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Apple's Principled Privacy Stance Also Makes Good Business Sense

Apple makes things that look cool. It’s also long wanted to make devices that people feel secure using.

Apple makes things that look cool. And it's easier to sell millions of those cool devices all over the world when people feel safe using them.

That’s why the tech giant is pushing back so hard against a new court order that would require the company to help the Federal Bureau of Investigation break into an iPhone — Apple objects to the idea on a philosophical basis, but it also makes good, solid business sense to tie its products to privacy and security, analysts say.

“When I buy an iPhone, I want to have that privacy, I want to have that security,” said David Kennedy, CEO of cybersecurity firm TrustedSec.

Tim Cook’s fiery response to a court order asking one of the world’s most valuable companies to provide the FBI “reasonable technical assistance” in unlocking an iPhone 5C used by one of the San Bernardino shooters is hardly the first time the Apple chief executive has taken a hard line on encryption and privacy.

"With iPhone touting security and military-grade encryption and everything that they do, they literally took over the entire enterprise market.”

Cook called privacy a “fundamental human right” in an interview with NPR last October, and he has chastised companies that make money by “lulling their customers into complacency about their personal information” — though he always stops just short of explicitly naming Facebook or Google.

“For Apple, it’s been a major and massive selling point and shift for corporations and for enterprise. They changed the whole demographics of what it means to have mobile phones,” Kennedy said. “Traditionally it was always BlackBerry, and with iPhone touting security and military-grade encryption and everything that they do, they literally took over the entire enterprise market.”

That’s all helped Apple maintain a strong reputation as a leader in privacy.

Read More: Why Are Apple and the FBI Battling Over an iPhone?

“It’s both philosophical and marketing,” said Daniel Matte, who studies the mobile industry for market research firm Canalys. “I think going back to Steve Jobs, he was very adamant about user privacy and always asking users every time about any access to users’ data. So they really do believe that.”

“But it is also it does benefit them from a marketing point of view, and they can and should market that is part of their corporate DNA, so to speak,” Matte said.

Apple itself pointed out in an October 2015 court filing in the Eastern District Court of New York that a ding in the company’s reputation for privacy could hurt its hugely successful business.

“Apple has taken a leadership role in the protection of its customers’ personal data against any form of improper access,” lawyers for the company wrote in the Oct. 19 filing. “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. This reputational harm could have a longer term economic impact beyond the mere cost of performing the single extraction at issue.”

Outside the U.S., Apple and other American tech companies are still dealing on a daily basis with the fallout from Edward Snowden’s surveillance revelations. Apple has a massive global presence, and wants to keep it that way. That means making sure people in surveillance-wary nations like Germany, as well as customers in countries where governments are even more prone to snooping, feel secure using Apple's products.

Earlier this year, Apple said that one billion of its devices had been active around the world in the three months prior. Products sold outside the U.S. made up 66 percent of the $75.9 billion in revenue that Apple reported for the quarter that ended in December 2015.

That means Apple has to take a global perspective when making its products, and the competitive edge they get from standing up for privacy makes it worthwhile from a business as well as ethical point of view.

“If you want to keep that as part of your brand going forward, you have to fight for that,” said Gene Munster, senior research analyst at Piper Jaffray. “I think this gets back to the brand. It’s an easy message to them to show why they’re different than Android and Google, and it’s critically important that they do that.”

Apple can't have different policies for each country where it sells products. Saying that it will do everything it can to protect user data in all instances is a practical policy in a world where ideas about surveillance, government reach and Internet freedom vary wildly.

"You have to have a single, simple policy that reflects everything," Munster said.

Read More: Google CEO Backs Apple in Fight Over Cracking San Bernardino Gunman's iPhone

Where’s one place Apple would definitely like to sell more iPhones? China.

There, Apple is locked in a turf war with companies like Xiaomi and Huawei to control the smartphone market. In July of 2015, Cook told investors that iPhone sales in China had spiked 87 percent year over year. But the country also came in dead last out of 65 countries in a report last year on Internet freedom published by the U.S.-based Freedom House.

“This is a privacy concern for anyone, because technology does not respect international boundaries, and Cook has insinuated once this capability exists it’s a capability that could cross international lines,” said Christopher Budd, global threat communications manager with cybersecurity firm TrendMicro.

When will we hear from Apple next? Look for Cook & Co. to talk privacy, as well as unveil new gizmos, at its event reportedly scheduled for mid-March.

“They’re masters of the message,” Munster said. “I’d guess they’ll make some reference to why security is so important.”