Will Apple’s Stock Suffer Serious Damage From The Recent Celebrity Photo Leaks?

On Monday, the FBI said it was addressing allegations that online accounts of several celebrities, including Oscar-winner Jennifer Lawrence, had been hacked.

The hacking allegedly led to the posting of their nude photographs and in some cases movies online.

Apple said Monday it was looking into whether its online photo-sharing service had been hacked to obtain the intimate images.

Now, there is an ongoing investigation to find out how this happened but already some technology blogs are calling this the “iCloud Celebrity Photo Hack”.

Short and Long Term Problems for Apple

There are two potential problems Apple might be facing as a result of this fiasco.

Short Term

I’m not a lawyer but if it is shown that the hacker or hackers behind this incident were able to break in to Apple’s iCloud in a manner that was foreseeable by credible security experts, the company could be liable for hundreds of millions (if not Billions) of dollars.

The damage that has been done to Ms. Lawrence’s reputation alone is arguable worth hundreds of millions of dollars. It can now be credibly argued that her brand and movie star appeal has been irreparably damaged.

She was just one of several celebrities who were exposed in compromising photos.

If Apple had to settle litigation with these celebrities (most of whom can afford good lawyers), for obvious reasons, the damages could be in the billions.

Long Term

The cloud is the centerpiece of Apple’s ecosystem. It’s the storage for movies, iTunes, Books, Siri and so much more. If consumers have a reason to distrust Apple’s cloud, it could be a much bigger long term problem.

Consumers could decide Apple’s competitors (like Microsoft) have a safer and more secure cloud infrastructure and decide to move that way.

Consumers could also decide that then cloud is not safe in general and rethink adopting any cloud based technology and that’s not good for Apple either.

This will be an interesting case to watch in the days to come…

Leave a Comment Below

  • I say yes short term easily. For the reasons you mentioned, this will make people skeptical of iCloud regardless of whether or not it was apple’s fault. Now in the long term, I think it will depend on how much it is shown that Apple was at fault here.

  • Nice post Onuora. I think Apple already lost no matter what happens moving forward. People are now scared of iCloud and it makes Apple seem less safe than it is. Unfortunately for them, they will be blamed for this in some capacity no matter what.

  • I wonder if the celebs are going to sue apple as well as the hackers. I know Apple says they have no fault in this, but I think some of these celebrity egos are going to want a scapegoat.

  • Astute points Onuora, and I completely agree. This isn’t the last we’ve heard about apple from this instance. Very unfortunate either way.

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