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 Already, an emerging industry is marketing super-secure phones and
mobile applications.
An Apple executive said the company will strengthen its encryption
if it wins its court battle with the federal government, which last
week secured a court order requiring Apple engineers to help extract
data from a phone associated with the mass shootings in San
Bernardino.
The executive spoke on condition of anonymity. An Apple spokesperson
declined to comment publicly.
If Apple loses the court case, the legal precedent could give the
U.S. government broad authority to order companies to assist in
breaking into encrypted products.
But even a government victory could have unintended consequences for
law enforcement, potentially prompting a wave of investment by U.S.
tech companies in security systems that even their own engineers
can't access, said Jonathan Zittrain, co-founder of Harvard
University's Berkman Center for Internet & Society.
"A success for the government in this case may further spur Apple
and others to develop devices that the makers aren't privileged to
crack," he said.
 The fast-growing online storage provider Box has already made it a
priority to give customers sole custody of data, said Joel De la
Garza, chief information security officer at the company. The intent
is to make it impossible for the company to access its customers'
data - even under a government order, he said.
"Our goal is to achieve a `zero-knowledge' state" for the company,
he said, "where our customers have total control over their data."
It's unclear whether Apple can - or would even want to - make
smartphones the company can't access. Two Apple employees familiar
with the company's security strategy said the company had no such
plans.
SMARTPHONE BLACK OUT
One immediate beneficiary of the government's case against Apple is
the niche industry, based mostly overseas, that has sprung up to
design apps and phones to thwart snooping by governments, business
rivals and criminals.
In the more than two years since former U.S. intelligence contractor
Edward Snowden revealed widespread spying via U.S. companies, a
handful of companies have released secure phones with names such as
BlackPhone, RedPhone or Priv that trumpet security as a prime
selling point.
Phones such as Boeing Co's<BA.N> Black target government customers.
Blackberry<BB.TO> markets the Priv, an Android device, to corporate
clients seeking more security.
Others include Silent Circle, with launched its Blackphone 2 late
last year, and Turing Robotic Industries, whose Turing Phone is due
in April. Many more apps, such as Signal and Wickr, encrypt calls or
texts messages.
Those businesses could surge if the Apple fight drags on.
“That’s going to happen,” said Chris Wysopal, cofounder and chief
technology officer of software security company Veracode. “People
will go out of the country, and there will be a market.”
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THE SNOWDEN EFFECT
U.S. law enforcement officials have long fought for new laws to
maintain access to private information that is harder to capture as
people move to digital devices from traditional phone lines - which
by law must be tappable.
Most recently, the tech industry has fought off numerous efforts to
get encryption legislation through Congress, including an attempt
last year that died after President Obama declined to support it.
FBI Director James Comey has been particularly outspoken in arguing
that law enforcement efforts are hobbled by encryption, which he
calls a safe haven for terrorists.
The FBI did not respond to a request for comment on this story.
Other law enforcement officials have said the tech industry fears
are exaggerated, or in Apple's case, even a marketing ploy.
Apple, Google, Facebook and other companies also have accelerated
efforts to implement encryption in the wake of Snowden's disclosures
about U.S. spying - including a program called Prism that culled
private data from some of the largest U.S. tech companies.
The revelations prompted companies to fight the perception that they
were arms of the government and dented the overseas sales of
companies including Cisco <CSCO.O>and IBM<IBM.N>, as countries such
as China shunned U.S. products.
Apple's iPhones now have longer passcodes tied to underlying
encryption, making them far harder to hack. Facebook's WhatsApp and
others have adopted protocols under which they don't have the means
to unlock user communications.
The fight between Apple and the government could give such security
efforts a new urgency. It could also undermine trust in automated
software updates, which have until now been viewed as one of the
best ways to fix security flaws.
Because U.S. prosecutors asked Apple to employ a software update as
a means to break into the phone tied to the San Bernardino
shootings, users now worry that updates could compromise the
security of their devices, said Orion Hindawi, chief executive of
security firm Tanium.
"You are going to see a lot of people who thought auto-update was
attractive backing away from that," he said.
(Additional reporting by Jeremy Wagstaff in Singapore; Editing by
Jonathan Weber and Brian Thevenot)
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