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In a secret meeting convened by the White House around Thanksgiving, senior national security officials ordered agencies across the U.S. government to find ways to counter encryption software and gain access to the most heavily protected user data on the most secure consumer devices, including Apple Inc.’s iPhone, the marquee product of one of America’s most valuable companies, according to two people familiar with the decision.The approach was formalized in a confidential National Security Council “decision memo,” tasking government agencies with developing encryption workarounds, estimating additional budgets and identifying laws that may need to be changed to counter what FBI Director James Comey calls the “going dark” problem: investigators being unable to access the contents of encrypted data stored on mobile devices or traveling across the Internet. Details of the memo reveal that, in private, the government was honing a sharper edge to its relationship with Silicon Valley alongside more public signs of rapprochement.

On Tuesday, the public got its first glimpse of what those efforts may look like when a federal judge ordered Apple to create a special tool for the FBI to bypass security protections on an iPhone 5c belonging to one of the shooters in the Dec. 2 terrorist attack in San Bernardino, California that killed 14 people. Apple Chief Executive Officer Tim Cook has vowed to fight the order, calling it a “chilling” demand that Apple “hack our own users and undermine decades of security advancements that protect our customers.” The order was not a direct outcome of the memo but is in line with the broader government strategy.White House spokesman Josh Earnest said Wednesday that the Federal Bureau of Investigation and Department of Justice have the Obama administration’s “full” support in the matter. The government is “not asking Apple to redesign its product or to create a new backdoor to their products,” but rather are seeking entry “to this one device,” he said.

Less than a week after the attacks in Paris — while the public and policymakers were still reeling, and the investigation had barely gotten off the ground — Cy Vance, Manhattan’s District Attorney, released a policy paper calling for legislation requiring companies to provide the government with backdoor access to their smartphones and other mobile devices. This is the first concrete proposal of this type since September 2014, when FBI Director James Comey reignited the “Crypto Wars” in response to Apple’s and Google’s decisions to use default encryption on their smartphones. Though Comey seized on Apple’s and Google’s decisions to encrypt their devices by default, his concerns are primarily related to end-to-end encryption, which protects communications that are in transit. Vance’s proposal, on the other hand, is only concerned with device encryption, which protects data stored on phones. It is still unclear whether encryption played any role in the Paris attacks, though we do know that the attackers were using unencrypted SMS text messages on the night of the attack, and that some of them were even known to intelligence agencies and had previously been under surveillance. But regardless of whether encryption was used at some point during the planning of the attacks, as I lay out below, prohibiting companies from selling encrypted devices would not prevent criminals or terrorists from being able to access unbreakable encryption. Vance’s primary complaint is that Apple’s and Google’s decisions to provide their customers with more secure devices through encryption interferes with criminal investigations. He claims encryption prevents law enforcement from accessing stored data like iMessages, photos and videos, Internet search histories, and third party app data. He makes several arguments to justify his proposal to build backdoors into encrypted smartphones, but none of them hold water.

Before addressing the major privacy, security, and implementation concerns that his proposal raises, it is worth noting that while an increase in use of fully encrypted devices could interfere with some law enforcement investigations, it will help prevent far more crimes — especially smartphone theft, and the consequent potential for identity theft. According to Consumer Reports, in 2014 there were more than two million victims of smartphone theft, and nearly two-thirds of all smartphone users either took no steps to secure their phones or their data or failed to implement passcode access for their phones. Default encryption could reduce instances of theft because perpetrators would no longer be able to break into the phone to steal the data.

Vance argues that creating a weakness in encryption to allow law enforcement to access data stored on devices does not raise serious concerns for security and privacy, since in order to exploit the vulnerability one would need access to the actual device. He considers this an acceptable risk, claiming it would not be the same as creating a widespread vulnerability in encryption protecting communications in transit (like emails), and that it would be cheap and easy for companies to implement. But Vance seems to be underestimating the risks involved with his plan. It is increasingly important that smartphones and other devices are protected by the strongest encryption possible. Our devices and the apps on them contain astonishing amounts of personal information, so much that an unprecedented level of harm could be caused if a smartphone or device with an exploitable vulnerability is stolen, not least in the forms of identity fraud and credit card theft. We bank on our phones, and have access to credit card payments with services like Apple Pay. Our contact lists are stored on our phones, including phone numbers, emails, social media accounts, and addresses. Passwords are often stored on people’s phones. And phones and apps are often full of personal details about their lives, from food diaries to logs of favorite places to personal photographs. Symantec conducted a study, where the company spread 50 “lost” phones in public to see what people who picked up the phones would do with them. The company found that 95 percent of those people tried to access the phone, and while nearly 90 percent tried to access private information stored on the phone or in other private accounts such as banking services and email, only 50 percent attempted contacting the owner.

Wedbush analyst Daniel Ives called the decline of iPhone sales in China a "doomsday type" like decline. Ives said the fall was an "unprecedented" drop and was "not surprising given the essential lockdown that most of China saw" in February. Wedbush expects Chinese demand to come back online in the second half of the year. * * * We've explained that economic paralysis in China started in early February and continues to this day. Alternative data first showed us the incoming economic crash developing in early February, only to be confirmed weeks later. Twin shocks plague the Chinese economy, which is a supply shock with manufacturers operating at less than full capacity, along with a demand shock, where consumers have been confined to their homes in forced quarantine, unable to spend.  So, on Monday morning, when new data from the China Academy of Information and Communications Technology (CAICT) reveals Apple smartphone sales in China were halved in February, this really shouldn't surprise ZeroHedge readers, considering they've been well informed about what would happen next. 

And it wasn't just Apple with plunging activity, all mobile phone brands operating in China saw shipments halved over the month.  CAICT said 6.34 million devices were shipped last month, down 54.7% from 14 million in the same month the previous year. This was the lowest level of February shipments since 2012, when the CAICT data first became available.  Android brands, including Huawei and Xiaomi, accounted for most of the drop, collectively saw shipments at 5.85 million units for the month, compared to 12.72 million units last year. Apple shipped 494,000 last month, down from 1.27 million in February 2019.

Google and Apple, which already battle over mobile operating systems, are opening a new front in their fight. How that plays out may determine the future of the web. Google was born on the web, and its business reflects its origin. The company depends on the web for search and advertising revenue. So it isn't a surprise that Google sees the web as key to the future of software. Front and center are web apps, interactive websites with the same power as conventional apps that run natively on operating systems like Windows, Android, MacOS and iOS.  Apple has a different vision of the future, one that plays to its strengths. The company revolutionized mobile computing with its iPhone line. Its profits depend on those products and the millions of apps that run on them. Apple, unsurprisingly, appears less excited about developments, like web apps, that could cut into its earnings.

The European Commission has opened formal antitrust investigations to assess whether Apple's rules for app developers on the distribution of apps via the App Store violate EU competition rules. The investigations concern in particular the mandatory use of Apple's own proprietary in-app purchase system and restrictions on the ability of developers to inform iPhone and iPad users of alternative cheaper purchasing possibilities outside of apps. The investigations concern the application of these rules to all apps, which compete with Apple's own apps and services in the European Economic Area (EEA). The investigations follow-up on separate complaints by Spotify and by an e-book/audiobook distributor on the impact of the App Store rules on competition in music streaming and e-books/audiobooks.

iPhone and iPad users can only download native (non web-based) apps via the App Store. The Commission will investigate in particular two restrictions imposed by Apple in its agreements with companies that wish to distribute apps to users of Apple devices: (i)   The mandatory use of Apple's own proprietary in-app purchase system “IAP” for the distribution of paid digital content. Apple charges app developers a 30% commission on all subscription fees through IAP. (ii)  Restrictions on the ability of developers to inform users of alternative purchasing possibilities outside of apps. While Apple allows users to consume content such as music, e-books and audiobooks purchased elsewhere (e.g. on the website of the app developer) also in the app, its rules prevent developers from informing users about such purchasing possibilities, which are usually cheaper.

The EU has been known to make a lot of odd decisions when it comes to tech, such as forcing Microsoft's hand at including a "browser wheel" with its Windows OS, but this latest decision is one I think most people will agree with. One thing that's frustrating about different smartphones is the occasional requirement to use a different charger. More frustrating is actually losing one of these chargers, and being unable to charge your phone even though you might have 8 of another charger readily available.

While this decision would cut down on this happening, the focus is to cut down on waste. On Thursday, the EU's internal market and consumer protection committee voted on forcing smartphone vendors to adopt a standard charger, which common sense would imply means micro USB, given it's already featured on the majority of smartphones out there. The major exception is Apple, which deploys a Lightning connector with its latest iPhones. Apple already offers Lightning to micro USB cables, but again, those are only useful if you happen to own one, making a sudden loss of a charger all-the-more frustrating. While Lightning might offer some slight benefits, Apple implementing a micro USB connector instead would make situations like those a lot easier to deal with (I am sure a lot of us have multiple micro USB cables lying around). Even though this law was a success in the initial voting, the government group must still bring the proposal to the Council which will then lead to another vote being made in the Parliament. If it does end up passing, I have a gut feeling that Apple will modify only its European models to adhere to the law, while its worldwide models will remain with the Lightning connector. Or, Apple might be able to circumvent the law if it offers to include the micro USB cable in the box, essentially shipping the phone with that connector.

The Office of Personnel Management (OPM) recently revealed that an estimated 5.6 million government employees were affected by the hack; and not 1.1 million as previously assumed.

Samuel Schumach, spokesman for the OPM, said: “As part of the government’s ongoing work to notify individuals affected by the theft of background investigation records, the Office of Personnel Management and the Department of Defense have been analyzing impacted data to verify its quality and completeness. Of the 21.5 million individuals whose Social Security Numbers and other sensitive information were impacted by the breach, the subset of individuals whose fingerprints have been stolen has increased from a total of approximately 1.1 million to approximately 5.6 million.” This endeavor expended the use of the Department of Defense (DoD), the Department of Homeland Security (DHS), the National Security Agency (NSA), and the Pentagon. Schumer added that “if, in the future, new means are developed to misuse the fingerprint data, the government will provide additional information to individuals whose fingerprints may have been stolen in this breach.” However, we do not need to wait for the future for fingerprint data to be misused and coveted by hackers.

Look no further than the security flaws in Samsung’s new Galaxy 5 smartphone as was demonstrated by researchers at Security Research Labs (SRL) showing how fingerprints, iris scans and other biometric identifiers could be fabricated and yet authenticated by the Apple Touch ID fingerprints scanner. The shocking part of this demonstration is that this hack was achieved less than 2 days after the technology was released to the public by Apple. Ben Schlabs, researcher for SRL explained: “We expected we’d be able to spoof the S5’s Finger Scanner, but I hoped it would at least be a challenge. The S5 Finger Scanner feature offers nothing new except—because of the way it is implemented in this Android device—slightly higher risk than that already posed by previous devices.” Schlabs and other researchers discovered that “the S5 has no mechanism requiring a password when encountering a large number of incorrect finger swipes.” By rebotting the smartphone, Schlabs could force “the handset to accept an unlimited number of incorrect swipes without requiring users to enter a password [and] the S5 fingerprint authenticator [could] be associated with sensitive banking or payment apps such as PayPal.”

Beijing, China - As Apple released the iPad today across Europe and Japan, a key supplier in China continued fortifying factory buildings with anti-suicide nets and bracing against a growing tide of public criticism about working conditions after 10 apparent employee suicides this year — including one this week hours after the company chief visited.   While tentative calls have emerged in China for boycotts of Apple products and other items made by electronics giant Foxconn, what remains entirely unclear is the impact this will have on the electronics manufacturing industry at large. The massive Foxconn plant, possibly the largest factory in the world, has been under the microscope for years over poor working conditions. In the past six months, renewed concerns have hit other electronics suppliers as well.

Now, with an apparent suicide cluster well underway at a key Apple supplier, labor activists have begun to wonder if that tide might be about to turn in the same way it did for international apparel and shoe companies in the 1980s and 1990s. “I think there is a tendency for consumers of iconic products like iPhones to stick their head in the sand when it comes abusive labor practices,” said Geoffrey Crothall of the Hong Kong-based China Labour Bulletin. “Their iPhone reflects who they are, or rather the image of themselves they wish to present to the world, and they don't want that image tarnished.”

Google maps are great for navigating to an address, but once you arrive, it's up to you to find the office, meeting room or vendor inside. Now Micello takes over where conventional navigators leave off, mapping your route inside buildings, malls, convention centers and other points of interest.  "Micello is quite literally Google maps for the insides of buildings," said Ankit Agarwal, founder and CEO of Micello. "We are mapping the last unchartered territory—the last mile—between the front door and where you are going. We are building the foundation for an indoor location-based services market."

Available as a free service to users of the iPhone, BlackBerry, Palm or Android mobile handsets, Micello displays the Google maps to an address adorned with icons showing where indoor maps are available. Once the user arrives at an address, clicking on the Micello icon overlays the indoor map. Search for a particular venue inside, and Micello highlights a recommended route from your current location. Future versions will also provide directions from your car in the parking lot, as well as store-to-store directions once inside a mall.

When Micello becomes available later this fall for the iPhone, it will come with maps for 150 points of interest in the Bay Area, with the rest of California slated for mapping by the end of the year. The other major cities, plus versions for BlackBerry, Palm and Android, are promised by the end of 2010, at which time Micello estimates it will have 5,000 shopping malls, 10,000 college campuses and 400 convention centers in its growing database. Locations will also include airports, stadiums, theme parks, golf courses, fitness centers and other venues where people naturally congregate.