Listen to: Why Apple May Have Picked the Wrong Fight

It’s the challenge that has riveted the business world: Apple has vowed to refuse the FBI’s requests to unlock an iPhone used by a perpetrator of a mass shooting on the grounds that doing so would endanger the privacy of all their iPhone customers. I sat down with Matt Hansen to talk over the implications of this stance for the company, and how being the challenger in this battle may not have been the right move.

Podcast Transcription

Dave: Hi. Welcome to Air Quotes, our podcast about invisible marketing, from the Cardwell Beach Network. My name is Dave Donars. I’m the chief of research.
Matt: My name is Matt Henson. I’m the head of content at Cardwell Beach. Alright. So, today, as some of the listeners may know, we have had an embargo for the last, I don’t know, a few months actually, on talking about Apple. And so, today’s episode, embargo is lifted. So, Dave, let’s start up with just a quick bit of background here. Today, we’re going to be talking about the FBI’s attempt–ongoing attempt really to compel Apple to essentially lift its encryption on one of its iPhones that was used by one of the perpetrators of the San Bernardino shooting in December. We wanted to talk about this for a couple of reasons. I know you wanted to dive in to some of the thinking behind it from a bunch of different perspectives, from the government’s perspective and from Apple’s perspective. But just to start off with, for those listeners who are still getting up to speed on this, just a quick bit of background, the FBI has been trying now for…
Dave: I think they’ve been trying for a long time. I think–I think it will be months.
Matt: Let’s say they’ve been trying for a couple of months since the attack to get Apple to help them essentially defeat the auto-erase function that’s triggered when too many incorrect passwords are entered on this particular iPhone. For those of you who have iPhones, you’ll be familiar with that. And essentially, you know, Apple has been able to comply with some of the requests, on part the FBI, in particular, a request to turn over information on the iCloud. But since they don’t actually own this information, they don’t actually own this iPhone, they haven’t complied with this request yet. And Apple’s argument, essentially–I’m going to read some quotes here in a in minute, is that allowing the FBI to compel them to do this, to create this–essentially this software exception, would open them up to creating the software exception for any iPhone and therefore, weakening the privacy of its customers. The FBI is arguing this is a one-time-only request. So, Dave, what are your initial thoughts on this?
Dave: I think it’s very rare that we deal in a world where multinational corporations takes dividing political stances. And on that end, I applaud Apple. But Apple has–over the decades had successes and failures. And starting with the iPhone, they’ve created the most successful, the most revenue-generating, the most ubiquitous consumer product in the history of the globe. There is–there is–I mean you can go back to Polaroid Brownie, which was successful on a few countries in the west, and that was held within many household. We are talking about something that globally, every country in the world, a high percentage of people have–or aspired to have an iPhone. That puts them into a certain realm of marketing where you’re with Coca-Cola, you’re an uber brand. You are–you are extremely dominant in this place. What concerns me about what Apple is doing is that they’re relocating themselves to a marketing stance that is of a challenger brand, that I think is the main issue that we’re going to discuss. What I mean by that is a challenger brand is that they’re defining themselves by saying, “Our product is for you if you like X, Y, or Z,” instead of, “As and uber brand, you don’t have to like X, Y, or Z. It’s just our product is for you. You’re a human being, you’re alive, therefore, our product is for you.” We’re dealing with something that’s happening in this country. There’s the San Bernardino attack on December 2nd, 2015. Now, with Justice Scalia [ph] passing, we’re into a face of an incredibly new ones in constitutional discussion happening in this country. Apple is global brand. I–and we’re going to reiterate this a few times. I think that Tim Cook–when you get out of this marketing or positioning sense, I think what Tim Cook is doing is–in line with who Tim Cook is, I’m not trying to argue that he is disingenuous in many of these appeals, but there’s something about morality that’s tricky. And whenever morality is the–whenever you take a moral position, that is also the easiest position for you to take and the most beneficial for you to take and causes you to come into a great deal of wealth, I don’t know if that’s the correct moral stance, you know? Like, morality should be a little bit difficult than that.
Matt: And it’s interesting that you bring that up because one of the arguments against Apple in this is that it–and this is the argument the FBI itself and the Department of Justice made last week was essentially, as you said, the company is taking a position that enriches itself. And therefore, how can that also be a moral position? Is it purely a branding position? And it sounds like from your perspective, there is a element of a moral position in this. And this isn’t the first time Apple has taken a moral stance on something.
Dave: I mean Tim Cook has his own entity and has his own brand stood up against a lot of the Indiana religious laws last March I want to say, because he is openly gay. He was offended by what those laws meant. And he publicly came out and said that as an American citizen. That was completely his right. What he is doing with this one is a little bit different where its–Apple coming out and saying these things. I do want to say that this–we’re considering this because we’re Americans. But as a global perspective, Apple doesn’t want to have to deal with all these different countries that want to get access to things and some of it, we can consider morally superior, some of it we consider crap, but, like, it doesn’t really matter from an operational standpoint, from a legal standpoint, from what you would have to do to deal with hundreds of countries in the globe, each doing request to have Apple unlock some of its backdoors is a–it’s a very bad precedence for Apple’s side from a monetary operational, legal perspective. Also, you know, in July 2014, this is from the BBC, Apple hit back on–at China over iPhone privacy claims. China was trying to gain access and was worried about what’s going to happen with IOS 9, and or–IOS 8 and IOS 9. They were–they wanted to have the ability to always go in and track people, to see what they’re doing and saying–and Apple said unequivocally, no. Now, as an American citizen where we hold our democracy and to an extent privacy and freedom and these other things, we–I can see how that perspective from Tim Cook is good, and he is being consistent in his perfective right now with the San Bernardino attack. But we’re small efficient as market. Like, I–if you break down by country how much money Apple makes, a tremendous sum of that is coming from China itself. Two out three dollars of their growth over the last two years has come from the Chinese market and those iPhone. So, I think that there’s–the element being disingenuous is that Tim Cook is saying that this is about these American issues without telling us that this is really about how difficult this would be to go out and deal with on an international scale.
Matt: What about the fact that we’re in a post-Snowden world though?
Dave: Yeah, but, like, I–Apple is always been the company that is obsessed with privacy. Remember, like, Steve Jobs was just obsessed with it. They wouldn’t really send in information. It was just this thing where people would never be able to work in Silicon Valley kind of a–just small feature sets of things that were going on before the iPhone existed, with stuff like that. Like, it’s embedded in their DNA that they are a very inward-looking, kind of privacy–there are certain aspects about them that are a little bit cultish, right? Like, they don’t necessarily have to worry about his stuff. They have a great deal of revenue. I mean, what was it, 2011 or so where they had more money than the entire US government? They have more cash on-hand than the US government? That gives them a lot of ability to not have to worry about that, but that’s the element that was most ingenious to me and we can look at a lot of different from a privacy angle. But Apple has always predated the modern cyber-privacy phenomena with–about protecting themselves. And they did a very good and diligent and disciplined about how they do that but that’s not the moral high ground. Alright.
So, I think really beginning to it, you know, where we were at the beginning of the episode is I want to–I think Tim Cook is now Dick Tuck. Dick Tuck was an American politician. He was a person, right? Not an action that you take in a movie, but he’s a campaign strategist, an advance man. He was also just a prankster. I mean with that kind of name, you’re going to a prankster. But he basically worked for the democrats. And he deal like a lot of anti-Nixon stuff and–even the early ’50s actually throughout the ‘70s. He was a famous thorn in Nixon’s side, and in 1966, this is where I think he and Tim Cook have the most–and like–Dick Tuck ran for California state senate, and he opened his campaign at a press conference at the Forest Lawn Cemetery in Glendale just because people had died, it doesn’t mean they still didn’t have rights. This is what Tim Cook is doing.
Matt: Yeah, I’m playing the devil’s advocate here based on Tim Cook’s own words, right? I mean if you look at the open letter that he or his staff wrote on behalf of Apple, I mean, they get–I mean they have a very clear, of course, to be expected opening statement, you know, denouncing the attacks and saying, look, we are not pushing back because we agree, is what happened here. We’re not pushing back because we support–we support Farook’s actions in any way or condemn terrorism, we’re pushing back because of the fact that this sets a presentment. And that this Pandora’s box, so to speak, is opened, it’s not Farook and his fellow extremist who will suffer, it’s the hundreds of millions of other iPhone customer who could have this breach used not even by the government, by hackers and others.
Dave: Outside of the operational difficult to Apple, I fundamentally, truly do not understand where they’re going with this argument. There’s a lot of people who are very obsessed with privacy and I think Tim Cook to them can be a hero of some kind. But, if you’re really that obsessed with privacy, Apple, on government request, will give data from your phone, anything that’s been transacted over the system, they are not–this isn’t a total by box which we saw as I mentioned earlier in the podcast about the facts that they did turn over the iCloud data, for example, that Farook and his wife uploaded. So, it’s not–as you say, it’s not as though any data you sent to them is somehow protected.
Dave: I just want to go into this, I mean, because don’t let me forget–I want to go back to the challenger uber brand, but, like, the total word count of Tim Cook’s letter, which is Apple.com/customer-letter, the total word count that we’re dealing is 1,276 words, of that, 133, a little over 10% of the words are baits at the bottom to click to purchase their product, linked in things, like, shop and learn, mac, itunes, find a store, genius bar, workshops and learning, like, this isn’t a completely political stance. This is very tied to their revenue even in the letter itself. So, I don’t see where this kind of spirals down and becomes this other worldly issue where we all have concern for privacy. I don’t understand Apple’s perspective because I don’t understand it because of, frankly, I think his position is absurd. I truly do not understand that. But that’s okay for me as a person to not understand that.
If there are stances that politicians take, there are stances that corporations take, there are stances that athletes and other brands and, you know, rappers become famous because they tell they make raps about, like, that the earth is flat, and stuffs like that. But from a branding perspective, you can understand that. Like, not that there’s a huge flat earth or community but you generate a lot of awareness and people listening to you talking about–Apple is uber branding, don’t need that. So, by them doing this, they’re automatically, in many ways, shrinking their market. I don’t think that they understand. I think that they’re seeing this as an operational game elsewhere. For them to just be able to describe it as I’m describing it, that it’s just way too difficult to do this instead of the veil of privacy, I think would have a lot of benefits with them. I don’t think anyone could disagree with them about that. But to go to the high road on this and start mentioning, like, the 1789 Brit of blah, blah, blah, like, it seems pretty far. What I don’t get is after somebody commits a terrible crime or when people are being investigated for various things, we can get warrants or we can go in after the fact and we can look at notebooks or phone correspondents, and things and Apple has cooperated. They’re not being–standing and saying that they won’t cooperate. On this issue, you’re backing yourself into a corner though, and this is what, like, all PR crisis that are built around, is either you are stupid or you’re evil. And, like, that’s it. Either Tim Cook and his team don’t know how to do this and therefore, like, as a tech company, that’s not a great statement for them because–then, they’ve essentially created enigma machines and there’s no turning to go solve this test for them. Or they’re evil. They’re doing this for reasons of purely profit, and I think that they’re backing themselves into a position where they were never were. That was always been a little bit for, you know, liberal versus conservative in this country–I don’t really know how it works in other countries. And it’s been this major thing that ever wants to have a part of.
But now you’ve politicized your product and you’re moving away from being an uber brand and more into a position where it’s a challenger brand. And I don’t–I don’t see that as a benefit to them because them claiming this moral high road that probably doesn’t exist, based on the fact that they’re Dick Tucking right now, saying that the rights of dead terrorists exceed the rights of you and I and everyone else, by saying that we have this unsaid group of rights that actually Apple doesn’t even believe that we should have because they do cooperate with the government. I don’t–I see this such–okay. It’s a Dick-ish thing that billionaires do to excuse our behavior without having to think about it because there’s not a lot of people saying no. There’s not a lot people in Tim Cook’s realm of conscience that are going to directly tell him that this is a bad idea, or articulated in a way.
And you know what? Maybe he doesn’t need that because we’re all kind of small potatoes but, like, that’s the image. Like, we’re small potatoes. We literally do not matter. Like, Tim Cooks is never going to anywhere without security. Tim Cook is never going to be anywhere where there’s going to be a serious threat of a random terrorist attack happening. Maybe something that’s, you know, aimed at Apple or something like that. Like, they have other security risks and he lives in a different world of security risks but the randomness of this, I think is what scares people and what touches a nerve and the encryption and all of that, I’ve read all these things online about it’s moronic to force a company to create essentially the ability to do wiretapping, or to make the company do that. But it’s–from my perspective, this privacy argument has been the long time coming, starting was a part of that chain, but you go back to things, like, Google Maps when they’re released in 2004 to the public and people started trying to block out their house. One of the few that was able to get a block for some reason was, like Bit Meddler and then, you have, like, government installations that have been blocked. I can understand the perspective of people saying, like, it’s all or not but, like, you put it there or you don’t and that’s kind of it. But this privacy has been brewing–you even go into the late ‘90s with some of the email security, things like that, you go into high schoolers, you know, sexting each other, like, this has been going on for a long, long, long time but now, it’s coming to a head and now it’s going to be a constitutional issue, this is definitely, in my opinion, this is going to go to the supreme court. We’ve got kind of a hang jury on the supreme court right now, they lost their main vote. Like, Scalia was super pro privacy. I just think their position on this is so nakedly toned off. And Tim Cook’s history was he was the operations guy. He’s like a hardware operations guy. He’s the guy who can make the leading manufacturing work, who can make sure that the warehouse and distributions are all in line, he’s–I think he’s in an intelligent person who’s made recent and principal statements before but I think that they’re kind of feeding into their own morality right now.
Matt: Do you think, to some degree, we’ve also just sort of crossed the Rubicon when it comes to digital privacy that we are–our information is so deeply embedded into systems, like, our iPhone or, you know, Android networks or our Gmail accounts that to even pretend that we have much privacy left is almost disingenuous in way itself?
Dave: Yeah, right. I don’t–I don’t think we’ve ever had privacy. I think it’s an odd conception, let’s not go incredibly historic on this but, like, what does privacy mean? Does privacy mean that after you are dead, no matter what act you have committed, you get to keep the–those things private just because it’s on a digital device, unlike if you have written it down in a notebook or spoken it to another person, that person could be indicted and put in jail for the rest of his life from not telling the government what you said but for some reason, Apple created a device which is literally an enigma machine and no one can get into it and therefore, that safe and protecting privacy, natural privacy is, it doesn’t–you could be compelled if the government took you in and, so, “We need to see what’s in your phone right now,” and you won’t open it up, you could be compelled to do that. You could be put in prison, you could do other things, but, like, this is why it’s such a Dick-Tuck kind of thing, like, to stand for the rights of dead mass murdering terrorist is an odd moral position to take. It’s an interesting position for them to take but because they wrapped this around of this idea of superior moral thinking, I think that that’s what’s going to burn them the wrong way. Let me go down this–I don’t want to writ large to this too much but let’s go down this path, okay? You go down this path where both sides are definitely digging the trenches to fight each other about this, both Apple and the FBI. The Justice Department’s involved, and you move forward in time where this is going to go to a appellate courts, this is going to the supreme court. Without Scalia there, there’s no designing vote on a closed vote. So, it’s 4-4 right now, as I would see it, where there’s only eight justices. So, if they–if there are–is 4-4 break on this, there’s no tie-breaking vote.
Considering what’s happening in the American presidential election where they are not going to nominate a president–or a supreme court justice until the next president is on board, you’re quickly moving Apple and their privacy stance right into America in a constitutional crisis. And it will be this Apple case that is mentioned, and it will a turn a tremendous amount–a lot of people don’t even know that this is happening right now. Every single day that this does not get solved is another day where more and more people are going to be aware of it and a percentage of those people will be very upset with Apple, whether they understand all the facts or not, whether they’re in technology. They have a right to make whatever opinion they want to about this company and beyond that, they–a percentage of people will not only be upset with Apple, a certain percentage of people will be forever turned off from Apple. And it starts to take away the gleam and the prestige of this brand if it’s overly politicized. Now, you’re going to November and you’re going to an actually presidential campaign where this is a campaign issue, that’s a serious issue for their brand in this country. Maybe not in China, maybe China will think it’s great. Maybe the average Chinese consumer will think it’s great that they caused this chaos here, but it does not–I don’t see a great end game for Apple. I don’t see this going away in a week. I don’t see this ending where they somehow had more consumers.
The first rule of branding is that brand should alienate people. There’s no question about that. Apple doing that is an astounding move in some ways, and something that they should be applauded for. But, it’s a very, very risking proposition because they are one of the few uber brands left on this planet. As we well know from what we’re talking about, this is one of those things that hasn’t been politicized at this point. So, like, ISIS and President Obama alike, are using the iPhone, you know, like–and I know that Apple doesn’t want to necessarily go there and discuss that but, like, that’s the issue at hand, is that everyone uses it. It’s almost totally ubiquitous. Android, there are still, I think, more Androids out there, but if you look at the total amount of data that’s being transferred, like, the actual usage by humans, the iPhones, although a small marketer totally outstretched the actual data usage on Androids. Which just means that they’re using it more. So, I think it’s a position that can’t halt. I think that it’s not a good idea if you–if you’ve gained uber brand status to move to challenger brand status.
I want to know what Dick Tuck thinks whatever the thing we’ve been thinking about. He was born on January 25th, 1924, and Dick Tuck, if you’re listening, please email us.
Matt: Yeah, email us at airqoutes@cardwellbeach.com.
Dave: Or if you’re a Twitter user, you can tweet us at Cardwell Beach.
Dave: Alright. I want to say that the Atlantic Newsstand app has been fantastic over the last few months. It’s a free app. It is updated seemingly seven days a week every few hours with thoughtful articles that aren’t just here’s what happened, like, AP or even the times kind of story. There’s a little bit of repose between the event and some type of reflection that come back with. I think they’ve been doing a really good job with that.
Matt: Yeah, and I’ve got actually a related Atlantic brand to recommend. That’s Quartz app, which is also a great business news app. It’s a nice mix of…
Male: Can you spell it?
Matt: Yeah, it’s Quartz, like, the–like the semi-precious stone. So, Q-U-A-R-T-Z.
Dave: Oh, quartz.
Matt: Yeah. They make a great–they just came out with an app. They do some really inventive business news coverage and it’s a–definitely a recommended download.
Matt: Thanks so much for listening.
Dave: Thank you very much.

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