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Sony Chief Stringer Blindsided by Hackers Seeking Revenge

Sony Corp. (6758), besieged by hackers since April, considered its PlayStation Network an unlikely target even after threats by the online collective Anonymous and three separate security incidents in 2008.

The hacker group declared in April that it would wage a cyber war against Sony for trying to stop people from tinkering with the PlayStation 3. Three years earlier, the company faced three breaches in Europe, including one in which Sony said some PlayStation Network user data might have been stolen.

The repeated incidents should have warned Sony its online network was vulnerable, said Eugene Spafford, a computer science professor at Purdue University in West Lafayette, Indiana. The failure to enact safeguards such as appointing a single chief of security may show Sony misunderstands the risks inherent in Chairman and Chief Executive Officer Howard Stringer’s networked strategy, he said.

“The evidence we’ve seen so far speaks to a lack of a good data management plan and a good security plan,” said Spafford, who specializes in information security, computer crime investigation and information ethics.

Japan’s Ministry of Economy, Trade and Industry said today it told Sony to carry out preventive measures against data breaches, instructed the company to ease customer concerns over misuse of credit cards and share more information among affiliates.

Spreading Attacks

Sony has struggled to keep up with the barrage that started in mid-April. The Qriocity and PlayStation Network entertainment services were knocked out for almost a month, compromising data in more than 100 million accounts.

In the past week, the Tokyo-based company has been hit with smaller intrusions -- a breach at online-service unit So-net Entertainment Corp. (3789) led to the misuse of user names and passwords of 128 customers. This week, Sony shut web pages that were targeted in Greece, Canada, Thailand and Indonesia.

The PlayStation Network will resume in Japan, Taiwan, Singapore, Malaysia, Indonesia and Thailand tomorrow, while services in South Korea and Hong Kong will remain suspended until further notice, Sony said today.

“Obviously our network security didn’t stop the attack and we’re trying to understand why, and we’ve made big strides in bolstering our security,” Stringer said in a May 17 interview, before the most recent incidents.

Sony believed it had “good, robust security,” Stringer said. He rejected suggestions that the company is paying for a lack of vigilance and said he was unaware of the 2008 intrusion on the PlayStation Network.

Photographer: Toru Yamanaka/AFP/Getty Images

Sony executive vice president and Sony Computer Entertainment president, Kazuo Hirai (C), accompanied by executives Shiro Kambe, left, and Shinji Hasejima, bow to apologize for the massive theft of personal data from users of the company's PlayStation Network and Qriocity online services, at a Tokyo press conference on May 1, 2011. Close

Sony executive vice president and Sony Computer Entertainment president, Kazuo Hirai... Read More

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Photographer: Toru Yamanaka/AFP/Getty Images

Sony executive vice president and Sony Computer Entertainment president, Kazuo Hirai (C), accompanied by executives Shiro Kambe, left, and Shinji Hasejima, bow to apologize for the massive theft of personal data from users of the company's PlayStation Network and Qriocity online services, at a Tokyo press conference on May 1, 2011.

‘New Experience’

Since most users of PSN don’t pay, and most threats focus on stealing credit card information, the theft of passwords and other personal data from those services appeared less likely, Stringer said.

“We have a network that gave people services free,” Stringer said. “It didn’t seem like the likeliest place for an attack.”

When the April incursion first started, he didn’t know how serious it was, Stringer said. “I really don’t think I could apologize for not knowing,” he said. “It’s a whole new experience for everybody at this scale.”

Anonymous Vow

There were warning signs. Sony was singled out for retaliation by Anonymous, the hacker group that brought down the websites of MasterCard Inc. (MA) in December, after the company sued 21-year-old George “GeoHot” Hotz for posting information on how to modify the PlayStation game console. The case was settled on March 31.

Anonymous announced its revenge campaign, “Operation Payback,” on the website anonnews.org. In an early May statement, the group denied involvement in the PlayStation and Qriocity breaches, while saying some members of the loosely organized collective may have been behind it.

Sony, Japan’s largest consumer-electronics exporter, must connect its televisions, Blu-ray players, game consoles and digital cameras via the Internet to music, movies and video games, Stringer has said. Unconnected devices rapidly become commodities as rivals compete for customers, he has said.

Sony’s investigation into the cause and search for suspects in the mid-April attack is ongoing, the company said. In a letter to U.S. lawmakers today, the company said it believes it knows how the network was penetrated. The company said it doesn’t know who was responsible or precisely how much information was taken.

‘Failure of Trust’

On May 23, Sony said it may spend more than $170 million related to the hack. The company also said it discovered personal data may have been stolen from 8,500 user accounts in a music entertainment site in Greece.

The company erred in “thinking of these incidents in terms of a breach of systems” and communicating with its customers based on the severity of the failure, said Kevin Kosh, a partner at Waltham, Massachusetts-based Chen PR, which represents technology companies.

“When you’re a consumer-facing organization, that’s not the way you should think,” Kosh said. “It’s first and foremost a business failure and a failure of trust.”

In March 2008, Sony informed users in Europe that an unauthorized person may have gained access to personal data on PSN through personal computers. There is no evidence that personal information or credit-card data was taken, and the security flaw, which is unrelated to the recent attack, was fixed, the company said in response to questions for this story.

2008 Probes

London Metropolitan Police questioned a teenager about a separate, September 2008 hacking attack into Sony’s developer network, according to three people familiar with the incident.

The network has no identifying information about customers and isn’t attached to the PlayStation Network, Sony said in the statement provided by Dan Race, a spokesman.

In December 2008, a user revealed a flaw in Sony’s PlayStation Home virtual-world game for the PS3 that let him manipulate pictures and videos on his own device. That person never had access to Sony’s servers, the company said.

“The one incident that related to PlayStation Network, once we identified what it was, they went in and fixed it,” Race said. The April attacks were much more sophisticated than 2008 and appear to be unrelated, Sony said.

In the weeks leading up to the April 16 breach, Sony missed key opportunities to plug holes in its system, said Bret McDanel, a security expert who monitored publicly available server logs.

Navy Server

The company’s network security should have seen a sustained probing of its systems from a Navy medical computer in Southern California, which may have been used as a proxy server by potential attackers, McDanel said.

The company hasn’t turned up evidence of such a probe of its servers, said a person with knowledge of Sony’s efforts to trace the cause of the security break.

“The truth is that people test for vulnerabilities on network systems on a daily basis, and Sony is constantly monitoring for unauthorized activity, conducting our own vulnerability tests and making constant enhancements,” Race said.

He declined to say whether Sony found evidence of a probe from the Department of Defense server. Justin Cole, a spokesman for the U.S. Navy, didn’t return a call requesting comment.

The attack in April was launched through a server rented from Amazon.com Inc. (AMZN)’s cloud-computing service, a person with knowledge of the matter said this month. The account was shut and Amazon’s servers weren’t compromised, the person said.

Security Chief

Companies should consider carefully what data belongs on open servers, put one person in charge of administrative rights and keep track of how and when the network is accessed, said Yuichi Uzawa, a Tokyo-based senior consultant in charge of investigative response at Verizon Business. Nevertheless, determined hackers can often find ways to break in, he said.

“In the end, it’s extremely difficult to defend a network from an organized, targeted attack,” Uzawa said. “Early discovery of signs of intrusion through monitoring of key assets is the best defense.”

Sony said it takes network security and the protection of personal information seriously. There are multiple layers of protection and the company constantly monitors for unauthorized activity, including testing for vulnerabilities, it said.

Even so, Sony’s chief information officer oversaw network security as part of his duties until after the April attacks. A chief information-security officer was then appointed, reporting to the CIO, to provide an additional layer of security, the company said.

Failing to take such a step earlier was a critical shortcoming, according to Chen PR’s Kosh.

“Adding a CISO after the fact is like hiring a bodyguard after you’ve been fatally wounded,” Kosh said. “It creates an impression that there’s a lack of accountability.”

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Michael Riley in Washington at michaelriley@bloomberg.net; Joseph Galante in San Francisco at jgalante3@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net; Michael Hytha at mhytha@bloomberg.net; Tom Giles at tgiles5@bloomberg.net

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