Welcome to Hillicon Valley, The Hill’s newsletter detailing all you need to know about the tech and cyber news from Capitol Hill to Silicon Valley.
Welcome! Follow the cyber team, Olivia Beavers (@olivia_beavers) and Jacqueline Thomsen (@jacq_thomsen), and the tech team, Harper Neidig (@hneidig). And CLICK HERE to subscribe to our newsletter.
TRADE TALKS CROSS INTO CYBER: U.S.-China trade tensions are poised to come to a head this week when President TrumpDonald John TrumpHyde-Smith prevails in Mississippi runoff after ‘public hanging’ stumble Trump, Cuomo to meet at White House to discuss infrastructure project Ivanka Trump, Tim Cook visit Idaho school district MORE meets with Chinese President Xi Jinping, and a major component of those talks will likely focus on intellectual property (IP) theft.
Federal officials have repeatedly accused Chinese hackers of stealing trade secrets, saying those actions are the underlying reason for billions of dollars worth of tariffs on imports from China.
And while trade talks are expected to dominate the conversation between Trump and Xi at the Group of 20 summit in Buenos Aires, Argentina, lawmakers on Capitol Hill say they expect the two leaders to discuss the economic espionage that has plagued American companies for decades.
“I don’t know how you could have a conversation without bringing it up,” said Sen. Marco RubioMarco Antonio RubioUS opposes Russian nominee to lead Interpol Senators push back on Russian official’s candidacy for Interpol president The Hill’s Morning Report — Are Pelosi’s Democratic detractors going too far? MORE (R-Fla.), a member of the Senate Foreign Relations Committee, on Tuesday.
Sen. Mark WarnerMark Robert WarnerSenate Intel chair: Panel’s Russia probe will extend into 2019 Dems slam Trump for siding with Saudi Arabia in Khashoggi killing CIA’s report complicates US response to Khashoggi murder MORE (Va.), the top Democrat on the Senate Intelligence Committee, said the same day that Trump should “absolutely” raise the issue with Xi. “We’re not really seeing a dramatic decline in IP theft,” Warner added.
The Office of the U.S. Trade Representative (USTR) alleged last week that China continues to conduct economic espionage despite the U.S. trade penalties.
“China shows no sign of ceasing its policy and practice of conducting and supporting cyber-enabled theft and intrusions into the commercial networks of U.S. companies,” USTR wrote in its assessment, arguing that tariffs are needed to counter China’s hacking efforts.
China has denied the allegation.
How Trump is fighting back: The Trump administration’s weapon of choice for combating cyber theft has been tariffs, and the president upped the stakes for the Xi meeting earlier this week when he told The Wall Street Journal that he was leaning toward slapping another series of tariffs on $200 billion of Chinese imports, including popular electronics like iPhones that are manufactured in China.
White House economic adviser Larry Kudlow said at a press briefing Tuesday that intellectual property theft was one of the topics that needed to be resolved in order to reach a trade deal with China.
While intellectual property theft from U.S. companies has been a common practice by China for decades, cyber experts told The Hill that hackers have been more aggressive in recent months, with some adopting new tactics that are more destructive and make it more difficult for them to be detected.
GOOGLE CEO SET TO TESTIFY NEXT WEEK: Google CEO Sundar Pichai is set to testify on Capitol Hill next week, marking the chief executive’s first public appearance before Congress as lawmakers intensify their criticism of the world’s biggest tech giants.
Pichai is scheduled to testify before the House Judiciary Committee on Dec. 5, the panel announced Wednesday, offering lawmakers an opportunity to scrutinize Google’s filtering practices and allegations of political bias.
The tech executive is likely to field sharp questions about allegations that Google censors conservative voices, a theory promoted by President Trump and key Republican figures. Pichai has previously disputed claims of political bias against conservatives in Google’s search results.
“The technology behind online services like social media and Internet search engines can … be used to suppress particular viewpoints and manipulate public opinion,” House Judiciary Committee Chairman Bob GoodlatteRobert (Bob) William GoodlatteTop GOP lawmaker says ‘it’s awfully tough’ for Ivanka Trump to comply with government email standards Gowdy suggests videotaping private interview with Comey to address concerns about leaks Comey shares news of House GOP subpoena: ‘Happy Thanksgiving’ MORE (R-Va.) said in a statement. “It is Congress’ responsibility to the American people to make sure these tech giants are transparent and accountable in their practices.”
House Majority Leader Kevin McCarthyKevin Owen McCarthyBorder melee ups ante on shutdown Nancy Pelosi should be Speaker of the House Trump heads to California to meet first responders amid deadly wildfires MORE (R-Calif.) also released a statement claiming Google’s “business practices may have been affected by political bias.”
DOJ MOVES ON SAMSAM ATTACKS: A federal grand jury on Wednesday charged two Iranian nationals for their involvement in an international hacking scheme in which they used a sophisticated malware to extort victims for a ransom, the Department of Justice announced.
Authorities allege that Faramarz Shahi Savandi and Mohammad Mehdi Shah Mansouri carried out the 34-month hacking campaign that caused over $30 million in damages by using ransomware known as “SamSam,” according to the unsealed six-count indictment.
The hackers, whom the DOJ says acted from inside Iran, allegedly targeted hospitals, state agencies, city governments and municipalities, along with other public institutions in their attacks, breaching the computer systems.
The DOJ identified more than 200 victims, including the city of Atlanta, the city of Newark, the Port of San Diego, the Colorado Department of Transportation as well as six health-care related entities that include the Kansas Heart Hospital in Wichita, Kan., and MedStar Health, headquartered in Columbia, Md.
Deputy Attorney General Rod RosensteinRod Jay RosensteinRussian firm indicted by Mueller wants permission to disclose ‘sensitive’ US info Both political parties guilty of weaponizing impeachment The Hill’s Morning Report — Pressure is on Trump, Republicans in Mississippi Senate race MORE, who announced the charges, said the hackers hijacked computers of places like hospitals and health-care providers — entities that are carrying out life-saving services — because they knew it would maximize their chances of getting paid the ransom.
“The conspirators collected more than $6 million in extortion payments and caused more than $30 million in losses,” Rosenstein said. “Many of the victims were public agencies with missions that involve saving lives and performing other critical functions for the American people.”
According to the indictment, the hackers would also disguise their attacks to look like legitimate computer activity.
BOTNET CHARGES: The Department of Justice (DOJ) on Tuesday unsealed charges against eight individuals in an alleged widespread digital advertising fraud that reportedly used botnets to give the appearance of billions of humans looking at online ads.
Aleksandr Zhukov, Boris Timokhin, Mikhail Andreev, Denis Avdeev, Dmitry Novikov, Sergey Ovsyannikov, Aleksandr Isaev and Yevgeniy Timchenko were charged with crimes including wire fraud, money laundering, computer intrusion and aggravated identity theft, according to a department release.
The department also announced that a federal court unsealed seizure warrants allowing the FBI to take over 31 domains as well as seize data from 89 servers involved in the botnets, which are networks of infected internet-connected devices that can be utilized by hackers.
“As alleged in court filings, the defendants in this case used sophisticated computer programming and infrastructure around the world to exploit the digital advertising industry through fraud,” U.S. Attorney for the Eastern District of New York Richard Donoghue said in a statement. “This case sends a powerful message that this Office, together with our law enforcement partners, will use all our available resources to target and dismantle these costly schemes and bring their perpetrators to justice, wherever they are.”
Ovsyannikov, Zhukov and Timchenko have all been arrested in different countries and are awaiting extradition, while the remaining defendants are at large, according to the DOJ release.
How the schemes worked: The indictment claims that five of the defendants ran what they claimed was an ad network and committed the fraud with the assistance of another defendant in the case.
The allegedly fake ad network rented more than 1,900 computer servers and used them to create ads on fake websites, giving the appearance that humans were viewing ads on those spoofed domains and causing businesses to pay more than $7 million for the commercials.
In another scheme, three of the defendants allegedly began another fake advertising network that utilized a botnet to reach more than 1.7 million infected computers, download fake domains and then run ads on the spoofed web pages.
The scheme led to businesses paying the false ad network more than $29 million for the ad views, which were never actually seen by humans, according to the indictment.
GROUPS PUSH FOR HOUSE HEARINGS ON T-MOBILE-SPRINT MERGER: Critics of the $26 billion T-Mobile-Sprint merger are pushing House Democrats to take a closer look at the mega-deal when they take control of the lower chamber in the new Congress.
Concerned about the lack of attention the merger has gotten from Republican leadership, a coalition of consumer and labor groups sent a letter to top Democrats on Wednesday asking them to hold hearings on the deal early next year.
“This is the largest telecom merger before the regulatory agencies,” said Debbie Goldman, the director of telecommunications policy at the Communications Workers of America (CWA). “It affects hundreds of millions of U.S. wireless subscribers.”
Among those joining CWA in signing the letter were Public Knowledge, the Open Markets Institute, Consumer Reports and Common Cause.
The deal would combine two of the four major wireless carriers in the U.S.
Opponents worry that such a major tie-up in an already heavily concentrated market would reduce competition and lead to higher prices for consumers, especially those that rely on telecom companies’ prepaid subsidiaries.
And labor groups like CWA are predicting that as many as 30,000 workers will lose their jobs as a result of the merger.
CORSI DOESN’T WANT YOUR PARDON: Conservative author and conspiracy theorist Jerome Corsi said Wednesday that he won’t be pursuing a pardon from President Trump after rejecting a plea deal offer from the special counsel that would have allowed him to avoid prison.
Corsi said during an interview with The Hill that he had no interest in pursuing a presidential pardon.
“My decision to reject the special counsel offer was not made anticipating a pardon, I have no reason to believe or anticipate that President Trump would pardon me,” Corsi said.
“And even if the president promised that he would not pardon me, I would still make the same decision, because I’m not going to violate my integrity in order to stay out of jail,” he continued.
The Hill has reached out to the White House for comment.
Corsi said earlier this week that he had rejected an offer for a plea deal from the special counsel on a charge of lying to federal investigators.
BUT HOLD ON… CORSI HAS A DEFENSE AGREEMENT WITH TRUMP: Roger StoneRoger Jason StoneMueller docs show communications between Corsi, Stone on WikiLeaks’s email release Trump lashes out at Mueller: A ‘conflicted prosecutor gone rogue’ Hillicon Valley: Justices weigh iPhone app case | Farewell to Facebook’s war room? | UK Parliament turns up heat on Zuckerberg | Russian hackers return after midterms | Papadopoulos begins 2-week prison sentence | NASA lands probe on Mars MORE ally and conservative conspiracy theorist Jerome Corsi has a joint defense agreement with President Trump.
Trump’s attorney Rudy Giuliani confirmed to The Hill on Wednesday that such an agreement is in place. Under a joint defense agreement, attorneys of different subjects are allowed to share information.
The Daily Beast first confirmed that the agreement is in place, with Giuliani telling the site that he has recently talked about Corsi with the president. He told the news outlet that Trump “vaguely knows” Corsi but “doesn’t remember the last time they spoke.”
The Daily Caller first reported this week that Corsi detailed the information-sharing agreement in an upcoming book.
Corsi told The Hill in an interview that he believed the joint defense agreement was “one way,” adding that his attorney, David Gray, only shared information about Corsi’s case with Trump attorney Jay Sekulow, and Sekulow did not pass on information about the president or other cases.
Sherrod BrownSherrod Campbell BrownGM draws Washington’s anger with new layoffs On The Money: GM job cuts, plant closures enrage Washington | Trump warns GM to stay in Ohio | More tariffs likely on Chinese goods | Cyber Monday set for record online sales | Farm bankruptcies spike: Fed report House Ethics Committee extends probe into Renacci MORE JUMPS INTO DEBATE OVER BIG TECH: Sen. Sherrod Brown (D-Ohio) said Wednesday he believes the government has not done a sufficient job of enforcing antitrust laws, but was noncommittal about breaking up tech giants.
Brown was asked on BuzzFeed’s “AM to DM” if the government should break up big tech companies like Amazon and Facebook.
“I don’t know,” Brown responded. “I would say this: I’m not a lawyer, but I have noticed that over the years government hasn’t been nearly aggressive enough on antitrust issues.”
He pointed to airline mergers in recent years that he said have hurt his constituents in Cleveland, Cincinnati and Columbus by driving up prices, affecting jobs and leading to fewer direct flights.
Brown also cited Democrats’ push to uphold net neutrality, and said the approach to big tech companies should be similar.
“Net neutrality was obviously a really important issue that the progressives, as I did, stood strong with users not with these companies,” he said. “And I think we follow that construct when we decide what to do on all of this.”
MNUCHIN HACKED? Treasury Secretary Steven MnuchinSteven Terner MnuchinTrump sanctions top Nicaraguan officials Charities fear hit from Trump tax law during holidays On The Money: GM job cuts, plant closures enrage Washington | Trump warns GM to stay in Ohio | More tariffs likely on Chinese goods | Cyber Monday set for record online sales | Farm bankruptcies spike: Fed report MORE on Wednesday suggested his Twitter account was breached after his account retweeted a post bashing General Motors.
“A retweet was posted last night on @stevenmnuchin1 by someone other than the Secretary or an individual with authorized access to his account,” Mnuchin said Wednesday on Twitter.
“As such, the retweet is being deleted.”
BE BEST: First lady Melania TrumpMelania TrumpThe Hill’s 12:30 Report — Trump lashes out at Mueller | What to watch in Mississippi Senate vote | WikiLeaks denies report Manafort met Assange The Hill’s Morning Report — Pressure is on Trump, Republicans in Mississippi Senate race White House unveils ‘American Treasures’ holiday decorations MORE said Wednesday that while she encourages young people to be kind on social media, sometimes there are exceptions.
“Sometimes you need to fight back, I’m sorry,” she said, while answering questions during an event at Liberty University in Lynchburg, Va., that focused on the opioid epidemic.
Trump’s “Be Best” initiative focuses on opioid abuse, social media practices and general well-being. A priority of the campaign focuses on preventing cyberbullying.
FACEBOOK EXPANDING LOCAL NEWS FEATURE: Facebook on Wednesday announced that it is expanding its local news feature “Today In” to 400 cities across the U.S as well as Australia.
The feature aggregates information from local media outlets, government, community organizations and first responders. Users can either check in directly at their “Today In” page or allow the feature to promote local news on their main newsfeed.
The latest expansion will mostly reach small and midsize cities, as well as “news deserts,” places that lack a robust local media presence. It was previously only available in a few dozen U.S. locations.
SENATORS WANT PROBE INTO ZTE’S WORK IN VENEZUELA: A bipartisan pair of senators is asking the White House to look into whether the Chinese telecommunications firm ZTE violated U.S. sanctions by helping Venezuela track and monitor its citizens.
In a letter shared with The Hill, Sens. Chris Van HollenChristopher (Chris) Van HollenDems criticize Brady’s new tax package 2020 Democrats challenge Trump’s use of troops at Mexico border Cortez Masto named Dem Senate campaign chairwoman MORE (D-Md.) and Marco Rubio (R-Fla.) write that they are concerned that, by building a database to help Venezuela track its citizens, ZTE “may have violated U.S. export controls and sanctions laws” as well as an agreement between the Commerce Department and ZTE reached earlier this year.
The letter was set to be sent to the White House on Wednesday, according to a Reuters report, and follows an investigation from the news outlet revealing ZTE was helping Venezuela build a database to track its citizens through identification cards.
AN OP-ED TO CHEW ON: Call for ‘universal verification’ on social media.
A LIGHTER CLICK: Wicked smart.
NOTABLE LINKS FROM AROUND THE WEB:
That virus alert on your computer? Scammers in India may be behind it. (New York Times)
New parents complain Amazon baby-registry ads are deceptive. (Wall Street Journal)
Google’s cellular service gets rebranded, offers support for iPhones. (Ars Technica)
Community activists kill Elon Musk’s plan for an underground freeway tunnel in L.A. (Vice)