Apple CEO Tim Cook didn’t come to his post with an activist agenda, yet when law enforcement officials began pressuring the company to hand over iPhone users’ data without their permission, Cook took what he believed was a moral stance to protect consumers’ privacy.
He knew taking this position would embroil the company in an ugly fight—one that risked alienating some shareholders—but he felt strongly that Apple should champion its customers’ basic human right to privacy.
“We believe that a company that has values and acts on them can really change the world,” Cook said in 2015, a year after Apple debuted new privacy measures that blocked law enforcement from accessing its customers’ data. “There is an opportunity to do work that is infused with moral purpose.” He said shareholders who were only looking for a return on investment “should get out of the stock.”
“What is new is the expectation that a company will have a position on social and political issues.”
A Harvard Business School case study and its revision, Apple: Privacy vs. Safety (A) and (B), illustrates the complex ramifications that companies should consider when putting their stake in the ground on challenging societal issues like privacy. The authors of the case offer a suggestion for CEOs: Few corporations can expect to steer clear of the lightning-rod issues of the day, so perhaps it’s best to meet them head on as part of the job.
“What is new is the expectation that a company will have a position on social and political issues,” says Nien-hê Hsieh, the Kim B. Clark Professor of Business Administration at HBS, who coauthored the case. Staking out a clear social position can actually help a company’s bottom line, boosting employee morale, making workers more productive, and attracting customers who feel they can trust the company, say the authors.
Hsieh wrote the original case and its 2021 revision and expansion with Henry McGee, senior lecturer of business administration at HBS; Christian Godwin, a researcher in the HBS case writing group; and former HBS case researcher Sarah McAra.
Customer privacy comes under fire
An industrial engineer known for his practical work style and deep manufacturing expertise, Cook has used his position to take on several hot-button topics, including fighting discrimination against people who identify as gay, lesbian, bisexual, and transgender.
Cook began championing privacy as controversy was swirling around an extensive US government surveillance program that had been disclosed by former National Security Agency contractor Edward Snowden. Snowden had leaked information indicating that the government was collecting private consumer data stored by internet and telecom corporations. The shocking revelations caused many consumers, businesses, and governments to take their business away from US tech companies; A New America analysis estimated the loss to US cloud computing over the Snowden disclosures at $35 billion.
Meanwhile, an influx of cybercrime was propelling government officials to develop tougher security measures. And law enforcement officials were increasingly asking for access to iPhones, powerful handheld devices that stored information that may help them solve crimes.
With the iOS 8 operating system, unveiled in 2014, Cook and Apple responded to these brewing forces with an improved encryption system that put privacy in the hands of the consumer. The company no longer possessed a master key to devices that government officials could request. Instead, when a user created a passcode, that passcode was combined with a unique key that was encrypted—and it could not be accessed by Apple.
Cook hoped the move would remove Apple from the middle. “If law enforcement wants something, they should go to the user and get it. It’s not for me to do that,” Cook explained at the time.
Law enforcement officials pushed back, making the case that technology companies should provide a backdoor into suspects’ phones. “Sophisticated criminals will come to count on these means of evading detection. It’s the equivalent of a closet that can’t be opened,” said James Comey, director of the Federal Bureau of Investigation, in 2014.
The issue came to a head on December 2, 2015, when a husband and wife claiming to be affiliated with the Islamic State opened fire at a party in San Bernardino, California, killing 14 people. Police found one of the shooter’s phones, an iPhone 5C running on the iOS 9 operating system. When a judge ordered Apple to help build decryption software to unlock the phone, the company refused. Cook vowed to take the issue all the way to the Supreme Court. While that standoff never happened, because the government dropped the case, it showed how seriously Cook took the situation.
International pressures test Cook’s resolve
Although Cook stood by his convictions in the US, other countries posed different challenges.
China, for instance, is an important market for Apple. Officials there wanted assurances from the company that it wasn’t sharing its users’ data with the US government. Cook ultimately allowed some security audits, inflaming critics who claimed the deal violated Apple’s commitment to privacy.
And, in 2017, the Chinese government cracked down on unlicensed virtual private network apps that allowed consumers to get around its censors. The Chinese government requires these apps to operate with a license that is expensive and difficult to obtain, the case explains, and the government asked Apple to take them off its Chinese App Store. Apple complied, eliciting blowback from free-speech advocates, showing how different and difficult it was for Cook to hold firm on privacy in a country where rights are valued differently.
“Even if you are not taking a stand on human rights, as Cook has done, you are going to wade into these debates.”
“We follow the law wherever we do business … we strongly believe participating in markets and bringing benefits to customers is in the best interest of the folks there,” said Cook at the time, in defense of Apple’s decisions.
A follow-on case written last year as the COVID-19 pandemic raged explores how Cook was presented with another privacy quandary: Public health officials wanted to use Apple’s products to conduct coronavirus contact tracing. Some governments wanted more control than Apple allowed, including location-tracking data that was protected as part of Apple’s encryption. Apple again refused.
In France, where the government had petitioned Apple to exempt contact tracing from the phones’ typical privacy protections, Digital Minister Cedric O said, “A company that has never been in better economic shape is not helping the government fight the crisis. We will remember that.”
Lessons for leaders
The case underscores an important point: Good leadership should be about more than the bottom line, the authors say.
“Even if you are not taking a stand on human rights, as Cook has done, you are going to wade into these debates, and not just if you are at a technology company,” says Hsieh.
After all, it’s difficult for leaders of most companies to completely avoid all political and social issues, particularly since consumers increasingly expect companies to take a position. “It’s very hard not to get involved and take a stand. There is a growing expectation that companies will do something,” Hsieh says.
The researchers suggest companies develop “ethical capacity” by hiring ethics experts to help shape the organization’s decision-making processes. Many companies already elevate an ethics focus to the board level, creating committees on corporate responsibility and accountability. These structures can help create trust in a company’s products among the public, they say.
In addition, leaders need to continually articulate their values to stakeholders—and be willing to change their perspectives when challenged. “You have to constantly re-evaluate your position in life,” McGee says.
Feedback or ideas to share? Email the Working Knowledge team at workingknowledge@hbs.edu.
Image: Unsplash/Wesson Wangi
