FILE - This June 6, 2013, file photo shows a sign outside the National Security Agency (NSA) campus in Fort Meade, Md. (Patrick Semansky/AP Photo)
In the latest instance of a Silicon Valley tech company being drawn into the shadowy activities of the National Security Agency, Apple (AAPL) on Tuesday denied any involvement in the spy agency's alleged efforts to hack into and monitor iPhones.
Responding to a report by Germany's Der Spiegel magazine this week that the NSA was able to use a program called "DROPOUT JEEP" to infiltrate a number of computing devices, including the iPhone, Apple has joined other tech giants like Google (GOOG) and Cisco (CSCO) in insisting it never worked with the agency and was unaware of efforts to target its products.
The Der Speigel report included a leaked NSA graphic from 2008 that laid out the program being developed, referring to it as a "software implant" that allows infiltrators to retrieve data from iPhones such as contact lists and to even turn on and use the device's microphone and camera. It's unclear where Der Spiegel obtained the information, although the magazine has worked in the past with NSA leaker Edward Snowden.
The report comes at a sensitive time for Apple, which earlier this month announced a deal to sell iPhones on China Mobile's network, giving the Cupertino tech giant a significant presence in the world's largest mobile market. China Mobile has more than 700 million customers, and any suggestion that the iPhone could be vulnerable to U.S. government break-ins could present huge problems for Apple.
According to the leaked documents, shared publicly by Der Spiegel and security researcher Jacob Appelbaum, the NSA's program lets the agency do a wide range of things on someone's iPhone, including reading text messages and personal contacts. The NSA, says the report, claims a 100 percent success rate when it comes to implanting iOS devices with spyware.
"Either [the NSA] have a huge collection of exploits that work against Apple products, meaning they are hoarding information about critical systems that American companies produce, and sabotaging them, or Apple sabotaged it themselves," Appelbaum said at the Chaos Communication Conference in Hamburg, Germany.
Apple vigorously denied any involvement, saying it "has never worked with the NSA to create a backdoor in any of our products, including iPhone."
Some news reports pointed out that the NSA graphic was dated, and said the information suggested that installation of malware to gain access to an iPhone could be done only if the NSA had possession of the phone. The report said the NSA was working on a way to implant the software using a remote method, but it's unclear how much progress the agency has made on that front.
Apple said it will "continue to use our resources to stay ahead of malicious hackers and defend our customers from security attacks, regardless of who's behind them."
Analyst Carolina Milanesi with Kantar Worldpanel said that while she believes Apple's assertion that the company had no knowledge of the NSA's activities, the tech company now joins others that have been caught up in the spy agency's shadows.
"If Apple hadn't commented on the report at all, that would have been different," said Milanesi. "But they've denied it, and I take their word for it. The bigger concern is that many other tech companies will continue to be swept up into this going forward."
Not everyone thinks the latest revelations mean Apple is necessarily doomed in China. Laurence Balter, an analyst at Oracle (ORCL) Investment Research, said that while any backdoor hacking of the iPhone would pose a very real security risk, this week's news should be taken in the proper context.
"There are much easier platforms to hack into, like Android, so this is a nonissue for most smartphone users in China," said Balter. "I don't think this report will hurt sales of iPhones in China at all. If anything, this could make consumers wonder about buying the cheaper phones or phones from companies with less integrity, where their information may be less secure."
The report also says Cisco, the San Jose computer-networking company, may have had its products compromised by the spy agency's activities. "We are deeply concerned with anything that may impact the integrity of our products or our customers' networks and continue to seek additional information," Cisco's Chief Security Officer John Stewart said in a blog post.
Cisco CEO John Chambers recently said that while security concerns are not the primary cause of the company's slowing sales worldwide, it is a concern in some regions where Cisco does business.
"I do not think (privacy) is the major factor across all emerging markets," Chambers said. "I do think it is a factor, however, in China."
Contact Patrick May at 408-920-5689 or follow him at Twitter.com/patmaymerc.
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