NSA Hack Should be Good News for AAPL Stock
At first blush, there doesn’t seem to be much of a connection between Apple Inc. (NASDAQ:AAPL) and the recent National Security Agency (NSA) hack. That being said, the specifics of the NSA hack show that Tim Cook was 100% right in protecting AAPL stock from the Federal Bureau of Investigation (FBI).
The subject resurfaced last week when a mysterious group called the “Shadow Brokers” hacked into the Unites States government’s NSA. (Source: “New Snowden documents prove the hacked NSA files are real,” Business Insider, August 19, 2016.)
The hackers released details about what tools, or “lockpicks”, the NSA uses to break into companies and countries around the world. In other words, the entire cyber-world can now copy spying tactics used by the U.S. government.
This is exactly what Tim Cook predicted months ago when he protected Apple stock from FBI intrusion. It was a gamble, but one that seems to have paid off.
Just to catch up for those who may have forgotten, the Apple-FBI standoff happened when the investigative agency was trying to break into an “iPhone” held by one of the San Bernadino shooters. They had initially bungled the case by changing the iPhone’s ID, making it nearly impossible for them to hack the smartphone.
As a result, the FBI asked Apple to build a backdoor, which would help them break into the shooter’s phone. Apple refused, arguing that a backdoor would jeopardize the security of every iPhone on the planet. The FBI thought that this was ridiculous.
The FBI took Apple to court, causing some AAPL stock investors to worry about the company’s future. But even when a judge ordered Apple to comply with the investigation, Tim Cook refused to budge. It shook investor faith in Apple stock.
Cook worried that hackers, with their uncanny ability to sniff out weaknesses, would find the backdoor. He couldn’t risk them having such unprecedented access to iPhone user data and Apple’s proprietary software, so he turned the FBI standoff into a public brawl.
Cook claimed that it was for the public good, but it also ensured the security of Apple stock.
After weeks of back and forth, dozens of editorials, and more than a handful of battle lines being drawn, the FBI withdrew its court case against Apple. However, they maintained that Apple was still wrong, that the FBI would have protected the backdoor.
Yet we now see that the NSA, an agency far more adept at cybersecurity than the FBI, has been hacked. Its tools for cyberwarfare have been exposed for all the world to see.
So, if Apple had provided the backdoor as requested, it could have ended up online. Not only was Tim Cook right, but he also scored a major public relations coup for Apple stock investors. Everyone got to see him publicly defend data privacy.
At the time, I wrote that Tim Cook was doing more than standing up for privacy rights—he was winning consumers’ trust by protecting their data from undue search and seizure.
He was insulating Apple stock from harm, because consumers really value their privacy right now.
As I wrote in February, “a poll from Pew Research Center shows that 93% of Americans consider the privacy of information to be an important issue… [and it] is increasingly affecting their buying decisions, particularly when it comes to consumer electronics.”
Since then, AAPL stock is up nearly 12%.