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Tech Brief: Administration Divide on Encryption Contributing to Policy Inaction

Today’s Washington Brief

  • The question about whether the government should be able to force tech companies to weaken encryption to ease law enforcement access has sparked “robust debate” within the Obama administration, according to a senior official. The lack of consensus has contributed to a delay in any formal White House policy on the matter. (The Christian Science Monitor)
  • The government is spending roughly three-fourths of its tech budget on outdated computer systems, including platforms more than 50 years old in crucial arenas like nuclear weapons and Social Security, according to the Government Accountability Office. (The Associated Press)
  • A bipartisan group of eight senators is aiming to include language in the Senate’s defense authorization bill that would elevate U.S. Cyber Command as a standalone entity from its current position under Strategic Command. The amendment would bring the Senate’s bill in line with the version passed by the House, though the White House has already stated its opposition to such a move. (The Hill)

Today’s Business Brief

  • The European Union’s proposal to create a single digital market for its 28 member states could require Netflix and other video streaming services to offer a minimum amount of local content in each country, while also helping fund its development. The broader proposal aims to regulate how EU residents can buy, access and consume online services. (The New York Times)
  • Apple Inc. will have to comply with a rule requiring it to sell at least 30 percent of locally sourced products if it wants to open stores in India, according to a senior government official. The company is hoping to capitalize on India’s smartphone market, one of the world’s fastest-growing, as sales in the U.S. and China dip. (Reuters)
  • Irish authorities warned that a data-transfer arrangement used by companies like Facebook Inc. and Google Inc. could violate EU rules on privacy. Ireland’s Data Protection Commissioner said it is passing its concerns to the Irish courts but recommended a ruling come from the European Court of Justice. (Financial Times)

Today’s Chart Review

Mark Your Calendars (All Times Eastern)

Senate Judiciary Committee votes on Electronic Communications Privacy Act Amendments Act 10 a.m.
House Small Business Committee hearing on the sharing economy 10 a.m.
No events scheduled.


Europe Seeks Greater Control Over Digital Services
Mark Scott, The New York Times

If European regulators get their way, Netflix may soon have to do more than just offer “Unbreakable Kimmy Schmidt” with French subtitles. European officials proposed on Wednesday a new set of rules that could force Netflix and other video streaming services to carry a minimum amount of local content in individual countries, as well as to help pay for its development.

India says Apple must sell locally-sourced goods to set up stores: source
Rajesh Kumar Singh, Reuters

India has said Apple Inc must meet a rule obliging foreign retailers to sell at least 30 percent locally-sourced goods if it wishes to open stores in the country, a senior government official told Reuters. Apple is hoping to expand its retail presence in India, one of the world’s fastest-growing smartphone markets, at a time when sales in the United States and China have slowed.

The SEC is investigating Alibaba
Charles Riley, CNN

Alibaba has disclosed that it is being investigated by the U.S. Securities and Exchange Commission over its accounting practices and how it reports data from its blockbuster Singles’ Day sale. The Chinese e-commerce firm said it has been told that regulators are looking for potential violations of federal securities laws.

Congressional Black Caucus Members Call for More Diversity in Tech
Amir Nasr, Morning Consult

Eight Congressional Black Caucus members on Wednesday wrote to Labor Secretary Thomas Perez urging his department to take more action to improve minority presence in the tech industry, where they’ve noticed a “stark underrepresentation of African Americans” compared to other sectors. “As the demand for technology worldwide increases, and it becomes a core component of our government’s functionality, this challenge will only become greater,” the lawmakers wrote in the letter.

Profiting From Politics Proves Challenging for Startups
Ruth Simon, The Wall Street Journal

Politics is difficult business as many startups are finding out. Some of the top digital, fundraising and analytics operatives on both sides of the U.S. political divide have tried to parlay their campaign skills into for-profit enterprises, creating startups that build on their campaign expertise.

Asia Stocks Rise Amid Economic Optimism as Energy Shares Climb
Jeff Sutherland and Toshiro Hasegawa, Bloomberg News

Futures on the S&P 500 climbed 0.1 percent after the underlying gauge added 0.7 percent on Wednesday to the highest level since April 27. The index notched up a set of consecutive advances after seven sessions of swinging from gains to losses.

Intellectual Property

Billions at Stake in University Patent Fights
Dave Merrill et al., Bloomberg News

A powerful and inexpensive technique for rewriting snippets of DNA — known as CRISPR-Cas9 — has two research institutions locked in a bitter patent battle. On one side is UC Berkeley, where faculty first reported using the gene-editing technology in 2012, on the other, Broad Institute of MIT and Harvard, where faculty won a special expedited patent for the technique in 2014.

Telecommunications, Broadcast & Cable

Court Throws Out FCC’s JSA Rule
John Eggerton, Broadcasting and Cable

he Third Circuit Court of Appeals has thrown out the FCC’s decision to make some joint sales agreements attributable as ownership interests, saying the FCC “improperly” enacted the rule. The court also chastised the FCC for not completing its quadrennial review of media ownership rules and concluded the FCC had “unreasonably delayed” action on defining an “eligible entity,” which is key to its promoting of minority and female ownership.

AT&T Wants Yahoo’s Internet Business
Alex Sherman and Ed Hammond, Bloomberg News

A giant U.S. telecommunications company is still interested in buying Yahoo Inc., but it’s not the one you think. AT&T Inc. made a bid for Yahoo and remains a contender to acquire the Sunnyvale, California-based company’s core internet business, according to people familiar with the matter, who asked not to be identified as the information isn’t public.

Chinese company fined $34 million for selling signal jammers
David McCabe, The Hill

The Federal Communications Commission (FCC) finalized a penalty of more than $34 million against a Chinese company Wednesday for selling devices that illegally jam wireless signals. “In today’s mobile world, cellular, GPS, and other signal jamming devices seriously jeopardize communications, business operations, and public safety,” said Travis LeBlanc, the FCC’s chief of the enforcement.

FCC sets up complementary $2B CAF II auction aimed at rural broadband expansion
Sean Buckley, FierceTelecom

In a nearly unanimous decision, the FCC approved a reverse auction that will provide an additional $2 billion in funds to rural broadband providers via the regulator’s CAF II program in an effort to accelerate growth. This item establishes rules for the auction, which the commission says will “harness market forces” to expand broadband in “targeted” rural areas.

Mobile & Social

Facebook data transfers threatened by EU ruling
Duncan Robinson, Financial Times

Irish authorities have warned that a crucial data transfer arrangement relied on by Facebook, Google and Amazon potentially falls foul of EU rules on privacy — threatening an “Armageddon of global data flows”, according to one lawyer. So-called “model contract clauses” are now used by thousands of multinational companies to allow them to transfer personal data — whether payslips or pictures — outside the EU, without breaching the bloc’s strict data protection rules.

Uber chased self-driving deals with GM, Ford, Cruise and others before hooking up with Toyota
Johana Bhuiyan and Kara Swisher, Recode

Over the last year, Uber actively courted a number of automakers and autonomous tech startups — including both General Motors and the carmaker’s newly acquired startup Cruise — to help the company advance its autonomous efforts, multiple sources close to the matter told Recode. Uber didn’t discriminate when it came to seeking partnerships and approached every player, including Ford, sources said.

WhatsApp ban ignites Brazil censorship fears
Samantha Pearson and Hannah Kuchler, Financial Times

Moments before a temporary WhatsApp ban came into force across Brazil this month, panic gripped Latin America’s biggest country.Families hurriedly called their loved ones, businesses made last-minute arrangements with suppliers, and doctors raced to send patients alternative emergency contact information.

Data & Privacy

What the US government really thinks about encryption
Sara Sorcher and Joshua Eaton, The Christian Science Monitor

The encryption debate can’t be simplified to a Silicon v. Washington fight over your privacy. Even though FBI concerns about “going dark” in its pursuit of criminals and terrorists have captured the headlines, the Obama administration is still deeply divided.

A Judge Just Made It Harder for the FBI to Use Hacking
Joseph Cox, Vice News

A judge has thrown out evidence obtained by the FBI via hacking, after the agency refused to provide the full code it used in the hack. The decision is a symptom of the FBI using investigative techniques that are usually reserved for intelligence agencies, such as the NSA.

Senate bill would let FBI read your emails without a court order
Shara Tibken, CNET

Better watch what you put in email. The Senate Intelligence Committee on Tuesday approved a bill that would make it easier for the government to read what you’re writing online.

House Follows Senate in Introducing Anti-Government Hacking Bill
Amir Nasr, Morning Consult

Both chambers of Congress now have legislation that would prevent federal judges from authorizing government hacking operations beyond their regular jurisdictions. Rep. Ted Poe (R-Texas) on Wednesday introduced a measure that would block the Supreme Court-approved changes to federal criminal procedure scheduled to take effect later this year.


Gov’t Report: Feds Spend Billions to Run Ancient Technology
Ricardo Alonso-Zaldivar, The Associated Press

The government is spending about three-fourths of its technology budget maintaining aging computer systems, including platforms more than 50 years old in vital areas from nuclear weapons to Social Security. One still uses floppy disks.

Lawmakers push to elevate Cyber Command in Senate defense bill
Katie Bo Williams, The Hill

A bipartisan group of senators wants to bring the Senate version of a national defense bill in line with its House counterpart on a change in authority for the U.S. military’s cyber unit. An amendment to the National Defense Authorization Act (NDAA) would direct the president to elevate U.S. Cyber Command to a standalone warfighting entity, pulling it out from under the authority of Strategic Command.

Senators ask what OPM hack means for global cyber relations
Aisha Chowdhry, FCW

Lawmakers want more clarity from the State Department on how breaches, including the Office of Personnel Management hack, affect the push to establish cybersecurity norms with countries such as Russia and China. “I want greater clarification on our goals, on our cyber policies, our protocols,” Sen. Ben Cardin (D-Md.), ranking member of the Foreign Relations Committee’s East Asia, the Pacific and International Cybersecurity Policy Subcommittee, told FCW after a hearing on international cybersecurity strategy.

Opinions, Editorials & Perspectives

Free Data Options Open Opportunities for Low-Income Households
Jonathan Spalter, Morning Consult

Are free data options a good thing for American consumers? I guess it depends on whether you ask consumers or advocates.

How to Reform Labor Law for the Gig Economy: Adapt it, Fix it, or Suspend it
Joe Kennedy, Morning Consult

More than one in six American workers today are neither full-time, year-round employees of a single company nor truly independent contractors who serve multiple clients, according to a recent study. Yet U.S. labor law insists on cramming all of us into one of two rigid categories—you are either a regular employee or independent contractor.

It’s time to update the Electronic Communications Privacy Act (ECPA)
Julie Brill, The Hill

Our emails, social media messages, and other electronic communications contain private information and deserve protection. Thirty years ago, Congress passed the Electronic Communications Privacy Act (ECPA) as a way to ensure that electronic communications were protected against wrongful use and public disclosure by third parties, including government agencies.

Passing the Kelsey Smith Act will help law enforcement save lives
Rep. Kevin Yoder and Ajit Pai, The Hill

Days after she graduated from high school, minutes after she got off the phone with her mother, and seconds after she bought an anniversary present for her boyfriend, 18-year-old Kelsey Smith was kidnapped. She was abducted in broad daylight as she got into her car outside a department store in Overland Park, Kan.

Why the Very Silly Oracle v. Google Trial Actually Matters
Sarah Jeong, Vice News

“This case is about an excuse,” said Oracle lawyer Benjamin Bicks in his closing arguments. “I call it the fair use excuse.”

Research Reports, Issue Briefs & Case Studies

Information Technology: Federal Agencies Need to Address Aging Legacy Systems
U.S. Government Accountability Office

The federal government spent about 75 percent of the total amount budgeted for information technology (IT) for fiscal year 2015 on operations and maintenance (O&M) investments. Such spending has increased over the past 7 fiscal years, which has resulted in a $7.3 billion decline from fiscal years 2010 to 2017 in development, modernization, and enhancement activities.