The Morning Download: CIOs Caught in Cyberwar Crossfire

Michael Hickins
The Morning Download comes from the editors of CIO Journal and cues up the most important news in business technology every weekday morning. Send us your tips, compliments and complaints. You can get The Morning Download emailed to you each weekday morning by clicking here.

Good morning. The finger-pointing has started as companies and security vendors struggle to contend with endless nation-sponsored cyberattacks. Vendors are becoming defensive when systems they protect are successfully infiltrated or brought down by massive distributed denial of service attacks, consultants are blaming government agencies for a lack of transparency, and some lobbyists are accusing the federal government of trying to impose rigid cybersecurity standards on the private sector.

The Wall Street Journal revealed Thursday its computer systems had been infiltrated by Chinese hackers; the New York Times reported Wednesday its systems had been infiltrated by Chinese hackers (more details below). Symantec Corp. felt forced to defend itself Thursday, saying a single system can’t defend against a multipilicty of various attack vectors, after it was revealed its software didn’t prevent the Times intrusion. The direct costs of these attacks are staggering; according to security firm Solutionary Inc., it can cost firms $6,500 per hour to recover from a distributed denial of service attack, and recovery and mitigation from malware attacks costs an average of $3,000 per day; moreover, it said in an email to CIO Journal, antivirus protection fails 54% of the time.

While the U.S. government is trying to convince large businesses to accept a voluntary cyberseucrity information sharing framework, consultants specialized in helping organizations recover from a DDoS attack or intrusion say they’re not getting help from U.S. government agencies in a timely manner. Eric Friedberg, partner at Stroz Friedberg, says agency protocols concerning classified information are preventing it from sharing data that could help companies fend against an ever-growing wave of cyberattacks. “The government is saying we have this information but we can only give it to” someone with security clearance, Mr. Friedberg told CIO Journal. He added it can take three to four days to work out a communications path between the agency in question, the consulting firm and the victimized company. The Senate introduced a bill on Jan. 23 called the Cybersecurity and American Cyber Competitiveness Act of 2013. One of the stated goals of that bill is to improve communication and collaboration between the Federal government and the private sector to help secure the U.S. against cyberattacks.

Big Data analysts reaping 17% pay premiums. IT workers skilled in the use of Big Data analytics are commanding a pay premium of as much as 17%, due to a shortage of people trained in the emerging specialty. The compensation premiums, among the highest in IT, reflect rising demand and a shortage of skilled workers, according to a January report from the IT research firm Foote Partners LLC, which gathered compensation data from 2,435 employers. Foote Partners CEO David Foote tells CIO Journal the premium for many of these skills will decrease over the next few years as more people gain the necessary training. “The price premium now is probably the highest it will ever be,” Mr. Foote said.

NFL gears up for Super Bowl download frenzy. Michelle McKenna-Doyle, CIO of NFL Enterprise LLC, has been outfitting the Mercedes-Benz Superdome in New Orleans with 880 multidirectional Wi-Fi devices, which will provide free, public Internet access for the expected 70,000 attendees to Sunday’s Super Bowl. “Everyone is a mini network today,” said Ms. McKenna-Doyle. “It used to be the [TV] networks you had to worry about. Now you have to worry about Joe Smith sitting in seat whatever, filming, sharing, streaming, blogging.”

TECHNOLOGY NEWS

Chinese hackers target Journal’s computers. The Wall Street Journal said its computer systems had been infiltrated by Chinese hackers for the apparent purpose of monitoring the newspaper’s China coverage. One of the ways the hackers penetrated the paper’s computer system was through its Beijing bureau, people familiar with The Wall Street Journal incident tell WSJ reporters. The revelation comes on the heels of a report by the New York Times that it has been the target of persistent attacks ever since publishing an investigation tying the relatives of China’s prime minister to various business dealings. The Journal on Thursday completed a network overhaul to bolster security.

Symantec: Don’t blame us for New York Times hack. Symantec has taken the unusual step of commenting on a story about a customer, issuing a robust statement denying its antivirus products were to blame for sophisticated targeted attack on the New York Times, the Register’s Phil Muncaster reports. In a news release Symantec said: “Advanced attacks like the ones the New York Times described … underscore how important it is for companies, countries and consumers to make sure they are using the full capability of security solutions. … Turning on only the signature-based anti-virus components of endpoint solutions alone are not enough in a world that is changing daily from attacks and threats. We encourage customers to be very aggressive in deploying solutions that offer a combined approach to security. Anti-virus software alone is not enough.” Symantec obviously falls short of clarifying whether the New York Times had these extra capabilities, Muncaster says, and if it did whether they were “switched on,” although the careful wording of the statement would indicate not.

Huawei CFO linked to firm that offered H-P gear to Iran. A Hong Kong-based firm at the center of a deal to sell embargoed Hewlett-Packard Co. equipment to an Iranian mobile-phone operator includes a familiar face, reports Reuters’s Steve Stecklow. Corporate records show that Cathy Meng, Huawei Technologies CFO and daughter of company founder Ren Zhengfei, served on the board for Skycom Tech Co., a company that tried to sell at least 1.3 million euros worth of H-P gear to Iran’s Mobile Telecommunication Co. Last year the U.S. House Intelligence Committee identified the world’s second-largest maker of telecommunications equipment as a threat to national security because their equipment could be used for spying on Americans.

Apple tops Samsung in U.S. fourth-quarter mobile phone sales. Strong sales of the iPhone 5 pushed Apple Inc. ahead of rival Samsung Electronics Co. in the U.S. mobile phone market in the fourth quarter of 2012, according to Strategy Analytics. The firm estimates that 52 million mobile phones were shipped in the U.S. last quarter, with Apple taking a record 34% share. Apple led with 17.7 million, up from 12.8 million in 2011. By comparison, Samsung is believed to have shipped 16.8 million during Q4 2012, up from 13.5 million in the year-earlier quarter, the Next Web’s Josh Ong reports. Samsung did end up with the lead for the whole year, though, with an estimated total of 53 million compared to Apple’s 43.7 million. Last year was a tough economic climate for the mobile market, as shipments contracted from 186.8 million units in 2011 to 166.9 million in 2012.

Apple denied Samsung injunction. Apple took a court setback in its patent battle with Samsung after a U.S. appeals court denied Apple’s request to ban sales of Samsung’s “Galaxy Nexus” phone, reports the WSJ’s Ian Sherr. The same court overturned the sales ban back in October, saying at the time that the court which initially set the ban in July had ”abused its discretion.” Apple has argued the search function in Samsung phones violates a patent it holds for collecting information from various databases.

Dell on the verge of deal. A Dell Inc. buyout deal could be sealed as soon as Monday, Reuters reports. CEO Michael Dell is expected to take majority ownership of the company, while Silver Lake and Microsoft Corp. would become minority investors. The final price the group is expected to pay Dell shareholders “could not be immediately learned.” The transaction is set to be finalized over the weekend but the buyout consortium “is working on last-minute details and the timetable could still slip.”

Amazon hit by outage. America’s greatest hobby took a hit yesterday when Amazon.com Inc.‘s website went down for almost an hour. The reason for the outage could not be immediately learned, said the WSJ’s John Letzing. The company’s AWS cloud-computing service was not affected.

Google responds to European antitrust concerns. Google Inc. hit the European Commission’s deadline of Jan. 31 to provide a substantive response to antitrust concerns — but just barely. The company submitted a proposal regarding what it is willing to settle after negotiations in Brussels went to the wire, AllThingsD’s Liz Gannes reports. The big question is whether the EC extracts more concessions from Google than the U.S. According to a source familiar with this week’s active negotiations, the proposal is quite similar to what Google already agreed to in a parallel case with the U.S. Federal Trade Commission, over scraping information to include in search results and sharing information through advertising APIs. However, there are likely to be a few key differences. One source said that the European agreement won’t address patents, and it will likely include instructions to have better labeling in search. Perhaps most significantly, as in the U.S., Google won’t have to admit wrongdoing.

Tablet sales continue to eat into PC market share. IDC estimates that 52.5 million tablets and 89.8 million PCs were shipped during the final quarter of 2012. Or, to put it another way, tablet shipments made up more than half of PC shipments. Significant also, says GigaOm’s Kevin C. Tofel, are the companies currently dominating the tablet market–Apple, Samsung, Amazon, ASUS Tek Computer Inc. and Barnes & Noble Inc. “Missing are the names of the long-time computer makers that either didn’t see the trend, lost their focus, are late to the game, or simply decided to pass on tablets,” he writes. “They missed out on the rise of smartphones…. and they’re missing out on the tablet market too.”

STMicroelectronics may pay $500 million to exit venture. STMicroelectronics NV, the biggest European chip maker, may have to spend up to $500 million this year to wind down the mobile chip-making joint venture it formed with Telefon AB L.M. Ericsson that has been a ball-and-chain on its results, the NYT’s David Jolly reports. STMicroelectronics and the Swedish mobile networking giant bet big on chips to power smartphones. But their joint venture, ST-Ericsson, foundered as big customers like Nokia Oyj and BlackBerry were smashed by competition from Apple and Samsung, which rely heavily on chips made by Qualcomm Inc.

Delay hurts RIM’s share price. Research in Motion Ltd. shares were down over 6% one day after the company unveiled its first two phones running on the BB10 operating system, the WSJ’s Judy McKinnon and Chip Cummins report. Investors could have been reacting to the news that the phones will not become available in the U.S. until sometime in mid-March. Some analysts said the delay could cut into device shipments.

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North Dakota went boom. North Dakota has had its share of oil boom and busts, but today’s activity in the 150,000 square mile Williston Basin in the western portion of the state has been like no other, writes the New York Times’s Chip Brown. Recent advances in horizontal drilling and hydraulic fracking, where a frothy stew of water, sand and chemicals is pumped into tight rock formations to create tiny hairline channels for the oil or natural gas to flow, has turned the once-sparsely populated region into the nation’s second largest oil producing state. As long as prices stay above $60 a barrel, oil will be part of North Dakota’s economy for at least a generation. “The people who are there appear to have weighed the benefits against the costs,” writes Brown. And given the state’s long history of hardship, they may not feel entitled to hold reservations about social and environmental costs. “It’s our gold rush, our Silicon Valley. It reverses decades of anxiety about out-migration and rural decline and death,” a humanities professor and local columnist tells Brown. “We aren’t going to do anything to jeopardize it. People aren’t interested in stepping back.”

‘Let’s do lunch’ works. Harvard Business Review contributor Lakshmi Balachandra wondered whether business deals improve when discussed over a meal. So she devised several experiments where MBA students were divided up and asked to negotiate a complex joint venture agreement. Some hammered out deals over a meal in a restaurant, others negotiated in a business conference room without a meal. A third group also worked in a conference room, but while sharing a meal. Balachandra found that joint venture deals negotiated while dining produced 12% greater profits than those deals negotiated sans food. There may be a biological reason for this. Consuming glucose enhances complex brain activities and bolsters self control. And there’s other research that shows that “unconscious mimicking behaviors of others leads to increased pro-social behaviors.” When people eat together they use the same movements which in turn may induce positive feelings toward the other party. Short answer: Keep the corporate Amex card, your business lunch is money well spent.

Libor lies revealed in rigging of $300 trillion benchmark. Despite its role as the global benchmark “for more than $300 trillion of contracts from mortgages and student loans to interest-rate swaps,” the London interbank offered rate, or Libor, was about as policed as a lemonade stand collection box. “The scandal demonstrates the failure of London’s two-decade experiment with light-touch supervision, which helped make the British capital the biggest securities-trading hub in the world,” writes Bloomberg Markets Magazine’s Liam Vaughn and Gavin Finch in a soup-to-nuts story on what could be “the biggest financial fraud of all time.” Given little training and scant oversight, traders at Deutsche Bank AG, UBS AG, Barclays, RBS and other banks colluded to publish borrowing rates in 10 currencies that did not fit any economic reality beyond setting numbers to their banks’ benefit. The manipulation went on for years, even after supervisors were aware of what was happening. “When a bank can benefit financially from doing the wrong thing, it generally will,” Shelia Bair, a former chairman of the Federal Deposit Insurance Corp., tells Bloomberg.

EVERYTHING ELSE YOU NEED TO KNOW

Bankruptcy laws could stifle Europe’s recovery. Tough national bankruptcy laws mean many Europeans are on the hook for unpaid mortgage balances even after losing their homes, write the WSJ’s Gabriele Steinhauser and Matthew Dalton. Many European banks feel they can’t afford to forgive billions of euros of housing debt, which leaves policy makers in a bind. Making it too easy to walk away from underwater mortgages would further weaken banks that already have received tens of billions of euros in government bailouts. Making it too hard risks leaving a debt overhang that could hamper growth for years.

China’s manufacturing recovery gains steam. Chinese manufacturing expanded in January, validating the nation’s reluctance to add to policy stimulus amid increasing inflation concern, Bloomberg says. The Purchasing Managers’ Index came in at 50.4 in January compared with 50.6 in December. But a separate gauge from HSBC and Markit Economics covering fewer businesses rose to a two-year high of 52.3 from 51.5. Readings above 50 indicate expansion.

Senate passes debt limit bill. The Senate on Thursday approved legislation that prevents the U.S. from hitting its debt limit until May 19, sending the legislation to President Obama, the Hill reports. The bill also would withhold pay to the members of a chamber that do not approve a budget resolution by April 15. Lawmakers could still get paid if they don’t write a budget, but not until the final day of the congressional session.

How cheap natural gas is powering manufacturing. Steelmaker Nucor is pouring money into a new plant in Louisiana – a move that highlights how the abundance of natural gas has made some manufacturing processes more feasible, the WSJ’s John W. Miller writes. The impact is widespread. Chemical and fertilizer companies, which use gas as both a feedstock and energy source, say lower prices have reduced costs and made the U.S. a more competitive manufacturing location. Dow Chemical Co. and Chevron Phillips Chemical plan to build multibillion-dollar chemical plants in Texas, Louisiana and other states. Energy-intensive industries like glass and aluminum makers can cut costs, while companies that make pipes and drills are benefiting from new domestic demand.

FTC chairman stepping down. Jon Leibowitz is stepping down as chairman of the FTC, ending a four-year tenure during which the agency took aggressive steps to protect consumer privacy but followed a more reluctant approach on antitrust enforcement, the WSJ reports. There are at least four candidates to replace Mr. Leibowitz as chairman, including the agency’s two other sitting Democratic commissioners, Julie Brill and Edith Ramirez. The White House could send a signal about its future enforcement approach with its choice, as Ms. Brill has been the more vocal proponent of aggressive action.

SEC names interim replacement for Khuzami. The SEC named a veteran agency prosecutor, George Canellos, to be its acting enforcement chief on Thursday, positioning him as one of the top cops on Wall Street, DealBook reports. It’s unclear whether the “acting” appointment, which kicks in when Mr. Khuzami departs on Feb, 8, will be short lived. But Mary Jo White’s nomination to head the commission bodes well for Mr. Canellos, who cut his prosecutorial teeth under Ms. White in New York. He spent nearly a decade there, serving as head of the so-called major crimes unit and senior trial counsel for the Wall Street task force.

DOJ tries to stop beer deal. The DOJ is flexing its antitrust muscles again as it sues to block Anheuser-Busch InBev’s $20 billion deal for Grupo Modelo. The lawsuit portrays Modelo as an important competitor that puts pressure on AB InBev to maintain or lower prices, especially in California, New York, Texas and some other markets, the WSJ reports. The DOJ says that when AB InBev raises beer prices, MillerCoors usually follows followed suit, while Modelo has been resistant. The lawsuit is the first major roadblock in a decade of consolidation by brewers around the world, DealBook notes. And it’s the biggest deal to be opposed since 2011, when the government sued to stop AT&T Inc.’s proposed $39 billion takeover of T-Mobile USA.

Tom Loftus contributed to this article.

Source http://blogs.wsj.com/cio/2013/02/01/the-morning-download-cios-caught-in-cyberwar-crossfire/