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Make no mistake — Apple's stance on encryption is also good for business

Tim Cook serious face
AP

Apple is standing up to the US government, opposing a federal court order that calls on the company to find a way to unlock the iPhone that belonged to one of the shooters involved in the San Bernardino massacre.

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To many — Donald Trump and a few other politicians notwithstanding — it may look like Apple is taking the moral high ground and doing the right thing — standing up for the privacy of its customers over the desires of the government.

That may be true. But make no mistake — this stance is also good for Apple's bottom line.

It distances Apple from Google, its biggest competitor:

Back in 2014, a few days after Apple announced the iPhone 6, Apple CEO Tim Cook went on Charlie Rose's show for an uncharacteristically long interview.

Rose asked Cook about Apple's biggest competitor, and Cook said it was Google. Google makes Android, the software that most smartphones around the world use.

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"...when I think of competitor, I would think of Google much above everyone else," Cook told Rose.

Cook went on to explain that Apple is in a different business than companies that collect data about their customers, which is, of course, what Google's business is built on.

"Our business is not based on having information about you," Cook told Rose. "You’re not our product. Our product are these [the iPhone], and this watch, and Macs and so forth. And so we run a very different company."

Google is in the advertising business — the company, which is now part of the holding company Alphabet, makes the vast majority of its revenue from advertising. And the more it knows about you — what you watch on YouTube, what music you stream, where you go in Google Maps, what subjects you email about, what's in your photos, and more, the better it can target advertising to you.

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Cook kept not-so-subtly digging at Google (emphasis is ours):

I think everyone has to ask, how do companies make their money? Follow the money. And if they’re making money mainly by collecting gobs of personal data, I think you have a right to be worried. And you should really understand what’s happening to that data.  

And companies I think should be very transparent about it. From our point of view, you can see what we’re doing on the credit card thing. We don’t want it. We’re not in that business. I’m offended by lots of it. And so, I think people have a right to privacy.

Tim Cook Charlie Rose
Tim Cook on Charlie Rose. YouTube/The Charlie Rose Show

Cook's interview on Charlie Rose took place only a few weeks after the embarrassing iCloud hack, when nude photos of celebrities were stolen and leaked online, so Cook was still doing damage control, ensuring customers that their data and photos would be safe on Apple devices. 

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But Apple, and especially Cook, has continued with this narrative. In June, when he was honored at an event for the Electronic Privacy Information Center (EPIC), a nonprofit focused on privacy and civil liberties issues, Cook again outlined the philosophical differences between Apple and Google:

“We believe the customer should be in control of their own information," he said, according to TechCrunch. "You might like these so-called free services, but we don’t think they’re worth having your email, your search history and now even your family photos data mined and sold off for god knows what advertising purpose. And we think some day, customers will see this for what it is.”

In a tweet on Wednesday, Edward Snowden, who we can credit with bringing the issue of government surveillance to the consciousness of the American people and the world, highlighted the difference in approaches between Google and Apple:

Cook's stance makes Apple products more appealing to businesses:

Apple is making a huge push into the business, or enterprise, market. It launched a high profile partnership with IBM about a year and a half ago.

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Ensuring that valuable information is safe from corporate espionage and snooping is essential in its sales pitch to corporations.

tim cook apple china
Apple Inc. CEO Tim Cook (R) and China Mobile's Chairman Xi Guohua (L) with iPhones pose with a customer at an event celebrating the launch of Apple's iPhone on China Mobile's network in January 2014. Kim Kyung Hoon/Reuters

It also makes Apple's products more appealing to people who live outside of the US:

Apple has a duty to protect its customers from cybercriminals and hackers. But it also needs to protect its customers from the prying eyes of their own governments, and that's a bigger issue in some places than in others.

Greater China, which includes mainland China, Hong Kong, and Taiwan, is Apple's second biggest market behind North and South America. In the last quarter, Apple brought in more than $18 billion in revenue from the region. Tim Cook said in October that the region will become "Apple’s top market in the world," Apple sold more iPhones in China than it did in the US during the first quarter of the year in 2015.

The Chinese government censors the internet and is known to monitor communication, so it's in Apple's best interest to communicate to potential customers that it safeguards what they do on their phones.

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It's unclear what, if anything, Apple has shared with the Chinese government. As Quartz's Joon Ian Wong wrote on Wednesday, there were reports last year that Apple agreed to a security audit with the Chinese official in charge of internet policy. Apple did not return an immediate request for comment on what it has shared with officials in China.

But the bottom line is this: Apple's stance against the FBI may make sense from a moral standpoint, and Cook and his colleagues may believe in it, but it's also a calculated business move to keep customers coming back to the iPhone.

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