Why You Need To Keep An Eye On the Tech “Showdown Of The Century”

8 | By Michael A. Robinson

I’ll never forget the time I interviewed the late Rose Bird, then the Chief Justice of the California Supreme Court.

At the time, Bird was getting ready for her re-election campaign and had done a series of media interviews in a bid to garner the public’s support.

I was a legal affairs analyst for the San Francisco Examiner. After putting Chief Justice Bird on the hot seat, I filed a page-one story predicting that Bird would go down in defeat.

And I didn’t stop there…

My deep-background research with my network of contacts convinced me a slew other justices would also lose their re-election bids. The reason? Their rulings on one hot button issue – the death penalty.

I don’t bring this up just to toot my own horn.  But only to let you know that when it comes to analyzing controversial and complicated legal matters, I’m pretty good at reading the tea leaves.

So you can believe me today when I tell you who I think will win the simmering dispute between the FBI and Apple Inc. (Nasdaq: AAPL)…

Silicon Valley Circles the Wagons

What’s happening now between Apple and the FBI is more than a mere legal “test case.” This Silicon Valley contretemps carries ramifications for everyone who owns – or is looking to own – a smart phone, tablet or laptop.

Which makes this case nothing less than the most consequential privacy rights showdown of the 21st Century.

And that means that, no matter how this case shakes out, the tech landscape will be altered forever. And that will have impact the value of technology investments across the board.

That’s one of the reasons why nearly every single major Silicon Valley firm has lined up behind Apple.

In This Corner…

At first glance, CEO Tim Cook appeared to be losing, at least in the court of public opinion.

After all, it’s hard for a majority of Americans to believe that the cell phone owned by Syed Rizwan Farook, a terrorist who slaughtered 14 innocents should be shielded from federal investigators.

As if to underscore the point, a couple of weeks ago Pew Research reported that 51% of those surveyed believed that Apple should help the FBI unlock Farook’s iPhone. Apple had the backing of 38% and 11% were unsure.

I bring up the public relations battle so you know that I’m not making this next statement lightly.

Based on the evidence to date, I believe Apple will win this case.

Because regardless of public opinion, the legal momentum clearly favors Apple.

Here’s what I mean.

A Stand for Freedom and Liberty

Not many folks know it, but this fight has been brewing for more than a decade.

It began in 2005 when a Texas federal magistrate denied a request by criminal investigators to gain access to a suspect’s mobile phone.

Since that time, federal magistrates – who are judges without life tenure and hear civil cases – have remained on the front lines of the struggle to protect digital privacy rights.

I believe these safe guards are paramount. That’s because our modern mobile devices contain more than texts, emails, and phone calls.

They also hold sensitive data about our private lives and finances… the state of our health… information about our jobs and employers… and the passwords to bank and brokerage accounts.

That’s why I was concerned when the FBI was able to convince a federal magistrate to order Apple to unlock Farook’s encrypted device.

Apple has appealed the ruling, saying it cannot directly gain access to a locked phone. The only way to do that is through a “back door” that would involve writing code to gain access.

In letter to Apple customers, Cook argued that to do so would violate his firm’s trade secrets, and would leave hundreds of millions of iPhones vulnerable to hackers and spies.

“While we believe the FBI’s intentions are good, it would be wrong for the government to force us to build a backdoor into our products,” Cook wrote.

“And ultimately, we fear that this demand would undermine the very freedoms and liberty our government is meant to protect.”

Government on the Ropes

If Apple were to lose, the door would be open for governments to gain access to an entire array of tech products – your tablet, PC, smart watch and car (which these days is basically a smart phone on wheels).

The government’s reach could even extend to routers, modems and even entire computer networks.

For its part, the FBI (and some commentators) dispute Cook’s version, and say that it’s the government’s request is very narrow in scope.

But in Congressional testimony last Tuesday, FBI director James Comey made what amounts to an about face. He told Congress that this case could become “precedential” – meaning it could in fact set a broad legal precedent.

Ironically, that is the exact argument Apple has been making all along…

And it gets worse for the FBI. It turns out the agency has admitted that it made a mistake in trying to unlock Farook’s phone, a misstep that meant data on the phone would no longer back up to iCloud.

Had it not followed the wrong procedure, the agency might not have needed Apple to break into the phone in the first place, because the company had already given the FBI access to data stored on Farook’s iCloud account.

You can bet Apple will use that disclosure in its legal pleadings, which will automatically put the FBI on the defensive.

Apple got more ammo for its legal case from another federal magistrate. Though the case is not directly related to Apple it does have huge ramifications for the fight with the FBI.

A Victory for Privacy

On Feb. 29 Magistrate Judge James Orenstein issued a 50-page opinion denying the Justice Department’s request that Apple provide access to a drug suspect’s iPhone.

Orenstein’s ruling is important because at present there is no law that directly affects the “cracking” of a criminal suspect’s phone.

For that reason the FBI and Justice Department relied on what many Americans don’t doubt think is an opaque, arcane law.

I’m talking about the All Writs Act. Written in 1789, and adopted the same week as the Fourth Amendment to the U.S. Constitution, the All Writs Act is still in use today. Prosecutors cite it in cases when no clear law covers requests for search warrants such as in the case of the San Bernardino terrorist.

But Orenstein said the government’s view of the act is so broad “as to cast doubt on [its] constitutionality if adopted.”

This was a strong rebuke that couldn’t have come at a worse time for the Bureau. The next day Comey appeared before Congress and was dealt a second setback.

Questions and comments from both liberal and conservative committee members indicated scant enthusiasm for enacting any new law giving the FBI any new powers to search digital devices.

For his part, Cook continues to maintain that Apple will take the case all the way to the U.S. Supreme Court.

Should it come to that, Cook and Apple won’t be going alone.

Last Thursday some 31 tech firms filed what are known as “amicus” (or “friend of the court) briefs on Apple’s behalf.

These firms include Silicon Valley Google, Twitter, LinkedIn, Amazon, Microsoft and AT&T.

That puts the FBI in the difficult position of arguing that the entire technology industry is wrong and that its investigative needs – as seemingly valid as they may be – trump privacy rights.

That’s why I believe based on what we know now that Apple, its customers and investors will prevail in court.

If All Else Fails…

The outcome of this Silicon Valley “Showdown of the Century” is far from certain. Like I said earlier, if the FBI wins, the tech landscape – especially the smartphone landscape – could change dramatically.

As investors, we need to be ready to adjust to shifting “facts on the ground.”

That’s why I want you to know about a tiny $5 firm with an amazing technology called “Onboard IQ,” which is already poised to disrupt the smartphone industry, possibly in the next 30 days.

This firm controls 41 patents for this technology, and its revenue could soar 11,900%. To put that into perspective, in the iPhone’s first five years, Apple’s sales grew by 5,101% – that’s less than half of the growth we’re talking about here.

So while hardly anyone in America owns this company’s name, I believe it’s getting ready to make a lot of folks a lot of money.

You can read all about it here.

Follow Michael on Twitter and Facebook.

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8 Responses to Why You Need To Keep An Eye On the Tech “Showdown Of The Century”

  1. Arlene Candy says:

    Very well written. As a programmer from way back in the day, I agree that the FBI made a number or missteps and that alone should give pause as to their ability to be trusted with software able to break IPhone’s security.

  2. David carll says:

    Would a case by case judicial request for access WITH the technology staying in Apple control solve the problem?
    Would it prevent “fishing expeditions” while reassuring public we have an agency able to find the bad guys?
    Would it work similar to old wiretap rules?

  3. Matthew Rensen says:

    Our Constitution protects us from “Unreasonable search and seizure”. As long as it has a court order with reason behind it it is legal. How hard is it to grasp that concept? If the FBI We need law enforcement to do its job. It is just that simple

  4. Greg Sparkman says:

    Couldn’t agree more. Just one correction, the cell phone at the heart of this dispute was not owned by Syed Rizwan Farook. It is owned by the Dept of Health of San Bernardino County.

    @Matthew Rensen: The issue is not about providing law enforcement aid. The number one request request to manufacturers by users of mobile computing device is, and has been for the past two decades, stronger security and encryption. That is because our law enforcement is just the tip of the iceberg of people wanting to gain access to private information stored on mobile devices. It’s more like 100:1 bad guys vs good guys. Someone getting into my iPhone would be able access my financial accounts and leave me destitute in the blink of an eye. The keys to encryption and security is not something that turned over solely to the “good guys.” Those keys, if created, will be in the hands of bad guys around the world within a week, or maybe a month, and our mobile devices will be relegated safe only to play Angry Birds.

  5. Larry says:

    Not long ago F stood for Fidelity. B stood for bravery and I stood for Integrity.
    As all things change so has our FBI. I no longer believe they have much in common with Fidelity,Integrity of Bravery.
    Today they take what they want, lie when it serves them and kill as they see fit.
    If they need something, they will take it.
    This is more likely about protecting the elite. The Bildenburg Group and the NWO extremists.
    Should the FBI put Congress phone information into data bases in a short time many could be facing life or the death penalty for anything from bribery to crimes against humanity should they not follow orders.
    In fact, congress already functions like a group under control. They have no power to act under the rule of law. They have to follow orders now or face personal destruction.
    The once strong ideals of the USA no longer exhist. The new government is a shadow government that controls every aspect of rule of law, only needing to destroy Russia to attain total tyranny over the entire world.
    A back door to shadow government information is not going to happen.
    Tim Cook attended Bildenburg. He is not protecting those standing by for genocide, he is protecting the shadow government.
    One hacker or another do good snitch would destroy $trillions and years of work invested in the overthrow of the sovereign worlds governments and planned genocide of the US middle class.
    There must be a $trillion invested in death camps alone in this country.
    Those investments won’t be allowed to go to waste.
    Hell no, Apple won’t give in on this one.

  6. Will S. says:

    What those outside the tech community fail to see is that Apple, doesn’t just sell phones in the U.S.

    If Apple supplies the back-door for THIS case, then it would be just an extension of the FBI/CIA/NSA/TSA or the dozen other U.S. security apparachicks’ usage to use it again, and again, and again. Any Chinese, Russian, German, French, Brazilian, Indian, Pakistani or other official, would therefore know in advance, that their data was compromised. (Hence my lack of trust for Cloud based services) So, whose device would YOU prefer? Samsung, Sony? Blackberry? or Apple?

    Apple knows this, so it must fight this fight not for the American People, but for its own business model, international reputation, and prestige…and future profits. Just as IBM lost out when its hardware was exposed as vulnerable and had built in back-doors for snooping on Chinese Nationals. Which is why Computer Chips made in Chinese factories need to be seriously tested for hardware back-doors or other entry points (such as in firmware) when imported to western nations. Edward Snowden has opened at last a can of worms, and we all need to be fully educated and informed about such practices by security agencies or Democracy becomes Corporataucracy and then Fascism – if we are not already there…

  7. Ed Stein says:

    I’m a veteran of WWII when individual liberties were completely trashed. But practically everyone went along, because the security of our nation was at stake.

    Now ISIS repeatedly warns that terrorists will strike the US.

    The FBI and the NSA are not willing to wait for a serious, coordinated terrorist act, like 9/11 to hit the country. So they convinced a judge to allow them to look at smartphone records to see if a network of terrorists already exists in the US.

    Under those circumstances Apple ought to cooperate, taking the chance that if they develop a “hacking tool” they might lose a marketing advantage. .

    After all, the FBI (with or without court orders) has tapped phones for many years and nobody has complained.

    The security of this nation comes first.

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