers spent $59 billion on Apple products in the past fiscal year — and the iPhone, the company’s top seller, has become both a status symbol and a form of personal security there, given how difficult the device is to break into in a country where people increasingly worry about hacking and cybercrime.
The company is playing the long game with its business. Privacy and security have become part of its brand, especially internationally, where it reaps nearly two-thirds of its almost $234 billion a year in sales. And if it cooperates with one government, the thinking goes, it will have to cooperate with all of them.
“Tim Cook is leveraging his personal brand and Apple’s to stand on the side of consumer privacy in this environment,” said Mark Bartholomew, a law professor at the University of Buffalo who studies encryption and cyberlaw. “He is taking the long view.”
The situation is complicated by China’s opaque legal system and a nationalistic sentiment that could turn on foreign companies deemed unsupportive of China’s interests.
Should an iPhone belonging to a suspected terrorist from China’s fractious Xinjiang province require decryption, the government, and popular opinion, wouldn’t give Apple the ability to argue its case as it’s doing in the U.S.
“Apple has recourse to fight the request through an independent judiciary and Tim Cook feels confident that he can argue publicly against the U.S. government request without fear that Apple’s business will be materially damaged by a retributive government,” said Bill Bishop, an entrepreneur and leading China watcher formerly based in Beijing.
Struggle for balance
Technology companies have long struggled to balance security and privacy with the demands of foreign governments.
Yahoo was admonished by U.S. lawmakers nearly 10 years ago for outing Chinese dissidents through their email accounts.
Microsoft, the target of an antimonopoly investigation in China, recently announced a joint venture with a Chinese firm to supply a customized version of its Windows 10 operating system aimed at resisting piracy of its software there.
BlackBerry continues to negotiate with the government of Pakistan after it refused an order to provide customer emails and chats.
And authorities in Brazil briefly shut down Facebook’s WhatsApp messaging application in December for not cooperating in a criminal investigation. The service was quickly returned after public protest.
Apple’s resistance to the U.S. government’s demand has been polarizing. Apple supporters have held protests in cities such as San Francisco to show their support of the company and have used hashtags on social media, such as #freeapple and #beatthecase.
“We’re fighting to maintain even the assumption that companies should protect us,” said Evan Greer, campaign director at Fight for the Future, a civil-liberties group that is organizing protests nationwide Tuesday to support Apple. “Apple is doing what every company should be doing.”
When it comes to doing business abroad, tech companies are being squeezed on both sides: If they don’t give up access to user data, they risk angering governments. But if they are perceived as selling products that aren’t secure, consumers won’t buy them. And that hurts the bottom line.
Forrester Research estimates U.S. cloud-computing firms will lose global sales of up to $180 billion by the end of this year because of the chilling effect of Edward Snowden’s National Security Agency (NSA) leaks in 2013.
If U.S. smartphone brands are thought to be compromised, it wouldn’t just hurt Apple, but also Google, whose Android mobile operating system is used on more than 80 percent of the world’s smartphones, according to research firm Gartner.
“You could see a similar effect here where customers say they don’t want to buy Apple because who knows when they’d be forced to turn over information to the U.S. government,” said Jan Dawson, chief analyst at Jackdaw Research. “The reality is that it will affect all these companies, including Apple, Google and Microsoft.”
Chinese companies have also met resistance in the United States. Huawei, one of China’s leading technology and telecommunications firms, has failed to make inroads in America after a congressional committee declared the company a security threat in 2012 because of its ties to the Chinese military.
Weaver, the researcher at UC Berkeley, said that if the FBI wins its battle with Apple, the NSA could soon make similar requests through the secretive Foreign Intelligence Surveillance Court.
That would set a precedent for other spy agencies, including those run by U.S. allies such as France and Israel, to demand that tech companies give up customer data.
“This particular request to (decrypt an iPhone) is remarkably reasonable, but the precedent it sets is disastrously bad,” Weaver said.