JBTL News Roundup: Week of October 29, 2018

Below please find a roundup of business and technology news from the past week.

About JBTL Online Weekly News Roundups

JBTL strives to provide its readers with updates regarding recent news and analysis at the intersection of law and technology. Check out JBTL Online for weekly updates regarding recent developments and subscribe to get updates right in your inbox.

Opinions and Analysis: The Big Hack: Updating National Security for the 21st Century

By: Kevin Redden, Staff Editor

Editor’s Note:  Both Apple and Amazon have apparently done in-house investigations and found no evidence of a hack; they have subsequently demanded a retraction of the story from Bloomberg.  Bloomberg has stood by its reporting and refused to retract its article.

On October 4th, 2018, Bloomberg published an alarming article alleging that the U.S. Government had fallen victim to a large-scale hack at the hands of Chinese operatives.  Their goal? Long-term access to treasured corporate secrets and government networks which house some of the nation’s most sensitive information. In 2015, Amazon became aware of an anomaly with a commonly used motherboard while vetting a Silicon Valley startup for an impending acquisition.  The anomaly came in the form of a chip, roughly the size of a grain of rice, which was attached to the motherboard after manufacturing.  The chip enabled third-party users to gain access to any computer using the motherboard, effectively opening the door to a vast array of sensitive data.  According to Bloomberg, the chip gave Chinese operatives access to data centers operated by the Department of Defense, several Navy warships, NASA, and the Department of Homeland Security in addition to private companies such as Apple and Amazon.

Like many other pieces of technology, large parts of the motherboard in question were manufactured in China.  Bloomberg reports that operatives for the Chinese government infiltrated the manufacturer’s supply chain, inserting the chip on thousands of motherboards before being shipped back to the United States for installation in government computers.  It seems that the federal government escaped with nothing more than a bruised ego as the chips were found relatively quickly and monitored for the past several years. Regardless of the consequences, one is left to wonder how this could happen to the country which spends more on defense than any other nation in the world.

A Cold Winter

Reports of espionage will undoubtedly freeze relations between the United States and China even further than they already are and could lead to an era marked by distrust and Machiavellian gamesmanship. The rate of technological adoption is at an all-time high; countries which react slowly to technological advancements risk economic and national security.  While the federal government has been proactive in updating military equipment and combat operations, it needs to take a holistic approach to modernize the nation’s defense strategy and realize that 21st Century technology is the linchpin to national security.  First and foremost, the federal government cannot afford to use motherboards, or other hardware, which is produced or manufactured outside the United States.  We have the workforce and knowledge to make hardware which can outcompete any manufacturer in the world if we can live with slightly increased costs. Kennedy did not buy ICBMs built in the U.S.S.R, so why are we buying sensitive hardware built in China?

This does not mean the federal government has to take on the responsibility of manufacturing themselves.  By implementing a policy consisting of economic incentives tied to performance measures while also communicating an unwillingness to purchase foreign hardware, the government can spur industry giants to relocate manufacturing sites within the United States.  The close geographic proximity of manufacturing and distribution centers resulting from these policies may enable both the manufacturer and the government to ensure a secure supply chain throughout the manufacturing process.  In addition to incentivizing hardware manufacturers, the United States also need to use international mechanisms to send a clear message that espionage of this sort will not be tolerated.  Bringing the international community to the table could put pressure on China and other nations with similar aspirations while legitimizing any unilateral actions the United States chooses to take.  The United States and the world is wading into the future with trepidation. More countries have become empowered to challenge the international world order which is currently in place as their technological prowess increases.  The United States cannot afford to be caught on its heels again, modernizing the way we think about defense is the first step in ensuring insuring against future hacks.

Editor’s Note:  Both Apple and Amazon have apparently done in-house investigations and found no evidence of a hack; they have subsequently demanded a retraction of the story from Bloomberg.  Bloomberg has stood by its reporting and refused to retract its article.

JBTL News Roundup: Week of October 15, 2018

Below please find a roundup of business and technology news from the past week.

About JBTL Online Weekly News Roundups

JBTL strives to provide its readers with updates regarding recent news and analysis at the intersection of law and technology. Check out JBTL Online for weekly updates regarding recent developments and subscribe to get updates right in your inbox.

JBTL News Roundup: Week of October 8, 2018

Below please find a roundup of business and technology news from the past week:

  • Staff editor Kevin Redden has flagged some great analysis from The Washington Post regarding Google+’s data privacy scandal. A vulnerability in the code animating Google+ left the data of 500 million users vulnerable to hacking. This article comes at the story from a unique angle, discussing the idea of digital “junk” that users create and then forget about. (Google kept the bug secret for months before effectively shutting down Google+.)
  • Reuters reports that the proposed $69 billion merger between CVS and mega-insurer Aetna has won antitrust approval from the Department of Justice. This merger will afford the merged corporation significant control over health care costs for customers–time will tell if those costs go up, down, or stay static.
  • Last week’s roundup noted that Amazon had raised its minimum wage to $15. The Associated Press reports that lost in the fine print of that announcement was the company’s plan to simultaneously eliminate bonuses and stock options for those same workers.
  • CNN reports that on Wednesday morning, the Dow fell 400 points as investors grow concerned about rising interest rates. Tech companies’ stocks have been hit particularly hard by this slump.
  • CBC News went undercover at a ticket company convention and revealed that Ticketmaster may be complicit in assisting scalpers.  By doing so, it has a dual effect of raising ticket prices and allowing Ticketmaster to profit from fees on selling the tickets originally, and then again if the scalper uses Ticketmaster’s website to re-sell them.
  • Media industry news outlet Variety discusses former White House communications director Hope Hicks’ move to head communications at Fox News, announced this week. Hicks’ move is the latest in a series of lateral moves between the White House or Trump campaign and major television news stations.

About JBTL Online Weekly News Roundups

JBTL strives to provide its readers with updates regarding recent news and analysis at the intersection of law and technology. Check out JBTL Online for weekly updates regarding recent developments and subscribe to get updates right in your inbox.

JBTL News Roundup: Week of October 1, 2018

Below please find a roundup of business and technology news from the past week.

  • CNBC reports that, after years of harsh criticism, Amazon has agreed to raise its minimum wage to $15 per hour. While this move has been praised as a positive step by workers’ rights advocates like Senator Bernie Sanders, as JBTL’s resident union expert Mike Shier pointed out last week, Amazon remains staunchly anti-union. For context, Amazon founder Jeff Bezos is the richest man in modern history.
  • President Trump said this week that he has struck a deal with both Canada and Mexico on a trade agreement that would replace the North American Free Trade Agreement (NAFTA). This new trade agreement will be called the United States, Mexico, and Canada Agreement (USMCA). The Washington Post explores the potential “winners and losers” of the new agreement.
  • ABC News reports that Elon Musk has reached a $40 million settlement agreement with the Securities and Exchange Commission (SEC), which also requires Musk to resign as chairman of the board at Tesla for at least three years. Musk will stay on as CEO of the company. The SEC filed suit against Musk late last week over what the agency described as misleading tweets about a proposed Tesla buyout.
  • Gizmodo details Facebook’s latest data scandal: users provided Facebook with their phone numbers to enable two-factor authentication, and Facebook then provided those phone numbers to advertisers. This new scandal opens up a further conversation about the power and scope of hyper-targeted advertising.
  • Finally, NPR reports that a federal judge in D.C. has ruled that Democratic members of Congress do have standing to sue President Trump over what they argue are violations of the emoluments clause of the Constitution. The plaintiffs contend that the President’s continued profits (often from visiting foreign governments) from his hotels and properties around the world, paired with his decision to not divest his interest in those properties, constitute unlawful gifts or payments from foreign governments. The Justice Department’s argument, by which the federal judge was not persuaded, was that only the body of Congress as a whole, and not its individual members, have standing to sue over the emoluments clause.
  • Gizmodo reports that Amazon’s anti-union training video for their managers has been leaked.  The video gives a glimpse at how aggressive Amazon has been at attempting to keep unions from organizing their employees.

About JBTL Online Weekly News Roundups

JBTL strives to provide its readers with updates regarding recent news and analysis at the intersection of law and technology. Check out JBTL Online for weekly updates regarding recent developments and subscribe to get updates right in your inbox.

JBTL News Roundup: Week of September 24, 2018

Below please find a roundup of business and technology news from the past week.

  • The Verge reports that Sirius XM has acquired music streaming service Pandora Radio for $3.5 million. The buyout comes as a relief to Pandora, who lost $200 million in the first half of 2018 after struggling against competitors like Spotify and Apple Music.
  • TechCrunch notes that Snapchat is rolling out a feature allowing users to take pictures of products and then purchase those products on Amazon. Snap has declined to disclose the financial details of the partnership with Amazon.
  • NBC News reports that Chinese billionaire and Alibaba CEO Jack Ma stated that the growing trade war between the U.S. and China has made it impossible for Ma to follow through on a promise to create one million jobs in the United States. Ma also stated that in his estimation, the trade war could last decades.
  • The Washington Post reports that the future of 5G cell service in America may hinge on FCC regulations regarding how much companies should pay to access public utility poles. The agency is likely to vote on this issue this week. From the article: “The proposal by the Federal Communications Commission would establish new limits on the fees that cities and towns can charge wireless carriers as the companies set up their new 5G data networks. And it would require local officials to make decisions more quickly on carriers’ permit applications.”
  • Finally, Bloomberg reports that Starbucks is planning significant restructuring, including layoffs at top corporate levels.
  • The October 2018 issue of the ABA Journal has a great piece on the tension between law enforcement’s interest in curtailing crime and consumers’ interests in maintaining privacy. It’s worth a read!
  • The Washington Post reports that today, Uber reached a $148 million dollar settlement with all fifty states and the District of Columbia to settle allegations that the company violated data breach laws by waiting one year to disclose to customers a breach of 57 million people’s data, and by paying the hackers $100,000 to keep the breach quiet. This settlement is the largest multi-state penalty laid down for a data breach.

About JBTL Online Weekly News Roundups

JBTL strives to provide its readers with updates regarding recent news and analysis at the intersection of law and technology. Check out JBTL Online for weekly updates regarding recent developments and subscribe to get updates right in your inbox.

JBTL News Roundup: Week of September 17, 2018

Below please find a roundup of business and technology news from the past week.

About JBTL Online Weekly News Roundups

JBTL strives to provide its readers with updates regarding recent news and analysis at the intersection of law and technology. Check out JBTL Online for weekly updates regarding recent developments and subscribe to get updates right in your inbox.