DOJ Wants Apple, Google To Hand Over Names And Phone Numbers Of 10,000 App Users

from the government-still-in-the-pointless-acquisition-business dept

Let's hope this isn't the only scope discussed by the court handling this case, detailed here by Thomas Brewster of Forbes.

[T]he government wants Apple and Google to hand over names, phone numbers and other identifying data of at least 10,000 users of a single gun scope app, Forbes has discovered. It’s an unprecedented move: Never before has a case been disclosed in which American investigators demanded personal data of users of a single app from Apple and Google. And never has an order been made public where the feds have asked the Silicon Valley giants for info on so many thousands of people in one go.

Well, "made public" might be overstating things. The DOJ did not want this made public but the document it wanted sealed made it to the public docket briefly before being disappeared by the court system. It targets users of the Obsidian 4 app, which controls rifle scopes made by American Technologies Network Corp.

What the government claims this is about barely seems connected to what it's asking for.

The Immigration and Customs Enforcement (ICE) department is seeking information as part of a broad investigation into possible breaches of weapons export regulations. It’s looking into illegal exports of ATN’s scope, though the company itself isn’t under investigation, according to the order. As part of that, investigators are looking for a quick way to find out where the app is in use, as that will likely indicate where the hardware has been shipped.

Acquiring the data of thousands of innocent app users isn't going to benefit government investigators in any great way. Sifting through tons of garbage data doesn't make anyone's job any easier. What it will do is give the government a lot of information on people not suspected of engaging in criminal acts -- data it can hold onto indefinitely if no one's paying attention.

And it's a lot of information. The DOJ is seeking phone numbers and names linked to accounts that have downloaded the app. It also wants data on when users used the app. All this in furtherance of an investigation that doesn't seem to contain much investigating at this point.

It’s unclear just whom ICE is investigating. No public charges have been filed related to the company or resellers of its weapons tools.

With this data grab, the government will have a chance to explore its options. If investigating weapon manufacturers isn't proving fruitful, maybe someone else in the 10,000+ pool of "suspects" will prove to be a more interesting target. The government isn't above fishing for criminal activity when performing supposedly-targeted searches. And if it wanders too far afield from its original aim, it can always argue the "fish" at the end of its 10,000 lines would have been "inevitably discovered" during the course of its fishing expedition.

Unfortunately, we don't know (yet) whether this ridiculous data request was granted. If a judge somehow managed to sign off on this, there's a good chance it will be rethought once Google or Apple tell the government they're not going to be handing over massive amounts of data the government hasn't shown it needs, much less has earned access to.

Filed Under: apps, doj, fishing expedition, gun scope, ice, obsidian 4, rifle scopes, weapons export
Companies: american technologies network corp., apple, atn, google

Much Of The Assault On 'Big Tech' Is Being Driven By 'Big Telecom'

from the inauthentic-outrage dept

Over the last few months, Google, Amazon, and Apple have all taken a significant beating on Wall Street amidst rumblings of looming antitrust investigations by the DOJ and FTC. Google, we're told, is subject of a looming antitrust probe by the DOJ. Amazon, we've learned, is facing growing scrutiny from the FTC. Apple stock also briefly did a nose dive on the news that it too may soon be subject to a significant new antitrust probe.

On its surface, many of these actions aren't all that surprising. After all, experts have noted for a decade than US antitrust enforcement has grown toothless and frail, and our definitions of monopoly power need updating in the Amazon era. Facebook's repeated face plants on privacy (and basic transparency and integrity) have only added fuel to the fire amidst calls to regulate "big tech."

But while Silicon Valley faces an endless cavalcade of outrage, the telecom sector is suddenly seeing no scrutiny whatsoever. Whether it's the speed at which the problematic T-Mobile merger is being shoveled through the DOJ and FCC or the blind eye being turned to major telecom privacy scandals (like location data), telecom lobbyists have been on a successful tear convincing well-heeled DC lawmakers to ignore the massive, obvious monopoly, privacy, and competition issues inherent in telecom to focus exclusively on the problems in "big tech."

Yet somehow, this asymmetrical policy paradigm is still treated as entirely coincidental in press coverage. Only recently have some news outlets started to notice how well things have been going for telecom lately in DC (Axios calls it telecom's "sweet summer of revenge"). Outlets have even started to finally realize that with former telecom lawyers now running the FCC and DOJ (Ajit Pai and Bill Barr), that is not coincidentally being reflected in federal policies attempting to hamstring telecom's competitors:

"In a June speech, DOJ Antitrust Division Chief Makan Delrahim laid out ways his agency could could go after Big Tech for anti-competitive behavior. In a June Senate hearing, FCC Chairman Ajit Pai said, “The greatest threat to a free and open internet has been the unregulated Silicon Valley tech giants that do, in fact, today decide what you see and what you don’t,” he said."

It's routinely understated how telecom lobbying, not a sincere worry about market power or privacy, is what's driving much of this current policy paradigm in DC (including much of the hyperventilation over nonexistent Censorship of Conservatives). The telecom sector is pushing hard into an online advertising sector traditionally dominated by Silicon Valley. As such, telecom lobbyists have spent several years now pushing to hamstring their direct competitors with the help of cash-compromised lawmakers and full blown regulatory capture.

That includes successfully convincing government that a sector filled with natural, historically-predatory monopolies should see no guard rails whatsoever (see the killing of net neutrality and the neutering of the FCC as example A). Yet somehow, there are still a lot of folks in tech policy circles who see the lopsided focus on "big tech" as entirely authentic, and any failure to police telecom as somehow coincidental. But folks in DC (like former FCC lawyer Gigi Sohn), are well aware that much of this current policy paradigm is highly-produced theater and, shockingly, all about money:

Again, none of this is to say that there aren't massive problems with Silicon Valley giants and plenty of authentic calls for reform. But it is a reminder that an oversized portion of the current anti big tech sentiment in DC is telecom driven. Intellectual inconsistency and campaign finance data usually makes it clear which lawmakers are telecom sector marionettes. More often than not consumer rights, market power, or healthy competition are the very last thing on the minds of those pushing lopsided regulatory solutions to a "big tech" problem they don't actually care all that much about.

Filed Under: antitrust, doj, ftc, internet, telecom
Companies: amazon, apple, at&t, comcast, facebook, google, verizon

Just As Attorney General Barr Insists iPhone Users Have Too Much Security, We Learn They Don't Have Nearly Enough

from the well,-look-at-that dept

You may recall a few years back, John Oliver did one of his always excellent Last Week Tonight shows all about encryption. It concluded with an "honest Apple commercial" that highlighted the difficulty of keeping phones secure, and noting that it's a constant war against malicious attackers who are always trying to figure out new ways to break into people's phones:

That commercial is a lot more realistic than people might think. And late last week, Google revealed a pretty astounding iOS exploit that broadly targeted anyone who visited a series of compromised websites, using a combination of zero day attacks that allowed them to more or less own anyone's iPhone who had visited the sites. As Wired noted in its piece about this attack, it changes most of what we know about iPhone attacks these days. At the very least, it demolished the idea that most iPhone hacking really only targeted key individuals.

It also represents a deep shift in how the security community thinks about rare zero-day attacks and the economics of "targeted" hacking. The campaign should dispel the notion, writes Google Project Zero researcher Ian Beer, that every iPhone hacking victim is a "million dollar dissident," a nickname given to now-imprisoned UAE human rights activist Ahmed Mansour in 2016 after his iPhone was hacked. Since an iPhone hacking technique was estimated at the time to cost $1 million or more—as much as $2 million today, according to some published prices—attacks against dissidents like Mansour were thought to be expensive, stealthy, and highly focused as a rule.

The iPhone-hacking campaign Google uncovered upends those assumptions. If a hacking operation is brazen enough to indiscriminately hack thousands of phones, iPhone hacking isn't all that expensive, says Cooper Quintin, a security researcher with the Electronic Frontier Foundation's Threat Lab.

"The prevailing wisdom and math has been incorrect," says Quintin, who focuses on state-sponsored hacking that targets activists and journalists. "We've sort of been operating on this framework, that it costs a million dollars to hack the dissident’s iPhone. It actually costs far less than that per dissident if you’re attacking a group. If your target is an entire class of people and you're willing to do a watering hole attack, the per-dissident price can be very cheap."

Now, it's true that device encryption has nothing to do with this attack -- and, in fact, the attack could be seen as a way to get around device encryption, since it was putting malware on your phone that could slurp up your data once you unencrypted it locally -- but it does strike me as yet another condemnation of Attorney General William Barr's utter nonsense lately about how the average consumer doesn't need that much phone security these days. If you'll recall, Barr shrugged off concerns about banning real encryption by saying that since all phones have some security vulnerabilities, what's a few more:

All systems fall short of optimality and have some residual risk of vulnerability — a point which the tech community acknowledges when they propose that law enforcement can satisfy its requirements by exploiting vulnerabilities in their products. The real question is whether the residual risk of vulnerability resulting from incorporating a lawful access mechanism is materially greater than those already in the unmodified product. The Department does not believe this can be demonstrated.

The Department of Justice and Barr are wrong. Encryption still remains not just a key piece of fighting these vulnerabilities, but one of the most important. Creating "lawful access" points is worse than taking away a protection, it's literally enabling a multitude of new vulnerabilities -- and playing right into the hands of people looking to exploit such vulnerabilities.

Indeed, as the Wired article notes, even as surprising and unexpected as the latest vulnerabilities were, it's notable that they appeared to be out there for quite some time, with many, many victims, and no one spotted it even though the attackers were super sloppy:

The hackers still made some strangely amateurish mistakes, Williams points out, making it all the more extraordinary that they operated so long without being detected. The spyware the hackers installed with their zero-day tools didn't use HTTPS encryption, allowing anyone on the same network as a victim to read or intercept the data it stole in transit. And that data was siphoned off to a server whose IP addresses were hardcoded into the malware, making it far easier to locate the group's servers, and harder for them to adapt their infrastructure over time. (Google carefully left those IP addresses out of its report.)

Given the mismatch between crude spyware and highly sophisticated zero-day chains used to plant it, Williams hypothesizes that the hackers may be a government agency that bought the zero day exploits from a contractor, but whose own inexperienced programmers coded the malware left behind on targeted iPhones. "This is someone with a ton of money and horrible tradecraft, because they’re relatively young at this game," Williams says.

And that certainly suggests that there are likely already much more sophisticated attacks out there -- and if not, many more are coming soon. And, they will target any and all possible vulnerabilities -- including any "backdoor" the DOJ/FBI demands that device makers install. Contrary to what you may have heard that the debate over backdoors is a fight between 'security and privacy," it's not. It's a debate between "security for most people, and rare instances where law enforcement doesn't want to do basic detective work and wants everything handed to them."

This latest revelation should now make many people more aware of the security challenges of protecting connected devices. But it should also re-emphasize how utterly ludicrous it would be to purposefully insert new vulnerabilities into phones because the DOJ can't be bothered to do its job properly.

Filed Under: encryption, hacks, iphone security, iphones, security, william barr, zero days
Companies: apple, google

Pressured By 'Right To Repair' Movement, Apple Will Sell Parts To Independent Repair Shops

from the monopolizing-repair dept

Apple has never looked too kindly upon users actually repairing their own devices. The company's ham-fisted efforts to shut down, sue, or otherwise imperil third-party repair shops are legendary. As are the company's efforts to force recycling shops to shred Apple products (so they can't be refurbished and re-used), and Apple's often comical attacks on essential right to repair legislation, which only sprung up after companies like Apple, Microsoft, Sony, John Deere, and others created a grass-roots counter-movement via their attempts to monopolize repair.

The motivation for these behaviors is obvious: if users are repairing or recycling their iDevices, that means fewer device sales and more customers wandering outside of Apple's ecosystem. Apple routinely obfuscates this obvious self interest under claims that it's exclusively worried about consumer safety and security, like that time it claimed that Nebraska would become a "mecca for hackers" (oh no!) if the state embraced legislation protecting a consumer's right to repair their own devices.

But the right to repair movement finally appears to have driven some actual change at the company. Apple announced this week it would be providing parts to independent repair shops for the first time in the company's history, provided the repair technicians are certified. The program creates an entirely new "authorized independent repair" program, but for the moment it only applies to out-of-warranty iPhone repairs in the US, and it's not clear yet how easy it will be to gain Apple's official approval.

In a company statement, Apple implies the decision was driven by a simple concern for consumer welfare:

"To better meet our customers’ needs, we’re making it easier for independent providers across the US to tap into the same resources as our Apple Authorized Service Provider network,” said Jeff Williams, Apple’s chief operating officer. “When a repair is needed, a customer should have confidence the repair is done right. We believe the safest and most reliable repair is one handled by a trained technician using genuine parts that have been properly engineered and rigorously tested."

Apple is, of course, hoping to preempt proposed legislation in nearly 20 states that would open the flood gates to consumer and independent repair, putting an end to the company's dreams of a repair monopoly. As such, some worried that Apple was attempting to co-opt the movement by creating this new program that it still at least has some degree of control over. Others were skeptical that Apple would just reject a wide swath of applicants and make the program far more restrictive than the announcement would leave you to believe:

Still, the fact that Apple is even doing this speaks to the incredible work being done by right to repair advocates, who've increasingly been successful in pushing this subject into the mainstream. That said, given Apple's history, it makes sense to not give Apple too many pats on the back until it's clear the program isn't rife with obnoxious restrictions and caveats.

Filed Under: authorized repair, iphones, repair shops, right to repair
Companies: apple

Don't Let This Get Lost In The Shuffle: The Data Transfer Project Is Expanding, And Could Help Create Real Competition Online

from the this-is-important dept

While lots of people are angling to break up the big internet companies in the belief that will lead to more competition, we've long argued that such a plan is unlikely to work. Instead, if you truly want more competition you need to end the ability of these companies to lock up your data. Instead, we need to allow third parties access so that the data is not stuck in silos, but where users themselves both have control and alternative options that they can easily move to.

That's why we were quite interested a year ago when Google, Facebook, Microsoft and Twitter officially announced the Data Transfer Project (which initially began as a Google project, but expanded to those other providers a year ago). The idea was that the companies would make it ridiculously easy to let users automatically transfer their own data (via their own control) to a different platform. While some of the platforms had previously allowed users to "download" all their data, this project was designed to be much more: to make switching from one platform to another much, much easier -- effectively ending the siloing of data and (worse) the lock-in effects that help create barriers to competition. As we noted last year:

But the really important thing that this may lead to is not so much about transferring your data between one of the giant platforms, but hopefully in opening up new businesses which would allow you to retain much greater control over your data, while limiting how much the platforms themselves keep. This is something we've talked about in the past concerning the true power of data portability. Rather than having it tied up in silos connected to the services you use, wouldn't it be much better if I could keep a "data bank" of my data in a place that is secure -- and where if and when I want to I can allow various services to access that data in order to provide the services I want?

In other words, for many years I've complained about how we've lost the promise of cloud computing in just building up giant silos of data connected to the various online services. If we can separate out the data layer from the service layer, then we can get tremendous benefits, including (1) more end-user control over their own data (2) more competitive services and (3) less power to dominate everything by the biggest platforms. Indeed, we could even start to move towards a world of protocols instead of platforms.

So it's good news to see the latest announcement about the project is that it's expanding once again. While the headlines are that Apple has joined the program (to round out the biggest internet companies) it's also notable that two other very interesting, but much smaller, players are joining as well: the federated Mastodon project and Tim Berners-Lee's Solid, which is an attempt to build the kind of "protocols, not platforms" approach that we keep advocating for.

There are still many open questions about how well all of this will work -- but if you believe in true competition among internet services this is the project to pay attention to it, as it has the highest likelihood of actually creating such competition. Plans to "break up" big tech just creates a few more data silos and effectively locks in some pre-selected (slightly smaller) giants, thanks to network effects. What the Data Transfer Project does is flip the equation. It makes it so that more competition can thrive without taking away the network effects that make the internet so powerful. It's the most interesting, and most compelling approach to generating actual competition among internet services.

I still hope that the project goes even further in knocking down silos and opening up for competition, but it's already quite encouraging. Of course, it got almost no attention at all because anti-trust is sexy, whereas companies opening themselves up to competition through technological means is apparently boring.

Filed Under: competition, data portability, data transfer project, lock-in, mastodon, solid
Companies: apple, facebook, google, microsoft, solid

Gab, Mastodon And The Challenges Of Content Moderation On A More Distributed Social Network

from the experimentation-through-federation dept

While so many of the discussions and debates about content moderation focus on a few giant platforms -- namely Facebook, YouTube and Twitter -- it's fascinating to see how they play out in other arenas. Indeed, one of the reasons why we're so concerned about efforts to "regulate" content moderation practices on social media is that focusing on the manner in which those big, centralized platforms work could serve to stifle newer, more innovative platforms, whose very set up may inherently deal with the "problems" in the first place (see my protocols, not platforms discussion for one example).

There are a few interesting platforms out there trying to take a different approach to nearly everything -- and one of the more well known is Mastodon, an open source "federated" system that is sort of somewhat like Twitter. If you somehow have missed the Mastodon boat, I'd recommend the long piece Sarah Jeong wrote about it two years ago, which is a pretty good intro to the topic. The really short version, though, is that anyone can set up their own Mastodon community and, if others so choose, they may "federate" with other Mastodon communities. You could build a Mastodon instance that is totally isolated from others, or you could build one that connects to others and allows "toots" to go from one instance of Mastodon to others. And, of course, the federating can change over time. It's kind of neat in that it allows for multiple communities, who can set different rules, norms and standards, and thus you get much more widespread experimentation. And, unlike a fully centralized system, like Twitter, the ability for different instances to just "go there own way" if they disagree, allows for much greater flexibility, without a centralized content moderation impossibility.

I'm still more interested in much more fully decentralized protocol-based systems, but a federated system like Mastodon, that allows for a distributed set of mini-centralized instances that can join together or separate as needed, is still pretty fascinating.

However, it got more fascinating and interesting earlier this month when the social network Gab moved to Mastodon. If you haven't followed this space at all, Gab likes to call itself the "free speech alternative" to Twitter, but in practice that has meant that it's the place that many trolls, racists and other general assholes have gathered after being kicked off of Twitter. Gab announced, back in May, that it was planning to shift its platform to Mastodon, setting up its own instance. In theory, this solved some "problems" that Gab had been facing -- starting with the fact that Apple and Google had removed Gab's mobile app from their app stores (something Gab sued over, in a strategy that was not very successful). Since there are a bunch of Mastodon apps that allow users to log into any particular Mastodon instance, Gab itself made it clear that this was a key reason for the move:

Of course, building on top of someone else's better tested open source code probably also helps Gab with the long list of technical issues the site was having. And then there's the pure troll factor. Besides harboring social media trolls, Gab, as a company has always sort of gleefully taken on a trollish roll in the way it works as a company as well. And, considering that part of the very reason that Mastodon's creator, Eugen "Gargron" Rochko, set up Mastodon in the first place was to build an alternative to Twitter that was free of Nazis, assholes and trolls... it was a truly trollish move to jump onto that platform and at least imply to many a plan to "invade" (or, perhaps we should say brigading) the wider "fediverse" of Mastodon.

The switch over happened earlier this month and it's been fascinating to watch how it's all played out. The shortest summary might be that the federated model has shown to be somewhat resilient so far. Mastodon itself put out a statement urging various Mastodon instances not to federate with Gab and also suggesting that the various Mastdodon app developers choose to blacklist Gab's domains from their apps (meaning that Gab's plan to use this to get back into the app store might not work as well as planned).

The Verge has a long, in-depth article about how all of this is playing out, and it seems like, as a federated system is designed to do, different parts of the system are experimenting and figuring out what makes sense. Most of the other instances have decided they don't want to federate with Gab.

If you join a major Mastodon instance right now, chances are you won’t be connected to Gab. “All the admins that I know, that I interact with myself, have already blocked Gab,” says Rochko — including Mastodon.Social. “Essentially, they’re isolated.”

As for the various app makers, they're figuring out what they want to do:

This has turned app access into a battlefield. Developers can lock Gab out by disabling login options to the instance or completely blocking content from its servers. And several have done just that. Mastodon lists six major mobile apps on its homepage. Four of them — the Android client Tusky and the iOS apps Toot!, Mast, and Amaroq — block Gab in some fashion.

Amaroq developer John Gabelmann banned Gab to avoid potential problems with the App Store. “My core objective is to keep Amaroq publicly available and to abide by all Apple policies, which keep unmoderated extremist/hateful content off the store,” he tells The Verge. “If your network is large enough and unmoderated enough to get the negative attention of Apple, Amaroq will follow Apple’s policies.”

Mast’s creator Shihab Mehboob, by contrast, blocked Gab after users requested it. He’s gotten one-star reviews from angry Gab users, but “if hate speech is masquerading as free speech on an app I’ve built, it’s upon myself to somehow moderate that and reduce it where possible,” he says. “I understand that the Fediverse is intended to be open and entirely at the user’s discretion as to what they want to see/use/partake in, but that shouldn’t cover Nazi-based ideologies. There has to be a line drawn somewhere.”

Other app developers maintain that this blocking doesn’t fit Mastodon’s mission. The Android-based Fedilab app’s free version initially blocked Gab because of Play Store content policy fears. But the ban has since been lifted. “I will simply not block instances with the app,” wrote Fedilab’s developer. “I clearly think that’s not my role … If you want a strong block, it’s in the hands of social network developers or your admins.”

And the developer of Subway Tooter, who goes by Tateisu, is skeptical that stores will censure apps for supporting Gab. “They can run their web app on a web browser,” Tateisu points out. “If Google wants to ban it, they should start from their Chrome web browser.”

This is all quite interesting. It's also the kind of experimentation and more distributed decision-making we'd like to see more of online. This is not a truly distributed system where the power is moved all the way out to the ends, but it is a federated system where the power is moved to various nodes -- leading to more competition and variety. The fact that most of the major Mastodon instances have said they don't want to federate or deal with Gab is an expression of preferences, and in many ways a better overall system than one in which a single company is making the decisions. And it's much better than politicians telling companies what they need to do. Of course, in a world without Section 230 -- or one with a nonsensical requirement for "neutrality" in platform moderation -- would these options even be available?

Filed Under: content moderation, distributed systems, federation, mastodon, moderation, platforms, protocols, social media
Companies: apple, gab, google, mastodon, twitter

Is 'This Time Different' Concerning Big Internet Dominance?

from the a-question-worth-asking dept

I've made a similar point a few times in the past, but now that the antitrust knives are out for the big tech companies (mainly Google, Facebook, Amazon and Apple), it does seem worth noting just how quickly the tech landscape seems to change. I moved to Silicon Valley 20 years ago. At that time, the "dominant" companies were: Microsoft, Sun, Oracle, Netscape, IBM, SGI, Intel and Yahoo. Those were still the days of "no one gets fired for buying IBM." Google's headquarters today were once SGI's. Facebook now occupies Sun's headquarters (affectionately nicknamed Sun Quentin, for its resemblance to the prison a bit north of here). A decade or so ago, I remember the general refrain about the startup ecosystem was that there were three "dominant" companies in the marketplace that any startup was trying to sell to. The so-called "GYM" companies: Google, Yahoo, Microsoft. Yet, today, all anyone can talk about is "GAFA" (Google, Amazon, Facebook, Apple) or in some versions "FAANG" (add in Netflix).

The tech market is one of disruption. It's a celebrated term around here -- often mocked by outsiders. But dominance has a way of falling. And falling fast. So I appreciate a recent piece by Ryan Bourne at Cato asking some fairly pertinent questions regarding the new antitrust focus on "GAFA."

Almost exactly the same arguments about how “network effects” might make Facebook or Google entrenched monopolies were used against Myspace, Microsoft’s Internet Explorer and AOL’s Instant Messenger. Analysts worried that web managers optimizing sites for IE because of its high use numbers would ossify the browser market in Microsoft’s favor. In the case of AOL, 40 companies wrote to the Federal Communications Commission asking it to make AOL’s network compatible with others. Of course, Myspace was rendered obsolete by Facebook, Internet Explorer by Google Chrome, and AIM by, well, a lot (there are many apps with instant messaging facilities).

But it’s not just network effects. In 2007 Forbes was running articles about how economies of scale for Nokia would act as a barrier to entry for rivals. The higher profits were generating “more money to invest in research and development.” It was said Nokia’s supposed technological superiority meant “no mobile company will ever know more about how people use phones than Nokia.” That year saw the first iPhone launch.

Today, consumer groups wail against Apple’s supposed “monopoly” power with its app store, saying it’s unfair to bundle it into its phone while prohibiting other means of download. Yet similar arguments were made about Apple’s iPods inability to play songs that weren’t downloaded from iTunes. Of course, developments in the music purchase market, mobiles and speaker technology completely unbundled music purchase from listening devices.

None of this is to say that there can't be antitrust concerns or market-power concerns to watch out for with these companies. But, the burden should be on those insisting that the only obvious thing is to "break up" these companies to explain why this time is different, and why no new competitors will be able to really enter and disrupt the legacy players.

When I first came to Silicon Valley, it was just as the antitrust effort against Microsoft was heating up -- and I totally supported it at the time. In retrospect, it's unlikely that case did much at all. There were other forces at work that limited Microsoft's power (though it's still a very big company doing quite well). After working around here for over two decades, though, and seeing just how much this place changes every few years, I've yet to see a convincing case that "this time is different." Indeed, I see plenty of entrepreneurs who are eager to disrupt the big players.

Filed Under: antitrust, big tech, dominance, internet companies, monopolies
Companies: amazon, apple, facebook, google

As The DOJ Continues To Complain About Encryption, Cellebrite (Again) Announces It Can Crack Any IPhone

from the do-y'all-not-get-the-internet? dept

On Monday, June 17, Deputy Attorney General Jeffrey Rosen said this during his speech to the National Sheriffs' Association:

In recent years, criminals have become more and more adept at using technology to avoid law enforcement in what we call “going dark.” While “going dark” has many manifestations, some of its greatest impacts are in the areas of encryption, in assuring the security of information. But, as you well know, encryption also allows criminals to frustrate law enforcement's access to evidence — even where a neutral judge has found probable cause and ordered that we have access to that evidence.

I guess the "going dark" crowd doesn't get out much.

On Friday afternoon, the Israeli forensics firm and law enforcement contractor Cellebrite publicly announced a new version of its product known as a Universal Forensic Extraction Device or UFED, one that it's calling UFED Premium. In marketing that update, it says that the tool can now unlock any iOS device cops can lay their hands on, including those running iOS 12.3, released just a month ago. Cellebrite claims UFED Premium can extract files from many recent Android phones as well, including the Samsung Galaxy S9. No other law enforcement contractor has made such broad claims about a single product, at least not publicly.

It was announced very publicly. This wasn't a press release sent only to government agencies or the byproduct of leaked internal documents. It was announced on the company's Twitter account, letting everyone know Cellebrite is apparently beating almost every device maker at their own encryption game. Like GrayKey's offering, Cellebrite's updated encryption-breaker is hardware that can be used on site by purchasers, allowing law enforcement agencies to perform their own cracking and extraction.

Sure, the flaws used to bypass device security will be patched, and Cellebrite and its competitors will keep digging around in device hardware/software to find holes to exploit. The security vs. insecurity war will continue. But for all the weak arguments made by the head of the FBI -- especially the ones about Apple, etc. "profiting" from locking out law enforcement -- it would seem companies like Cellebrite are more likely to directly profit from device encryption. Encryption on phones is a standard offering, not a selling point. Tools that break encryption? Now, that's where the real money is.

Cellebrite, along with companies like GrayKey, are providing the solutions the FBI and DOJ think device manufacturers should be creating for them. We don't hear much from FBI officials about third party offerings because this agency would prefer a permanent fix delivered by Congress and the courts, rather than spend any of their own money and time trying to find a solution. The FBI has been misleading and dishonest for the entirety of its "going dark" campaign, all the while claiming tech companies would willingly give the FBI what it wants -- encryption backdoors -- if they would just engage in an "honest" conversation about the issue.

Filed Under: doj, encryption, fbi, going dark, ios, iphone
Companies: apple, cellebrite

If 'Big Tech' Is a Huge Antitrust Problem, Why Are We Ignoring Telecom?

from the ill-communication dept

Over the last week or so, Google, Amazon, and Apple have all taken a significant beating on Wall Street amidst rumblings of looming antitrust investigations by the DOJ and FTC. Google, we're told, is subject of a looming antitrust probe by the DOJ. Amazon, we've learned, is facing growing scrutiny from the FTC. Apple stock also did a nose dive on the news that it too may soon be subject to a significant new antitrust probe.

On its surface, many of these actions aren't all that surprising. After all, experts have noted for a decade than US antitrust enforcement has grown toothless and frail, and our definitions of monopoly power need updating in the Amazon era. Facebook's repeated face plants on privacy (and basic transparency and integrity) have only added fuel to the fire amidst calls to regulate "big tech."

Oddly missing from coverage from these probes is the fact that much of this behavior by the Trump administration may (*gasp*) not be driven by a genuine interest in protecting markets and consumer welfare. For one, it's hard to believe that an administration that has shown it's little more than a rubber stamp for sectors like telecom is seriously worried about monopoly power. Two, it's hard to believe an administration obsessed with nonexistent censorship is going to come at these inquiries with integrity, and not, say, as a vessel to pursue a pointed partisan persecution complex.

I've been arguing for a while that while many of the calls to regulate big tech are driven by genuine worries about monopoly power, a lot of it is being driven by the telecom sector. For years now, telecom lobbyists and policy folks have been using the anger over Facebook to covertly call for heavier regulation of Silicon Valley. You see, these telecom lobbyists, who just got done convincing the Trump administration to neuter FCC oversight of their own natural monopolies, are looking for any advantage they can get as they try to compete with companies like Google in the online ad space.

This is how former FCC boss turned cable lobbyist Michael Powell put it at a recent conference:

"Our governmental authorities need to get a handle on what kind of market power and harm flow from companies that have an unassailable hold on large pools of big data, which serve as barriers to entry, allowing them to dominate industries throughout the economy. For years, big tech companies have been extinguishing competitive threats by buying or crushing promising new technologies just as they were emerging. They dominate their core business, and rarely have to foreclose competition by buying their peers. Competition policy must scrutinize more rigorously deals that allow dominant platforms to kill competitive technologies in the cradle."

If you've watched as telecom giants have crushed every and any competitive threat by buying state and federal government, this entire paragraph should be fairly amusing to you. Powell's clients couldn't care less about anti-competitive behavior. What they do want is, again, for government to erect regulatory barriers that hamper the Silicon Valley companies whose ad revenues giants like AT&T and Comcast have drooled over for the better part of the last fifteen years. In the Trump administration they've finally found a vessel for this agenda.

The problem, of course, is there's enough legitimate bipartisan worry about the power of big tech that this little telecom sector lobbying gambit has been able to fly under the radar as the real driver of this new Trump administration push. Even with former Verizon lawyers now at the head of the DOJ (Bill Barr) and the Trump FCC (Ajit Pai). But there's a reason the Trump administration ignores telecom's monopoly and privacy issues while amplifying Silicon Valley's, and I'd argue it has a lot more to do with protectionism than a genuine worry about healthy markets.

If you were remotely serious about addressing the US' monopoly and antitrust problems, there's no way you'd simply ignore telecom. Giants like AT&T and Comcast already enjoy natural monopolies over the on ramp to the internet. They've then increasingly hoovered up countless media companies as they also position themselves to dominate the media flowing over those connections. This conflict and the potential for anticompetitive behavior sits at the heart of the net neutrality debate. Now, giants like AT&T want to become the next Google, with data harvesting plans every bit as problematic if not more so.

Yet again, notice how telecom gets a free pass by the Trump administration? Notice how Silicon Valley is demonized, but telecom's surveillance and anti-competitive gambits see zero backlash? I don't think it's happenstance that this new Trump "big tech" antitrust push comes as big telecom has asked for just such a push to aid its own competitive agenda. A lot of folks on both sides of the political aisle who'd like to see more done to rein in "big tech" seem a touch oblivious to the possibility that this new antitrust push may not be entirely in good faith.

There's a good chance these antitrust inquiries into Google, Facebook, and Apple are little more than partisan fever dreams co-driven by telecom lobbyists, yet a lot of outlets and experts are acting as if market health and consumer welfare are genuine motivators. It's entirely unclear what the Trump administration did to suddenly earn this blanket trust, but as the net neutrality fracas and trade wars have made pretty clear, it sure as hell isn't its several year track record on coherent tech policy.

Filed Under: antitrust, broadband, competition, doj, ftc, monopoly, telcos
Companies: amazon, apple, facebook, google

Qualcomm Used Patent Monopolies To Shake Down The Entire Mobile Phone Industry For Decades

from the and-we-all-suffered dept

Just a few weeks ago, Qualcomm and Apple settled a massive patent dispute on the eve of a trial. In the run-up to the settlement, Apple had made a really compelling case that Qualcomm's practices involve blatant abuse of its patents to jack up prices to insane levels and to limit any real competition. Just recently we wrote about how media-tracking giant Nielsen was abusing patents for anticompetitive purposes, but they looked like blatant amateurs compared to Qualcomm. As we noted in that post, our founding fathers worried quite a bit about the impact of patent monopolies and how they would stifle innovation and competition. James Madison said:

"But grants of this sort can be justified in very peculiar cases only, if at all; the danger being very great that the good resulting from the operation of the monopoly, will be overbalanced by the evil effect of the precedent; and it being not impossible that the monopoly itself, in its original operation, may produce more evil than good."

And Thomas Jefferson, who grudgingly ran the patent system for a while (and where he tried to institute rules to prevent abuse) seemed to regret the entire concept of patents:

... generally speaking, other nations have thought that these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.

But one quote regarding such monopolies that sticks most with me is that of UK Parliament member Thomas Macauley, who gave a famous speech in 1841, in which he declared:

Sir, that I may safely take it for granted that the effect of monopoly generally is to make articles scarce, to make them dear, and to make them bad...

He further noted that if there is a case that the only way to remunerate people is through such a monopoly they may grudgingly be granted, but warns of the evil this will enable if allowed to do more than incentivize the original creation:

It is good that authors should be remunerated; and the least exceptionable way of remunerating them is by a monopoly. Yet monopoly is an evil. For the sake of the good we must submit to the evil; but the evil ought not to last a day longer than is necessary for the purpose of securing the good.

I'm thinking about these quotes, yet again, in relation to Qualcomm. Just a month after settling the lawsuit with Apple, a federal judge in an ongoing antitrust lawsuit filed by the FTC, laid out in massive detail just how evil Qualcomm has been in using its monopoly powers to stifle innovation and competition. The 283-page ruling is incredibly damning -- and if you don't feel like reading the whole thing, Tim Lee over at Ars Technica has an only slightly shorter summary of just how Qualcomm's shake down scam worked.

I read every word of Judge Koh's book-length opinion, which portrays Qualcomm as a ruthless monopolist. The legal document outlines a nearly 20-year history of overcharging smartphone makers for cellular chips. Qualcomm structured its contracts with smartphone makers in ways that made it almost impossible for other chipmakers to challenge Qualcomm's dominance. Customers who didn't go along with Qualcomm's one-sided terms were threatened with an abrupt and crippling loss of access to modem chips.

"Qualcomm has monopoly power over certain cell phone chips, and they use that monopoly power to charge people too much money," says Charles Duan, a patent expert at the free-market R Street Institute. "Instead of just charging more for the chips themselves, they required people to buy a patent license and overcharged for the patent license."

Qualcomm -- which it should be noted has been one of the most aggressive agitators against patent reform (and sometimes in favor of making patent law much, much worse) -- is basically the world's largest patent troll, and it loved every minute of it.

Qualcomm's patent licensing fees were calculated based on the value of the entire phone, not just the value of chips that embodied Qualcomm's patented technology. This effectively meant that Qualcomm got a cut of every component of a smartphone—most of which had nothing to do with Qualcomm's cellular patents.

"Qualcomm charges us more than everybody else put together," Apple executive Jeff Williams said. "We've never seen such a significant licensing fee tied to any other IP we license," said Motorola's Todd Madderom.

And, of course, Qualcomm leveraged its position to hold everyone over a barrel:

These high royalties reflected an unusual negotiating tactic called "no license, no chips." No one could buy Qualcomm's cellular chips unless they first signed a license to Qualcomm's patent portfolio. And the terms of these patent deals were heavily tilted in Qualcomm's favor.

Once a phone maker had signed its first deal with Qualcomm, Qualcomm gained even more leverage. Qualcomm had the right to unilaterally terminate a smartphone maker's chip supply once the patent licensing deal expired.

"If we are unable to source the modem, we are unable to ship the handset," said Motorola executive Todd Madderom in a deposition. "It takes many months of engineering work to design a replacement solution, if there is even a viable one on the market that supports the need."

That made Qualcomm's customers extremely vulnerable as they neared the expiration of a patent licensing deal. If a customer tried to negotiate more favorable terms—to say nothing of formally challenging Qualcomm's patent claims in court—Qualcomm could abruptly cut off the company's chip supply.

And, of course, Qualcomm used this power to crush the competition and stamp out any kind of non-Qualcomm innovation.

Qualcomm's first weapon against competitors: patent licensing terms requiring customers to pay a royalty on every phone sold—not just phones that contained Qualcomm's wireless chips. This gave Qualcomm an inherent advantage in competition with other chipmakers. If another chipmaker tried to undercut Qualcomm's chips on price, Qualcomm could easily afford to cut the price of its own chips, knowing that the customer would still be paying Qualcomm a hefty patent licensing fee on every phone.

Also notable: right after Apple and Qualcomm settled their legal dispute in April, Intel announced it was exiting the mobile 5G chip space, and admitted it was entirely because of that settlement:

“In light of the announcement of Apple and Qualcomm, we assessed the prospects for us to make money while delivering this technology for smartphones and concluded at the time that we just didn’t see a path,” [Intel CEO Bob] Swan said.

And the ruling a month later made clear, Qualcomm's patent attack against Apple was very much driven by fear of competition from Intel:

Freed of Qualcomm's chip supply threat, Apple began to challenge Qualcomm's high patent royalty rates. Qualcomm responded by cutting Apple off from access to Qualcomm's chips for new iPhone models, forcing Apple to rely entirely on Intel for the cellular chips in its 2018 models. Qualcomm sued Apple for patent infringement in courts around the world, while Apple pressed the Federal Trade Commission to investigate Qualcomm's business practices.

And, of course, Qualcomm has long used its patents to directly stifle any competition as opposed to the indirect versions described above:

Chipmakers are ordinarily expected to acquire patents related to their chips and indemnify their customers for patent problems. But Qualcomm refused to license its patents to competitors, putting them in a difficult position.

"The prevailing message from all of the customers I engaged with was that they expected us to have a license agreement with Qualcomm before they would consider purchasing 3G chipsets from MediaTek," said Finbarr Moynihan, an executive at chipmaker MediaTek.

If a chipmaker asked to license Qualcomm's patents, Qualcomm would only offer a promise not to sue the chipmaker itself—not the chipmaker's customers.

As Tim Lee highlights, Qualcomm was so comically evil in executing this plan, it literally laid out the details of how to starve MediaTek (MTK) in a PowerPoint presentation:

This is summarized in the judge's opinion:

The slide includes the strategy “make sure MTK can only go after customers with WCDMA SULA,” with an arrow leading to “Reduce # of MTK’s 3G customers to ~50.”... The next strategy is “Formulate and execute a GSM/GPRS strategy to destroy MTK’s 2G margin & profit,” with an arrow to “Take away the $$ that MTK can invest in 3G.” .... Thus, Qualcomm’s refusal to license MediaTek was designed to (and in fact did) limit MediaTek’s customer pool and reduce MediaTek’s revenue base to invest in future cellular generations.

There's a LOT more in the ruling by Judge Lucy Koh and it basically lays out a road map of pure evil by Qualcomm, allowing it to skim a ton of (literal) monopoly rents off the entire mobile phone market, even when its own innovations were a minimal part of that market -- while at the same time abusing its patent position to deliberately stifle competition and innovation. The court order says that Qualcomm needs to renegotiate its licenses, and can no longer use its "no license, no chip" deals that block customers from buying Qualcomm chips if they don't have a license.

Of course, Qualcomm won't go down without a fight, and has announced that it's appealing the ruling. So this will go on for some time. But if you ever want a pure example of the "evil" created by excessive patent monopolies, Qualcomm is about as pure an example as you can find.

Filed Under: antitrust, extortion, licensing, lucy koh, mobile phones, monopolies, no license no chips, patents, shake down
Companies: apple, intel, mediatek, qualcomm