Further Reading, Other Developments, and Coming Events (9 February 2021)

Further Reading

  • Why Intel’s troubles should concern us all” By Ina Fried — Axios. One of the last major American semi-conductor manufacturers is struggling to keep up with rivals, and this could be very bad for United States (U.S.) national security. Biden Administration officials have made noise signifying they understand, but we will see what, if any action, is taken. A provision in the FY 2021 National Defense Authorization Act (NDAA) could help, but it requires the Appropriations Committees to provide the funding to maintain and stimulate semi-conductor manufacturing in the U.S.
  • Companies and foreign countries vying for your DNA” By Jon Wertheim — CBS News. This piece is a frightening view of the waterfront in the high-tech world of genealogy, which is serving as a front of sorts to collect huge DNA data sets pharmaceutical companies and others will pay billions of dollars for. There are also concerns about investors from the People’s Republic of China (PRC) in light of the country’s ambition to lead the way into biotechnologies.
  • Brazil’s government plans 5G network separate from private market – document” By Lisandra Paraguassu — Reuters. It appears with former President Donald Trump having left office, plans in Brasilia to ban or sideline Huawei have left, too. Now the right-wing government is planning for a government 5G network in Brazil’s capital subject to high security standards that may rule out Huawei while leaving the rest of the nation’s 5G rollout to companies such as Huawei, a state of affairs Brazilian telcos might like considering that an estimated 50% of existing infrastructure is Huawei.
  • An AI saw a cropped photo of AOC. It autocompleted her wearing a bikini.” By Karen Hao — MIT Technology Review. Unsupervised learning algorithms are a new means by which algorithms are educated. Normally, algorithms are fed information, and with respect to images, researchers feed them an image along with its name. But, unsupervised leaning algorithms are let loose on the internet to learn, so it should not be surprising the toxicity of online life is absorbed. Consequently, an autocomplete function with a headshot of a man puts him in a suit whereas the headshot of a woman will be “completed” with a low-cut top or a bikini.
  • How the US Lost to Hackers” By Nicole Perlroth — The New York Times. This piece makes the point that the United States’ (U.S.) relentless focus on offensive cyber operations is now costing the nation as Russian, Chinese, Iranian, and other hackers are pillaging U.S. systems and assets. Defensive capabilities were always a stepchild, and this has left the U.S. vulnerable. A paradigm shift is needed across the U.S. because a number of other nations are every bit as good as the U.S. is.

Other Developments

  • Maryland may be on the verge of enacting the first tax in the United States (U.S.) on digital advertising. The Democratic majorities in the state Senate and House of Delegates seem poised to override the veto the Maryland governor’s veto. The “Taxation – Tobacco Tax, Sales and Use Tax, and Digital Advertising Gross Revenues Tax” (HB0732) would impose a tax on digital advertising in the state and may be outside a federal bar on certain taxes on internet services. However, if the veto is overridden, there will inevitably be challenges, and quite likely a push in Congress to enact a federal law preempting such digital taxes. Additionally, the primary sponsor of the legislation has introduced another bill barring companies from passing along the costs of the tax to Maryland businesses and consumers.
    • In a bill analysis, the legislature asserted about HB0732:
      • The bill imposes a tax on the annual gross revenues of a person derived from digital advertising services in the State. The bill provides for the filing of the tax returns and making tax payments. The part of the annual gross revenues of a person derived from digital advertising services in the State are to be determined using an apportionment fraction based on the annual gross revenues of a person derived from digital advertising services in the State and the annual gross revenues of a person derived from digital advertising services in the United States. The Comptroller must adopt regulations that determine the state from which revenues from digital advertising services are derived.
      • The digital advertising gross revenues tax is imposed at the following rates:
        • 2.5% of the assessable base for a person with global annual gross revenues of $100.0 million through $1.0 billion;
        • 5% of the assessable base for a person with global annual gross revenues of $1.0 billion through $5.0 billion;
        • 7.5% of the assessable base for a person with global annual gross revenues of $5.0 billion through $15.0 billion; and
        • 10% of the assessable base for a person with global annual gross revenues exceeding $15.0 billion.
    • In his analysis, Maryland’s Attorney General explained:
      • House Bill 732 would enact a new “digital advertising gross revenues tax.” The tax would be “imposed on annual gross revenues of a person derived from digital advertising services in the State.” Digital advertising services are defined in the bill to include “advertisement services on a digital interface, including advertisements in the form of banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services.” The annual gross revenues derived from digital advertising services is set out in a formula in the bill.
      • Attorney General Brian Frosh conceded there will be legal challenges to the new Maryland tax: there are “three grounds on which there is some risk that a reviewing court would find that the taxis unconstitutional: (1) preemption under the federal Internet Tax Freedom Act; (2) the Commerce Clause; and, (3) the First Amendment.”
    • Governor Larry Hogan (R) vetoed the bill in May along with others, asserting:
      • These misguided bills would raise taxes and fees on Marylanders at a time when many are already out of work and financially struggling. With our state in the midst of a global pandemic and economic crash, and just beginning on our road to recovery, it would be unconscionable to raise taxes and fees now. To do so would further add to the very heavy burden that our citizens are already facing.
    • As mentioned, a follow on bill has been introduced to ensure the digital advertising tax will not result in higher costs for Maryland businesses and residents. The “Digital Advertising Gross Revenues Tax – Exemption and Restriction” (SB0787) provides:
      • A person who derives gross revenues from digital advertising services in the state may not directly pass on the cost of the tax imposed under this section to a customer who purchases the digital advertising services by means of a separate fee, surcharge, or line-item.
      • However, the news media would be exempted from the digital advertising tax in this bill.
  • The chair and subcommittee chairs of the House Energy and Commerce Committee wrote Facebook, Twitter, and Google “as part of their ongoing investigation into tech companies’ handling of the COVID-19 pandemic in response to reports that COVID-19 vaccine misinformation is escalating on their platforms” per the press release. Chair Frank Pallone, Jr. (D-NJ), Health Subcommittee Chair Anna G. Eshoo (D-CA), Oversight and Investigations Subcommittee Chair Diana DeGette (D-CO), Communications and Technology Subcommittee Chair Mike Doyle (D-PA), and Consumer Protection and Commerce Subcommittee Chair Jan Schakowsky (D-IL) noted the letters “are a follow-up to letters they sent to the same companies in July, expressing deep concern regarding the rampant rise of COVID-19 disinformation more generally.” They argued:
    • These COVID-19 vaccines and others in development present hope in turning the deadly tide of the last year and can be a powerful tool in our efforts to contain the pandemic—but only if the public has confidence in them. Thus, it is imperative that [Facebook, Twitter, and Google] stop[] the spread of false or misleading information about coronavirus vaccines on its platform. False and misleading information is dangerous, and if relied on by the public to make critical health choices, it could result in the loss of human life.
    • They posed the following questions:
      • Details of all actions the companies have taken to limit false or misleading COVID-19 vaccine misinformation or disinformation on their platforms;
      • Descriptions of all policy changes the companies have implemented to stop the spread of false or misleading COVID-19 vaccine misinformation, and how the companies are measuring the effectiveness of each such policy change;
      • Whether the companies have used information labels or other types of notifications to alert users about COVID-19 vaccine misinformation or disinformation, and if so, the date(s) it first began implanting labels or notifications and how the companies are measuring its effectiveness;
      • Details about the five common targeted advertisements that appear alongside COVID-19 vaccine misinformation or disinformation on the platforms;
      • Details on the companies’ COVID-19 vaccine misinformation and disinformation enforcement efforts; and
      • Whether the companies have coordinated any actions or activities with other online platforms related to COVID-19 vaccine misinformation or disinformation.
  • Graphika released a report on fake social media activity that seems to be advocating for Huawei and against the Belgian government’s proposed ban of the Chinese company in its 5G networks. Graphika asserted the following:
    • A cluster of inauthentic accounts on Twitter amplified, and sometimes created, articles that attacked the Belgian government’s recent plans to limit the access of “high-risk” suppliers to its 5G network. The plans are reportedly designed to limit the influence of Chinese firms, notably Huawei and ZTE. 
    • The operation appears to have been limited to Twitter, and it did not gain substantial traction: other than a systematic amplification by the real accounts of Huawei executives in Western Europe, its main amplification came from bots with zero followers. 
    • As so often in recent influence operations, the accounts used profile pictures created by artificial intelligence. 
    • There is insufficient forensic evidence to prove conclusively who was running the fake accounts, or who sponsored the operation.
  • One of the dueling groups convened at the United Nations (UN) to address information and communications technologies (ICTs) issues and problems has issued a draft report and related materials. The group backed by the Russian Federation, People’s Republic of China (PRC), and other nations, the Open-Ended Working Group (OEWG), has issued its Zero Draft, which details its discussions, findings, and recommendations. The OEWG is working alongside the United States led Group of Governmental Experts on Advancing responsible State behaviour in cyberspace in the context of international security, which is expected to finish its work in May 2021. The OEWG also made available the following:
    • In a 2018 U.N. press release, it was explained that two resolutions to create groups “aimed at shaping norm-setting guidelines for States to ensure responsible conduct in cyberspace:”
      • the draft resolution “Developments in the field of information and telecommunications in the context of international security” (document A/C.1/73/L.27.Rev.1), tabled by the Russian Federation.  By the text, the Assembly would decide to convene in 2019 an open-ended working group acting on a consensus basis to further develop the rules, norms and principles of responsible behaviour of States.
      • the draft resolution “Advancing Responsible State Behaviour in Cyberspace in the Context of International Security” (document A/C.1/73/L.37), tabled by the United States…[that] would request the Secretary-General, with the assistance of a group of governmental experts to be established in 2019, to continue to study possible cooperative measures to address existing and potential threats in the sphere of information security, including norms, rules and principles of responsible behaviour of States.
      • The U.N. noted that ‘[s]everal speakers pointed out that language in [the Russian proposal] departed from previous year’s versions and included excerpts from the Group of Governmental Experts reports in a manner that distorted their meaning and transformed the draft resolution.” The U.N. also acknowledged that “some delegates said [the U.S. proposal] called for the establishment of a new group of governmental experts, with the same mandate as the previous ones and the same selectivity in terms of its composition.” The U.N. added that “[m]ore broadly, while some delegates regretted to note that two separate, yet similar draft resolutions were tabled, others highlighted a need for bold, swift action to prevent cyberattacks and malicious online behaviour.”
    • In the 2018 resolution offered by Russia, an OEWG was convened “with a view to making the United Nations negotiation process on security in the use of information and communications technologies more democratic, inclusive and transparent…and to further develop the rules, norms and principles of responsible behaviour of States” from previous UN-sponsored efforts. The OEWG was further tasked with examining “the ways for their implementation; if necessary, to introduce changes to them or elaborate additional rules of behaviour; to study the possibility of establishing regular institutional dialogue with broad participation under the auspices of the United Nations; and to continue to study, with a view to promoting common understandings, existing and potential threats in the sphere of information security and possible cooperative measures to address them and how international law applies to the use of information and communications technologies by States, as well as confidence-building measures and capacity-building and the concepts.” The OEWG is charged with submitting “a report on the results of the study to the General Assembly at its seventy-fifth session, and to provide the possibility of holding, from within voluntary contributions, intersessional consultative meetings with the interested parties, namely business, non-governmental organizations and academia, to share views on the issues within the group’s mandate.”
  • The United States (U.S.) Department of Justice (DOJ) “announced a coordinated international law enforcement action to disrupt a sophisticated form of ransomware known as NetWalker.” The DOJ asserted:
    • NetWalker ransomware has impacted numerous victims, including companies, municipalities, hospitals, law enforcement, emergency services, school districts, colleges, and universities. Attacks have specifically targeted the healthcare sector during the COVID-19 pandemic, taking advantage of the global crisis to extort victims.
    • The NetWalker action includes charges against a Canadian national in relation to NetWalker ransomware attacks in which tens of millions of dollars were allegedly obtained, the seizure of approximately $454,530.19 in cryptocurrency from ransom payments, and the disablement of a dark web hidden resource used to communicate with NetWalker ransomware victims.
    • According to the affidavit, once a victim’s computer network is compromised and data is encrypted, actors that deploy NetWalker deliver a file, or ransom note, to the victim. Using Tor, a computer network designed to facilitate anonymous communication over the internet, the victim is then provided with the amount of ransom demanded and instructions for payment.
    • Actors that deploy NetWalker commonly gain unauthorized access to a victim’s computer network days or weeks prior to the delivery of the ransom note. During this time, they surreptitiously elevate their privileges within the network while spreading the ransomware from workstation to workstation. They then send the ransom note only once they are satisfied that they have sufficiently infiltrated the victim’s network to extort payment, according to the affidavit.
    • According to an indictment unsealed today, Sebastien Vachon-Desjardins of Gatineau, a Canadian national, was charged in the Middle District of Florida. Vachon-Desjardins is alleged to have obtained at least over $27.6 million as a result of the offenses charged in the indictment.
    • The Justice Department further announced that on Jan. 10, law enforcement seized approximately $454,530.19 in cryptocurrency, which was comprised of ransom payments made by victims of three separate NetWalker ransomware attacks.
    • This week, authorities in Bulgaria also seized a dark web hidden resource used by NetWalker ransomware affiliates to provide payment instructions and communicate with victims. Visitors to the resource will now find a seizure banner that notifies them that it has been seized by law enforcement authorities.
  • The European Data Protection Board (EDPB) has issued guidance to European Union (EU) member states that governs transfers of personal data under Directive (EU) 2016/680 (the Law Enforcement Directive aka the LED.) This guidance flows, in significant part, from Schrems II, the case that struck down the adequacy decision on which the United States-EU Privacy Shield relied. The EDPB noted
    • The LED “lay[s] down the specific rules with regard to the processing of personal data by competent authorities for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, including the safeguarding against the prevention of threats to public security.”
    • The LED determines the grounds allowing the transfer of personal data to a third country or an international organisation in this context. One of the grounds for such transfer is the decision by the European Commission that the third country or international organisation in question ensures an adequate level of protection.
    • As specified by the CJEU, while the level of protection in the third country must be essentially equivalent to that guaranteed in the EU, ‘the means to which that third country has recourse, in this connection, for the purpose of such a level of protection may differ from those employed within the European Union ’but‘ those means must nevertheless prove, in practice, effective’. The adequacy standard therefore does not require to mirror point by point the EU legislation, but to establish the essential-core requirements of that legislation.
  • Canada’s federal and state privacy officials asserted in a statement “that [Clearview AI] violated federal and provincial privacy laws.” Clearview AI is an American firm that assembled much of its database by scraping photos from public facing websites, a practice that has left many privacy stakeholders uncomfortable. In a sense these findings are moot, for in summer 2020 shortly after this investigation was launched, Clearview AI announced it would no longer offer its facial recognition technology in Canada. However, a separate federal investigation of whether the Royal Mounted Canadian Police’s use of Clearview AI’s services violated Canadian law is ongoing. The Office of the Privacy Commissioner of Canada, the Commission d’accès à l’information du Québec, the Office of the Information and Privacy Commissioner for British Columbia and the Office of the Information and Privacy Commissioner of Alberta claimed:
    • Clearview AI’s technology allowed law enforcement and commercial organizations to match photographs of unknown people against the company’s databank of more than 3 billion images, including of Canadians and children, for investigation purposes. Commissioners found that this creates the risk of significant harm to individuals, the vast majority of whom have never been and will never be implicated in a crime.
    • The investigation found that Clearview had collected highly sensitive biometric information without the knowledge or consent of individuals. Furthermore, Clearview collected, used and disclosed Canadians’ personal information for inappropriate purposes, which cannot be rendered appropriate via consent.
    • When presented with the investigative findings, Clearview argued that:
      • Canadian privacy laws do not apply to its activities because the company does not have a “real and substantial connection” to Canada;
      • Consent was not required because the information was publicly available;
      • Individuals who placed or permitted their images to be placed on websites that were scraped did not have substantial privacy concerns justifying an infringement of the company’s freedom of expression;
      • Given the significant potential benefit of Clearview’s services to law enforcement and national security and the fact that significant harm is unlikely to occur for individuals, the balancing of privacy rights and Clearview’s business needs favoured the company’s entirely appropriate purposes; and
      • Clearview cannot be held responsible for offering services to law enforcement or any other entity that subsequently makes an error in its assessment of the person being investigated.
    • Commissioners rejected these arguments. They were particularly concerned that the organization did not recognize that the mass collection of biometric information from billions of people, without express consent, violated the reasonable expectation of privacy of individuals and that the company was of the view that its business interests outweighed privacy rights.
    • On the applicability of Canadian laws, they noted that Clearview collected the images of Canadians and actively marketed its services to law enforcement agencies in Canada. The RCMP became a paying customer and a total of 48 accounts were created for law enforcement and other organizations across the country.
    • The investigation also noted the potential risks to individuals whose images were captured and included in Clearview’s biometric database.  These potential harms include the risk of misidentification and exposure to potential data breaches.

Coming Events

  • On 10 February, the House Homeland Committee will hold a hearing titled “Homeland Cybersecurity: Assessing Cyber Threats and Building Resilience” with these witnesses:
    • Mr. Chris Krebs, Former Director, Cybersecurity and Infrastructure Security Agency, U.S. Department of Homeland Security
    • Ms. Sue Gordon, Former Principal Deputy Director of National Intelligence, Office of the Director of National Intelligence
    • Mr. Michael Daniel, President & CEO, Cyber Threat Alliance
    • Mr. Dmitri Alperovitch, Executive Chairman, Silverado Policy Accelerator
  • The House Judiciary Committee’s Antitrust, Commercial, and Administrative Law Subcommittee will hold a hearing titled “Justice Restored: Ending Forced Arbitration and Protecting Fundamental Rights.”
  • The Federal Communications Commission’s (FCC) acting Chair Jessica Rosenworcel will hold a virtual Roundtable on Emergency Broadband Benefit Program on 12 February “a new a program that would enable eligible households to receive a discount on the cost of broadband service and certain connected devices during the COVID-19 pandemic.” The FCC also noted “[i]n the Consolidated Appropriations Act of 2021, Congress appropriated $3.2 billion” for the program.
  • On 17 February, the Federal Communications Commission (FCC) will hold an open meeting, its first under acting Chair Jessica Rosenworcel, with this tentative agenda:
    • Presentation on the Emergency Broadband Benefit Program. The Commission will hear a presentation on the creation of an Emergency Broadband Benefit Program. Congress charged the FCC with developing a new $3.2 billion program to help Americans who are struggling to pay for internet service during the pandemic.
    • Presentation on COVID-19 Telehealth Program. The Commission will hear a presentation about the next steps for the agency’s COVID-19 Telehealth program. Congress recently provided an additional $249.95 million to support the FCC’s efforts to expand connected care throughout the country and help more patients receive health care safely.
    • Presentation on Improving Broadband Mapping Data. The Commission will hear a presentation on the work the agency is doing to improve its broadband maps. Congress directly appropriated $65 million to help the agency develop better data for improved maps.
    • Addressing 911 Fee Diversion. The Commission will consider a Notice of Proposed Rulemaking that would implement section 902 of the Don’t Break Up the T-Band Act of 2020, which requires the Commission to take action to help address the diversion of 911 fees by states and other jurisdictions for purposes unrelated to 911. (PS Docket Nos. 20-291, 09-14)
    • Implementing the Secure and Trusted Communications Networks Act. The Commission will consider a Third Further Notice of Proposed Rulemaking that proposes to modify FCC rules consistent with changes that were made to the Secure and Trusted Communications Networks Act in the Consolidated Appropriations Act, 2021. (WC Docket No. 18-89)
  • On 27 July 2021, the Federal Trade Commission (FTC) will hold PrivacyCon 2021.

© Michael Kans, Michael Kans Blog and michaelkans.blog, 2019-2021. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Michael Kans, Michael Kans Blog, and michaelkans.blog with appropriate and specific direction to the original content.

Image by Ranjat M from Pixabay

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