That thought experiment is an entirely different case, and yes Apple regularly provides iCloud backups to law enforcement. Apple does not own the phone, nor do

That thought experiment is an entirely different case, and yes Apple regularly provides iCloud backups to law enforcement. Apple does not own the phone, nor does it posses the data. In the case where apple owns the server and a customer's data resides on it the court may compel Apple to provide the state the evidence. Similarly, if Apple posessed the key to the device they would be compelled to provide it. Apple has intentionally designed the system so that users are able to use their phone without storing the data or encryption key on Apple's servers to avoid that thought experiment because everyone agrees that that thought experiment leads to apple having to provide the keys/data. Also, Apple doesn't have to update the code, they need to provide the PIN, how they do it is completely up to them. If they refuse a search warrant will be issued and the US Marshalls will seize the evidence.