Tech Brief: Conway Rejects Calls for Independent Panel to Probe Russian Hacks

Washington Brief

  • Kellyanne Conway, a top adviser to President-elect Donald Trump, ridiculed a proposal from congressional Democrats that would establish an independent, bipartisan commission to investigate the Russian hacking and disinformation campaign aimed at interfering in the U.S. election. Conway also said Trump might reconsider some of the punitive actions against Russia ordered by President Barack Obama. (USA Today)
  • The Energy Department said the infrastructure used to deliver electricity to U.S. homes, hospitals and businesses is in “imminent danger” of cyberattacks. (CyberScoop)
  • The Supreme Court won’t hear an appeal from three sex trafficking victims who allege that the advertising website Backpage.com helped promote the exploitation of children. The justices left in place a lower court’s ruling that Backpage is protected from liability because the website hosts content created by users. (The Associated Press)

Business Brief

  • Alibaba Group Holding Ltd. Executive Chairman Jack Ma met with Trump and said the two discussed a plan to support 1 million small businesses by selling more U.S. goods to China through the Chinese e-commerce firm’s platform. (The Wall Street Journal)
  • If Verizon closes its $4.8 billion acquisition of Yahoo’s core internet business, Yahoo will retain its 15 percent stake in Alibaba and 35.5 percent stake in Yahoo Japan under an investment company with the new name Altaba Inc. Yahoo Chief Executive Marissa Mayer would step down from the newly formed firm. (TechCrunch)
  • Facebook’s push to hire a more diverse workforce has been obstructed by a multi-layered hiring process that gives high-ranking engineers the power to veto promising candidates, with decisions being made on traditional metrics such as where a candidate attended college. (Bloomberg News)

Chart Review

Events Calendar (All Times Local)

Tuesday
Senate Homeland Security and Governmental Affairs Subcommittee On Investigations hosts hearing on Backpage.com 10 a.m.
FCC hosts Informal Working Group Four on regulatory issues 10 a.m.
Clapper, Rogers, Brennan, Comey testify at Senate Intelligence Committee hearing 1 p.m.
Senate Homeland Security Committee holds confirmation hearing for retired Gen. Kelly to lead DHS 3:30 p.m.
Wednesday
Open Technology Institute event on internet freedom 9:30 a.m.
Rep. Pompeo testifies at Senate Intelligence Committee nomination hearing for CIA post 10 a.m.
Reps. Hultgren, Luján speak at event on tech R&D 10 a.m.
Senate Commerce Committee nomination hearing for Elaine Chao to lead Transportation Dept. 10:15 a.m.
Atlantic Council event on a nonstate strategy for cybersecurity 3:30 p.m.
Thursday
FTC hosts PrivacyCon 9 a.m.
Commerce Committee nomination hearing for Wilbur Ross to lead Commerce Dept. 10 a.m.
Friday
FCC Chairman Wheeler speaks at Aspen Institute event 11 a.m.

 

General

Alibaba’s Jack Ma: China-U.S. Relationship Should Be ‘More Friendly’
Ryan Knutson and Laura Stevens, The Wall Street Journal

Add Jack Ma to the list of billionaires that has visited Trump Tower for a meeting that ended in a photo opportunity with the president-elect and a bold, if vague, promise of creating more U.S. jobs. Mr. Ma, the founder and executive chairman of Alibaba Group Holding Ltd., met with Donald Trump for about half an hour on Monday.

Marissa Mayer resigning from Yahoo board as remaining company renames itself Altaba
Kate Conger, TechCrunch

Despite hiccups, Yahoo’s planned sale to Verizon appears to be moving forward — but some portions of the company will be left behind and renamed Altaba Inc. Yahoo is hanging on to its 15 percent stake in Alibaba and its 35.5 percent stake in Yahoo Japan, and those assets will survive as an investment company under the new name Altaba Inc., as the rest of Yahoo integrates with Verizon.

High Court Won’t Hear Appeal Over Backpage.com Escort Ads
Sam Hananel, The Associated Press

The Supreme Court said Monday it won’t hear an appeal from three sex trafficking victims who accuse advertising website Backpage.com of helping to promote the exploitation of children. The justices left in place a lower court ruling that said federal law shields Backpage from liability because the site is just hosting content created by people who use it.

Under Senate pressure, Backpage shutters adult section
Josh Gerstein, Politico

After two years of intense scrutiny from the U.S. Senate and elsewhere, online ad-posting site Backpage.com announced Monday night that it is shuttering its adult services section, which was repeatedly accused by critics of facilitating child prostitution and human trafficking. Backpage said its decision, which came hours before a Senate panel was set to convene a hearing on the site, was made in the face of pressure that amounted to a violation of the site’s First Amendment rights.

Silicon Valley’s rank and file prepare to fight Trump
Tess Townsend, Recode

“Secret meeting? Secret meeting?” prompted a graying engineer as he waved people clad in hoodies, plaid collars and side-mullets into an office building in the SoMa district of San Francisco Friday night. Not that the meeting was strictly secret — it had been advertised openly on Twitter.

Bitcoin exchange operator pleads guilty in U.S. case tied to JPMorgan hack
Nate Raymond, Reuters

A Florida man pleaded guilty on Monday to charges that he conspired to operate an illegal bitcoin exchange, which prosecutors said was owned by an Israeli who oversaw a massive scheme to hack companies, including JPMorgan Chase & Co. Anthony Murgio, 33, entered his plea in federal court in Manhattan to three counts, including conspiracy to operate an unlicensed money transmitting business and conspiracy to commit bank fraud, a month before he was to face trial.

Wall Street Clearing House to Adopt Bitcoin Technology
Nathaniel Popper, The New York Times

After months of talk and hype, the world’s biggest banks have taken the first steps toward moving a significant piece of financial infrastructure onto a so-called blockchain — the technology introduced to the world by the virtual currency Bitcoin. The company that serves as the back end for much Wall Street trading — the Depository Trust and Clearing Corporation, or D.T.C.C. — said on Monday that it would replace one of its central databases, used by the largest banks in the world, with new software inspired by Bitcoin.

Italy looking at Google proposal to close tax dispute: source
Emilio Parodi, Reuters

Italy’s tax authorities are looking at a proposal from Google to pay between 270 million and 280 million euros ($296 million) to wrap up a tax dispute, a source close to the matter said on Tuesday. Earlier this year Italian tax police presented a claim against Google for the non payment of taxes between 2009 and 2013 to the tune of 227 million euros.

Germany’s plan to fight fake news
Rachel Stern, The Christian Science Monitor

In May 2015, hackers infected some 20,000 computers in Germany’s parliament with malicious software designed to steal sensitive data. The vast and damaging cyberattack was the most expansive in the government’s history.

Dollar Retreats as Trump Euphoria Ebbs, Gold Gains: Markets Wrap
Natasha Doff and Emma O’Brien, Bloomberg News

S&P 500 futures were little changed after closing Friday at an all-time high. The Stoxx Europe 600 Index was little changed in London.

Intellectual Property

Artificial intelligence keeps IBM atop 2016 patent list
Stephen Shankland, CNET

IBM’s efforts to match and surpass the human brain with computing technology helped push the company to the top of the 2016 list of patent awards. The US Patent and Trademark Office granted IBM 8,088 patents for the year, more than 2,700 of them stemming from artificial intelligence and cognitive computing work, IBM and IFI Claims said Monday.

Telecom, Wireless and TV

Verizon raises upgrade fee to “cover increased cost”—but its costs declined
Jon Brodkin, Ars Technica

Verizon Wireless is now charging a $30 upgrade fee when customers switch to a new phone, up from the previous fee of $20. The $30 upgrade fee must be paid “if you purchase a new device at retail price or through [Verizon’s] device payment program,” Verizon notes. The fee increase went into effect on January 5.

NAB Taps Leahy Staffer for Deputy General Counsel
John Eggerton, Broadcasting and Cable

There may be a Republican Congress and soon White House, but the National Association of Broadcasters has tapped a top Democratic Hill staffer to be deputy general counsel NAB said Monday that it has hired Garrett Levin, former senior counsel to Sen. Patrick Leahy (D-Vt.), ranking member of the Judiciary Committee, as deputy general counsel for intellectual property law and policy.

Mobile Technology and Social Media

Facebook’s Hiring Process Hinders Its Effort to Create a Diverse Workforce
Ellen Huet, Bloomberg News

Facebook has put itself at the forefront of efforts to recruit a more diverse workforce, including a targeted internal recruiting strategy in 2015 designed to bring in female, black and Latino software engineers. Yet within Facebook’s engineering department, the push has been hampered by a multi-layered hiring process that gives a small committee of high-ranking engineers veto power over promising candidates, frustrating recruiters and hindering progress on diversity goals.

Facebook is going to start showing ads in the middle of its videos and sharing the money with publishers
Peter Kafka, Recode

Facebook wants to show more ads to people who watch its videos and start making money for the people who supply it with those videos. Industry sources say the social network is going to start testing a new “mid-roll” ad format, which will give video publishers the chance to insert ads into their clips after people have watched them for at least 20 seconds.

Alphabet’s Waymo May Sell Autonomous Hardware to Other Companies
Mark Bergen and Keith Naughton, Bloomberg News

When Alphabet Inc.’s car unit, Waymo, launches commercially it will have a key weapon in its arsenal: specialized self-driving hardware built in-house. Waymo unveiled an improved suite of sensors and said it had slashed the cost of the pivotal technology on Sunday at the North American International Auto Show in Detroit.

Snapchat establishes international HQ in Britain
Madhumita Murgia and Hannah Kuchler, Financial Times

Snap, the company behind Snapchat, has established its international headquarters in Britain, where it will book all sales made outside the US, in a post-Brexit win for the UK. The move by the Los Angeles-based messaging start-up, which plans to go public this year with a valuation of up to $25bn, is an unusual one among top US tech companies.

Cybersecurity and Privacy

Conway dismisses need for independent hack probe, says Trump may reconsider sanctions on Russia
Susan Page, USA Today

Kellyanne Conway, one of Donald Trump’s top advisers, on Monday questioned whether additional investigations are needed into reports of Russian hacking during the campaign and indicated the incoming president may reconsider some of the punitive actions President Obama had ordered in response. “I predict that President Trump will want to make sure that our actions are proportionate to what occurred, based on what we know,” she told Capital Download.

DOE warns of potentially ‘imminent’ cyberattack on power grid
Chris Bing, CyberScoop

Infrastructure used to deliver electricity to U.S. homes, hospitals and businesses is in ”imminent danger” of cyberattacks, the Energy Department warns in a massive new report. While advancements in energy grid technology have allowed for a more dynamic, reliable and efficient system to provide energy, it has also simultaneously resulted in greater integration of existing networks, the Energy Department noted in broad terms.

Stolen NSA Windows hacking tools now for sale
Joe Uchill, The Hill

The Shadow Brokers, the hacker or hackers who stole and are now claiming to sell National Security Agency surveillance software, are now selling the agency’s package of Windows hacking tools. Like all Shadow Brokers wares, the tools are at least three years old. But codes used to pass through security that were released by the Shadow Brokers in August worked when tested at that time, sparking concerns.

If a Best Buy technician is a paid FBI informant, are his computer searches legal?
Tom Jackman, The Washington Post

At a giant Best Buy repair shop in Brooks, Ky., Geek Squad technicians work on computers owned by people across the country, delving into them to retrieve lost data. Over several years, a handful of those workers have notified the FBI when they see signs of child pornography, earning payments from the agency.

How hackers made life hell for a CIA boss and other top US officials
Dan Goodin, Ars Technica

A North Carolina man has pleaded guilty to a conspiracy that illegally accessed the e-mail and social media accounts of Central Intelligence Director John Brennan and other senior government officials and then used that access to leak sensitive information and make personal threats.

A Message from the Electronic Payments Coalition:

A special interest bill allowed retailers to pocket $42,000,000,000. The longer we go without a Durbin Amendment repeal, the more money merchants pocket at the expense of consumers. It is time to end this failed policy. Get the facts from the Electronic Payments Coalition.

Opinions, Editorials and Perspectives

Russia’s D.N.C. Hack Was Only the Start
Robby Mook, The New York Times

Imagine the headlines if, in 2015, Russian agents had leapt out of a van at 2 a.m. in Southeast Washington and broken into the Democratic National Committee offices using sophisticated tools and techniques to steal tens of thousands of documents, including the names and Social Security numbers of donors and employees, and confidential memorandums about campaign strategy for the presidential election. The world would have been aghast.

The released report on Russian meddling isn’t enough
David Ignatius, The Washington Post

The intelligence community’s allegation that Russia intervened covertly in the 2016 election describes a significant assault on our democracy. The country needs to know more: The charge needs to be followed up with an independent investigation that continues after Donald Trump becomes president on Jan. 20.

Why Uber lost $2.2 billion in 9 months
Timothy B. Lee, Vox

It’s not unusual for a new company to lose money as it seeks market share and traction, but Uber is testing investors’ patience to a degree that’s unprecedented in the history of Silicon Valley. A December report from Bloomberg showed that the car-hailing app lost over $2.2 billion in the first nine months of 2016.

Data capitalism is cashing in on our privacy . . . for now
John Thornhill, Financial Times

The buzz at last week’s Consumer Electronics Show in Las Vegas was all about connectivity and machine learning. For some reason, the world’s engineers seem strangely compelled to turn every quotidian product — from toothbrushes, to cars, to showers, to shoes — into smart, connected devices.

Trump Runs Twitter Now, But He’s Not Going To “Save” It
Alex Kantrowitz, BuzzFeed News

Donald Trump’s viral tweets and his centrality to the American conversation have made him vastly the largest force on Twitter — ten times larger in terms of conversations than the entire Kardashian clan, according to new data — giving him unprecedented leverage over a social platform that, as it struggles as a business, remains central to news and politics.

A Message from the Electronic Payments Coalition:

Despite their promises before the bill was passed, only one percent of merchants actually lowered prices following the Durbin Amendment’s implementation. It is time to end this failed policy. Learn more about retailers’ broken promises from EPC.

Research Reports

Backpage.com’s Knowing Facilitation of Online Sex Trafficking
Staff Report, Senate Subcommittee on Investigations

For more than twenty months, the Permanent Subcommittee on Investigations has investigated the problem of online sex trafficking. The investigation led the Subcommittee to focus on Backpage.com, the leading online marketplace for commercial sex.

The Worst Innovation Mercantilist Policies of 2016
Nigel Cory, The Information Technology and Innovation Foundation

Around the world, countries are competing for market share in high-wage, innovation-based industries. Unfortunately, as this global race for innovation advantage intensifies, many countries have turned to “innovation mercantilism”—a strategy that seeks prosperity by imposing protectionist and trade-distorting policies that tip market scales to expand domestic technology production.

Briefings

Tech Brief: Week in Review & What’s Ahead

Sen. Jeff Flake (R-Ariz.) said he and other senators will attempt to roll back Federal Communications Commission rules governing broadband privacy through the Congressional Review Act, which allows Congress to eliminate agency rules with a simple majority of lawmakers. Flake said he has a dozen co-sponsors lined up, but he wouldn’t say when he plans to introduce the resolution.

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