Is Apple’s Teflon Skin Wearing Thin?

By Charles King, Pund-IT, Inc.  February 24, 2016

Since Steve Jobs’ celebrated return in 1997 Apple has played, mostly successfully, by its own rules. Along the way, the company has weathered mistakes that would have badly damaged or sunk other organizations, including faulty phone designs, strategic missteps and failed efforts in new products and categories. In fact, its ability to avoid punishment was often linked to Jobs’ supposed ability to conjure up a “reality distortion field” at will.

That obviously hasn’t been available in the half decade since Jobs’ death but it’s not like Apple needed an excess of mojo to sustain a Teflon-like, problem-resistant quality. Under the leadership of former COO Tim Cook, the company has become a far more stable and predictable organization, and a far, far more profitable enterprise. That’s not to say Apple hasn’t suffered disappointments, including its inability to launch a product or category as successful as the iPhone.

But in spite of that, Apple seemed to be essentially on track, at least until recently when it tripped over issues that should have been relatively easy to avoid or resolve. Let’s look at this in greater detail.

Error 53

Last September, shortly after Apple released the new iOS 9, iPhone and iPad discussion boards began seeing questions from some iPhone 6, iPhone 6 Plus and iPad owners who had experienced a previously unknown and unfixable “Error 53” code that effectively “bricked” their devices. Apple said it would look into the problem but seemed to be caught flatfooted in late January when Error 53 reports and complaints accelerated significantly – the owner of reported that the site’s “Error 53” page had seen over 183,000 hits, suggesting Apple had a serious problem.

Eventually, the company explained that Error 53 protected a device’s “advanced security architecture” and occurred when the OS detected problems with an iPhone’s Touch ID sensor (built into the Home button). If the sensor had been altered in any way, the device would be permanently shut down to prevent the owner’s fingerprint data from being compromised. However, Error 53 could also occur if the sensor had been replaced by a non-Apple repairperson.

The supposed security angle didn’t mollify iPhone owners, especially when they were told Error 53 was a hardware problem that couldn’t be easily or cheaply addressed. Not surprisingly, lawyers were close behind. On February 11, Pfau, Cochran, Vertetis, Amala (PCVA), a law firm in Seattle, filed a class action suit against Apple for damages caused by Error 53.

Then on February 20, the company pushed out a software update, iOS 9.2.1 that it says will restore iPhones and iPads affected by Error 53, though it will not restore Touch ID functionality. Customers who wish to use Touch ID will need to return their devices to Apple for more extensive repair. The company also now claims that Error 53 was manufacturing test code designed to check whether Touch ID was working properly, and was never intended for public release.

Apple vs. the FBI

Apple’s other high-profile problem began on February 9 when FBI director James Comey testified before the Senate Intelligence Committee that the agency was in possession of an iPhone 5c once owned by Syed Rizwan Farook who, with his wife, Tashfeen Malik, killed 14 people and wounded 22 others at a government agency in San Bernardino where Farook worked. Comey said the agency had not been able to break the phone’s encryption and requested help from Apple, which refused.

On February 16, U.S. Magistrate Judge Sheri Pym of the U.S. District Court’s Central District of California ordered Apple to help the Federal Bureau of Investigation. The following day, Apple posted a letter from Tim Cook to customers stating that the FBI had asked the company “to build a backdoor to the iPhone,” and that “while the government may argue that its use would be limited to this case, there is no way to guarantee such control.”

The DOJ answered Cook’s letter on February 19, filing a motion that would compel Apple to accede to the FBI’s requests or face punishment. Apple responded with a media blitz, telling its side of the story and suggesting that a “commission” be appointed to look into the matter. Industry leaders and political figures have weighed in with support for both sides, as further details have emerged concerning efforts by the FBI and other law enforcement agencies to crack the phone.

Final analysis

Since Apple has sustained or risks significant damage to its reputation in both of these cases, it’s worth asking why the company pursued these courses. The Apple/FBI confrontation is at the top of the news just now so it’s difficult to accurately sort out the individual parties’ specific actions and motivations.

For example, it’s been pointed out that Apple previously cooperated with government agencies to bypass device security dozens of times, so why should this case be any different? But it’s also been suggested that the company’s recent encryption technologies were designed to discourage those sorts of engagements and what the company felt were compromises to customers’ privacy rights and concerns.

Similarly, since there have been numerous past cases where the FBI and other law enforcement agencies quietly worked with vendors and service providers to access secured accounts, why are they pursuing Apple in so public a manner? Some have suggested that the government has been increasingly frustrated by increasingly secure commercial IT products, and that this is the first of a continuing effort to shame or coerce vendors into lowering encryption standards.

In any case, it’s difficult to see how Apple comes out the winner in all this. The phone’s owner, a mass-murdering terrorist, isn’t someone that any company would willingly choose as a poster boy for privacy concerns. Apple’s request for a commission to study the matter seems like little more than Hail Mary attempt to delay the FBI’s court order request.

In a Pew Research study, a majority of respondents were decidedly against Apple while a Reuters/Ipsos poll found that 46% of participants supported the company. Acceding to the FBI’s demands is likely to injure Apple commercially, particularly in security-sensitive markets such as China which Apple hopes will support its next phase of growth. Pressing too hard makes the FBI look like a bully in an election season sparked by many voters’ anger at what they consider to be oppressive government.

This may simply be a situation in which, no matter the outcome, nearly everyone loses.

Unfortunately, the Error 53 controversy is equally problematic for Apple. In essence, the company broke faith with many of its most enthusiastic early adopter customers with a so-called security feature it failed to mention till after the fact. Then, after a firestorm of criticism, Apple reversed its original claims and offered a fix that will still leave its vaunted Touch ID inoperable.

One reason this is important is that from the start of their release, complaints arose about the awkwardness and durability of the iPhone 6 and 6Plus models sensitive to Error 53. Numerous reviews noted that the handsets were slippery and tended to break easily, meaning that Apple had delivered a next generation flagship product with a heightened likelihood of damage—not exactly a ringing claim for going-to-market.

Error 53 also clearly threatens the independent phone repair companies that are a crucial part of the iPhone ecosystem. Make no mistake—Apple has never approved of third party services and prefers customers to use its own repair services. But iPhone owners love the independents in strip malls and kiosks who get their handsets up and running in a fraction of the time and at a significantly lower cost than Apple.

By designing new products whose core features are either difficult or impossible for third parties to successfully repair, Apple appears to be reverse engineering a walled garden around its iPhone ecosystem. That may cage-in customers and keep out those it considers unworthy, but such activities seldom end well for the companies that attempt them.

Apple has always been a company that acts first in its own best interests. That may make sense for its business but it was an easier and safer course to pursue when “reality distortion fields” were easier to come by. In the case of both Error 53 and the dispute with the FBI, Apple appears to be on a track leading toward significant risk and substantial harm.

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