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You're not reading that, you're implying it. It doesn't say anything at all about remote installs, and it's not even suggested.

It doesn't say anything about remote install - in fact it says "physical possession" several times.

Come on. It can be iOS update that waits until you enter the code or use touchID - and then sends the keys or decrypted data somewhere.

It could be, but why would the FBI want that?

Please read carefully. They don't have that capability. The FBI wants them to create it.

if they can create it, they have the capability.

They never say they can create it. They say the FBI wants them to create it, which may or may not be possible and is not addressed in this letter.

you've noticed auto updates yes?