Earlier this week, Apple and several other major U.S. tech companies renewed their calls for the U.S. government to reform its controversial electronic surveillance programs. In an open letter addressed to President Barack Obama, NSA Director Admiral Rogers, Attorney General Eric Holder, and several prominent members of Congress, Apple and dozens of other signatories urged the government to end the bulk data collection practices that were authorized under Section 215 of the USA Patriot Act. As noted in the letter, Section 215 of the USA Patriot Act is used as the legal basis for the NSA’s bulk collection of electronic communications metadata. The letter also asked the government to institute “transparency and accountability mechanisms for both government and company reporting” for decisions made by the secret Foreign Intelligence Surveillance Court.
Apple lent its support to the letter through its membership in the Reform Government Surveillance group, a coalition of major tech companies that includes Facebook, Google, Microsoft, and Yahoo. The Reform Government Surveillance sent a separate open letter to the Senate last year that called for similar reforms. Besides tech companies, other prominent signatories to the most recent letter included the American Civil Liberties Union (ACLU), the Electronic Frontier Foundation (EFF), and Human Rights Watch.
While it’s no surprise that organizations like the ACLU and the EFF would be concerned with issues affecting privacy and electronic communications, it may surprise some people to know that Apple has emerged as one of the most outspoken opponents of the government’s spying programs following their exposure by former NSA contractor Edward Snowden in 2013. Apple’s strong stance against the government’s surveillance programs is even more surprising when considering that the company has historically received low marks from the EFF when it comes to protecting users’ data from government requests. Although Apple received the highest six-star rating in the EFF’s annual “Who Has Your Back?” report in 2014, the digital rights organization noted that the iPhone maker only earned one star in each of the previous three years. So why is Apple suddenly so gung-ho about government transparency and user privacy? Here are the three main reasons why Apple has become an outspoken opponent of the U.S. government’s spying programs.
1. Public image/brand perception
In general, Apple’s products tend to be more expensive than competitors’ products with similar technical specifications. Higher pricing is one reason why Apple was able to take 88.7% of the profits in the worldwide smartphone market during the fourth quarter of 2014 (per Strategy Analytics), despite having less than a 20% share of the global smartphone market shipments (per IDC).
While it can be argued that Apple consumers are paying a premium for a better user experience, one of the major reasons that Apple is able to charge a higher price for its products is because of the appeal of its brand. In 2014, Interbrand named Apple as the world’s most valuable brand for the second year in a row. Although Apple’s brand is clearly a valuable asset for the company, it is also an intangible one that is wholly dependent on people’s perception.
As the owner of the world’s most valuable brand, Apple is probably keenly aware that appearing to help the government with its controversial bulk data collection programs would tarnish its carefully crafted image as the consumer electronics brand for those who dare to “Think Different.” In this sense, Apple’s public opposition to the government’s surveillance programs is an effort to protect its brand from losing its appeal to consumers.
2. Foreign revenue
If consumers associated Apple with spying, this would make the company’s products less appealing, which in turn would hurt the company’s bottom line. However, the public’s perception of the company’s brand isn’t the only way that the U.S. government’s spying programs could hurt Apple’s ability to make money. For Apple and other tech companies, there is also billions of dollars at stake in their dealings with foreign governments and businesses. This is an especially crucial concern for Apple as it seeks to grow its smartphone business in foreign countries that have governments with legitimate reasons to be concerned about the NSA’s spying efforts.
China — a country that was largely responsible for Apple’s explosive sales growth in the fourth quarter of 2014 – is perhaps the most notorious example of a foreign government that has criticized Apple over its alleged association with the NSA’s spying programs. China’s state-run media described the iPhone as “threat to national security” in 2014, as reported by Reuters. While it may come as no surprise that China would be suspicious of a tech company based in the U.S., it should be noted that it is not the only foreign government to express concern about using Apple products due to worries about spying. According to RT, government officials in Germany are banned from using iPhones for official business due to concerns over having their communications intercepted by spy agencies like the NSA. The ban was implemented after documents leaked by Snowden showed that the NSA had monitored Chancellor Angela Merkel’s communications.
While it’s unknown how seriously Apple’s overseas sales may have been impacted by the NSA’s spying programs, some analysts believe the “hidden” cost of these programs to the overall tech industry could be substantial. Forrester Research analyst James Staten estimated that the NSA’s spying programs could cost the U.S. cloud computing industry as much as $180 billion in lost revenue by 2016. With a cash hoard that stands at $178 billion following a record-setting fourth quarter in 2014, Apple doesn’t seem like a company that needs to be too concerned about lost sales. However, with overseas markets now providing most of the company’s growth, Apple likely realizes that it needs to make sure it takes a firm stance against the NSA’s spying programs in order to protect its future revenue stream.
3. Because it’s the right thing to do
While many of the reasons for Apple’s opposition to the government’s surveillance programs may be due to purely business concerns, there is also evidence that Apple’s leadership simply feels it is the right thing to do. “None of us should accept that the government or a company or anybody should have access to all of our private information,” Apple CEO Tim Cook recently told The Telegraph. “This is a basic human right. We all have a right to privacy. We shouldn’t give it up. We shouldn’t give in to scare-mongering or to people who fundamentally don’t understand the details.”
While it would be easy to dismiss this statement as an insincere attempt to win back the public’s trust after Snowden’s revelations, there are several reasons to believe Apple is genuinely concerned about the government’s intrusion into people’s private lives. It should be noted that Apple hasn’t just been paying lip service to the idea of privacy. The company has implemented several security improvements aimed at protecting users’ privacy during Cook’s tenure. In 2013, the company improved its Apple ID protections by offering two-factor authentication. Last year, the company announced that its iOS 8 mobile operating system would feature a default encryption setting that prevents anyone but the device’s owner from gaining access to the data stored on the device. Despite harsh criticism from various law enforcement officials over the latter initiative, Apple has so far refused to back down.
Additionally, Cook has repeatedly made it clear that Apple would take uncompromising stances on certain moral issues regardless of how it may affect the company financially. During Apple’s annual shareholder meeting last year, Cook had a tense exchange with a representative from a conservative foundation that criticized the company for adopting environmental sustainability practices that may not improve the company’s profitability. Cook’s response was that not everything the company did was for monetary gain.
“When we work on making our devices accessible by the blind, I don’t consider the bloody ROI [return on investment],” said Cook, according to the Mac Observer. In other words, regardless of whether its sustainability practices improve or hurt its image with certain customers, Apple has committed to implementing those policies because it believes it’s the right thing to do. In the same way, despite the flak the company has gotten from law enforcement over its implementation of default encryption for the iPhone, Apple is sticking to its pro-privacy principles.
Follow Nathanael on Twitter @ArnoldEtan_WSCS