American multinational technology company Apple Inc. delivered record quarterly earnings and revenue that beat expectations and sent the stock higher in extended trading.
The results headlined by blockbuster quarter of iPhone sales and the first-ever $10 billion quarter for Apple’s AAPL, +2.83% wearables, home, and accessories category, which includes the Apple Watch and AirPods, both strong holiday sellers.
The company also delivered an upbeat view of the current quarter while indicating that the coronavirus outbreak gives the company less visibility than it would normally have.
Apple has alternate supply sources for its manufacturers located in Wuhan but will be monitoring what happens with factories outside the city.
Executives also provided more information about how the company will account for free trials of its new Apple TV+ streaming service.
Earlier Apple Inc dropped plans to let iPhone users fully encrypt backups of their devices in the company’s iCloud service after the FBI complained that the move would harm investigations.
The reversal of Apple, has not previously been reported.
It shows how much Apple has been willing to help US law enforcement and intelligence agencies, despite taking a harder line in high-profile legal disputes with the government and casting itself as a defender of its customers’ information.
The long-running tug of war between investigators’ concerns about security and tech companies’ desire for user privacy moved back into the public spotlight last week.
United States (US) Attorney General William Barr took the rare step of publicly calling on Apple to unlock two iPhones used by a Saudi Air Force officer who shot dead three Americans at a Pensacola, Florida naval base last month.
US President Donald Trump piled on, accusing Apple on Twitter of refusing to unlock phones used by ‘killers, drug dealers and other violent criminal elements.’
Republican and Democratic senators sounded a similar theme in a December hearing, threatening legislation against end-to-end encryption.
Apple in fact did turn over the shooter’s iCloud backups in the Pensacola case.
The company said it rejected the characterization that it “has not provided substantive assistance.”
Apple has provided the US Federal Bureau of Investigation with more sweeping help, not related to any specific probe.
An Apple spokesman declined to comment on the company’s handling of the encryption issue or any discussions it has had with the FBI.
The FBI did not respond to requests for comment on any discussions with Apple.
More than two years ago, Apple told the FBI that it planned to offer users end-to-end encryption when storing their phone data on iCloud.
Under that plan, primarily designed to thwart hackers, Apple would no longer have a key to unlock the encrypted data.
It means it would not be able to turn material over to authorities in a readable form even under court order.
When Apple spoke privately to the FBI about its work on phone security the following year, the end-to-end encryption plan had been dropped.
Apple appealed a court order to break into that phone for the FBI.
The government dropped the proceedings when it found a contractor that could break into the phone, a common occurrence in FBI investigations.
Apple’s decision not to proceed with end-to-end encryption of iCloud backups made the FBI’s job easier.
The agency relies on hacking software that exploits security flaws to break into a phone.
But that method requires direct access to the phone which would ordinarily tip off the user, who is often the subject of the investigation.
Apple’s iCloud, on the other hand, can be searched in secret.
In the first half of last year, the period covered by Apple’s most recent semiannual transparency report on requests for data it receives from government agencies.
US authorities armed with regular court papers asked for and obtained full device backups or other iCloud content in 1,568 cases, covering about 6,000 accounts.
The company said it turned over at least some data for 90% of the requests it received.
It turns over data more often in response to secret US intelligence court directives, which sought content from more than 18,000 accounts in the first half of 2019, the most recently reported six-month period.
In October 2018, Alphabet Inc’s Google announced a similar system to Apple’s dropped plan for secure backups.
The maker of Android software, which runs on about three-quarters of the world’s mobile devices.
They said users could back up their data to its own cloud without trusting the company with the key.
Two people familiar with the project said Google gave no advance notice to governments, and picked a time to announce it when encryption was not in the news.
The company continues to offer the service but declined to comment on how many users have taken up the option.
The FBI did not respond to a request for comment on Google’s service or the agency’s approach to it.