One of the more interesting stories that we at Mediolana have been poring over in recent days has been the revelation that the iPhone 6 – a device which has so far made headlines mostly for its purportedly malleable case – is causing concern at the highest level of the Federal Bureau of Investigation (‘FBI’). This is because the ninth iteration of Apple’s iconic mobile handset is also its most secure: the phone’s encryption of emails, photographs and contacts is so comprehensive that Apple will not be able to hand over anything particularly substantive to a law enforcement or intelligence agency in the event of an investigation.
Whether Apple’s claims about the impracticability of trying to crack the iPhone 6’s encryption prove to be correct or not, James B. Comey – a distinguished alumnus of the University of Chicago’s law school and the director of the FBI – is clearly concerned enough to be making pronouncements about the dangers of companies manufacturing and marketing electronic devices that ‘allow people to hold themselves above the law’. Comey may have a point, but after some consideration, we believe that there are at least three even more salient issues that have arisen from this perhaps unexpected iPhone 6 USP:
- The Value of Privacy. The iPhone 6 signals that there is an economic value to privacy: consumers will be willing to pay more (or at least allocate their disposable income in a different way) on the basis of whether their data will remain just that. Moreover, in large markets whose jurisdictions are wary of US espionage – think Angela Merkel – the ability of American companies to do business in those countries may depend on their meeting certain encryption standards.
- Competing on Security. Google has already announced that the forthcoming version of its own mobile operating system, Android, will have encryption as the default setting. With companies seeking to outdo each other on the impenetrability of their offerings, the conflict between the requirements of consumers and the level of access desired by national or international agencies is likely to intensify in the future.
- Trust. With ever-more private and sensitive data being stored on mobile devices, perceived breaches of trust could have significant economic consequences – as well as impacting brand equity. In the notoriously volatile smart devices market, today’s ubiquitous phone is tomorrow’s museum piece – and security may be a key determinant of which manufacturer is next to end up in the bankruptcy courts.