The Stroz Friedberg Cyber Brief

  FEATURED STORY            



An interagency panel that assesses national security risks associated with foreign acquisitions of U.S. companies has effectively blocked the sale of Xcerra, a Massachusetts-based semiconductor firm, to a Chinese state-backed group. Xcerra confirmed on Thursday that it terminated the agreement to be acquired by Hubei Xinyan.

The ill-fated deal is the latest in a string of Chinese acquisitions blocked by Washington. Under President Obama, the Committee on Foreign Investment in the United States, or CFIUS, became increasingly wary of Chinese stakes in U.S. companies, a trend that has continued under the Trump administration. Moreover, federal lawmakers introduced a bill late last year that would expand CFIUS’ remit, giving it oversight over more types of deals. (NYT, FT, WSJ, Reuters)


Overseas Data: This Tuesday, the U.S. Supreme Court is set to hear arguments on whether emails and other customer data stored abroad are subject to U.S. search warrants. SCOTUS is reviewing a 2016 ruling that said such warrants can’t be enforced on U.S. providers if the information is stored exclusively on foreign servers. (WSJ)


Net Neutrality: A coalition of nearly two dozen state attorneys general and the District of Columbia refiled legal challenges to block the Trump administration’s repeal of net neutrality rules. The FCC officially published its order overturning the Obama-era rules on Thursday. (Reuters)

Bitcoin Fraudster: The SEC filed a lawsuit accusing BitFunder founder Jon Montroll of running an unregistered securities exchange that defrauded its users. Montroll was arrested in his home state of Texas and charged in New York federal court with perjury and obstruction of justice. (Reuters)


Intel Breach: The U.S. chipmaker did not inform federal cybersecurity officials of the so-called Meltdown and Spectre chip flaws until they leaked to the public, six months after Alphabet Inc. notified Intel of the problems. (Reuters)

  ON THE HILL                                    

Russia Probe: President Trump’s legal team is reportedly weighing options for him to testify before special counsel Robert Mueller. His attorneys are keen to ensure that the questions he faces are limited in scope and don’t attempt to trap him into perjuring himself. (WSJ)


SEC Guidance: The Securities and Exchange Commission updated its guidance to public companies on how to disclose cybersecurity risks and breaches, including potential weaknesses that have not yet been targeted by hackers. The SEC first issued guidance on cyber disclosures in 2011. (Reuters)

E-Passports: U.S. Customs and Border Protection has reportedly not deployed the software needed to verify cryptographic signatures on U.S. passports, despite having more than a decade to do so. (Wired)

  PRIVATE SECTOR                             

Fake Social Media: An examination by the New York Times found that social media companies like Facebook and Twitter often fail to vigorously enforce their own policies against impersonation, enabling the spread of fake news and propaganda. (NYT)


Apple: The company is taking what analysts say is the unprecedented step of storing encryption keys for Chinese iCloud accounts in China. Until now, Apple has stored the codes only in the U.S. for all global users. (WSJ)


AI: A group of artificial intelligence researchers and policymakers from prominent labs and think tanks in the United States and UK released a report that describes how increasingly affordable AI technologies could be used for malicious purposes. (NYT)

Airplane Internet: A group of companies including Airbus, Delta, and Sprint started an initiative to upgrade global standards for airborne connectivity. Calling itself the Seamless Air Alliance, the collective spelled out benefits of the potential changes in conjunction with the opening of the Mobile World Congress. (WSJ)

  THE WORLD                                     

EU: The European Union is preparing legislation to force companies to turn over customers’ personal data when requested, even if it is stored on servers outside the bloc. (Reuters)

Venezuela: The beleaguered administration of President Nicolas Maduro announced it had begun a presale of virtual currency backed by the nation’s vast petroleum reserves. It is the first digital currency to be issued by a national government. (NYT)


Setting the Bar Higher for Chinese Takeovers: “National security interests in a narrow sense is not the only reason that targets and governments should treat Chinese offers with care. There are at least three others: reciprocity, transparency and data security. All of the key sectors of China’s own economy — telecoms, cars, the internet, pharmaceuticals, education, media, and others — are either partially or completely closed to foreign acquisitions,” write editors of the Financial Times.


How Silicon Valley Can Protect U.S. Democracy: “The first step to remedy the situation is for tech companies to admit that an ongoing problem exists, accept help from the government and independent researchers, and expose challenges in a timely manner. This should start, as NYU Stern’s report recommends, with ‘across-the-board internal assessments of the threats … call[ing] on engineering, product, sales, and public policy groups to identify problematic content, as well as the algorithmic and societal pathways by which it is distributed,’” write Jamie M. Fly and Laura Rosenberger in Foreign Affairs.

How to Monitor Fake News: “The Mueller investigation is shining a welcome light on the Kremlin’s covert activity, but there is no similar effort to shine a light on the social media algorithms that helped the Russians spread their messages. There needs to be. This effort should begin by ‘opening up’ the results of the algorithms. In computer-speak, this ‘opening up’ would involve something called an open application programming interface,” writes Tom Wheeler in the New York Times.



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