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Congress Pledges To Decide Phone Encryption Issue Pitting Apple, FBI

Advocates for law enforcement and personal privacy on Tuesday clashed at a congressional hearing weighing the issue of smartphone encryption, a debate most recently pitting Apple against the FBI. Speaking at the hearing, U.S. Rep. Bob Goodlatte, R-Va., said the matter is “too complex to be left to the courts and must be answered by Congress.” The House Judiciary Committee held a hearing titled “The Encryption Tightrope: Balancing Americans’ Security and Privacy.” Witnesses testifying at the inquiry included FBI Director James Comey and Apple ( AAPL ) General Counsel Bruce Sewell. Comey and Sewell presented their sides in a case being played out in a federal court in California. A U.S. magistrate on Feb. 16 ordered Apple to assist the FBI in hacking an iPhone belonging to one of the two shooters in the Dec. 2 massacre in San Bernardino, Calif. Apple is seeking to have the order rescinded. Comey said the FBI is simply pursuing every avenue in its investigation to determine possible accomplices and links to terror groups. He admitted the case could set a precedent for other law enforcement agencies and governments to press Apple to crack its encryption. But he says national security concerns win out in this case. Sewell said the court’s order is government overreach and would force it to write special software for the FBI to get around its security protections. It also would lead to security vulnerabilities that would threaten the security of personal and financial data stored on all iPhones its customers use, he said. CEO Tim Cook, who wasn’t at the hearing, has led Apple’s fight in this case. Rep. John Conyers, D-Mich., suggested the FBI could be exploiting a national tragedy to pursue a change in the law. He said the FBI appeared to be taking an end run around the legislative branch with its judicial requests to hack smartphones. Comey said he isn’t asking for Apple to remove the encryption on its iPhones, only to give it an opportunity to figure out the password without the risk of the data being erased after 10 incorrect tries and to remove time barriers between password tries. It also wants Apple to allow the FBI to electronically submit password tries in a “brute force” attack on the device. “We are asking Apple to take the vicious guard dog away and let us pick the lock,” he told the panel. Some members of the committee sided with law enforcement. U.S. Rep. Trey Gowdy, R-S.C., said he didn’t want to see smartphones become “evidence-free zones.” Sewell said Apple continues to improve the security on its devices because customers demand it. They don’t want their data accessed by cybercriminals and spies, he said. “We see ourselves as being in an arms race with criminals, cyberterrorists and hackers,” he said. “We’re trying to provide a safe and secure place for the users of our devices to be assured that their information cannot be accessed, cannot be hacked or stolen.” On Monday, a federal judge in a Brooklyn drug case ruled that the Justice Department cannot force Apple to provide the FBI with access to locked iPhone data. If the FBI gets access to encrypted iPhones, terrorists are likely to move to encrypted apps to avoid detection, Sewell said. The issue is popping up elsewhere. Early Tuesday, Brazilian federal police arrested the head of Facebook ’s ( FB ) Latin America operations for not complying with police requests to access WhatsApp messages linked to an organized-crime and drug-trafficking case.

Apple Stock Retakes Critical Level As Market Surges

Loading the player… Apple ( AAPL ) made a critical move in the stock market today as the major indexes notched solid gains. The consumer tech giant is set to unveil new products at its March 21 spring media event. Some analysts speculate that Apple will roll out a small-screen iPhone and a smaller-screen iPad Pro. Shares jumped 4% to 100.53 in slightly below-average turnover, retaking the key 50-day moving average. Apple hasn’t traded above that level in nearly three months. The move also puts Apple back above the 100 price level. It’s a good sign for Apple to be coming off of its recent lows, but it’s also good to remember that its 50-day line is sloping downward as Apple’s overall performance over the last several months has trended lower. The stock is currently trading about 25% below its all-time high, reached last April. Apple is currently battling a federal order to assist the FBI in unlocking an encrypted iPhone connected to the terrorist attack in San Bernardino, Calif. Meanwhile, Facebook ( FB ) is continuing higher as it bounces back from a breach of its 50-day line about a month ago. The stock is now trading 6% below its high. Google owner Alphabet ( GOOGL ) was able to retake its 50-day line, rising 3.5% in above-average volume Tuesday. Alphabet is about 8% below its high. Microsoft ( MSFT ) tried to retake its 50-day line and closed the session right at that level. Other recent attempts to retake that level met resistance. Microsoft is 7% below its peak. Amazon ( AMZN ) is 16% below its high. The e-commerce giant was able to retake its 200-day line last week. Image provided by Shutterstock .

First Apple, Now Facebook Under Pressure To Turn Over User Data

Brazilian federal police arrested the head of Facebook ‘s ( FB ) Latin America operations early Tuesday for not complying with police requests to access WhatsApp messages linked to an organized-crime and drug-trafficking case, the Wall Street Journal reported. The arrest is expected to draw the attention of other U.S. tech companies watching the combat taking place between Apple ( AAPL ) and the U.S. government. The U.S. Justice Department recently requested that Apple unlock an iPhone that belonged to a terrorist involved in a mass shooting last year in San Bernardino, Calif. Apple has said that it won’t comply, seeking to safeguard product users’ privacy. In the WhatsApp case, Diego Dzodan was arrested on his way to work in São Paulo and is being held under “preventative arrest,” according to a police spokeswoman in the state of Sergipe, where a judge’s order was issued, the WSJ said. A Facebook spokesman said that the company is “disappointed with the extreme and disproportionate measure” of taking Dzodan into custody. The Facebook spokesman said that Dzodan was detained for questioning, not arrested. Facebook owns WhatsApp, but WhatsApp operates separately from Facebook. According to the court, Facebook was fined about $250,000 — more than BRL 1 million, the local currency — for not complying with three previous requests, said the WSJ. This is the second time in three months that Facebook has clashed with Brazilian authorities, the report said. In December, a different judge ordered the shutdown of WhatsApp throughout the entire country for 48 hours after the service didn’t comply with a criminal investigation. The ruling affected millions of users but was overturned the next day. WhatsApp is popular in Brazil, where half of the country’s 204 million residents rely on the free text- and voice-messaging service. Many poorer Brazilians depend on WhatsApp for their day-to-day communications, the WSJ said, since texting in Brazil is about 55 times more expensive than in the U.S., according to advisory firm Activate. WhatsApp says that it doesn’t store its users’ messages after they’ve been delivered and has also been rolling out end-to-end encryption so that it can’t intercept or compromise those messages, according to the WSJ. “This means police have arrested someone over data that doesn’t exist,” a WhatsApp spokesman said. “We cannot provide information we do not have.” Both the police and the court declined to provide additional information about the case. Facebook stock was up 2% in afternoon trading in the stock market today , near 71. Apple stock was up 3%, near 100. Apple executives and FBI officials are making their cases Tuesday at a House Judiciary Committee meeting.