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Startups Weekly: #CodeCon, the ‘techlash’ and ill-prepared CEOs

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Hello and welcome back to Startups Weekly, a newsletter published every Saturday that dives into the week’s noteworthy venture capital deals, funds and trends. Before I dive into this week’s topic, let’s catch up a bit. Last week, I wrote about Peloton’s upcoming initial public offering. Before that, I noted the proliferation of billion-dollar companies. 

Remember, you can send me tips, suggestions and feedback to kate.clark@techcrunch.com or on Twitter @KateClarkTweets. If you don’t subscribe to Startups Weekly yet, you can do that here. 

Now I know this newsletter is supposed to be about startups, but we’re shifting our focus to Big Tech today. Bear with me.

I spent the better part of the week in Scottsdale, Ariz. where temperatures outside soared past 100 and temperatures inside were icy cold. Both because Recode + Vox cranked the AC to ungodly levels but also because every panel, it seemed, veered into a debate around the “techlash” and antitrust.

If you aren’t familiar, the Financial Times defines the techlash as “the growing public animosity toward large Silicon Valley platform technology companies.” Code Conference has in the past been an event that underscores innovation in tech. This year, amid growing tensions between tech’s business practices and the greater good, things felt a little different.

The conference began with Peter Kafka grilling YouTube’s CEO Susan Wojcicki. Unfortunately for her, CodeCon took place the week after an enormous controversy struck YouTube. You can read about that here. Wojcicki wasn’t up to the task of addressing the scandal, at least not honestly. She apologized to the LGBTQ community for YouTube’s actions but was unable to confront the larger issue at hand: YouTube has failed to take necessary action toward eliminating hate speech on its platform, much like other social media hubs.

From there, The Verge’s Casey Newton asked Instagram head Adam Mosseri and Facebook vice president of consumer hardware Andrew Bosworth point blank if Facebook should be broken up. Unsurprisingly, neither of the two men are fond of the idea.

“Personally, if we split [Facebook and Instagram] it might make my life easier but I think it’s a terrible idea,” Mosseri, who was named CEO of Instagram last fall, said. “If you split us up, it would just make it exponentially more difficult to keep people safe. There are more people working on safety and integrity issues at Facebook than all the people that work at Instagram.”

Bosworth, who manages VR projects at Facebook, had this to say: “You take Instagram and Facebook apart, you have the same attack surfaces. They now aren’t able to share and combine data … So this isn’t circular logic. This is an economy of scale.”

Wojcicki, when asked whether YouTube should separate from Google, had a less nuanced and frankly shockingly ill-prepared response:

There’s more where that came from, but this newsletter isn’t about big tech! It’s about startups! Here’s all the startup news you missed this week.

IPO Corner

CrowdStrike’s IPO went really well: After pricing its IPO at $34 per share Tuesday evening and raising $612 million in the process (a whole lot more than the planned $378 million), the company’s stock popped 90% Wednesday morning with an initial share price of $63.50. A bona fide success, CrowdStrike boasted an initial market cap of $11.4 billion, nearly four times that of its last private valuation, at market close Wednesday. I chatted with CrowdStrike CEO George Kurtz on listing day. You can read our full conversation here.

Fiverr climbs: The marketplace had a good first day on the NYSE. The company priced its IPO at $21 per share Wednesday night, raising around $111 million. It then started trading Thursday morning at $26 apiece, with shares climbing for most of the day and closing at $39.90 — up 90% from the IPO price. Again, not bad. Read TechCrunch’s Anthony Ha’s conversation with Fiverr CEO Micha Kaufman here.

Get ready for … Slack’s highly-anticipated direct listing next week (June 20). Catch up on direct listings here and learn more about Slack’s journey to the public markets here.

Bird confirmed its acquisition of Scoot

As is usually the case with these things, parties from both Bird and Scoot declined to tell us any details about the deal, so we went and found the details ourselves! First, The Wall Street Journal’s Katie Roof reported the (mostly stock) deal was valued at roughly $25 million. We confirmed with our sources that it was indeed less than $25 million and came after Scoot struggled to raise additional capital from venture capital investors.

Fortnite throws a Houseparty 

While we’re on the subject of M&A, Epic Games, the creator of Fortnite, acquired Houseparty, a video chatting mobile app, this week. The deal comes shortly after Epic Games raised a whopping $1.25 billion. Founded in 2015, Houseparty is a social network that delivers video chat across a number of different platforms, including iOS, Android and macOS. Like Fortnite, the offering tends to skew younger. Specifically, the app caters toward teen users, providing a more private and safer space than other, broader platforms.

Startup Capital

Symphony, a messaging app, gets $165M at a $1.4B valuation
BetterUp raises $103M to fast-track employee development
Neurobehavioral health company BlackThorn pulls in $76M from GV
Against Gravity, maker of the VR hit ‘Rec Room,’ nabs $24M
Simpo secures $4.5M seed round to help drive software adoption

~Extra Crunch~

If you’ve been unsure whether to sign up for TechCrunch’s awesome new subscription service, now is the time. Through next Friday, it’s only $2 a month for two months. Seems like a no-brainer. Sign up here. Here are some of my personal favorite EC pieces of the week:

Silicon Valley’s founder fetish infantilizes public companies

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I debate dual-class stock, discuss my takeaways from #CodeCon and review the biggest rounds of the week. You can subscribe to Equity here or wherever else you listen to podcasts.

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Cyberattack on Albanian government suggests new Iranian aggression

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Enlarge / Tirane, Albania.

Pawel Toczynski | Getty Images

In mid-July, a cyberattack on the Albanian government knocked out state websites and public services for hours. With Russia’s war raging in Ukraine, the Kremlin might seem like the likeliest suspect. But research published on Thursday by the threat intelligence firm Mandiant attributes the attack to Iran. And while Tehran’s espionage operations and digital meddling have shown up all over the world, Mandiant researchers say that a disruptive attack from Iran on a NATO member is a noteworthy escalation.

The digital attacks targeting Albania on July 17 came ahead of the “World Summit of Free Iran,” a conference scheduled to convene in the town of Manëz in western Albania on July 23 and 24. The summit was affiliated with the Iranian opposition group Mujahadeen-e-Khalq, or the People’s Mojahedin Organization of Iran (often abbreviated MEK, PMOI, or MKO). The conference was postponed the day before it was set to begin because of reported, unspecified “terrorist” threats.

Mandiant researchers say that attackers deployed ransomware from the Roadsweep family and may have also utilized a previously unknown backdoor, dubbed Chimneysweep, as well as a new strain of the Zeroclear wiper. Past use of similar malware, the timing of the attacks, other clues from the Roadsweep ransomware note, and activity from actors claiming responsibility for the attacks on Telegram all point to Iran, Mandiant says.

“This is an aggressive escalatory step that we have to recognize,” says John Hultquist, Mandiant’s vice president of intelligence. “Iranian espionage happens all the time all over the world. The difference here is this isn’t espionage. These are disruptive attacks, which affect the lives of everyday Albanians who live within the NATO alliance. And it was essentially a coercive attack to force the hand of the government.”

Iran has conducted aggressive hacking campaigns in the Middle East and particularly in Israel, and its state-backed hackers have penetrated and probed manufacturing, supply, and critical infrastructure organizations. In November 2021, the US and Australian governments warned that Iranian hackers were actively working to gain access to an array of networks related to transportation, health care, and public health entities, among others. “These Iranian government-sponsored APT actors can leverage this access for follow-on operations, such as data exfiltration or encryption, ransomware, and extortion,” the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency wrote at the time.

Tehran has limited how far its attacks have gone, though, largely keeping to data exfiltration and reconnaissance on the global stage. The country has, however, participated in influence operations, disinformation campaigns, and efforts to meddle in foreign elections, including targeting the US.

“We’ve become used to seeing Iran being aggressive in the Middle East where that activity just has never stopped, but outside of the Middle East they’ve been far more restrained,” Hultquist says. “I’m concerned that they may be more willing to leverage their capability outside of the region. And they clearly have no qualms about targeting NATO states, which suggests to me that whatever deterrents we believe exist between us and them may not exist at all.”

With Iran claiming that it now has the ability to produce nuclear warheads, and representatives from the country meeting with US officials in Vienna about a possible revival of the 2015 nuclear deal between the countries, any signal about Iran’s possible intentions and risk tolerance when it comes to dealing with NATO are significant.

This story originally appeared on wired.com.

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“Huge flaw” threatens US emergency alert system, DHS researcher warns

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Enlarge / Obstruction light with bokeh city background

The US Department of Homeland Security is warning of vulnerabilities in the nation’s emergency broadcast network that makes it possible for hackers to issue bogus warnings over radio and TV stations.

“We recently became aware of certain vulnerabilities in EAS encoder/decoder devices that, if not updated to most recent software versions, could allow an actor to issue EAS alerts over the host infrastructure (TV, radio, cable network),” the DHS’s Federal Emergency Management Agency (FEMA) warned. “This exploit was successfully demonstrated by Ken Pyle, a security researcher at CYBIR.com, and may be presented as a proof of concept at the upcoming DEFCON 2022 conference in Las Vegas, August 11-14.”

Pyle told reporters at CNN and Bleeping Computer that the vulnerabilities reside in the Monroe Electronics R189 One-Net DASDEC EAS, an Emergency Alert System encoder and decoder. TV and radio stations use the equipment to transmit emergency alerts. The researcher told Bleeping Computer that “multiple vulnerabilities and issues (confirmed by other researchers) haven’t been patched for several years and snowballed into a huge flaw.”

“When asked what can be done after successful exploitation, Pyle said: ‘I can easily obtain access to the credentials, certs, devices, exploit the web server, send fake alerts via crafts message, have them valid / pre-empting signals at will. I can also lock legitimate users out when I do, neutralizing or disabling a response,’” Bleeping Computer added.

This isn’t the first time federal officials have warned of vulnerabilities in the emergency alert system.

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North Korea-backed hackers have a clever way to read your Gmail

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Getty Images

Researchers have unearthed never-before-seen malware that hackers from North Korea have been using to surreptitiously read and download email and attachments from infected users’ Gmail and AOL accounts.

The malware, dubbed SHARPEXT by researchers from security firm Volexity, uses clever means to install a browser extension for the Chrome and Edge browsers, Volexity reported in a blog post. The extension can’t be detected by the email services, and since the browser has already been authenticated using any multifactor authentication protections in place, this increasingly popular security measure plays no role in reining in the account compromise.

The malware has been in use for “well over a year,” Volexity said, and is the work of a hacking group the company tracks as SharpTongue. The group is sponsored by North Korea’s government and overlaps with a group tracked as Kimsuky by other researchers. SHARPEXT is targeting organizations in the US, Europe, and South Korea that work on nuclear weapons and other issues North Korea deems important to its national security.

Volexity President Steven Adair said in an email that the extension gets installed “by way of spear phishing and social engineering where the victim is fooled into opening a malicious document. Previously we have seen DPRK threat actors launch spear phishing attacks where the entire objective was to get the victim to install a browser extension vs it being a post exploitation mechanism for persistence and data theft.” In its current incarnation, the malware works only on Windows, but Adair said there’s no reason it couldn’t be broadened to infect browsers running on macOS or Linux, too.

The blog post added: “Volexity’s own visibility shows the extension has been quite successful, as logs obtained by Volexity show the attacker was able to successfully steal thousands of emails from multiple victims through the malware’s deployment.”

Installing a browser extension during a phishing operation without the end-user noticing isn’t easy. SHARPEXT developers have clearly paid attention to research like what’s published here, here, and here, which shows how a security mechanism in the Chromium browser engine prevents malware from making changes to sensitive user settings. Each time a legitimate change is made, the browser takes a cryptographic hash of some of the code. At startup, the browser verifies the hashes, and if any of them don’t match, the browser requests the old settings be restored.

For attackers to work around this protection, they must first extract the following from the computer they’re compromising:

  • A copy of the resources.pak file from the browser (which contains the HMAC seed used by Chrome)
  • The user’s S-ID value
  • The original Preferences and Secure Preferences files from the user’s system

After modifying the preference files, SHARPEXT automatically loads the extension and executes a PowerShell script that enables DevTools, a setting that allows the browser to run customized code and settings.

“The script runs in an infinite loop checking for processes associated with the targeted browsers,” Volexity explained. “If any targeted browsers are found running, the script checks the title of the tab for a specific keyword (for example’ 05101190,’ or ‘Tab+’ depending on the SHARPEXT version). The specific keyword is inserted into the title by the malicious extension when an active tab changes or when a page is loaded.”

Volexity

The post continued:

The keystrokes sent are equivalent to Control+Shift+J, the shortcut to enable the DevTools panel. Lastly, the PowerShell script hides the newly opened DevTools window by using the ShowWindow() API and the SW_HIDE flag. At the end of this process, DevTools is enabled on the active tab, but the window is hidden.

In addition, this script is used to hide any windows that could alert the victim. Microsoft Edge, for example, periodically displays a warning message to the user (Figure 5) if extensions are running in developer mode. The script constantly checks if this window appears and hides it by using the ShowWindow() and the SW_HIDE flag.

Volexity

Once installed, the extension can perform the following requests:

HTTP POST Data Description
mode=list List previously collected email from the victim to ensure duplicates are not uploaded. This list is continuously updated as SHARPEXT executes.
mode=domain List email domains with which the victim has previously communicated. This list is continuously updated as SHARPEXT executes.
mode=black Collect a blacklist of email senders that should be ignored when collecting email from the victim.
mode=newD&d=[data] Add a domain to the list of all domains viewed by the victim.
mode=attach&name=[data]&idx=[data]&body=[data] Upload a new attachment to the remote server.
mode=new&mid=[data]&mbody=[data] Upload Gmail data to the remote server.
mode=attlist Commented by the attacker; receive an attachments list to be exfiltrated.
mode=new_aol&mid=[data]&mbody=[data] Upload AOL data to the remote server.

SHARPEXT allows the hackers to create lists of email addresses to ignore and to keep track of email or attachments that have already been stolen.

Volexity created the following summary of the orchestration of the various SHARPEXT components it analyzed:

Volexity

The blog post provides images, file names, and other indicators that trained people can use to determine if they have been targeted or infected by this malware. The company warned that the threat it poses has grown over time and isn’t likely to go away anytime soon.

“When Volexity first encountered SHARPEXT, it seemed to be a tool in early development containing numerous bugs, an indication the tool was immature,” the company said. “The latest updates and ongoing maintenance demonstrate the attacker is achieving its goals, finding value in continuing to refine it.”

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