Apple-FBI Dispute: Who Should Decide What Is Bad for America?

In defending his decision not to honor the FBI's request to help unlock the encrypted iPhone of the San Bernardino terrorists, Apple CEO Tim Cook said that what he was being asked to do would be "bad for America".

We are not mind-readers but we think it is highly unlikely that Mr. Cook's first thought when he was notified that the FBI wanted Apple to do this was not - this would be bad for America. We believe it is more probable that he thought what would this mean or do for the Apple brand and business model.

Mr. Cook's observation reminded us of the famous statement made by former General Motors CEO, Charles Erwin Wilson back in GM's hey days in the early 50's. During a hearing to become Secretary of Defense, Mr. Wilson said, "...for years I thought what was good for the country was good for General Motors and vice versa."

Similar to Mr. Wilson, Mr. Cook may think that what is bad for America is bad for Apple and vice versa. We don't know if that is the case.

We do know, however, that Apple's CEO has raised the core issue that needs to be addressed to resolve this dispute properly - not in a legal sense but in civic sense. It is: What is bad for America and Americans?

We also believe there is another issue of import here. It is: What is the responsibility of corporate leaders in matters such as this?

Adam Ross Sorkin addressed this head on in a recent article that he wrote for the New York Times that began with the question, "What does it mean to be a good corporate citizen?" Sorkin does an excellent job of exploring the potential range of responses to that question in his column.

One of the positions he presents is that of conservative business economist, Milton Friedman. Sorkin quotes Friedman as declaring in a 1970 New York Times Magazine article, "There is one and only one social responsibility of business - to use its resources and engage in activities to increase its profits so long as it stays within the rules of the game, which is to say, engage in open and free competition without deception or fraud."

Friedman who was one of the founders of the Chicago school of economics was a champion of corporate capitalism centered on the interests of business executives and shareholders to the exclusion of all other stakeholders. His singular focus on "increasing profits" as a social responsibility is difficult for us to fathom.

It is probably difficult to fathom as well for economists and business school professors whose perspectives differ significantly from Friedman's. For example, Michael Porter and Mark Kramer of Harvard are articulate advocates for corporate social responsibility (CSR).

In a 2006 article for the Harvard Business Review, Porter and Kramer spelled out the following four traditional rationales for CSR:

  • Moral Obligation: Emphasis on ethical values and respect for people and nature.
  • Sustainability: Emphasis on community and environmental stewardship.
  • License to Operate: Emphasis on the need for tacit or explicit permission from governments, communities or stakeholders to do business in certain locations.
  • Reputation: Emphasis on the focus of the company's image, strength of the brand, and positioning potential.

It's not just the academics who believe corporations have a responsibility beyond the bottom line. So too do some business leaders - or, at least they used to.

In 1943, Robert Wood Johnson, chairman of Johnson and Johnson from 1932 to 1963, personally wrote a credo for Jonson and Johnson that placed that company's responsibilities in the following order:

  • Customers, first
  • Employees and management, second
  • Community, third
  • Stockholders, last.

We wonder how many of today's corporate leaders would craft such a credo. Or, more importantly, how many of them would conduct their business in accordance with this priority list even if they had spelled it out in writing.

The times have changed. In the 21st century, the focus of many executives in large companies is almost exclusively on maximizing shareholder value.

Witness a November 2014HBR article titled "The Best Performing CEO's in the World" that identifies the 100 chief executives who performed most effectively in "increasing shareholder return and market capitalization in the long term."

The article did acknowledge that "being a good CEO is about far more than investment performance" and that the "best run companies connect effectively with customers, employees, and the communities where they operate." Still, the only metric taken into account to identify the "best" CEO's was the financial one.

This brings us back to what is bad for America. In the debate between Apple and the FBI, the conflict revolves around a concern for protecting the privacy of iPhones created through encryption versus promoting the safety of the American public.

These were the positions put forward by FBI Director James Comey and Apple's Chief Counsel Bruce Sewell in the hearing of the House Judiciary Committee on March 1.

Sewell argued "That pass code is the cryptographic key. So, essentially we are throwing open the doors and allowing the very act of decryption to take place."

Comey argued, "'s so seductive to talk about privacy as the ultimate value in a society where we aspire to be safe, and have our families safe, and our children safe - that can't be true, we have to find a way to accommodate both."

The legal resolution to this dispute will come from a court hearing in California scheduled for March 22. We should note - while it does not affect the California case - a New York judge ruled that Apple did not have to unlock the iPhone of a suspected drug dealer because Congress had "specifically considered and rejected a bill that requires companies like Apple to make the data on a locked iPhone available to law enforcement."

The New York ruling highlights that the appropriate place for the overall resolution of this matter is not the court system nor the court of public or private opinion but the Congress. This is the point that Cyrus Vance, New York District Attorney, made at the March 1 congressional hearing.

In his written testimony, Vance stated "The line between personal privacy and public safety should be drawn by Congress." He further noted, "In the absence of a uniform policy, our nation will effectively delegate the crafting of public security and law enforcement policy to boardrooms in Silicon Valley.

Apple Chief Counsel Sewell agreed with Vance but for different reasons. In his written statement, Sewell observed, "The decisions should be made by you and your colleagues as representatives of the people, rather than through a warrant request based on a 220-year old statute."

We agree with Vance and Sewell. It is time to give power to the people - or at least to their elected representatives in a democratic republic - to make this decision.

Congress may not always know what is bad for America or do what is good for America. But, it is their job to attempt to do so.

It is not Tim Cook's job. In our opinion, his job is to do what is good for Apple - which we are confident he does. And, to act as a responsible corporate citizen - which we are not as confident about in this instance.

In the United States today, we live in an era when too many corporate leaders have been more committed to piracy than privacy. That piracy has included shipping jobs offshore, closing plants, shrinking the work force, reducing wages and benefits of employees, and elevating the concerns of the few above those of the many.

These CEO's have done things that are bad for America. What is needed, at this juncture, is more corporate leaders willing to step forward, as responsible corporate citizens, to commit to and actually do things that are good for America and Americans.