iPhone Doubles Apple Profits, but Draws Privacy Concerns

Apr 21st, 2011 | By | Category: Technology and Science

Apple stock soared Wednesday following an announcement of record second-quarter profits, fueled by Verizon Wireless now offering iPhone service. But the good news was dampened by the US Congress and Senate expressing concerns over newly-discovered iPhone privacy concerns.

Until January, only AT&T customers were able to buy iPhone. Offering the iPhone through Verizon opened the doors to tens of millions of new customers. The result was that Apple sold 18.65 million iPhones in its fiscal second quarter, the most sold since the device premiered in 2007.

TN60 Iphone 4G 2 iPhone Doubles Apple Profits, but Draws Privacy Concerns

Photo by Daniel Zanetti

Sales of Macs and iPads further boosted profits. Overall, Apple posted record second-quarter revenue of $24.67 billion and record second-quarter net profit of $5.99 billion. This nearly doubled performance from the same quarter last year, which saw revenue of $13.50 billion and net quarterly profit of $3.07 billion.

The results buoyed Apple on Wall Street. In after-hours trading Wednesday, Apple stock rose $8.70, or 2.54 percent, to $351.11.

But a storm cloud threatened to rain on the parade when security researchers Alasdair Allan and Pete Warden announced Wednesday that they had discovered a privacy problem with iPhones. Allan and Warden reported that ever since iOS 4 was released last summer, iPhones and their computer backups have included a file that logs detailed data tracking the user’s location and personal habits. The data is stored unencrypted by default, and is simple to access, opening the potential risk of security breach and privacy invasion.

The discovery drew swift action from Congressman Jay Inslee and Senator Al Franken. Franken sent Apple CEO Steve Jobs a letter expressing concerns and asking pointed questions.

“Anyone who gains access to this single file could likely determine the location of the user’s home, the businesses he frequents, the doctors he visits, the schools his children attend, and the trips he has taken over the past months or even a year,” Franken wrote. “here are numerous ways in which this information could be abused by criminals and bad actors.”

“Furthermore,” Franken continued, “there is no indication that this file is any different for underage iPhone or iPad users, meaning that the millions of children and teenagers who use iPhone or iPad devices also risk having their location collected and compromised.”

Franken concluded by asking Apple to answer a series of questions about why the information is being collected, how it is being collected, how it is being protected, and why its collection was not communicated to iPhone users.

Franken told Jobs he would “appreciate your prompt response to these questions.”

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