OMG. Can our long international nightmare be over? HP won a criminal case against Autonomy, the e-discovery vendor it bought in 2011 for more than $10 billion, of which it had to write off $8.8 million, claiming that the U.K. company had inflated its value.
Sushovan Hussain, “the former chief financial officer of Autonomy Corp. was found guilty of orchestrating an accounting fraud to arrive at the $10.3 billion price Hewlett-Packard Co. paid for the U.K. software maker more than six years ago,” writes Joel Rosenblatt for Bloomberg. “A jury voted to convict Sushovan Hussain Monday on all 16 counts of wire and securities fraud after three days of deliberations in San Francisco federal court.”
The trial lasted three months, according to the Telegraph. Hussain was first charged by prosecutors in 2016. He was convicted of one count of conspiracy, fourteen counts of wire fraud and one count of securities fraud. Assuming the charges stick, he faces a maximum sentence of 20 years in prison, and a fine of $250,000, plus restitution, for the conspiracy count and each of the wire fraud counts, as well as a maximum sentence of 25 years in prison, and a fine of $250,000, plus restitution, for the securities fraud count. He was supposed to have been sentenced May 8, but that appears to have been changed to August. In the meantime, he had to surrender his passport, wear a GPS bracelet, and can’t go to airports or bus stations, according to the Times UK (which also has even more detail about the accounting problems Autonomy had).
So what did he do?
“Specifically, Hussain used backdated contracts, roundtrips, channel stuffing, and other forms of accounting fraud to inflate Autonomy’s publicly-reported revenues by as much as 14.6% in 2009, 17.9% in 2010, 21.5% in the first quarter of 2011, and 12.4% in the second quarter of 2011,” according to a Department of Justice press release. “In addition, Hussain, and his co-conspirators, fraudulently concealed from investors and market analysts the scale of Autonomy’s hardware sales, which were used to boost the company’s reported top-line revenue. Autonomy’s total revenues included re-sold hardware of approximately $53.3 million in 2009, $99.08 million in 2010, $20.09 million in the first quarter of 2011, and $20.85 million in the second quarter of 2011.”
On the other hand, HP didn’t come off so great in the case, either. For one thing, it didn’t help HP’s case that it had several other purchases where it had to write off part of the value.
“Hussain’s lawyer argued that HP bought, and then hobbled, an increasingly profitable software company,” Rosenblatt writes. “It was one of a string of failed acquisitions requiring write-offs, a list that includes Palm, Compaq, and Electronic Data Systems, he said.”
“Even if his conviction is upheld, HP’s acquisition of Autonomy should be remembered as one of the most poorly thought out and incompetently executed deals of all time,” notes the Financial Times in an unsigned editorial. “ It does not suggest that HP was anything less than catastrophically careless.
But hey! We’re not done!
“It also gives the company momentum as it heads toward a trial next year in London in a $5 billion civil suit against Hussain and Autonomy co-founder and former Chief Executive Officer Mike Lynch,” Rosenblatt writes.
Plus, Hussain plans to appeal, writes FT.
Here we go again.
Yet another court has ruled that U.S. Customs and Border Patrol agents have to have some sort of probable cause to search people’s electronics. The Fourth Circuit has now agreed.
The Department of Homeland Security has said in the past that it is entitled to broad powers of search within 100 miles of the U.S. border. Knowing that the U.S. is 3000 miles across, that doesn’t sound like much, but given how bumpy our border is, that covers a lot of territory. More to the point, it covers a lot of territory where people are.
CityLab actually has a really cool map of just how much territory we’re talking about. “The border zone is home to 65.3 percent of the entire U.S. population, and around 75 percent of the U.S. Hispanic population,” writes Tanvi Misra. “This zone, which hugs the entire edge of the United States and runs 100 air miles inside, includes some of the densest cities—New York, Philadelphia, and Chicago. It also includes all of Michigan and Florida, and half of Ohio and Pennsylvania.”
And those broad powers of search are…pretty broad. “In the ‘border zone,’ different legal standards apply,” Misra writes. “Agents can enter private property, set up highway checkpoints, have wide discretion to stop, question, and detain individuals they suspect to have committed immigration violations—and can even use race and ethnicity as factors to do so.”
Consequently, over the past few years, there have been a number of incidents of people having the storage of their portable electronics, ranging from laptops to cellphones, and even cameras, searched. That includes the electronics of people such as journalists and attorneys, who are supposed to have some degree of protection against such things.
And we’re not just talking a Border Patrol agent taking a cellphone and scanning to see what apps it has. This involves actually taking the person’s electronics, shipping them hundreds of miles to a lab, and doing a full forensic—sometimes taking as long as seven months. It also appears that this sort of search has been ramping up under President Donald Trump.
This has been drawing the ire of civil liberties organizations such as the American Civil Liberties Union and the Electronic Frontier Foundation for some time.
Fortunately, over the past couple of years, courts have started to agree, especially after the Riley Supreme Court decision that said law enforcement officials had to have a warrant to search someone’s cellphone. In March, the Eleventh Circuit – while it did uphold a border search – at least had a strong dissent. Also in March, the Fifth Circuit made such a ruling, although it fell short of actually saying agents couldn’t search devices.
Most recently, the Fourth Circuit made a similar ruling, in a case called Kolsuz. “After Riley, we think it is clear that a forensic search of a digital phone must be treated as a nonroutine border search, requiring some form of individualized suspicion,” the court writes. Indeed, the court suggested that it might have gone further had the appeal asked for it. “Because Kolsuz does not challenge the initial manual search of his phone at Dulles, we have no occasion here to consider whether Riley calls into question the permissibility of suspicionless manual searches of digital devices at the border.”
In response to criticism and rulings, Customs and Border Protection has been backing off some. For example, in January it clarified that agents could only search the physical devices themselves, not whatever storage they might have access to in the cloud. A number of people are also taking steps such as not taking their own phones and laptops across the border, or wiping them as they approach the border.
Where this goes from here isn’t clear. So far, it seems like the lower courts are mostly agreeing. In addition, the civil liberties organizations have been pushing for a test case that would extend the Riley decision to laptops at the border. This may yet end up at the Supreme Court, but it isn’t clear how it would rule with this court and in this political climate.
A couple of weeks ago, there was some discussion about the material seized from the office of Michael Cohen, the attorney for the Trump organization, and the e-discovery implications of that. In passing was also a reference to a number of cell phones and hard drives that had also been seized, and since then, there’s been some further discussion of this nuance.
“Manhattan federal prosecutors seized as many as 16 cell phones when the FBI raided the home, office and hotel room of President Trump’s personal lawyer Michael Cohen,” writes Kaja Whitehouse [which has to be the best journalist name ever] in the New York Post. “Prosecutor Thomas McKay made the astonishing revelation while telling a judge Thursday that the feds are on track to hand over seized materials to Cohen’s lawyers by May 11. In explaining the process, McKay said the feds have already turned over the contents of four phones and one iPad.”
What does this tell us? At the time the materials were seized, I wrote “(No word on whether any of the electronic devices are encrypted or otherwise protected by a fingerprint or a password. That would be an interesting wrinkle. Although, seriously, they should have been.)” So, among other things, it appears that the phones weren’t encrypted, or even particularly password-protected, if the FBI was already able to retrieve their contents.
On the other hand, McKay reportedly said that some will take longer. “The contents of two Blackberries may take as long as three weeks to be produced to Cohen and the special master and one cell phone may take 104 days to have its data extracted,” write Kara Scannell and Katelyn Polantz, for CNN. This could indicate that some of them were encrypted. Back in the day, one of the selling points of BlackBerrys was how secure they were.
One of the more interesting side discussions were the people who found it “astonishing” that someone in 2018 would have 16 cell phones, and used that as “proof” there must have been something nefarious going on (including some pretty funny lists of what all the phones could have been used for).
Not to mention the age of some of the electronics. “Among the devices seized are two BlackBerrys, suggesting Cohen has been holding on to his electronics for many, many years,” Whitehouse writes.
I would expect that most of my friends have ten-year-old electronics kicking around their houses. I know I do. And BlackBerry fans tended to be particularly…possessive about their devices.
“You know how I know Michael Cohen is either a professional fixer or one of the drug dealers from The Wire?” writes Monique Judge in The Root. “Because when federal agents raided his office, hotel room and apartment earlier this month, they seized as many as 16 phones and other devices. You read that correctly. There were 16 phones. Either Cohen is working very hard in the lowrises, keeping McNulty and Bunk off of Stringer and Avon’s trail, or he had all those phones to deal with his various troublesome clients who couldn’t seem to stay out of trouble. No, seriously? Who has 16 old phones just lying around, waiting to be taken and imaged by federal agents who are possibly building a case against you and your biggest and most famous client, the president of the United States?”
Um, me. Except for the federal agents part.
If having 16 cell phones is incriminating, I’m in trouble. I don’t even buy a new phone every year, nor do my partner and child, and yet our household probably has close to 16 phones kicking around.
- 3 OnePlus (a One, and Two, and my 5T, my current phone)
- Samsung Galaxy SIII, my previous phone
- At least two flip phones before that
- My daughter has at least two cell phones and a flip phone
- My partner just got a new phone, plus he has at least two Samsung Galaxy Notes before that
That’s up to 12 already, and I haven’t even looked around the device shelf or the computer room.
Other nerds are also backing Cohen up on this. “In fairness there are a dozen cellphones in my house right now,” writes one commenter to Judge’s article. “They’re between 1 and 18 years old. I can’t just throw them away. It’s one of those things that I should do, but can’t bring myself to do. What can I say, I’m a tech junkie.”
And as an attorney, Cohen probably lives and dies by his phone. A recent Vanity Fair piece noted that, even though the FBI had allegedly literally seized the phone he was holding in his hand, a couple of days later he was still…on the phone.
But what about the old phones? “16 phones?” Judge writes. “Was he keeping them so he could later blackmail his clients?”
Why do people keep cell phones?
- In the case of an attorney, it may be that he’s concerned about security and what might be on the phones.
- Or he could think, as I have sometimes, “these are too good to throw out or donate, I should try to sell them” – and never get around to it.
- When you have a teenage girl, you often keep a couple of spare phones around in case something happens to her primary phone, because MOM OH MY GOD MY PHONE DIED is worse than losing an arm.
- This is kind of a nerdy household, so we’re always thinking we’ll find some sort of project use for them, such as acting as some sort of server for the TV or stereo. I also understand that some Pokemon Go fans have multiple accounts so they can gang up on raids or exchange gyms among each other, and you would need a separate device for each of those.
- And occasionally we do donate phones to a battered women’s shelter; they can always use them to give to people trying to escape abusive situations who don’t have the money to get their own.
So Cohen may or may not be a bad guy. But 16 phones doesn’t prove that. It just means he’s one of us.
Whether it was “ingenious” or “creepy” depends on which way you look at it, but the recent capture of the alleged Golden State Killer wasn’t the first time that law enforcement has used genetic databases to find criminals. However, it went further than police have done so before, and some people are concerned.
The so-called Golden State Killer was said to have been responsible for12 killings, 50 rapes, and 120 burglaries in 10 counties across California between 1976 and 1986. Police had obtained a DNA sample from a crime scene, and figured they would compare it with DNA samples in genealogical databases. In this particular case, law enforcement used the “open-source” site GEDmatch, as opposed to commercial sites that have been used at other times, such as Ancestry.com and 23andme.com.
But where to start? “The FBI created a database of DNA profiles in the 1990s, and police queued up to check their evidence samples against it, hoping that their suspect might be an ex-convict, or already imprisoned, or otherwise in the system,” writes Avi Salk in the Washington Post. “The method even allowed police to solve old cold cases — some of them initially investigated long before DNA testing existed. But the database was little help if the person tied to the DNA wasn’t already in it,” which was the case here.
First, they selected people who lived in areas where the Golden State Killer struck. They then narrowed down their search to people who fit the same age and description. Finally, they compared the DNA sample with those people. They also obtained a DNA sample from a piece of trash from the suspect, and compared it with the DNA sample from the crime scene, to make sure it matched.
“The suspected Golden State Killer was not in this database, either, but it didn’t matter,” writes Selk in a different Washington Post article. “A distant relative of his was, police say, and that person’s DNA partially matched evidence related to the serial killer. Instantly, the pool of suspects shrank from millions of people down to a single family.”
Interestingly, unlike some other cases, law enforcement did not work with the database company, but simply used its resources. In fact, part of the reason that police used GEDmatch was that 23andMe and Ancestry have refused law enforcement requests, Selk writes, out of concern about false positives. “Although we were not approached by law enforcement or anyone else about this case or about the DNA, it has always been GEDmatch’s policy to inform users that the database could be used for other uses,” the company reportedly said in a statement.
GEDMatch is a free site where users who have obtained DNA profiles from commercial companies such as Ancestry.com and 23andMe can upload them to expand their search for relatives, according to CBS News, which added that an investigator told them that officials did not need a court order to access GEDMatch’s database of genetic blueprints. For example, it is also used to help identify remains, including murder victims, according to CBS News.
“If you are concerned about non-geneatological uses of your DNA, you should not upload your DNA to the database and/or you should remove DNA that has already been uploaded,” the statement from GEDmatch said. Well, yes. But how many people think of that sort of thing when they’re hoping to find relatives? How many of them will remember the places they’ve uploaded it to take it down now?
In fact, in response, some genealogists are reportedly making profiles on GEDmatch private, writes Sarah Zhang in The Atlantic. They fear that backlash from this case could make it harder for people trying to find family—or even police trying to find other suspects—in the future. The practice, known as familial DNA testing, is actually forbidden in some states. “A policy that implicates New Yorkers in a criminal investigation solely because they are related to someone with DNA in the state’s databank is a miscarriage of justice,” Donna Lieberman, the New York Civil Liberties Union’s executive director, told CBS News, which added that Maryland and the District of Columbia have banned it.
“People who submit DNA for ancestors testing are unwittingly becoming genetic informants on their innocent family,” Steve Mercer, the chief attorney for the forensic division of the Maryland Office of the Public Defender, told the Associated Press, adding that they “have fewer privacy protections than convicted offenders whose DNA is contained in regulated databanks.”
There’s one group of people that is really, really excited about the seizure of the potentially millions of legal documents associated with President Donald Trump: E-discovery people.
“Discovery nerds — and political junkies — are having a field day with the materials seized by the FBI’s raid of Trump Organization attorney Michael Cohen,” writes Kathryn Rubino of the Above the Law blog.
E-discovery is an issue because the seized materials include not only paper records, but electronic ones, write Benjamin Weiser and Alan Feuer of the New York Times. “The courtroom battle over what to do with the seized material came one week after federal agents, in an extraordinary move, descended on Mr. Cohen’s properties and walked away with 10 boxes of documents and as many as a dozen electronic devices, including cellphones and computer hard drives.”
(No word on whether any of the electronic devices are encrypted or otherwise protected by a fingerprint or a password. That would be an interesting wrinkle. Although, seriously, they should have been.)
In fact, several of the people proposed to be the Special Master in charge of the documents are experts in e-discovery, writes Rubino writes in a separate blog post. The purpose of the Special Master is to act as a neutral party to determine which of the documents might be protected by attorney-client privilege, explains Weiser in a different New York Times article.
The Hon. Frank Maas, Retired Federal Magistrate Judge, now with the mediation firm of JAMS Neutral, is described by Rubino as a “Frequent speaker on e-discovery issues at the Conference on Preservation Excellence and the E-Discovery Institute Leadership Summit, while the Hon. James C. Francis IV, a retired Federal Magistrate Judge and a Distinguished Lecturer at City University of New York Law School, is described as a “Frequent lecturer on electronic discovery, employment litigation, constitutional torts, legal ethics, and pretrial practice.”
Incidentally, both of these gentlemen are on the government’s list of potential special masters – not the defense’s, Rubino notes. This is as an alternative to what the prosecution actually wants, which is a “taint team,” a term that has enabled an entire section of the legal profession to channel its internal 12-year-olds. (What is a “taint team,” aside from making people giggle? “A taint team made up of lawyers who are not involved in the underlying investigation will almost certainly be put in place to review the materials obtained in the raid before those materials are handed over to the prosecutorial team,” writes Claire Foran of CNN.)
All in all, E-discovery people haven’t been so excited about a gigantic set of documents since Hillary Clinton.
Most excited of all is Andy Wilson, CEO of Logikcull, an e-discovery vendor. Logikcull, which has only been on the radar since 2015 or so, has actually been bringing e-discovery into several current events these days, including bitcoin.
Wilson was interviewed by Ian Lopez of the Legaltechnews blog. “In Wilson’s estimation, document collection and review with about 1.4 million documents and two reviewers would take between 24 and 48 hours,” Lopez writes, primarily by giving those reviewers tools to let them filter out the Amazon orders, fantasy football discussions, and other “junk” from the email records. (Presumably “junk” is literal and not metaphorical in this particular case, speaking of 12-year-olds.)
In fact, it’s the presence of all that junk that has led many legal professionals to encourage their clients to set up a rigid document retention policy that ends up deleting many email messages and other files after a short period of time. Anything that’s retained has the potential of causing damage later, as well as increasing legal costs by adding to the pile that must be examined.
If you’ve been revealing secrets on Facebook and thinking that you’re okay because your messages and postings are private, not public, think again: a recent court case ruled that attorneys could rule to more easily discover private as well as public Facebook material.
The case is Forman vs. Henkin, and the court that so ruled, unanimously, was the New York Court of Appeals.
“Prior to Forman, the developed case law with respect to discovery of social media accounts largely required a defendant to lay a factual predicate for the relevancy of the evidence being demanded,” write Robert S. Kelner and Gail S. Kelner in the New York Law Review. While courts could sometimes gain access to private material in Facebook, it was typically because there was something public that led people to believe there was more incriminating material privately.
In the case of Forman, that didn’t happen. “Plaintiff was injured in a fall from a horse,” the Kelners write. “She testified that, before she was injured, she posted photographs of herself engaging in various activities on Facebook. She claimed that her injuries prevented her from continuing to participate in those activities. She further alleged that because of brain injuries caused by the accident, she had sustained cognitive impairment. She testified that since her injury, she was unable to compose emails and text messages.”
Consequently, attorneys for the owner of the horse, whom she was suing, wanted to see all of her Facebook postings. The court rejected this, but did say she had to produce all the post-accident private photographs “that did not show nudity or romantic encounters.”
In addition, since she was claiming that she was unable to compost email and text messages, she also “was directed to provide an authorization for defendant to obtain records from Facebook, showing each time plaintiff posted a private message after the accident and the number of characters or words in the text of each private message, from the date of her injury until she deactivated her Facebook account.”
“The practical upshot of the Forman decision is that the traditional rules governing most forms of discovery are applicable to plaintiffs’ social media accounts. It is no longer necessary for a defendant to lay a specific kind of foundation from the public portions of a plaintiff’s Facebook page to obtain any social media discovery,” the Kelners write. “But that does not mean that defendants now have unfettered access to plaintiffs’ social media information,” A defendant’s boilerplate demand for a plaintiff’s full social media accounts is exceedingly unlikely to pass muster under Forman. Plaintiff’s counsel should carefully scrutinize demands to ensure they are appropriately tailored and object to overbroad demands for unlimited Facebook records.”
This isn’t the first time that the legal profession has been salivating to get its hands on the wealth of data Facebook holds. In 2013, New York prosecutors had filed 381 warrants to get photos and private information from Facebook on hundreds of public employees – some of them 9/11 first responders — suspected of Social Security fraud. Facebook continued to argue in 2017 that the warrants were overbroad.
This is also a case of not being greedy. According to one attorney, the case was appealed in the first place by the plaintiff, not the defendant. “Although this was only a partial victory for the defendant, it was actually the plaintiff who appealed the decision to the Appellate Division,” writes Christine Rodriguez in Above the Law. “That court further limited the order and directed plaintiff to provide only photographs posted on her Facebook account that she intended to use at trial. The defendants decided to appeal that order in the Court of Appeals and won.”
In fact, because the defendant didn’t appeal, it’s possible a future court may rule on the issue even more broadly, writes Martin Clearwater and Bell. “Since the defendant did not appeal from the Supreme Court Order which denied much of his original request, review by the Court of Appeals was limited to reinstating the discovery allowed by the Supreme Court’s Order,” it writes. “As a result it is possible that the Court of Appeals will reach these issues again, at which point it may allow even greater discovery into social media material.”
Rodriguez also notes that this limited ruling only applies to civil cases. “In criminal matters, courts often grant search warrants that may require disclosure of everything in a Facebook account,” she writes. “This is common in large scale drug and gang conspiracy cases where what someone else posts about you could be used as evidence to link you to the conspiracy – and then your whole Facebook account and every other social media account is fair game.”
One might say that the logical conclusion is that people should make sure they don’t have any such evidence – public or private – on their Facebook page or other social media account when filing a lawsuit. On the other hand, deleting such material, particularly once a lawsuit has been filed, could be seen as destroying evidence, writes Patrick M. Connors in the New York Law Review. “An attorney is permitted to advise a client to remove postings from a social media site, but cannot advise the client to destroy such information,” he writes. (The distinction between “removing” and “destroying” in this context isn’t clear.) He also cites the New York Rules of Professional Conduct, which provides that a lawyer “shall not suppress any evidence that the lawyer or the client has a legal obligation to reveal or produce.”
“While not addressed in Forman, lawyers advising clients regarding the contents of a social media site must be aware of potential disclosure obligations and the duty of preservation, which begins at the moment litigation is reasonably anticipated,” Connors writes. “Once litigation is reasonably anticipated, anything of potential relevance that is removed from a site must be preserved so a party can comply with any future obligations to produce the materials in disclosure.”
With all the strife going on right now, it’s nice to know that the world can come together on one day in mutual agreement. No, it’s not the Olympics, and that was last month, anyway. It’s World Backup Day.
In case you haven’t heard about it, World Backup Day is always celebrated on March 31, the day before April Fool’s Day, presumably to protect oneself against “tricks.” It’s intended to encourage users to set up regular backup practices for their data, both business and personal. First held in 2011, World Backup Day was actually spawned by a reddit discussion and is primarily intended for consumers who might otherwise lose pictures, music, and so on.
To be honest, it isn’t clear to what extent World Backup Day is still a thing. The Facebook and Twitter pages for World Backup Day haven’t been updated in a year, and the content on the website doesn’t have dates on it so it isn’t clear whether any of that is new either.
One thing that did get updated was the OnTrack survey on backups. According to that survey,– 67 percent of businesses and consumers use some sort of backup solution, but almost 20 percent of the respondents experienced a data loss in 2017, compared with 27 percent in 2016.
Of the people who did experience data loss, 33 percent were not using a backup, down from 37 percent in 2013 and 39 percent in 2015. The main reason respondents did use a backup solution was that they didn’t have enough time to research and administer one.
From the respondents who experienced a data loss in 2017, 43 percent were able to restore 75-100 percent of their data from their backup, while 11 percent were able to restore 40-75 percent of their data. The remaining respondents lost either most of their data or all of it. In 2016, 66 percent were able to restore 75-100 percent of their data, while11 percent could only retrieve 40-75 percent of the data.
The problem, OnTrack says, is that people don’t test their backups. 27 percent of the respondents test their backup weekly while 32 percent test once a month. The remaining respondents either test their backup once a year or never. In 2016 24 percent of the respondents tested their backup once a week, 34 percent at least once a month, and 13 percent do a backup check once a year and almost 24 percent never did.
While there aren’t any official sponsors for World Backup Day this year – another indication that it might be going by the wayside – a number of vendors do have specials going on to commemorate the day. (Not to mention, presumably, hoping to sell a few products.) They appear to be the primary ones keeping World Backup Day alive. They include:
And even the people who run websites explaining all the special days of the year.
Disclaimer: I am a BackBlaze customer.
Oh hey. You know that Microsoft Ireland Supreme Court case?
In case you forgot, the case, which started in 2014, involved whether Microsoft must release data stored on one of its servers to a U.S. government agency, even though the data in question is outside the U.S. In January 2017, the Second Circuit Court of Appeals denied a rehearing of the case, which left the Supreme Court as the only option. At the very last minute – and after two extensions – the Department of Justice decided in June to go for it, and in October the Supreme Court agreed to hear the case. (Here’s a good description of it.)
The Supreme Court heard arguments on the case in February, and the consensus was actually that things didn’t necessarily look so good for Microsoft, but we would find out by June.
Which brings us to now. It’s been suggested all along that the proper way to address the situation would be to have Congress deal with it, and that’s just what happened. Legislation to update the Stored Communications Act and explicitly declare how the U.S. and foreign countries were to look at the data that each has about the other’s citizens was developed in February, cutely called the Clarifying Lawful Overseas Use of Data (CLOUD) Act. As it turns out, it was snuck into the omnibus spending bill that President Donald Trump signed on March 23.
Whether that’s a good thing depends on whom you ask.
“The proposed CLOUD Act creates a modern legal framework for how law enforcement agencies can access data across borders,” writes Microsoft president Brad Smith, in a blog post. “It’s a strong statute and a good compromise that reflects recent bipartisan support in both chambers of Congress, as well as support from the Department of Justice, the White House, the National Association of Attorneys General and a broad cross section of technology companies. It also responds directly to the needs of foreign governments frustrated about their inability to investigate crimes in their own countries. The CLOUD Act addresses all of this, while ensuring appropriate protections for privacy and human rights. And it gives tech companies like Microsoft the ability to stand up for the privacy rights of our customers around the world.”
In particular, the law helps clarify what happens when a foreign government tries to get data about a foreign person from the same country who is in the U.S. “Partner governments can, pursuant to a long list of qualifications, directly request data of non-U.S. persons from U.S.-based providers without going through the [Mutual Legal Assistance] process,” write attorneys Jennifer Daskal and Peter Swire in Lawfare. “If the foreign government wants to request the data of a U.S. citizen or resident, it still needs to employ the MLA system.” This was an issue because, increasingly, foreign governments were demanding that data about their citizens needed to be stored in their country, because they didn’t want to have to deal with the U.S. court system to get it, they write.
On the other hand, the civil liberties organizations that have also been submitting briefs, such as the American Civil Liberties Union and the Electronic Frontier Foundation, are not happy.
“First, it empowers U.S. law enforcement to grab data stored anywhere in the world, without following foreign data privacy rules,” writes David Ruiz of the Electronic Frontier Foundation. “Second, it empowers the president to unilaterally enter executive agreements with any nation on earth, even known human rights abusers. Under such executive agreements, foreign law enforcement officials could grab data stored in the United States, directly from U.S. companies, without following U.S. privacy rules like the Fourth Amendment, so long as the foreign police are not targeting a U.S. person or a person in the United States.”
In particular, the foreign country would then be able to seize the communication between the foreign person and U.S. people, and then be able to pass that data on to the U.S. government, Ruiz warns. “At no point need probable cause be shown. At no point need a search warrant be obtained.”
Pragmatically, the point can be made that 1) We likely weren’t going to get legislation that was much better, at least with this Administration and 2) If Microsoft lost the Supreme Court case, which is what it was looking like, then there wouldn’t be any protection at all. So to a certain extent it seems like it’s, at least, better than nothing. To what degree this can be modified going forward isn’t clear.
It’s also not clear exactly what this means for the Supreme Court case. Do they just drop it? Will they get together and then say never mind? Or can they still issue a ruling? I guess we’ll see.
Anyone who’s surprised by the Dropbox IPO this Friday, please poke out your right eye. Because this thing has been a loooooooooooooong time coming.
As far back as 2011, analysts were speculating that Dropbox would file for an IPO. It was actually pretty surprising when Box filed for one first, in 2014. Then there was some back-and-forth and Box pulled its IPO because it was getting sued by OpenText. When it finally had its IPO in January 2015, it ended up going more than 50 percent, $20.20, after its initial price of $14 on the first day.
Today? Box is at 21.69, after going as high as 23.82 and as low as $9.90 since then.
Once Box filed, people expected Dropbox to soon follow. As long ago as 2015, Dropbox had hired a chief financial officer experienced in IPOs, presumably because the company had Plans. And now, finally, the day is here. Like competitor Box, it filed secretly, in January. The guess is that it’s going to go well; reportedly, it is already oversubscribed at its opening price of $16-$18 per share.
On the other hand, its valuation is actually less than it was a few years ago. According to Forbes contributor David Trainer, the valuation is $7 billion. As he himself points out, “At the midpoint of Dropbox’s expected price range, its post IPO valuation would be nearly one-third below the $10 billion valuation it earned in 2014,” he writes.
And Trainer is concerned it means the stock is overpriced. “Dropbox’s revenue growth is slowing. Revenue growth dropped from 40 percent in 2017 to 31 percent in 2016. Paid users grew by 35 percent in 2016 and 25 percent in 2017, while average revenue per paid user has barely changed,” he writes. “Despite amassing a large user base over the past decade (500+ million), Dropbox has yet to monetize these users in a profitable manner.”
Trainer isn’t the only one concerned. All sorts of people are making all sorts of comparison between Dropbox and Snap, which went public last year and didn’t do so well afterwards. In addition, a number of people are also reporting what they say are reasons that Dropbox actually isn’t doing too well (besides the fact that it’s operating at a loss), such as competing offerings from bigger companies such as Google and Microsoft. Plus, the stock market is nothing if not volatile these days.
On the other hand, after the successful IPO of Zscaler, a successful IPO for Dropbox – which will be followed by an IPO for Spotify – could presage all sorts of other major IPOs this year.
Another interesting theory is that Salesforce will eventually acquire Dropbox. It wouldn’t be the first time there had been rumors about a Dropbox acquisition. One wonders, though, if the company’s going to be acquired, why bother going through an IPO in the first place?
Disclaimer: I am a Dropbox customer.
Another day, another missing unencrypted portable hard disk drive.
In this particular case, it was from the athletic department at California State University, Fresno (which athletic fans typically refer to as Fresno State University, despite the fact that Fresno is not a state). The school lost a portable hard drive containing data about 15,000 people, “including names, addresses, phone numbers, birth dates, credit card numbers, driver’s license numbers and full or last four digits of Social Security numbers,” after a theft from the athletic department over the Christmas holiday that wasn’t detected until January 12. The data included former student athletes, sports-camp attendees and Athletic Corporation employees and were mostly from 2003 to 2014, the university said, adding that only about 300 of the people were still associated with the university.
This leads to the usual series of questions.
- Why wasn’t the data encrypted? That’s a lot of personally identifiable information. So what kept the university from encrypting the data?
- For that matter, why did the university collect 12 years of that data about 15,000 people all together in the first place? If the majority of these people are no longer with the university, wouldn’t it be a good idea to get rid of that data?
- And if that data had to be collected, why in the world was it on a portable hard disk drive? “Having sensitive information on an external hard drive is a breach waiting to happen,” writes Bailey Miller in YourCentralValley.com.
- Reportedly, 18 laptops were stolen from the department at the same time. Didn’t those laptops have hard disk drives as well? What sort of data is on those? Were they encrypted? Or were they all Chromebooks that connected to the university data via the cloud? Given how often laptops and hard disk drives seem to walk away, wouldn’t it actually make sense to use a Chromebook or some similar system?
- Why did it take almost two months from the time the theft was detected until letting the potential victims know? “Notification of affected individuals began this week as soon as University officials could verify the extent of the breach and the names and contact information of those affected, and the proper notification process.” Okay, but *why* does it take that long? Don’t criminals usually try to use such numbers right away before the victims know they’re missing?
- Why did it take so long to discover that the portable hard disk drive was one of the items stolen, if the theft happened over the Christmas break? Interestingly, the school’s announcement said only that the hard disk drive was “reported missing” on January 12, not that it was stolen then. When was it actually stolen, anyway? A different notification indicated that the theft was during the last week of the year. So it took more than two weeks just to realize it was missing?
- That different notification also adds that “health-insurance numbers and personal health information” could also have been part of that data. Why was that fact left out of the other notification? How much do people have to worry about having their health information compromised or their health insurance used by someone else?
- How do they know exactly what data was on that hard disk drive? If it’s simply a dump of the university database, aren’t those people wondering why the university has that data? (One story noted that the CIO had to go through a million files to determine what data was on the drive.)
- Oh, so “there is no reason to believe that the hard drive was stolen for the information it contained” and that the thieves didn’t know what was on it. WELL, GUESS THEY KNOW NOW, DON’T THEY? Yes, there’s reasons why these thefts have to be promoted the way they are, and security through obscurity doesn’t work, but these announcements do seem counterproductive sometimes.
- Even if the thieves didn’t steal the hard drive for the data, wouldn’t they check the hard drive to see what goodies might be on it before fencing it, even if they were only looking for a bootlegged copy of Girls Gone Wild? “There’s this implication that the information was not or will not be accessed because the hard drive wasn’t stolen for the information,” writes AlertBoot, a security vendor, in its blog. “How faulty is that logic? Let us assume that some guy boosts a car because he’s going to sell it to a chop shop. Are you telling me that he’s not going to maybe take a peek in the glove compartment box or the trunk because he stole the car for its hardware, and not its content? Possibly lift up the armrest to access the center console? Steal the quarters in the ashtray?”
- “To help reduce the possibility of similar incidents from happening in the future, Fresno State is reinforcing its procedures with its employees regarding the proper storage of confidential information and the importance of protecting portable electronic devices.” You think? Like, maybe not using portable electronic devices at all? And encrypting them if for some reason they’re necessary?
- Victims are being offered the usual free year of credit monitoring. Ever wonder whether credit monitoring companies stage these thefts to help keep themselves in business?