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Cook to Apple shareholders: Fighting the feds 'doesn't scare us'

The iPhone maker's annual investor meeting takes place as the company faces one of the biggest legal battles in its history. Also: CEO Tim Cook plays coy when asked about plans for an electric car.

Connie Guglielmo SVP, AI Edit Strategy
Connie Guglielmo is a senior vice president focused on AI strategy for Red Ventures. Previously, she was editor in chief of CNET, overseeing an award-winning team of reporters, editors and photojournalists producing original content about what's new, different and worth your attention. A veteran business-tech journalist, she's worked at MacWeek, Wired, Upside, Interactive Week, Bloomberg News and Forbes covering Apple and the big tech companies. She covets her original nail from the HP garage, a Mac the Knife mug from Macweek, her pre-Version 1.0 iPod, a desk chair from Next Computer and a tie-dyed BMUG T-shirt. She believes facts matter.
Expertise I've been fortunate to work my entire career in Silicon Valley, from the early days of the Mac to the boom/bust dot-com era to the current age of the internet, and interviewed notable executives including Steve Jobs. Credentials
  • Member of the board, UCLA Daily Bruin Alumni Network; advisory board, Center for Ethical Leadership in the Media
Connie Guglielmo
5 min read

Apple CEO Tim Cook, addressing shareholders Friday, talked about how the company added new iPhone models, updated the Apple TV set-top box and iPad, chased customers in China, and watched its software uptake expand to more than 1 billion devices in the past year.

But he also joked that Apple has "been in the news" over the past two weeks about its decision to fight a court order asking it to change its software so the FBI can get data off an iPhone used by one of the terrorists behind the San Bernardino, California, shootings. Before taking questions from the audience, he vowed that Apple will continue to be a "staunch advocate" of customers' privacy and personal safety.

"We do these things because they are the right things to do," Cook said after receiving a standing ovation from the crowd of over 400 attendees at Apple's Cupertino, California, headquarters. "Being hard doesn't scare us."

Rev. Jesse Jackson, who's pushed the tech industry to be more inclusive of women and minorities, was in the audience as well. He praised Cook as a "man of integrity and character" and voiced support for Apple's fight with the US government, even as he denounced terrorism.

"There's this tension between freedom and fear...but we oppose the unprecedented government overreach that threatens the civil liberties of all Americans," Jackson said. "We thank you for standing up, sir."

Regarding Apple's pushback against a court order, CEO Tim Cook said, "We do these things because they are the right things to do." He's shown here at an Apple event late last year.

James Martin/CNET

Apple's legal battle against the US is its biggest since 1988, when former CEO Steve Jobs accused Microsoft of copying the Mac's graphical user interface. Cook says modifying iOS in a way that lets the FBI access the phone's data would create a backdoor into all iPhones. More important is that what the FBI is asking would give the government "a dangerous power" over tech companies, Apple argued in its Thursday filing in answer to the court order.

The FBI, led by Director James Comey, says its goal is to protect national security and argues that the government's request is limited to that single iPhone.

As usual, Apple didn't provide a video or audio stream of its annual meeting or a transcript of the event. Reporters weren't allowed in the auditorium with Apple's shareholders and executives, but rather were required to watch remotely via video in a separate room.

Watch this: Rev. Jesse Jackson backs Apple in FBI privacy fight

Apple executives including the heads of retail and software, Angela Ahrendts and Craig Federighi, watched from the front rows. Most of the board, including former US Vice President Al Gore and Walt Disney CEO Bob Iger, were also in attendance.

Each of Apple's eight board members was re-elected, with at least 93 percent of votes in favor. Apple investors also sided with the board and voted against four shareholder proposals. Those proposals included a call for the company to reach a net-zero goal for greenhouse gas emissions by 2030, a push to increase the diversity of Apple's senior management team, and efforts to produce a report outlining how it does business in regions with human rights violations.

Though Apple's battle with the FBI has been front-page news for more than a week, shareholders also asked questions about the company's plans to make its retail stores more business-friendly, its efforts in China and India, and how it will handle backward compatibility of software for its devices.

The Rev. Jesse Jackson and Cindy Cohn, executive director of digital-rights group the Electronic Frontier Foundation, voice their support for Apple's privacy stance.
Enlarge Image
The Rev. Jesse Jackson and Cindy Cohn, executive director of digital-rights group the Electronic Frontier Foundation, voice their support for Apple's privacy stance.

The Rev. Jesse Jackson and Cindy Cohn, executive director of digital-rights group the Electronic Frontier Foundation, voiced their support for Apple's privacy stance.

The Electronic Frontier Foundation

One shareholder asked about whether Apple is working on an electric cars. Cook, dressed in a blue button-down shirt and perched on stool, alone in front of the crowd, said he wanted to remind everyone of what it feels like to be a kid on Christmas Eve -- it's so exciting waiting for something special the next day. Then he joked, "It's going to be Christmas Eve for a while."

He also said the construction of Apple's new, circular campus nearby is "on target" and that "some number" of employees will start moving there in January.

The iPhone maker reiterated its recent tally of 11 million paying subscribers for the Apple Music service and said Apple has purchased 19 companies in the past five quarters.

Apple's shares have fallen nearly 7 percent so far this year, though they've risen slightly since the company's fight with the government became public. The shares closed at $96.76 on Thursday.

Showdown with the US government

Apple's decision to challenge the FBI's request and a February 16 court order has received mixed reactions. The top-ranking members of the Senate intelligence committee, Dianne Feinstein, a Democrat from California, and Richard Burr, a Republican from North Carolina, chastised the company for fighting the FBI, which is relying on the 227-year-old All Writs Act to compel Apple to modify its technology.

And while Apple faced off against rival Microsoft in the user interface case, the two tech titans are now on the same side. Microsoft Chief Legal Officer Brad Smith said at a congressional hearing Thursday that the world's biggest software maker "wholeheartedly" backs Cook in his fight over the court order. Microsoft will file a friend-of-the-court brief next week, detailing its support.

Facebook, Twitter and Google also said they'll file amicus briefs backing Apple, as will the Electronic Frontier Foundation, a digital-rights group.

Apple filed its response to the court on Thursday, a day before it was due and ahead of the shareholder meeting. In the 65-page filing, the company said the court order violates its constitutional rights.

"This is not about one isolated iPhone," Apple argued. "This case is about the Department of Justice and the FBI seeking through the courts a dangerous power that Congress and the American people have withheld: the ability to force companies like Apple to undermine the basic security and privacy interests of hundreds of millions of individuals around the globe."

A hearing is set for March 22 in federal court in Riverside, California.

Before closing the 75-minute meeting, Cook addressed Apple's efforts around diversity and inclusion. A yearly survey of US employees found that Apple's female employees earn 99.6 cents for every dollar paid to a male in a similar job. Underrepresented minorities earn 99.7 cents for every dollar earned by a white counterpart. Cook said Apple will continue to release the results of the survey each year so every employee of Apple knows that they're being paid fairly.

He also joked about his ability -- or inability -- to take a great photo on the iPhone. Shareholders were treated to a slideshow of beautiful images taken on iPhones as they entered the meeting room. "Maybe one day I can take one that good," Cook said to laughter, a reference to stories about a blurry photo he posted while watching the Super Bowl. "Yes, we can joke about ourselves."