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Seized cache of Facebook docs raise competition and consent questions

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A UK parliamentary committee has published the cache of Facebook documents it dramatically seized last week.

The documents were obtained by a legal discovery process by a startup that’s suing the social network in a California court in a case related to Facebook changing data access permissions back in 2014/15.

The court had sealed the documents but the DCMS committee used rarely deployed parliamentary powers to obtain them from the Six4Three founder, during a business trip to London.

You can read the redacted documents here — all 250 pages of them.

In a series of tweets regarding the publication, committee chair Damian Collins says he believes there is “considerable public interest” in releasing them.

“They raise important questions about how Facebook treats users data, their policies for working with app developers, and how they exercise their dominant position in the social media market,” he writes.

“We don’t feel we have had straight answers from Facebook on these important issues, which is why we are releasing the documents. We need a more public debate about the rights of social media users and the smaller businesses who are required to work with the tech giants. I hope that our committee investigation can stand up for them.”

The committee has been investigating online disinformation and election interference for the best part of this year, and has been repeatedly frustrated in its attempts to extract answers from Facebook.

But it is protected by parliamentary privilege — hence it’s now published the Six4Three files, having waited a week in order to redact certain pieces of personal information.

Collins has included a summary of key issues, as the committee sees them after reviewing the documents, in which he draws attention to six issues.

Here is his summary of the key issues:

  • White Lists Facebook have clearly entered into whitelisting agreements with certain companies, which meant that after the platform changes in 2014/15 they maintained full access to friends data. It is not clear that there was any user consent for this, nor how Facebook decided which companies should be whitelisted or not.

Facebook responded

  • Value of friends data It is clear that increasing revenues from major app developers was one of the key drivers behind the Platform 3.0 changes at Facebook. The idea of linking access to friends data to the financial value of the developers relationship with Facebook is a recurring feature of the documents.

In their response Facebook contends that this was essentially another “cherrypicked” topic and that the company “ultimately settled on a model where developers did not need to purchase advertising to access APIs and we continued to provide the developer platform for free.”

  • Reciprocity Data reciprocity between Facebook and app developers was a central feature in the discussions about the launch of Platform 3.0.
  • Android Facebook knew that the changes to its policies on the Android mobile phone system, which enabled the Facebook app to collect a record of calls and texts sent by the user would be controversial. To mitigate any bad PR, Facebook planned to make it as hard of possible for users to know that this was one of the underlying features of the upgrade of their app.
  • Onavo Facebook used Onavo to conduct global surveys of the usage of mobile apps by customers, and apparently without their knowledge. They used this data to assess not just how many people had downloaded apps, but how often they used them. This knowledge helped them to decide which companies to acquire, and which to treat as a threat.
  • Targeting competitor Apps The files show evidence of Facebook taking aggressive positions against apps, with the consequence that denying them access to data led to the failure of that business.

Update: 11:40am

Facebook has posted a lengthy response (read it here) positing that the “set of documents, by design, tells only one side of the story and omits important context.” They give a blow-by-blow response to Collins’ points below though they are ultimately pretty selective in what they actually address.

Generally they suggest that some of the issues being framed as anti-competitive were in fact designed to prevent “sketchy apps” from operating on the platform. Furthermore, Facebook details that they delete some old call logs on Android, that using “market research” data from Onava is essentially standard practice and that users had the choice whether data was shared reciprocally between FB and developers. In regard to specific competitors’ apps, Facebook appears to have tried to get ahead of this release with their announcement yesterday that it was ending its platform policy of banning apps that “replicate core functionality.” 

The publication of the files comes at an awkward moment for Facebook — which remains on the back foot after a string of data and security scandals, and has just announced a major policy change — ending a long-running ban on apps copying its own platform features.

Albeit the timing of Facebook’s policy shift announcement hardly looks incidental — given Collins said last week the committee would publish the files this week.

The policy in question has been used by Facebook to close down competitors in the past, such as — two years ago — when it cut off style transfer app Prisma’s access to its live-streaming Live API when the startup tried to launch a livestreaming art filter (Facebook subsequently launched its own style transfer filters for Live).

So its policy reversal now looks intended to diffuse regulatory scrutiny around potential antitrust concerns.

But emails in the Six4Three files suggesting that Facebook took “aggressive positions” against competing apps could spark fresh competition concerns.

In one email dated January 24, 2013, a Facebook staffer, Justin Osofsky, discusses Twitter’s launch of its short video clip app, Vine, and says Facebook’s response will be to close off its API access.

As part of their NUX, you can find friends via FB. Unless anyone raises objections, we will shut down their friends API access today. We’ve prepared reactive PR, and I will let Jana know our decision,” he writes. 

Osofsky’s email is followed by what looks like a big thumbs up from Zuckerberg, who replies: “Yup, go for it.”

Also of concern on the competition front is Facebook’s use of a VPN startup it acquired, Onavo, to gather intelligence on competing apps — either for acquisition purposes or to target as a threat to its business.

The files show various Onavo industry charts detailing reach and usage of mobile apps and social networks — with each of these graphs stamped ‘highly confidential’.

Facebook bought Onavo back in October 2013. Shortly after it shelled out $19BN to acquire rival messaging app WhatsApp — which one Onavo chart in the cache indicates was beasting Facebook on mobile, accounting for well over double the daily message sends at that time.

The files also spotlight several issues of concern relating to privacy and data protection law, with internal documents raising fresh questions over how or even whether (in the case of Facebook’s whitelisting agreements with certain developers) it obtained consent from users to process their personal data.

The company is already facing a number of privacy complaints under the EU’s GDPR framework over its use of ‘forced consent‘, given that it does not offer users an opt-out from targeted advertising.

But the Six4Three files look set to pour fresh fuel on the consent fire.

Collins’ fourth line item — related to an Android upgrade — also speaks loudly to consent complaints.

Earlier this year Facebook was forced to deny that it collects calls and SMS data from users of its Android apps without permission. But, as we wrote at the time, it had used privacy-hostile design tricks to sneak expansive data-gobbling permissions past users. So, put simple, people clicked ‘agree’ without knowing exactly what they were agreeing to.

The Six4Three files back up the notion that Facebook was intentionally trying to mislead users.

In one email dated November 15, 2013, from Matt Scutari, manager privacy and public policy, suggests ways to prevent users from choosing to set a higher level of privacy protection, writing: “Matt is providing policy feedback on a Mark Z request that Product explore the possibility of making the Only Me audience setting unsticky. The goal of this change would be to help users avoid inadvertently posting to the Only Me audience. We are encouraging Product to explore other alternatives, such as more aggressive user education or removing stickiness for all audience settings.”

Another awkward trust issue for Facebook which the documents could stir up afresh relates to its repeat claim — including under questions from lawmakers — that it does not sell user data.

In one email from the cache — sent by Mark Zuckerberg, dated October 7, 2012 — the Facebook founder appears to be entertaining the idea of charging developers for “reading anything, including friends”.

Yet earlier this year, when he was asked by a US lawmaker how Facebook makes money, Zuckerberg replied: “Senator, we sell ads.”

He did not include a caveat that he had apparently personally entertained the idea of liberally selling access to user data.

Responding to the publication of the Six4Three documents, a Facebook spokesperson told us:

As we’ve said many times, the documents Six4Three gathered for their baseless case are only part of the story and are presented in a way that is very misleading without additional context. We stand by the platform changes we made in 2015 to stop a person from sharing their friends’ data with developers. Like any business, we had many of internal conversations about the various ways we could build a sustainable business model for our platform. But the facts are clear: we’ve never sold people’s data.

Zuckerberg has repeatedly refused to testify in person to the DCMS committee.

At its last public hearing — which was held in the form of a grand committee comprising representatives from nine international parliaments, all with burning questions for Facebook — the company sent its policy VP, Richard Allan, leaving an empty chair where Zuckerberg’s bum should be.

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New Bluetooth hack can unlock your Tesla—and all kinds of other devices

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When you use your phone to unlock a Tesla, the device and the car use Bluetooth signals to measure their proximity to each other. Move close to the car with the phone in hand, and the door automatically unlocks. Move away, and it locks. This proximity authentication works on the assumption that the key stored on the phone can only be transmitted when the locked device is within Bluetooth range.

Now, a researcher has devised a hack that allows him to unlock millions of Teslas—and countless other devices—even when the authenticating phone or key fob is hundreds of yards or miles away. The hack, which exploits weaknesses in the Bluetooth Low Energy standard adhered to by thousands of device makers, can be used to unlock doors, open and operate vehicles, and gain unauthorized access to a host of laptops and other security-sensitive devices.

When convenience comes back to bite us

“Hacking into a car from hundreds of miles away tangibly demonstrates how our connected world opens us up to threats from the other side of the country—and sometimes even the other side of the world,” Sultan Qasim Khan, a principal security consultant and researcher at security firm NCC Group, told Ars. “This research circumvents typical countermeasures against remote adversarial vehicle unlocking and changes the way we need to think about the security of Bluetooth Low Energy communications.”

This class of hack is known as a relay attack, a close cousin of the person-in-the-middle attack. In its simplest form, a relay attack requires two attackers. In the case of the locked Tesla, the first attacker, which we’ll call Attacker 1, is in close proximity to the car while it’s out of range of the authenticating phone. Attacker 2, meanwhile, is in close proximity to the legitimate phone used to unlock the vehicle. Attacker 1 and Attacker 2 have an open Internet connection that allows them to exchange data.

Attacker 1 uses her own Bluetooth-enabled device to impersonate the authenticating phone and sends the Tesla a signal, prompting the Tesla to reply with an authentication request. Attacker 1 captures the request and sends it to Attacker 2, who in turn forwards the request to the authenticating phone. The phone responds with a credential, which Attacker 2 promptly captures and relays back to Attacker 1. Attacker 1 then sends the credential to the car.

With that, Attacker 1 has now unlocked the vehicle. Here’s a simplified attack diagram, taken from the above-linked Wikipedia article, followed by a video demonstration of Khan unlocking a Tesla and driving away with it, even though the authorized phone isn’t anywhere nearby.

Wikipedia

NCC Group demo Bluetooth Low Energy link layer relay attack on Tesla Model Y.

Relay attacks in the real world need not have two actual attackers. The relaying device can be stashed in a garden, coat room, or other out-of-the-way place at a home, restaurant, or office. When the target arrives at the destination and moves into Bluetooth range of the stashed device, it retrieves the secret credential and relays it to the device stationed near the car (operated by Attacker 1).

The susceptibility of BLE, short for Bluetooth Low Energy, to relay attacks is well known, so device makers have long relied on countermeasures to prevent the above scenario from occurring. One defense is to measure the flow of the requests and responses and reject authentications when the latency reaches a certain threshold, since relayed communications generally take longer to complete than legitimate ones. Another protection is encrypting the credential sent by the phone.

Khan’s BLE relay attack defeats these mitigations, making such hacks viable against a large base of devices and products previously assumed to be hardened against such attacks.

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Researchers devise iPhone malware that runs even when device is turned off

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Classen et al.

When you turn off an iPhone, it doesn’t fully power down. Chips inside the device continue to run in a low-power mode that makes it possible to locate lost or stolen devices using the Find My feature or use credit cards and car keys after the battery dies. Now researchers have devised a way to abuse this always-on mechanism to run malware that remains active even when an iPhone appears to be powered down.

It turns out that the iPhone’s Bluetooth chip—which is key to making features like Find My work—has no mechanism for digitally signing or even encrypting the firmware it runs. Academics at Germany’s Technical University of Darmstadt figured out how to exploit this lack of hardening to run malicious firmware that allows the attacker to track the phone’s location or run new features when the device is turned off.

This video provides a high overview of some of the ways an attack can work.

[Paper Teaser] Evil Never Sleeps: When Wireless Malware Stays On After Turning Off iPhones

The research is the first—or at least among the first—to study the risk posed by chips running in low-power mode. Not to be confused with iOS’s low-power mode for conserving battery life, the low-power mode (LPM) in this research allows chips responsible for near-field communication, ultra wideband, and Bluetooth to run in a special mode that can remain on for 24 hours after a device is turned off.

“The current LPM implementation on Apple iPhones is opaque and adds new threats,” the researchers wrote in a paper published last week. “Since LPM support is based on the iPhone’s hardware, it cannot be removed with system updates. Thus, it has a long-lasting effect on the overall iOS security model. To the best of our knowledge, we are the first who looked into undocumented LPM features introduced in iOS 15 and uncover various issues.”

They added: “Design of LPM features seems to be mostly driven by functionality, without considering threats outside of the intended applications. Find My after power off turns shutdown iPhones into tracking devices by design, and the implementation within the Bluetooth firmware is not secured against manipulation.”

The findings have limited real-world value since infections required a jailbroken iPhone, which in itself is a difficult task, particularly in an adversarial setting. Still, targeting the always-on feature in iOS could prove handy in post-exploit scenarios by malware such as Pegasus, the sophisticated smartphone exploit tool from Israel-based NSO Group, which governments worldwide routinely employ to spy on adversaries.
It may also be possible to infect the chips in the event hackers discover security flaws that are susceptible to over-the-air exploits similar to this one that worked against Android devices.

Besides allowing malware to run while the iPhone is turned off, exploits targeting LPM could also allow malware to operate with much more stealth since LPM allows firmware to conserve battery power. And of course, firmware infections are already extremely difficult to detect since it requires significant expertise and expensive equipment.

The researchers said Apple engineers reviewed their paper before it was published, but company representatives never provided any feedback on its contents. Apple representatives didn’t respond to an email seeking comment for this story.

Ultimately, Find My and other features enabled by LPM help provide added security because they allow users to locate lost or stolen devices and lock or unlock car doors even when batteries are depleted. But the research exposes a double-edged sword that, until now, has gone largely unnoticed.

“Hardware and software attacks similar to the ones described, have been proven practical in a real-world setting, so the topics covered in this paper are timely and practical,” John Loucaides, senior vice president of strategy at firmware security firm Eclypsium. “This is typical for every device. Manufacturers are adding features all the time and with every new feature comes a new attack surface.”

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The tech sector teardown is more catharsis than crisis

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Following a series of “super clarifying” meetings with shareholders, Uber’s chief executive, Dara Khosrowshahi, emailed employees on Sunday night with an arresting message: “we need to show them the money.”

Mangling his metaphors, Khosrowshahi explained that the market was experiencing a “seismic shift” and the “goalposts have changed.” The ride-hailing and food delivery company’s priority must now be to generate free cash flow. “We are serving multitrillion-dollar markets, but market size is irrelevant if it doesn’t translate into profit,” he wrote.

For the boss of Uber to be trumpeting cash flow and profit would once have seemed about as likely as Elon Musk shouting about the benefits of personal humility and petrol-fueled cars. No company has been more emblematic of the long, crazy, capital-doped bull market in technology stocks than Uber. Founded in 2009, the company floated a decade later at a valuation of $76 billion without recording a single quarter of profits. Its belated conversion to financial orthodoxy shows how much markets have been transformed since the turn in the interest rate cycle and the crash of the tech-heavy Nasdaq market, which has dropped 26 percent this year.

As ever, when bubbles burst, it is hard to distinguish between temporary adjustment and permanent change, between the cyclical downturn and the secular trend. Has the speculative froth just been blown off the top of the market? Or have the rules of the game fundamentally changed for those venture capital-backed start-ups trying to emulate Uber? My bet is on the latter, but that may be no bad thing.

There is certainly a strong argument that the extraordinary boom in tech stocks over the past decade was largely fueled by the unprecedented low-interest-rate policies in response to the global financial crisis of 2008. With capital becoming a commodity, it made sense for opportunistic companies such as Uber to grab as much cash as VC firms would give them to “blitzscale” their way to market domination.

This madcap expansion was accelerated by funding provided by a new class of non-traditional, or tourist, investors, including Masayoshi Son’s SoftBank and “crossover” hedge funds such as Tiger Global. Such funds are now seeing spectacular falls in their portfolio valuation. SoftBank has just announced a historic $27 billion investment loss over the past year at its two Vision Funds, while Tiger Global has lost $17 billion this year.

“There was a unique set of economic and financial policies enacted by the world’s central banks that we have never seen before: sustained negative interest rates over the long term,” says William Janeway, the veteran investor. As a result, he says, some companies pursued “capital as a strategy,” looking to invest their way to success and ignoring traditional metrics. “But I do not believe that is a sensible or sustainable investment strategy.”

Stock market investors have drawn the same conclusion and are now distinguishing between those tech companies that generate strong cash flow and profits, such as Apple, Microsoft, and Alphabet, and more speculative investments, such as Netflix, Peloton, and Zoom. These may have grown extraordinarily fast during the COVID-19 pandemic, but they are still flooded with red ink.

Just as public market investors have rotated out of cash-guzzling growth stocks into cash-generating value companies, so private market investors are following suit, says Albert Wenger, managing partner of Union Square Ventures, the New York-based VC firm. “I think that this is healthy. Companies have to build real products and deliver customer value that translates into earnings,” Wenger says, even if this shift will prove “very, very painful for a number of companies.”

Life is already becoming uncomfortable for late-stage startups looking to exit. The public markets are now hard to access. According to EY, the value of all global IPOs in the first quarter of 2022 dropped 51 percent year on year. The once-manic market for special purpose acquisition companies, which enabled highly speculative tech companies to list through the backdoor, has all but frozen. Trade sales have also fallen as M&A activity has contracted sharply. And valuations for late-stage funding rounds have now dropped in the US, with the rest of the world following behind.

In spite of this, the VC industry remains stuffed with cash and desperate to invest. According to KPMG, almost 1,400 VC funds around the world raised a total of $207 billion last year.

Although cash will count for far more, the ability of startups to exploit opportunities by using cheap and powerful tools such as open source software, cloud computing, and machine learning applications remains undimmed. And a slowdown in the voracious hiring plans of the big technology companies may persuade more budding entrepreneurs to give it a go. “We still need to take many more shots on goal from an investment and societal perspective,” says Wenger. There remains screaming demand for climate tech startups to invent smarter ways of reducing energy consumption, for example.

Venture-backed companies may have just ridden the most extraordinary wealth-generating bull market in history. Such supernatural conditions will never occur again. What follows will more likely prove to be catharsis than crisis, so long as they, like Uber, can show investors the money.

Financial Times: © 2022 The Financial Times Ltd. All rights reserved Not to be redistributed, copied, or modified in any way.

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