Apple Inc. AAPL finally got a breather yesterday as the U.S. Department of Justice (DOJ) withdrew its case regarding the unlocking of a terrorist’s iPhone for FBI investigation. But is it really a relief or a bigger problem for Apple?
The DOJ declared that “The FBI has now successfully retrieved the data stored on the San Bernardino terrorist's iPhone and therefore no longer requires the assistance from Apple required by the Court Order.”
Earlier this month, there were rumors that the FBI has been taking help from a third party to crack the iPhone code without erasing its contents. Apple has always taken pride on the security of its devices. The devices are so designed that the operating system erases all data after 10 incorrect password attempts because of the unique encrypted "signing key" that only Apple can unlock.
This raises a lot of questions as to whether there are loopholes in Apple’s supposedly flawless security (and confirming Apple’s worst fear that anyone could hack its devices with a backdoor).
Since Apple was not aware of any glitches in its operating system (it would have acted accordingly had it known), the issues of security and privacy become even more grave for its customers.
Apple, on its part, has tried to reassure its customers stating “we will continue to increase the security of our products as the threats and attacks on our data become more frequent and more sophisticated.”
While the long and nasty Apple-FBI battle has ended, it seems that there is no end to Apple’s woes. Not only did the FBI succeed in accessing the contents of its device, it got an unnamed third party to do so.
Now as consumers get wary about the security of their devices, the company’s brand value will also take a hit.
Nonetheless, all is not yet lost as the device in question was an iPhone 5C running on an older version of the operating system (iOS 9). This might mean that the newer devices can still be protected. But of course, there is no certainty until FBI reveals how it cracked the stringent security.
Meanwhile, Apple will have to quickly find out the loopholes in its system and fix the issue.
At present, Apple carries a Zacks Rank #3 (Hold). Some other tech stocks worth considering include Yirendai Ltd. YRD, Limelight Networks, Inc. LLNW and Blue Calypso, Inc. BCYP. All three stocks carry a Zacks Rank #2 (Buy).
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