Apple vs. FBI Case Study

Apple vs.
FBI Case Study

Ann Skeet and Markkula Center Staff
In the wake of the December 2015 terrorist attack in San Bernardino, attention turned to the
perpetrator’s iPhone. A federal judge asked Apple, maker of the iPhone, to provide
“reasonable technical assistance” to the FBI in accessing the information on the phone with
that hope of discovering additional threats to national security.
Apple provided the FBI with data it had in their possession and sent Apple engineers to
advise the FBI, but refused to comply with the court order to bypass the phone’s security
measures: specifically the 4-digit login code and a feature that erases all data after ten
incorrect attempts. The FBI argued that the bypass could only be used for this phone, this
one time. The agency also cited national security concerns, given the phone may lead to
better understanding the attack and preventing further incidents.
Apple CEO Tim Cook issued a public letter reiterating Apple’s refusal to cooperate. Cook
advocated for the benefits of encryption in society to keep personal information safe. He
stated that creating the backdoor entry into the iPhone would be akin to creating a master key
capable of accessing the tens of millions of iPhones in the U.S. alone. Cook also had
concerns that the FBI was outstepping its bounds - by using the court system to expand its
authority - and believed the case should be settled after public debate and legislative action
through Congress instead.
Public opinion polls on the issue were split. A number of major tech firms filed amicus briefs
in support of Apple. The White House and Bill Gates stood behind the FBI. In anticlimactic
fashion, the FBI withdrew its request a day before the hearing, claiming it no longer needed
Apple’s help to assess the phone. It is speculated that an Israeli tech firm, Cellebrite, helped
the FBI gain assess.
Questions
1. Was Apple wrong for not complying with the FBI’s request? If so, why? If not, why
not?
2. What ethical issues are involved in this case? Who are the stakeholders in this
situation?
3. Apple’s values are listed on the bottom of its home page at apple.com. Is the
company’s decision consistent with its values? Is that important?
Case on Executive Integrity
Below are three examples of CEOs whose leadership of their firm has been called into
question over matters of their personal integrity and behavior. Issues have included their
personal political positions and contributions, personal behavior and relationships with
employees while CEO, and illegal and inappropriate behavior in college.
Mozilla
“Mozilla was built on the mission to promote openness, innovation and opportunity on the
Web. Every day, we bring together over half a billion users and thousands of contributors
from more than 80 countries to advance the cause outlined in the Mozilla Manifesto. The
web is a vital public resource and Mozilla exists to protect it. That is what we do at Mozilla,
our singular point of focus.” --From Mozilla’s blog Q and A regarding the resignation of
Brendan Eich
Brendan Eich was a co-founder of Mozilla, an organization set up as a nonprofit foundation,

passionate about its purpose. Eich’s previous political support for the Defense of Marriage
Act, which prior to 2015 defined marriage on the federal level as the union between one man
and one woman, was well known by the board and employees prior to his appointment as
CEO. What wasn’t known was how strongly employees and outsiders would react to a
perceived disconnect between Eich’s personal values and the values of the company. In spite
of posting about his commitment to continuing the organization’s support of the LGBTQ+
community through various policies and benefits and apology for “causing pain,” the issue
did not die down. Eich made his own decision to resign as CEO and declined the board’s
offer to take another C-level position in the company.
American Apparel
“Passion, innovation & ethical practices for the clothing industry. That's American
Apparel.”--From American Apparel’s website under “About Us”
American Apparel founder Dov Charney has never apologized for using sex to sell clothes.
In fact, it’s been central to his company’s strategy and marketing from Day One. He has also
long acknowledged his personal behavior is strange and he is his own worst enemy.
For example, 10 years ago, “Charney gave a now infamous interview with Claudine Ko, a
reporter for Jane magazine, during which he masturbated, with her consent, while carrying on
a conversation about business. He engaged in oral sex with an employee with Ko nearby,
too” (Bloomberg Businessweek, July 9, 2014). Also, in 2006, American Apparel starting
asking employees to sign a form indicating that they knew they were coming to work in a
sexually charged environment.
According to board co-chairmen, in mid 2014, Charney was removed as chairman by the
board pending termination following a 30-day notice clause in his contract. The board first
gave him the choice to resign if he gave up voting rights to his 27 percent share of the
company. In that scenario, he would have received a four-year, multi-million dollar
consulting contract. Officially removed for violating the company’s sexual harassment
policy and misusing company funds, Charney refused to go quietly, which threw the
company’s ownership and governance into play. Hedge fund Standard General stepped in
with a cash infusion for the company following a loan call by another investment firm after
Charney’s ouster. Five of the seven board directors voluntarily agreed to step down, and
Standard General agreed to add three new directors. Charney stayed on as a strategic
consultant but was eventually fired as CEO in December 2014.
Snapchat
“Deletion should be the default.”--Snapchat’s mission statement
At the end of May 2014, details of sordid emails from Snapchat CEO Evan Spiegel’s college
days were released to the media. Trouble is, his college years were only four years prior to
these emails being released, because, in 2014, he was only 24. The e-mails detailed illegal
drug use, underage drinking, and misogynistic behavior, including urinating on one after she
passed out following sex, and harassing women who he believed were overweight. Some
found elements of his emails racist as well.
Spiegel’s privileged background and lavish lifestyle had always received plenty of press.
After the email release, he began getting more press for his bad behavior than his app. He
apologized immediately following the release of the e-mails saying, “ I’m obviously
mortified and embarrassed that my idiotic emails during my fraternity days were made
public. I have no excuse. I’m sorry I wrote them at the time and I was a jerk to have written
them. They in no way reflect who I am today or my views towards women.” Spiegel remains
CEO and was responsible for taking the company public in 2017.
Leader Company Issue Outcome

Brendan Eich Mozilla Personal support of Prop 8 Resignation
Dov Charney American Sexual relationships with employees Dismissed as CEO in
Apparel resulting in lawsuits for charges of December of 2014 and
harassment, misuse of company funds for removed as chairman prior to
personal expenses his termination
Evan Spiegel Snapchat Misogynistic behavior, drug use prior to Still in place
serving as CEO
Questions to Consider
1. Are there ethical issues involved in all of these cases? Which ones and why?
2. How important to a company’s investors and shareholders is the personal behavior of
the CEO? Do people have to like him/her for the company to be successful?
3. Does mission matter when assessing gaps between a leader’s values and the
organization he or she is running?
4. Should boards consider risky personal behavior in hiring executives? What should
boards do if the risky personal behavior comes from the founding CEO?

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Brendan Eich was a co-founder of Mozilla, an organization set up as a nonprofit foundation,

Leader Company Issue Outcome

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