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As it continues to explore new business models that may work in a world focused on privacy rather than broadly sharing data online, Facebook on Tuesday revealed plans for its own global digital currency, Libra, which aims to allow users to make purchases or send money with close to zero transaction fees. Facebook said it hopes Libra will make it easier for the estimated 1.7 billion unbanked adults worldwide to access banking services and transfer money electronically. “Just as people can use their phones to message friends anywhere in the world today, with Libra, the same can be done with money — instantly, securely and at a low cost,” Facebook said in a Libra white paper.

Users will be able to make transactions with Libra by 2020, Facebook says, both through a standalone app called Calibra as well as with Facebook’s own family of apps. Unlike bitcoin and some similar offerings, the price of Libra is tied to low-risk assets, which should prevent the speculative behavior and wild price swings plaguing other digital currencies. The currency will be overseen by the Libra Association, a Switzerland-based collective of more than a dozen companies, including Visa, Uber and Mastercard, each of whom have invested at least $10 million in the technology. Users of Libra will pay $1 to use Libra which will sit in a bank account and earn interest which will pay the Libra Association.

Facebook expects to pay a fine of up to $5 billion in a settlement with federal regulators. The tech giant disclosed that figure in its first-quarter 2019 financial results. Facebook has been in negotiations with the Federal Trade Commission following concerns that the company violated a 2011 consent decree. Back then, company leaders promised to give consumers "clear and prominent notice" when sharing their data with others and to get "express consent."

But, experts say, Facebook broke its promise. Just one example: giving user data to Cambridge Analytica, the political consulting firm that did work for the 2016 Trump campaign. Facebook estimates the fine will be in the $3 billion to $5 billion range and has set aside $3 billion for payment. "The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome," the company's statement says.

Disaster stories involving the Internet of Things are all the rage. They feature cars (both driven and driverless), the power grid, dams, and tunnel ventilation systems. A particularly vivid and realistic one, near-future fiction published last month in New York Magazine, described a cyberattack on New York that involved hacking of cars, the water system, hospitals, elevators, and the power grid. In these stories, thousands of people die. Chaos ensues. While some of these scenarios overhype the mass destruction, the individual risks are all real. And traditional computer and network security isn’t prepared to deal with them.Classic information security is a triad: confidentiality, integrity, and availability. You’ll see it called “CIA,” which admittedly is confusing in the context of national security. But basically, the three things I can do with your data are steal it (confidentiality), modify it (integrity), or prevent you from getting it (availability).

So far, internet threats have largely been about confidentiality. These can be expensive; one survey estimated that data breaches cost an average of $3.8 million each. They can be embarrassing, as in the theft of celebrity photos from Apple’s iCloud in 2014 or the Ashley Madison breach in 2015. They can be damaging, as when the government of North Korea stole tens of thousands of internal documents from Sony or when hackers stole data about 83 million customer accounts from JPMorgan Chase, both in 2014. They can even affect national security, as in the case of the Office of Personnel Management data breach by—presumptively—China in 2015. On the Internet of Things, integrity and availability threats are much worse than confidentiality threats. It’s one thing if your smart door lock can be eavesdropped upon to know who is home. It’s another thing entirely if it can be hacked to allow a burglar to open the door—or prevent you from opening your door. A hacker who can deny you control of your car, or take over control, is much more dangerous than one who can eavesdrop on your conversations or track your car’s location. With the advent of the Internet of Things and cyber-physical systems in general, we've given the internet hands and feet: the ability to directly affect the physical world. What used to be attacks against data and information have become attacks against flesh, steel, and concrete. Today’s threats include hackers crashing airplanes by hacking into computer networks, and remotely disabling cars, either when they’re turned off and parked or while they’re speeding down the highway. We’re worried about manipulated counts from electronic voting machines, frozen water pipes through hacked thermostats, and remote murder through hacked medical devices. The possibilities are pretty literally endless. The Internet of Things will allow for attacks we can’t even imagine.

On the 21st floor of a high-rise hotel in Cleveland, in a room full of political operatives, Microsoft’s Research Division was advertising a technology that could read each facial expression in a massive crowd, analyze the emotions, and report back in real time. “You could use this at a Trump rally,” a sales representative told me. At both the Republican and Democratic conventions, Microsoft sponsored event spaces for the news outlet Politico. Politico, in turn, hosted a series of Microsoft-sponsored discussions about the use of data technology in political campaigns. And throughout Politico’s spaces in both Philadelphia and Cleveland, Microsoft advertised an array of products from “Microsoft Cognitive Services,” its artificial intelligence and cloud computing division. At one exhibit, titled “Realtime Crowd Insights,” a small camera scanned the room, while a monitor displayed the captured image. Every five seconds, a new image would appear with data annotated for each face — an assigned serial number, gender, estimated age, and any emotions detected in the facial expression. When I approached, the machine labeled me “b2ff” and correctly identified me as a 23-year-old male.

“Realtime Crowd Insights” is an Application Programming Interface (API), or a software tool that connects web applications to Microsoft’s cloud computing services. Through Microsoft’s emotional analysis API — a component of Realtime Crowd Insights — applications send an image to Microsoft’s servers. Microsoft’s servers then analyze the faces and return emotional profiles for each one. In a November blog post, Microsoft said that the emotional analysis could detect “anger, contempt, fear, disgust, happiness, neutral, sadness or surprise.” Microsoft’s sales representatives told me that political campaigns could use the technology to measure the emotional impact of different talking points — and political scientists could use it to study crowd response at rallies.

Facial recognition technology — the identification of faces by name — is already widely used in secret by law enforcement, sports stadiums, retail stores, and even churches, despite being of questionable legality. As early as 2002, facial recognition technology was used at the Super Bowl to cross-reference the 100,000 attendees to a database of the faces of known criminals. The technology is controversial enough that in 2013, Google tried to ban the use of facial recognition apps in its Google glass system. But “Realtime Crowd Insights” is not true facial recognition — it could not identify me by name, only as “b2ff.” It did, however, store enough data on each face that it could continuously identify it with the same serial number, even hours later. The display demonstrated that capability by distinguishing between the number of total faces it had seen, and the number of unique serial numbers. Photo: Alex Emmons

The Senate Judiciary Committee held an open hearing today on the FISA Amendments Act, the law that ostensibly authorizes the digital surveillance of hundreds of millions of people both in the United States and around the world. Section 702 of the law, scheduled to expire next year, is designed to allow U.S. intelligence services to collect signals intelligence on foreign targets related to our national security interests. However—thanks to the leaks of many whistleblowers including Edward Snowden, the work of investigative journalists, and statements by public officials—we now know that the FISA Amendments Act has been used to sweep up data on hundreds of millions of people who have no connection to a terrorist investigation, including countless Americans. What do we mean by “countless”? As became increasingly clear in the hearing today, the exact number of Americans impacted by this surveillance is unknown. Senator Franken asked the panel of witnesses, “Is it possible for the government to provide an exact count of how many United States persons have been swept up in Section 702 surveillance? And if not the exact count, then what about an estimate?”

The lack of information makes rigorous oversight of the programs all but impossible. As Senator Franken put it in the hearing today, “When the public lacks even a rough sense of the scope of the government’s surveillance program, they have no way of knowing if the government is striking the right balance, whether we are safeguarding our national security without trampling on our citizens’ fundamental privacy rights. But the public can’t know if we succeed in striking that balance if they don’t even have the most basic information about our major surveillance programs."  Senator Patrick Leahy also questioned the panel about the “minimization procedures” associated with this type of surveillance, the privacy safeguard that is intended to ensure that irrelevant data and data on American citizens is swiftly deleted. Senator Leahy asked the panel: “Do you believe the current minimization procedures ensure that data about innocent Americans is deleted? Is that enough?”  David Medine, who recently announced his pending retirement from the Privacy and Civil Liberties Oversight Board, answered unequivocally:

Elizabeth Goitein, the Brennan Center director whose articulate and thought-provoking testimony was the highlight of the hearing, noted that at this time an exact number would be difficult to provide. However, she asserted that an estimate should be possible for most if not all of the government’s surveillance programs. None of the other panel participants—which included David Medine and Rachel Brand of the Privacy and Civil Liberties Oversight Board as well as Matthew Olsen of IronNet Cybersecurity and attorney Kenneth Wainstein—offered an estimate. Today’s hearing reaffirmed that it is not only the American people who are left in the dark about how many people or accounts are impacted by the NSA’s dragnet surveillance of the Internet. Even vital oversight committees in Congress like the Senate Judiciary Committee are left to speculate about just how far-reaching this surveillance is. It's part of the reason why we urged the House Judiciary Committee to demand that the Intelligence Community provide the public with a number. 

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.

The first (and thus far only) roll-back of post-9/11 surveillance authorities was implemented over the weekend: The National Security Agency shuttered its program for collecting and holding the metadata of Americans’ phone calls under Section 215 of the Patriot Act. While bulk collection under Section 215 has ended, the government can obtain access to this information under the procedures specified in the USA Freedom Act. Indeed, some experts have argued that the Agency likely has access to more metadata because its earlier dragnet didn’t cover cell phones or Internet calling. In addition, the metadata of calls made by an individual in the United States to someone overseas and vice versa can still be collected in bulk — this takes place abroad under Executive Order 12333. No doubt the NSA wishes that this was the end of the surveillance reform story and the Paris attacks initially gave them an opening. John Brennan, the Director of the CIA, implied that the attacks were somehow related to “hand wringing” about spying and Sen. Tom Cotton (R-Ark.) introduced a bill to delay the shut down of the 215 program. Opponents of encryption were quick to say: “I told you so.”

But the facts that have emerged thus far tell a different story. It appears that much of the planning took place IRL (that’s “in real life” for those of you who don’t have teenagers). The attackers, several of whom were on law enforcement’s radar, communicated openly over the Internet. If France ever has a 9/11 Commission-type inquiry, it could well conclude that the Paris attacks were a failure of the intelligence agencies rather than a failure of intelligence authorities. Despite the passage of the USA Freedom Act, US surveillance authorities have remained largely intact. Section 702 of the FISA Amendments Act — which is the basis of programs like PRISM and the NSA’s Upstream collection of information from Internet cables — sunsets in the summer of 2017. While it’s difficult to predict the political environment that far out, meaningful reform of Section 702 faces significant obstacles. Unlike the Section 215 program, which was clearly aimed at Americans, Section 702 is supposedly targeted at foreigners and only picks up information about Americans “incidentally.” The NSA has refused to provide an estimate of how many Americans’ information it collects under Section 702, despite repeated requests from lawmakers and most recently a large cohort of advocates. The Section 215 program was held illegal by two federal courts (here and here), but civil attempts to challenge Section 702 have run into standing barriers. Finally, while two review panels concluded that the Section 215 program provided little counterterrorism benefit (here and here), they found that the Section 702 program had been useful.

There is, nonetheless, some pressure to narrow the reach of Section 702. The recent decision by the European Court of Justice in the safe harbor case suggests that data flows between Europe and the US may be restricted unless the PRISM program is modified to protect the information of Europeans (see here, here, and here for discussion of the decision and reform options). Pressure from Internet companies whose business is suffering — estimates run to the tune of $35 to 180 billion — as a result of disclosures about NSA spying may also nudge lawmakers towards reform. One of the courts currently considering criminal cases which rely on evidence derived from Section 702 surveillance may hold the program unconstitutional either on the basis of the Fourth Amendment or Article III for the reasons set out in this Brennan Center report. A federal district court in Colorado recently rejected such a challenge, although as explained in Steve’s post, the decision did not seriously explore the issues. Further litigation in the European courts too could have an impact on the debate.

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.”

The National Security Agency and its British counterpart, Government Communications Headquarters, have worked to subvert anti-virus and other security software in order to track users and infiltrate networks, according to documents from NSA whistleblower Edward Snowden. The spy agencies have reverse engineered software products, sometimes under questionable legal authority, and monitored web and email traffic in order to discreetly thwart anti-virus software and obtain intelligence from companies about security software and users of such software. One security software maker repeatedly singled out in the documents is Moscow-based Kaspersky Lab, which has a holding registered in the U.K., claims more than 270,000 corporate clients, and says it protects more than 400 million people with its products. British spies aimed to thwart Kaspersky software in part through a technique known as software reverse engineering, or SRE, according to a top-secret warrant renewal request. The NSA has also studied Kaspersky Lab’s software for weaknesses, obtaining sensitive customer information by monitoring communications between the software and Kaspersky servers, according to a draft top-secret report. The U.S. spy agency also appears to have examined emails inbound to security software companies flagging new viruses and vulnerabilities.

The efforts to compromise security software were of particular importance because such software is relied upon to defend against an array of digital threats and is typically more trusted by the operating system than other applications, running with elevated privileges that allow more vectors for surveillance and attack. Spy agencies seem to be engaged in a digital game of cat and mouse with anti-virus software companies; the U.S. and U.K. have aggressively probed for weaknesses in software deployed by the companies, which have themselves exposed sophisticated state-sponsored malware.

The requested warrant, provided under Section 5 of the U.K.’s 1994 Intelligence Services Act, must be renewed by a government minister every six months. The document published today is a renewal request for a warrant valid from July 7, 2008 until January 7, 2009. The request seeks authorization for GCHQ activities that “involve modifying commercially available software to enable interception, decryption and other related tasks, or ‘reverse engineering’ software.”

A new study says that the U.S. tech industry is likely to lose more than $35 billion from foreign customers by 2016 because of concerns over government surveillance.“In short, foreign customers are shunning U.S. companies,” the authors of a new study from the Information Technology and Innovation Foundation write.ADVERTISEMENT“The U.S. government’s failure to reform many of the NSA’s surveillance programs has damaged the competitiveness of the U.S. tech sector and cost it a portion of the global market share,” they said.The think tank’s report found that the cost to the tech sector associated with ongoing concerns over surveillance programs run out of the U.S. was likely to “far exceed” $35 billion by 2016, an earlier estimate set by the group.

The group said that lawmakers must enact additional reforms to surveillance policy if they wish to help the tech sector regain the trust of foreign customers. That includes opposing “backdoors,” which allow law enforcement to access otherwise encrypted data, and signing off on trade agreements, including the controversial Trans-Pacific Partnership, that “ban digital protectionism.”The study’s authors found that the revelations about broad U.S. surveillance programs acted as a justification for foreign policymakers to enact protectionist policies aimed at aiding their own domestic technology sectors.Foreign companies have also used the information about U.S. surveillance programs to their advantage.“Some European companies have begun to highlight where their digital services are hosted as an alternative to U.S. companies,” the authors write.

American companies, they found, have lost contracts to foreign competitors over fears about mass surveillance.Earlier this month, President Obama signed the USA Freedom Act, a bill that reformed the three Patriot Act provisions that authorized the bulk, warrantless collection of Americans’ phone records. The bill was widely supported by technology companies, including giants like Apple and Google.

According to a study from Freedom House, the decline of internet freedom kicked into high-gear in 2014 and is expected to suffer further this year because of opinions derived from 65 nations who have access to the World Wide Web. Since 2010, internet freedom has been eroded with restrictive applications enacted by governments and censoring of content, website filters and surveillance of user’s online behavior.

In 2015, predictions assume that the internet will be further restricted with an estimated “41 countries had either proposed or passed legislation to penalize legitimate forms of speech online.”

The change in the law wrought by the Federal Circuit can also be viewed substantively through the controversy over software patents. Throughout the 1960s, the USPTO refused to award patents for software innovations. However, several of the USPTO’s decisions were overruled by the patent-friendly U.S. Court of Customs and Patent Appeals, which ordered that software patents be granted. In Gottschalk v. Benson (1972) and Parker v. Flook (1978), the U.S. Supreme Court reversed the Court of Customs and Patent Appeals, holding that mathematical algorithms (and therefore software) were not patentable subject matter. In 1981, in Diamond v. Diehr, the Supreme Court upheld a software patent on the grounds that the patent in question involved a physical process—the patent was issued for software used in the molding of rubber. While affirming their prior ruling that mathematical formulas are not patentable in the abstract, the Court held that an otherwise patentable invention did not become unpatentable simply because it utilized a computer.

Virtually no foreign government is off-limits for the National Security Agency, which has been authorized to intercept information “concerning” all but four countries, according to top-secret documents. The United States has long had broad no-spying arrangements with those four countries — Britain, Canada, Australia and New Zealand — in a group known collectively with the United States as the Five Eyes. But a classified 2010 legal certification and other documents indicate the NSA has been given a far more elastic authority than previously known, one that allows it to intercept through U.S. companies not just the communications of its overseas targets but any communications about its targets as well.

The certification — approved by the Foreign Intelligence Surveillance Court and included among a set of documents leaked by former NSA contractor Edward Snowden — lists 193 countries that would be of valid interest for U.S. intelligence. The certification also permitted the agency to gather intelligence about entities including the World Bank, the International Monetary Fund, the European Union and the International Atomic Energy Agency. The NSA is not necessarily targeting all the countries or organizations identified in the certification, the affidavits and an accompanying exhibit; it has only been given authority to do so. Still, the privacy implications are far-reaching, civil liberties advocates say, because of the wide spectrum of people who might be engaged in communication about foreign governments and entities and whose communications might be of interest to the United States.

That language could allow for surveillance of academics, journalists and human rights researchers. A Swiss academic who has information on the German government’s position in the run-up to an international trade negotiation, for instance, could be targeted if the government has determined there is a foreign-intelligence need for that information. If a U.S. college professor e-mails the Swiss professor’s e-mail address or phone number to a colleague, the American’s e-mail could be collected as well, under the program’s court-approved rules

About 89,000 foreigners or organizations were targeted for spying under a U.S. surveillance order last year, according to a new transparency report. The report was released for the first time Friday by the Office of the Director of Intelligence, upon order of the president, in the wake of surveillance leaks by NSA whistleblower Edward Snowden. But the report, which covers only surveillance orders issued in 2013, doesn’t tell the whole story about how many individuals the spying targeted or how many Americans were caught in the surveillance that targeted foreigners. Civil liberties groups say the real number is likely “orders of magnitude” larger than this. “Even if it was an honest definition of ‘target’—that is, an individual instead of a group—that also is not encompassing those who are ancillary to a target and are caught up in the dragnet,” says Kurt Opsahl, deputy general counsel of the Electronic Frontier Foundation.

The report, remarkably, shows that the government obtained just one order last year under Section 702 of FISA—which allows for bulk collection of data on foreigners—and that this one order covered 89,138 targets. But, as the report notes, “target” can refer to “an individual person, a group, an organization composed of multiple individuals or a foreign power that possesses or is likely to communicate foreign intelligence information.” Furthermore, Section 702 orders are actually certificates issued by the FISA Court that can cover surveillance of an entire facility. And since, as the government points out in its report, the government cannot know how many people use a facility, the figure only “reflects an estimate of the number of known users of particular facilities (sometimes referred to as selectors) subject to intelligence collection under those Certifications,” the report notes.

“If you’re actually trying to get a sense of the number of human beings affected or the number of Americans affected, the number of people affected is vastly, vastly larger,” says Julian Sanchez, senior fellow at the Cato Institute. “And how many of those are Americans is impossible to say. But [although] you may not think you are routinely communicating with foreign persons, [this] is not any kind of assurance that your communications are not part of the traffic subject to interception.” Sanchez points out that each individual targeted is likely communicating with dozens or hundred of others, whose communications will be picked up in the surveillance. “And probably a lot of these targets are not individuals but entire web sites or companies. While [a company like the Chinese firm] Huawei might be a target, thousands of emails used by thousands of employees will be swept up.” How many of those employees might be American or communicating with Americans is unknown.

Sitting inside a medium-security federal prison in Kentucky, Jeremy Hammond looks defiant and frustrated.  “[The FBI] could've stopped me,” he told the Daily Dot last month at the Federal Correctional Institution, Manchester. “They could've. They knew about it. They could’ve stopped dozens of sites I was breaking into.” Hammond is currently serving the remainder of a 10-year prison sentence in part for his role in one of the most high-profile cyberattacks of the early 21st century. His 2011 breach of Strategic Forecasting, Inc. (Stratfor) left tens of thousands of Americans vulnerable to identity theft and irrevocably damaged the Texas-based intelligence firm's global reputation. He was also indicted for his role in the June 2011 hack of an Arizona state law enforcement agency's computer servers.

There's no question of his guilt: Hammond, 29, admittedly hacked into Stratfor’s network and exfiltrated an estimated 60,000 credit card numbers and associated data and millions of emails, information that was later shared with the whistleblower organization WikiLeaks and the hacker collective Anonymous.   Sealed court documents obtained by the Daily Dot and Motherboard, however, reveal that the attack was instigated and orchestrated not by Hammond, but by an informant, with the full knowledge of the Federal Bureau of Investigation (FBI).  In addition to directly facilitating the breach, the FBI left Stratfor and its customers—which included defense contractors, police chiefs, and National Security Agency employees—vulnerable to future attacks and fraud, and it requested knowledge of the data theft to be withheld from affected customers. This decision would ultimately allow for millions of dollars in damages.