This is why Apple is at war with the feds

Apple (AAPL) and the U.S. government are obviously having a spat. And it appears to have started not during the San Bernardino investigation that has brought the controversy into the limelight recently, but in a different case in New York last October, when Apple suddenly reversed its longstanding policy of cooperating with law enforcement in helping unlock iPhones used by suspects in criminal cases.

Court documents show that Apple was a reliable ally of the government since the iPhone debuted in 2007, agreeing to help unlock phones used by criminal suspects at least 70 times between then and last fall. But the company surprised and angered government prosecutors in October, after they asked for Apple’s help unlocking an iPhone used by a man who subsequently pled guilty of selling methamphetamines. In that case, Apple first seemed willing to cooperate, as it had many times before. Then Apple changed course, with company lawyers contesting a court order for what appears to be the first time in such a case.

Apple also claimed in a court filing last fall that helping the government unlock the phones of criminal suspects could “tarnish the Apple brand,” a claim it had never made before. Prosecutors lambasted that argument. “Apple’s stated reputational concerns are particularly ill-founded in this case because Apple has previously stated that it will extract data from phones … when the government obtains a warrant,” prosecutors wrote in a filing of their own. “Apple is an American company, incorporated in California, and derives significant legal, infrastructural and political benefits from that status.” The case, in the Eastern District of New York, is still active, and the judge hasn’t yet issued a ruling. Meanwhile, Apple has stopped arguing about possible damage to its brand, instead claiming that cooperating with the government by unlocking encrypted phones would endanger the civil liberties of its customers, and possibly even their safety.

The animosity generated in the New York case appears to have carried over to the San Bernardino case. When the Justice Department filed a court order on Feb. 16, seeking to force Apple to help it open an iPhone 5C used by one of the assailants in the Dec. 2 shooting that left 14 dead, it didn’t give Apple any notice of what was coming; Apple CEO Tim Cook learned about it from the press. Cook, for his part, told ABC News, “I’m surprised I wasn’t contacted personally and told they were doing this.” He also dinged the government for making an “error” by changing the iCloud password associated with the phone before contacting Apple, which, he says, made it impossible to access data from the San Bernardino phone that might otherwise have been obtainable. And Apple has now challenged the court order in the San Bernardino case, just as it did last October in New York.

The San Bernardino case is also unusual because the government—usually a bastion of secrecy on national-security matters—took the provocative step of asking the court to unseal the case, which would normally be secret by default. That was most likely a strategic move meant to raise the stakes for Apple and marshal public support in favor of unlocking the terrorist’s phone.

The government’s indignation seems related to Apple’s newfound concerns about its image and reputation in cases involving federal warrants. In an unusual filing in the San Bernardino case, prosecutors implied that Apple is more concerned about “its business model and public brand marketing strategy” than about public safety or national security. That insinuation has put Apple on the defensive, forcing Cook to argue that Apple abhors terrorism but is taking a stand on the matter because also at stake is the privacy of millions of other Apple customers, most of them not criminals.

Years of cooperation

What may be most surprising about the smackdown between Apple and the government is the chummy relationship the two organizations seem to have had on legal matters for years prior to the disagreements. Prior to the New York case, Apple had established routine procedures for prosecutors to follow every time they got a warrant for an iPhone and needed help unlocking it. The company even drafted language it asked prosecutors to use when requesting court orders, which would preemptively address Apple’s legal concerns and speed the request. Apple could often complete the technical work of unlocking a phone in one day or less, and it never asked the government to compensate the company for costs it incurred while complying with court orders, even though the law entitles Apple to do that. As of last fall, the government said Apple had unlocked at least 70 iPhones in this manner, never once objecting to a court order.

Apple’s cooperation ended last October. Prosecutors seeking help unlocking the iPhone 5S used by Jun Feng, the suspect accused of peddling meth in the New York case, contacted Apple’s law enforcement liaison on Oct. 7. A response came quickly; Apple asked the feds to provide the unique ID number for the phone and confirm what operating system it was running. The same day the government reached out, Apple said in an email that once there was a court order with the proper language, “we can schedule the extraction date within a 1-2 week time frame.”

The next day, prosecutors asked the court for the necessary order, which the court issued. Apple received the court order on Oct. 9. At the time, the government was in a hurry, because Feng, the defendant, hadn’t yet pled guilty and his trial was scheduled for Nov. 16. Apple seemed to be doing its part and moving quickly. On Oct. 11, Apple told the government the “target phone” had a “remote wipe” request pending—someone had sent instructions through the Internet to delete all data from the phone, which would happen automatically once it was connected to a network and turned on. Apple was able to preempt that.

Apple reverses course

But then came Apple’s reversal, in a court filing on Oct. 19, when the company asked the judge to deny the government’s request for Apple’s cooperation—the first time, apparently, Apple ever resisted such an order. Apple cited two reasons for its objection to the court order. The first was the “inevitable testimonial demands” on Apple engineers who did the actual work of unlocking phones, meaning they could be called to testify in trials involving the phones they had helped unlock. Second was the sudden worry about reputational damage. “Forcing Apple to extract data in this case, absent clear legal authority to do so, could threaten the trust between Apple and its customers and substantially tarnish the Apple brand,” a company lawyer wrote. “This reputational harm could have a longer term economic impact beyond the mere cost of performing the single extraction at issue.”

Prosecutors laid into Apple at a hearing a week later. “For years, Apple has provided this assistance and until two weeks ago Apple indicated to the government it would provide that assistance again in this case,” Saritha Komatireddy, an assistant U.S. attorney, stated in court, according to a transcript of the hearing. “Apple’s position in court today represents what we consider to be a stunning reversal of that position…. American consumers should expect that American companies protect their privacy and safety.” Komatireddy’s condemnation of Apple was so strong that the judge, James Orenstein, suggested her argument “goes to a surprising length to questioning the patriotism of a company that stands on its rights.”

There’s one major difference between the New York case and the San Bernardino case: The phone in the New York case ran on iOS 7, which is older software that does not have the more sophisticated encryption on the phone used by the assailant in the San Bernardino shootings. That means Apple would have been able to use established methods tapped many times before to unlock Feng's phone. In the San Bernardino case, Apple says it would have to create new software to breach the operating system, something it has never done before. Cook is so opposed to creating such software that he calls it the equivalent of “creating cancer.”

That actually makes it more perplexing why Apple chose to take a stand on the New York case, which in all outward respects was routine. Apple said at the time that fewer than 10% of all iPhones in use ran on the older software, with the portion declining as more people upgrade to new phones. Apple also had to know that a fresh case involving the newer encryption standards was inevitable, given how often law enforcement asked for help cracking into phones. Cook has said many times that Apple is fighting the government in the San Bernardino case because “it’s not about one phone, it’s about the future.” The New York case, by contrast, is about the past, since it involves an operating system that is fading into obsolescence.

New defiance

The unanswered question is this: Why did Apple make a corporate decision to change its policy last October, and shift from cooperating with law enforcement to resisting legal orders to help unlock phones used by criminal suspects? Apple spokesman Steve Dowling didn’t respond to Yahoo Finance’s request for comment, and Cook’s public explanations have mostly been generalizations about the need to protect its customers’ privacy, rather than specific answers about why Apple has become surprisingly defiant in a few specific cases.

It’s possible the government is right, and Apple has identified some kind of branding problem associated with cooperating with a government more and more Americans distrust. It’s also possible Apple is still trying to repair the damage from one of the most embarrassing episodes of the iPhone era—the 2014 hack of Apple servers that led to the publication of nude photos of numerous celebrities, including Kate Upton, Jennifer Lawrence and Kirsten Dunst. Yet if that’s the motivation for Apple’s tougher response, the response didn’t come until a year after the hack occurred.

Tim Cook is surely right about one thing: The nation needs updated laws that better address the complexities of modern communication. The prevailing statute governing the obligations of private companies like Apple in cases where the government needs help unlocking digital devices is the All Writs Act of 1789, which was obviously written way before smartphones—or any phones—even existed. Congress updated the law in 1946, when wired rotary phones with U-shaped handsets were the standard and many Americans still had no phone at all. Now that there’s a smartphone in nearly every pocket, we probably need digital-era laws rather than pre-industrial ones.

Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.