Benner on Tech: Cyber Spying Road Rules

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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People are Talking About… 

Remember when hackers got into the State Department’s e-mail system? Well, they’re still roaming around in there, and investigators think that the Russians could be involved. It’s the latest volley in a cyber-espionage war that the world’s superpowers have been waging since the likes of Mata Hari traded in lipstick for laptops. As the fight escalates, I wonder whether these campaigns will truly harm the tech industry.

High-tech spying is sort of like the cousin of the breaches that have plagued Sony and Target, where hackers gunned for information, financial gain and revenge. But in the spy game, the thinking goes, intel is more important than destruction. Corporations shouldn't really be collateral damage as government agents rifle through one another’s computer systems.

But there are countless examples of governments compromising businesses in order to get the information they want. The Intercept says that American and British spies stole the encryption keys from the world’s largest maker of SIM cards, in order to bypass cellphone privacy protections. Internet companies have expressed dismay at being turned into tools of the government’s mass surveillance program. And tech giants are fighting against what they deem to be government overreach. Microsoft wants the Justice Department to go through proper channels to obtain information from overseas servers. Twitter is fighting against the U.S. government “gag orders” that keep it from talking when the government demands information on users.

As cyber espionage gets more sophisticated, it’s clear that companies and their innocent customers are increasingly getting caught up in the action. There’s talk that some countries are favoring home-grown Internet and hardware players because they’re deemed more trustworthy … or easier to control.

Cisco chief executive John Chambers stopped by Bloomberg for a wide-ranging discussion yesterday, and he noted that it’s time for the government to acknowledge that its push for more intelligence has the power to hurt business. He said that Cisco has a good relationship with countries such as China, but that it could be derailed if the U.S. does things like tamper with supply chains to expand its spy capabilities.

“Governments have to come to an understanding not to put companies in the middle of [spy programs],” Chambers said. Otherwise he says that spying will put the brakes on the current high-tech revolution.

It’s hard to imagine the world’s superpowers rolling back their attempts to infiltrate Internet and hardware companies. Those businesses have reach that’s incredibly tempting. But is Chambers right? Should those same powerful governments be trying to balance their security priorities with their economic interests?

Weekend reads...

* Bloomberg’s Eric Newcomer and Karen Gullo say that Silicon Valley’s male-dominated culture is on trial in the Ellen Pao-Kleiner Perkins case. And he and Serena Saitto say that the trial is the latest in a series of woes for Kleiner, one of the Valley's preeminent venture firms.

* The New York Times’s Sara Corbett follows the Airbnb user experience of researchers who are figuring out how to translate the share-everything ethos for Japanese hosts.

* Fusion’s Kevin Roose looks at the “tweet deleters” who have found ways to make the messaging service more ephemeral.

* The New Yorker’s Maria Konnikova talks about why some problems have been too gross to solve, even though we have the tech to tackle them.

Ventureland

GoPop, a startup whose app makes simple animations, was acquired by BuzzFeed. GoPop was part of a class of Matter, a new media publication that’s part of the new blogging platform Medium. It’s a veritable new media nesting doll.

Companies

Amazon…

Jeff Bezos wants to sell you everything under the sun, including very fancy clothing, Bloomberg reports.

Apple…

Are you an Apple car obsessive? Then you’ll like 9to5Mac’s roundup of the key executives the company has poached to work on the project. Bloomberg says the vehicle is tentatively scheduled to hit the road in 2020. If you’re interested in the Apple Watch, 9to5Mac says the company is considering standalone watch stores, I think that’s the right thing to do, especially for the Edition. The Apple Store experience just isn’t luxury watch friendly.

Facebook…

CEO Mark Zuckerberg sat down with Bloomberg’s Emily Chang and Sarah Frier to talk about Internet.org.

Google…

The company’s uphill battle to counter Apple Pay includes herding unruly partners with competing interests, the Wall Street Journal reports. It’s also releasing a YouTube Kids app on Feb. 23 that will feature content from DreamWorks TV, National Geographic and The Jim Henson Co., Bloomberg reports.

LinkedIn…

The company launched display advertising as part of its push to build a $1 billion business-to-business marketing operation, Business Insider reports.

Pandora…

The Internet radio company, which doesn’t negotiate directly with labels, is at the mercy of a possible change to the statutory rates paid by webcasters to artists, according to the Wall Street Journal.

Yahoo…

Putting the “M” in MaVeNS: CEO Marissa Mayer says Yahoo is now the third largest mobile ad company in the world, CNBC reports.

Cybersecurity Blotter

JPMorgan is hitting back at cyberattackers with an army of security specialists that Bloomberg says are doing a better job in some cases than law enforcement.

Media Files

Ashton Kutcher has a media empire you’ve never heard of. A+, whose stories read a lot like all the other viral network content, is now one of the top 50 websites in the U.S., according to Business Insider.

Norm Macdonald’s epic tweetstorm about SNL’s 40th anniversary was captured by Gothamist in all of its glory.

News and Notes

Amid calls for unionization in the gig economy, Fast Company explores just what such a coalition might look like.

Building an app for the developing world? It’s not as easy as it is to build for rich people in the U.S., explains former venture investor Shruti Gandhi.

Software is steering the auto industry, argues the Financial Times's John Gapper.

The U.S. Treasury will accept PayPal just in time for tax season, the Verge reports.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.