By John Kell and Alan Murray
February 19, 2016

This morning, FORTUNE unveils its list of the World’s Most Admired Companies, based on surveys of business leaders conducted by Korn Ferry Hay Group. Top of the list: Apple. (Number two and three also begin with A, and also reside on the West Coast: Alphabet and Amazon. See the full list here.)


The release comes at a critical moment. Apple this week decided to put its vaunted reputation to the ultimate test, launching what my colleague Geoff Colvin correctly calls an epic battle with the U.S. government over the encryption of its smart phones.


The government has chosen its test case wisely. It is asking Apple to unlock the iPhone 5C used by Rizwan Farook who, along with his wife, slaughtered 14 people and wounded 22 others at a holiday party in San Bernadino. Who would dare withhold evidence in such a case? Donald Trump calls Apple’s stance “disgraceful,” and Trump has proven that he has a good sense of the public mood.


Cook is arguing that this is not just a business issue, but one of fundamental political rights. He is building a legal team – Ted Olsen, who won the Citizens United case that struck down campaign finance laws, and Ted Boutrous, who frequently represents media organizations – that suggests he is going to argue encrypted software is protected by the First Amendment’s right of free speech. That’s an argument that could make its way to the Supreme Court – perhaps reaching it next year, when Antonin Scalia’s replacement may swing the balance.


Silicon Valley companies – Facebook, Twitter, Google – are lining up behind Apple in this fight. But the law enforcement and intelligence communities are in lockstep on the other side. Manhattan District Attorney Cyrus Vance said yesterday he now has 175 Apple devices he can’t access in criminal investigations. Senate Intelligence Committee Chairman Richard Burr has proposed legislation that would impose criminal penalties on companies that refuse to unscramble encrypted messages.


Can Apple’s – and Cook’s – vaunted reputations survive this battle? External events – like the shooting in San Bernadino – will matter. This is a big one that bears close watching.


More news below.


Alan Murray


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