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Sunday, July 8, 2012

New Zealand Police Investigated over MegaUpload’s Founder Arrest

The country is currently conducting a judicial review as to how its police ended up carrying out a bizarre unauthorized raid on Kim Dotcom, the cyberlocker’s owner. The officers who carried out the police raids on Dotcom’s house will have to take the stand in order to give evidence for the judicial review.

So far it is known that the warrants were issued on behalf of the Federal Bureau of Investigation, which in its turn was acting as enforcer for the US entertainment industry. However, the warrants were ruled illegal last week by High Court judge. The latter also claimed that it was against the law to take the copies of Kim’s personal computer to the United States.

According to the local media, Kim Dotcom requires an independent lawyer to pass through the seized evidence and give all irrelevant content back to him. The authorities of the United States have charged Kim Dotcom and three of his colleagues in the United States with numerous copyright offences and are currently trying to extradite him. Meanwhile, Dotcom’s lawyers want an independent lawyer to be appointed by the court to go through the evidence and decide which of its part is important.

Crown lawyer John Pike, appearing for the Attorney General, agreed that sorting the mess out wasn’t simple, with part of the problem being that the Crown was working for a foreign government.

The US is worried that allowing for an independent barrister it would give him “disproportionate authority”. It means that they fear he won’t let them have evidence which they really need to make a case against the MegaUpload founder.

The important part of the problem is that this case is “breaking new ground” in extradition legislation in the country. First of all, the judicial review of the search warrants’ legality is an entirely new feature of an extradition case. Secondly, another decision by a district court judge to allow disclosure to Kim Dotcom meant that the suspects suddenly have more rights now: at least, they can hear what evidence the authorities have against them to ruin their life.

Of course, the Feds are appealing this point – they believe that such governments as New Zealand’s one must turn over any person the US names as a suspect to face a kangaroo court in the United States without presenting any evidence.

Iceland Warned of WikiLeaks Vendetta

The government of Iceland warned one of its MPs not to travel to the United States because the country was about to engage on some wholesale arrests of people involved with WikiLeaks.

Indeed, Icelandic MP Birgitta Jónsdóttir confirmed that her attorneys have seen papers showing that a grand jury investigation into WikiLeaks’ whistleblowing is currently underway in the United States. Birgitta Jónsdóttir was a co-producer of a video released by WikiLeaks to show US soldiers shooting civilians in Baghdad from a helicopter. The MP admitted that already the American Department of Justice tried to hack by legal means into her social media accounts. Unfortunately, the legal team of Twitter unsealed the US secret document and provided a chance to defend personal data in court from being used in a dragnet, for the first serious attacks on the whistleblower’s supporters and volunteers.

Meanwhile, the speaker of the Icelandic Parliament even raised this issue at the International Parliamentarian Union in 2011, but was backed. It said the outfit was concerned that the legal framework over the use of electronic media wasn’t enough to provide sufficient guarantees to ensure respect for freedom of expression, access to data and the right to privacy.

Birgitta Jónsdóttir has parliamentary immunity under its home country’s law when she carries out political activity, but the United States clearly ignored that fact. She believes that it’s proof that WikiLeaks’ founder is clearly not overreacting to his fear of possible extradition to the United States. Jónsdóttir added that the fact her Twitter data sought was clearly content to establishing key facts about an ongoing investigation.

However, during a meeting at the Icelandic State Department, Jónsdóttir received a message from the newly appointed US Ambassador, who was instructed by his country to announce that if Jónsdóttir ever popped over to the US, the border agents wouldn’t get out their rubber hoses, and promised she wouldn’t have to face an involuntary interrogation.

Nevertheless, the Icelandic State Department strongly advised Birgitta against visiting the United States. In a while, her attorneys saw at least a couple of sealed grand jury papers relating to her when requesting access to the papers pertaining to her case. Of course, the United States wants to get even with the service, and its founder has every reason to worry about being extradited to the country, no matter from Britain or Sweden.

The Chinese Hacked Indian Navy Systems

According to the latest security reports, India has left contemplating its naval, as the Chinese hackers managed to take out the computer system on the National Navy’s Eastern Command.

The intruders managed to plant malware on the targeted system based near the city of Visakhaptnam. The malware in question sent sensitive information to specific IP addresses in China. Local media reported how the country’s first nuclear missile submarine, named INS Arihant, had been running trials at the facility and might have got the bug.

The malware was said to work the following way: it had created a hidden folder where it copied specific files and documents based on the keywords it had been programmed to identify. The folder remained hidden on the pen drives until those were put in the machines connected to the web. That’s when the bug silently sent the collected files to the specific IP addresses in China.

Thus far, it is unclear how much was stolen in the hacking raid. The experts also can’t say whether the malware in question operated like Stuxnet and needed to be installed within the system by a spook first. Meanwhile, India has already arrested six officers for procedural lapses that caused the breach. The authorities do not reveal whether any of the officers can later face spying charges.

The interesting part of the story is that the national navy stores sensitive information only in standalone machines that are never connected to the Internet. Moreover, these computers also can’t have any ports or access points to use flash drives or external storage devices. How the malware got into machines should be a mystery for the Indians…

China Banned Bloomberg

Bloomberg has suddenly found out that the wrath of the Chinese government can be really long-lasting. The company discovered that its news portals were blocked after the story involving the finances of the extended family of the Chinese Vice President.

The websites in question have been unreachable in the country for 5 days. Moreover, it seems that they are likely to remain that way, at least until the country decides who its next leader will be.

In response, Bloomberg made an official announcement that its portals were blocked by the Chinese government after the company published details about the multi-million dollar fortunes of the Chinese Vice President Xi Jinping’s extended family.

Xi Jinping, the Vice President, is expected by many to head a group of younger leaders who would take over the Communist Party from President Hu Jintao, and Premier Wen Jiabao. Meanwhile, the Bloomberg story didn’t say that any mysterious assets were traced to Xi, his wife or their daughter. The story also never mentioned that there were any indication the Vice President intervened to advance his family’s business transactions, or of any wrongdoing by him or his relatives.

The experts point out that China seems determined to guard against any signs of discontent, and it is obvious that the fact that a team of Young Turks might take over could destabilize things even further.

Meanwhile, Belina Tan, the Bloomberg’s representative, said in the interview that there had been no impact to the Bloomberg’s other services, such as terminal feeds used by the customers to access economic information and news.

Declaration of Internet Freedom

A few days ago, online leaders, including the EFF, Public Knowledge, Free Press, and the Mozilla Foundation, have issued a document titled “Declaration of Internet Freedom”.


The declaration stands for a free and open web and calls not to censor the Internet. Although the document doesn’t propose any specific policy, it hopes to put a line in the sand about what things should look like. Meanwhile, its principles were designed to be accepted by the political arena.

The document was mainly sustained by liberal groups like the Free Press, but the declaration was also supported by a couple political figures, who encouraged Republicans to vote against SOPA and similar bills.

In the meantime, not everyone is happy with this move – for instance, a coalition of right-of-center outfits delivered their own version with various sets of principles, which included “humility” and “the rule of law” – the list includes TechFreedom, the Competitive Enterprise Institute, and the National Taxpayers Union. They argued that the original document contained an “ambiguity which could pave the way for more government intervention”.

However, if you take a closer look on both versions of the document, you would notice that they both highlight the importance of free expression, privacy and innovation. The question is how to apply those ideas. In fact, the real issue is the ambiguity of the documents, a feature which may prove fatal to the outfits’ plans. In addition, the Congress doesn’t seem to be going to vote against free speech or creativity, but it is less likely to support vague principles.

So, to make a change the initiators must have a good plan focused on the political sector. You can recall Demand Progress’ campaign, which emphasized that the MegaUpload case had set a precedent, and pointed out that now such portals like Gmail and Flickr might be in danger as well.

Demand Progress also filed an amicus brief (with more than 50,000 signatures) with a Virginia judge who managed the MegaUpload case. The matter is that solving the cyberlocker’s problem (and other troubles that may appear soon) would demand the legislation be modified, especially the 2008’s PRO-IP Act, because it enables federal government to seize domains, servers, and everything else they may need in a copyright violation case.

Advertising Sustains Online Piracy

Search giant Google, in co-operation with PRS for Music, has carried out a study titled “The 6 Business Models For Copyright Infringement”. So, what did they find out?

The report revealed that a key source of revenues for the services “believed by the largest copyright owners to be massively facilitating copyright violation” is advertising. However, this will surely start a heated debate instead of calming things down.

The study was based on a research made by Detica and the information offered by the Premier League, FACT, UKIE and The Publishers Associations. The report classifies piracy portals into six groups: live TV gateways, embedded streaming, peer-to-peer groups, music transaction, subscription groups, and rewarded freemium.

Meanwhile, there are a couple of interesting discoveries about the music sector. One of them emphasizes the importance of advertising (funding 86% of P2P community portals). Another one reveals the importance of search engines for music transaction services, which means that their users usually find out about the portal through a search engine.

The study in question indicates that there are a lot of various business models for Internet infringement that can be tackled if the industries co-operate. The collected evidence suggests that one of the most efficient ways to do so is to follow the money, looking for those advertisers who prefer to earn money from such services and working with payment providers in order to make sure they realize how their services are used.

The head of the PRS for Music hopes the result of the study will reach the government of the United Kingdom and other countries. He says that the portals involved in copyright violation are mainly businesses with real costs and revenue sources, which receive subscription and advertising revenue. On the other hand, those services have to pay their server or hosting costs. The only problem is that they don’t pay the creators of the material on which their businesses depend.

As you can see, the business models of the copyright infringers are different, and the authorities now have the evidence to realize which policy levers they need to apply to solve the problem of piracy and deal with those strategies efficiently.

Google Will Settle EU Charges

The search engine is reported quaking in its boots about the prospect of receiving a huge fine from the European Union for its anti-trust antics. The company has confirmed that it would settle antitrust charges following an ultimatum by the European regulators who investigated its business practices.

Joaquin Almunia, the Competition Commissioner of the European Union, set an early July deadline for the search giant to resolve the concerns of over a dozen competitors, one of which is Microsoft.

The representative of the search engine, Al Verney, told in the interview that Google had made a proposal to address the 4 areas the European Commission regarded as concerns. Those 4 areas seem to have come from the European watchdog that barked about the engine’s business practices after an 18-month long investigation.

Meanwhile, Antoine Colombani (a spokesperson for Almunia) confirmed that the watchdog of the European Union had got a letter from the search engine’s executive chairman, Eric Schmidt. However, nothing was said about the watchdog being satisfied yet.

They argue that the search giant may have favored its own search services over its competitors, including Microsoft. Besides, it may have also copied travel and restaurant reviews from the rivals’ websites without their permission.

An allegation is that the engine’s advertising deals with various websites effectively stopped its competitors from operating. At the same time, its contractual restrictions managed to prevent advertisers from moving their Internet campaigns away from the company.

FairSearch, whose members are Internet travel agencies and Google complainants Expedia and TripAdvisor, is hoping that the search engine’s proposals would address these problems.

File-Sharing & Streaming On the Rise

Recent research released by one of the network security companies confirmed that P2P file-sharing and online streaming are on the rise, compared to statistics from previous years.


The regular report from the network security company offered a thorough view on global data usage, based on evaluating traffic from over 2,000 companies throughout the globe, and covering a period from November 2011 to May 2012.

Taking into account that the lines between professional and private life still blur, the results of the report show that many employees prefer using personal technologies such as Netflix and Tumblr at work. That’s why the key to out new digital reality is not to ignore the existence of these programs or ban them, but to manage their usage by policies which provide modern workforce with the needed flexibility without impeding on the business.

The businesses find out that they are able to successfully employ network security controls which enable Internet application usage for the workers while meeting quality-of-service standards for business-critical programs and managing security threats.

The report found out 3 important things:

1. Streaming video bandwidth consumption has increased by over 300%: if you compare the statistics with the last report, you understand that the total bandwidth consumed by streaming video has more than tripled, reaching 13%. Moreover, 34 streaming programs were employed on 97% of the covered organizations’ networks. Such increase was thanks to services like YouTube and Netflix in America and PPStream in Asia and Pacific.

2. P2P file-sharing is currently gaining popularity with the consumption spiking with 700%. 7 P2P clients and 13 browser-based file-sharing applications were found on 90% of networks throughout the globe.

3. Social networking remains a strong player gathering many file-sharing enthusiasts. For instance, Tumblr and Pinterest became very popular in the past 6 months. Meanwhile, at least one social networking client was found on 97% of the covered companies, with an average of 29 different social networking applications found on each company.

Another interesting finding: almost 1/3 of every dollar spent on bandwidth supports streaming media or file-sharing, with these two categories encompassing about 250 apps, most of which are dedicated to personal use.

Irish ISP’s Agreement with Music Industry Favored by Court

Four record labels (Warner Music, EMI Records, Universal Music and Sony Music, all based in Ireland) claimed a victory over the Irish Internet service provider Eircom after the court ruled to reject a notice issued by the Data Protection Commissioner.

The record labels challenged Data Protection Commissioner’s notice, which was filed late last year, and finally won this battle. The established agreement between the music industry and Eircom says that a “three-strikes” regime has to be enforced on the Eircom’s customers.

If a subscriber fails to comply after 3 notifications, their Internet account will be suspended for a week, but after 4 warnings the infringer can lose their access to the web permanently. Data Protection Commissioner claimed that the notice was aimed at stopping the information protection and privacy legislation breaches. On the other side, the record labels said the notice would meddle with their agreement.

The court decided that the notice was invalid because it brought no further reasons for it to be applied. In addition, the reasons also involved a misconstruction of the relevant legislation. Finally, the notice was regarded as an excess of power and irrationality, as the record labels claimed in the proceedings. The High Court agreed with the music industry, saying that the notice was unlawful. The DTC denied the claims.

The notice in question was filed after the Data Protection Commissioner followed on a complaint from an Eircom customer who got a warning. According to the settlement, the record labels had to provide Eircom with IP addresses of its subscribers suspected of unauthorized downloading. In response, the Data Protection Commissioner reminded that the European Court of Justice has already ruled that the protocol was illegal under EU laws.

Flaws Found in US Watchdog System

Jonathan Mayer, a computer scientist, has recently proved that the search giant Google has been bypassing technology developed to block tracking systems in order to allow for anonymous browsing. He suspected that Internet advertisers might be circumventing the legislation which stopped them from tracking people who moved from one website to another. Mayer ran a number of tests where he bought adverts which acted as sniffers for the kind of unauthorized cookies believed to be used.

As a result, he found out that Google was secretly planting cookies on many iPhone browsers. This was done in exactly the way the FTC tries to protect people from, so the search engine is now reportedly facing a fine of over $10,000,000.

Worse still, the FTC itself did not discover the infringement – it didn’t even look for it. Jonathan Mayer is just a 25-year-old student of Stanford University working on law and computer science degrees. He discovered what the search giant was up to in his free time between classes and homework, and didn’t even get any money for his work.

The media reports say that although the FTC should be stopping the search engine and other organizations from doing such things, the outfit is given little cash to do its job. Moreover, there is reluctance for American politicians to take on the Internet giants, especially if those are funding their election campaigns.

However, the press reports revealed that the FTC officials hired by the Obama administration were privacy hawks who earlier worked for consumer-rights groups such as Public Citizen and the EFF. Their problem is lack of time or money to take on the technological leg work necessary to find out what the companies are doing. Another amazing fact is that the FTC’s Privacy and Identity Protection technologist isn’t able to do his research work, because his PC has security filters blocking access to key websites!

Wednesday, July 4, 2012

London Olympics Face Cyber Attack Threat

Jonathan Evans, MI5 head, has warned about the astonishing level of threat posed by hacker attacks on business and government infrastructure in the United Kingdom. During his speech, he emphasized the increase in hacking activity which was carried out on an “industrial scale”, and usually committed by nation states.

It was pointed out that hybrid private-public partnerships have been sniffing out important intellectual property and leaking commercial secrets. In fact, every single Fortune 500 company was suspected to be under threat. Jonathan Evans explained that the threat is now reaching greater prominence, as a number of high-profile attacks increases, with both businesses and authorities being attacked aggressively.

Meanwhile, Evans points out that it’s not just about the government secrets, but also about the safety and security of the country’s infrastructure. For instance, one of the major London listed companies was fleeced for £800 million in result of a state-sponsored hacker attack. This intrusion caused intellectual property loss and a commercial disadvantage, with leaking the company’s corporate secrets, and the experts predict that they won’t be the only corporate victim of these problems.

Indeed, as the world moves into the connected web of things, it automatically increases opportunities for cyber criminals, which could lead to the risk of real world damage, not only information loss. Ahead of the London Olympic Games, the fears are that even if terrorists don’t succeed in hacker attacks, they are undoubtedly aware of the potential to do so.

Security experts at Sophos confirm that the signs of increased hacker threats are evident for a while now. This is a real threat, no matter if it’s financially motivated cyber crime or Anonymous groups, or a real state-sponsored cyber crime. Of course, the authorities should be on high alert for such attacks at the costly Olympics.

Meanwhile, political hacktivists are now regarded as the biggest threat which causes havoc at the event, so there should be protective measures in place if the United Kingdom wants to avoid a disaster. The experts say that more needs to be done in order to mitigate the threat of such actions, otherwise the country will surely see not just the private sector, but also government and military outfits put at risk, which would cause devastating impact on the British companies.

European Cyber Insurance Kick-Started

ENISA, the European Network and Information Security Agency, is currently calling on insurance providers to make cybersecurity a key policy. At the same time, security experts believe that the agency might struggle to have this idea regulated.

The report from ENISA reveals that both businesses and consumers will benefit from the better protection for their PCs and information in case the cyber insurance market is kick started. While cyber security is an important concern for EU and national policy makers, for some reason insurance providers across the region generally can’t comprehensively address digital risk in their policies. The reason might hide in a range of obstacles the industry faces, including a lack of actuarial information on the extent of the risk, along with the uncertainty about what kind of risk they should insure against.

When trying to address these problems, the outfit made 4 recommendations: for example, it points out that a collection of information in cyber insurance in the region, including the types of risk insured, premiums paid and levels of payouts to define future trends, will help to see which holes should be filled. Then, if one takes a look at how incentives could encourage the businesses to enhance their information security, this will also help reduce the risk and financial liability in the event of data protection regulations breach.

Finally, the outfit issued recommendations for an agreed framework in order to help companies put a measurable value on their data. ENISA explains that this work could be assisted by privacy and data security advisors, alongside with the underwriters and the European Commission. The outfit itself is also ready to provide further support.

This proposal is mostly regarded as a good idea, because there are indeed far too many loopholes right now. This means that when it comes to getting money back or reimbursing companies for this kind of loss, there will be a long time frame that sometimes leads to no money or support at all. Still, although the outfit has good intentions, the strategy wouldn’t be as straight forward as implementing the policy and demanding businesses to comply. At least, setting up such insurance policies is very complicated and costly. 

Apple Will Get Rid of Its Reality Distortion Field

For years now, Apple has been promoting a myth saying that its devices were immune to the malware which plagued personal computers and claimed that it was thanks to the superior OS design.

Only Apple fans could seriously believe in it, while this myth was made up by the company’s marketing, even after their operating system appeared to be regularly turned over at hacking events.

In fact, Apple managed to get away with it only because its iOS was such a small player that virus writers couldn’t be bothered writing code to target it. However, this was before iPhones and iPads became too widespread and this OS became a viable target.

According to the security company Sophos, there was a change in the company’s marketing: for instance, official Apple website now features a new statement: instead of the claim that its Mac computers are “completely immune to viruses” you can now see just “It's built to be safe”. Although Apple refused to comment this, the press asked its former engineer currently working with Google what the change could be all about.

The latter said that Jobs’ reality distortion field actually represented “a confounding mix of a charismatic rhetorical style, indomitable will, and eagerness to bend any fact to fit the purpose at hand. He also said that spin played a great role in the company’s marketing strategy. However, Apple doesn’t have much to stand on when calling its Macs absolutely safe when they aren’t.

It became clear when the Flashback trojan killed off all illusions that the Mac machines were completely secure. The malware in question even managed to create a false Apple-signed Java certificate that tricked users into clicking the “Continue” button in order to allow the virus infect the host further.

The experts believe that most of the security problems were caused by the company’s arrogance. Apple couldn’t be bothered updating its Java security patches, most likely because it believed its own spin. This was completely fatal, but the hopes are that it won’t repeat. A great example for Apple is Microsoft – the company which learned the hard way that security is not the thing you can be light about, or a subject for faith. 

UK Prime Minister Calls for Online Porn Ban

David Cameron has developed a cunning plan, according to which when you sign up for a broadband account, you will have to confess that you really want to use it to watch porn. Cameron didn’t clarify whether you have to specify what sort of porn you want to watch.

His idea is that people will be too embarrassed to opt in. The Prime Minister’s crack team suggests that people should automatically be barred from accessing porn content unless they actually choose to view it. Along with porn, they suggest banning websites promoting suicide, anorexia and self-harm.

Of course, this move was suggested under the idea that the authorities are somehow protecting children from pedophiles. Meanwhile, Tory MP Claire Perry tries hardly to make the restrictions happen, spinning this under the title “active choice”. As usual, this idea comes from the puritan United States of America, known as the “Nudge” theory, meaning that people will do as they should if a truly open web is made tricky to get.

Major ISPs, including Virgin Media, BT, TalkTalk, and Sky, have reluctantly signed up to a code of practice and offered their subscribers a choice of whether to apply these filters, but made this entirely optional.

The weird thing is that the ministers realize such technology won’t be effective. The world’s largest and most infringing BitTorrent tracker The Pirate Bay has already proved that everyone can still get access to banned websites if they want to, and the ways to do so are too numerous to tackle them.

Meanwhile, children’s minister Tim Loughton told in the interview that parents don’t feel in control of what their families are exposed to on the Internet. They do want to be responsible, but find the technology too difficult, while their children are too bright and ignore them.

He says that automatic filtering can lull parents into a false sense of security. At the same time, the answer may be lying in combination of technical solutions and better education. However, since the education cuts, the children won’t get a better education.

Prime Minister explained that he wanted to explore all options which might help protect kids, but the media says he himself isn’t a very good dad, as he somehow left his own kid in the pub the other day.

Six Strikes Law

Within its fight with digital piracy, the content industry has learned much about their enemy, and therefore decided to adopt a different approach to deal with copyright violation.

The CCI (Center for Copyright Information) is the result of the cooperation between the MPAA, the RIAA and 5 of the most established ISPs in the United States – AT&T, Verizon, Cablevision, Comcast and Time Warner Cable. The goal of CCI is to build a system able to handle digital copyright violation. The suggested system will work according to the common scheme: once the rights owner pin-points a pirate, they will send the pirate’s broadband provider a notice saying that the IP address is involved into illegal activity. The ISP will then send the pirate an e-mail, warning him or her about the alleged copyright violation and directing towards legal alternatives of procuring films or music.

The CCI says it’s a kind of a new model of collaboration with the film and music companies to identify allegedly infringed files and send those notices on the broadband providers. If the suggested system, dubbed “six-strikes”, works right, it won’t be seen as punitive but as helpful.

When the user receives 2 strikes, they will get a warning e-mail. After the next two strikes, the user will have to confirm the receipt of the notice. Finally, the mitigation measures will kick start only after the 5th strike, which means that the broadband provider is able to tamper with the download and upload speeds for a few days, while also forcing the infringer to watch educational videos or make them call their office to explain what happens.

In case you received copyright violation notices while realizing that you never downloaded anything copyrighted, you will have to pay $35 to an independent board which will take interest into your claims, but this fee will be refunded if you win.

Instead of simply rapping people on the hands, the content industry wants to try and give them information they need to get to content in legal, accessible, and cost-effective way.

According to official statistics, inline piracy is on the fall in the United States, decreasing from 16% in 2007 to 9% in 2010. Nevertheless, it’s still unclear whether this is due to industry’s efforts or thanks to the legitimate alternatives like iTunes, Rhapsody or Spotify.

MegaUpload’s Founder Was Arrested Illegally

A New Zealand Court has finally handed down the decision saying that the local police, while acting for the FBI, raided Kim Dotcom’s mansion, arrested MegaUpload’s owner, stole computer information and sent it to the United States completely illegally.

Over 70 police officers were raiding Kim’s house at the request of the FBI believing that they only needed a general search warrant. However, High Court judge Justice Helen Winkelmann ruled that the warrants used in the seizure of property from his house near Auckland were illegal. Moreover, the Judge was very annoyed that the New Zealand police allowed FBI agents to copy information from Kim Dotcom’s personal computer and take it out of the country.

The court ruled that the warrants even failed to adequately describe the offences to which they related. The local police explained in a statement they were considering the judgment and were in discussions with Crown Law in order to find out what further action might be required.

Kim Dotcom is currently on bail in his home country, trying to fight attempts by the United States government to extradite him on charges of copyright theft and money laundering. His extradition hearing is now set for this August. Press reports quoted the attorneys who represent the American government – those said that they weren’t surprised with the court ruling. Their legal team would be discussing options, including the one about lodging an appeal.

American attorneys for MegaUpload have responded that the authorities can’t charge the cyberlocker with any criminal behavior because the company is based in Hong Kong. In addition, no papers have ever been formally served.

Apple Co-Founder Said MegaUpload Case Harms Internet

Apple co-founder, Steve Wozniak, again criticized the US piracy case against MegaUpload, calling it “hokey” and a threat to online innovation. In May, Wozniak met Kim Dotcom, the MegaUpload’s founder, when he was visiting New Zealand to give a speech. Wozniak learned that Kim couldn’t meet him outside because he was under house arrest, and so the Apple co-founder arranged a meeting. The men have been chatting by email since.

Steve Wozniak claims it’s ridiculous what the US authorities did to Kim’s life, and too many citizens of New Zealand are supporting his point of view. The American government seems to be on thin ground. Millions of people used MegaUpload for legitimate purposes before the US authorities shut it down in the beginning of this year and filed criminal charges against its operators, including Kim Dotcom. Local police swooped down in helicopters onto the grounds of Kim’s house and cut their way into a room where he was hiding. Dotcom spent a month in jail before a judge allowed to release him on bail.

Steve Wozniak compared the cyberlocker with a highway, and file-sharers – with speeding motorists, saying that you can’t just close down the whole street because someone is speeding. Kim Dotcom, in his turn, said in the interview that the more users learn about this case the more they understand that this type of copyright dispute between Hollywood and new cloud storage technology becomes a political debate rather than criminal one.

Steve Wozniak thinks that people should pay for content, but the web should be kept open to encourage innovation. Anyway, attempts to shut down websites like MegaUpload are fruitless.

Privacy Group Hit Back at DEA Code

The Open Rights Group has slammed Ofcom’s Initial Obligations Code proposal, calling it no more than “a joke”. The measures that will be published under the UK’s Digital Economy Act advise the public on unauthorized downloading of video and music.

In addition, they give Internet service providers pointers on notifying their subscribers whether they believe to download pirated content, including advising where they are able to go to find legal music downloads, and how to protect the network from being used to violate copyright.

The Initial Obligations Code will originally cover Internet service providers with over 400,000 broadband-enabled fixed lines. The list of those includes BT, TalkTalk, Everything Everywhere, O2, Sky, and Virgin Media. The largest broadband providers are demanded to send letters to their subscribers, at least a month apart, notifying them about their account being connected to reports of alleged copyright violation. In case the subscriber gets 3 letters or more within a year, anonymous data may be released on request to rights holders indicating which infringement reports were linked to that subscriber’s account.

Nevertheless, the appeal side of the code says that people who feel to be accused on wrong grounds have to spend £20 to appeal. In addition, the grounds for appeal had been narrowed and will include only matters of factual accuracy of the accusation. Moreover, the accusation also covered everyone using a connection, not only the individual receiving a letter.

In other words, although commercial Wi-Fi operators were excluded, public services, like libraries, hotels and bars sharing broadband connections over Wi-Fi will still have to refute accusations of their customers.

In response, the executive director of the Open Rights Group pointed out that digital revenues are increasing, while the content industry is moving in the right direction. He called the appeals a “joke”, because according to them people will undoubtedly end up in court having done nothing wrong. Meanwhile, the Ofcom’s Consumer Group Director explained that the suggested measures were designed to foster investment and innovation in the country’s entertainment industry, while ensuring online users are treated fairly and facilitating access to lawful content.

Jimmy Wales Will Fight for TVShack.net Founder

Jimmy Wales, Wikipedia creator, has launched a campaign aimed at stopping the extradition of TVShack.net founder Richard O'Dwyer to the United States. O’Dwyer is suspected of having committed copyright offences and is currently facing extradition to the United States.

Actually, charges against TVShack.net founder in the United Kingdom were dropped before he was handed an extradition notice. This makes many believe that the entertainment industry wants one of its court show trials in the United States, where TVShack creator will face a long jail sentence and a million dollar fine.

Thus far, the UK authorities have gone along with it, with the judge ruling in January that O'Dwyer could be extradited to the United States. As for Home Secretary Theresa May, whose hobbies listed on Facebook include “sending people to legal doom in other countries”, she signed off the extradition a couple months ago.

The problem is that in the United Kingdom, this online portal didn’t violate the law. The service only linked to locations where content could be downloaded, but didn’t provide the downloading function directly. In other words, it served as a search engine for video content, and the results could lead to unauthorized websites. Since TVShack wasn’t hosted in the United States, any “criminal” behavior happened in the United Kingdom, which means that the service should have faced the UK justice rather than the expensive charade of justice planned in the former colonies. Wikipedia founder claims that the web as a whole must not tolerate censorship in response to mere accusations of copyright violations.

Richard O'Dwyer always played by the rules: when he received requests to delete material from copyright owners, he complied. Jimmy Wales believes that although copyright is a very important institution, which serves a beneficial moral and economic purpose, this shouldn’t mean that copyright’s powers are unlimited. Nor should it mean that people have to abandon time-honored moral and legal principles in the interests of Hollywood.

Wikipedia founder says that Richard O'Dwyer represents the human face of the battle between the entertainment industry and the people. It’s just as if he fought against anti-copyright laws SOPA and PIPA. The petition against his extradition has 12,610 signatures.

Italy Started to Worry about Google Power

Italy seems to be starting to worry about the Google monopoly. Someone in the country sees it as becoming as bad as the hold that Berlusconi has over the press there.

Actually, the only reason that Berlusconi hasn’t faced anti-trust convictions is because he’s Italian and his attorneys knew how to slow up a court case until it was ruled “out of time”. However, the search giant hasn’t been that lucky and has already fallen foul of the local court system.

With the court case between YouTube for using stolen Berlusconi telly material dragging on, it looks like the Italian anti-trust regulators are going to snap at Google’s rump. The country’s antitrust chief named Giovanni Pitruzzella claimed he was worried that the search engine risks becoming a publishing monopoly in the nearest future. This wouldn’t be a problem but as it is antitrust legislation seems to apply to neither Google nor Facebook.

Giovanni Pitruzzella wants to change the legislation in the country so that social networks should be subject to antitrust limits, and he is able to salvage the Italian debt crisis by fining the search giant. The local media reported that Pitruzzella told the country’s lower house of Parliament that antitrust regulation should extend to online media including social networks. He said that social networks were competing with traditional publishing entities for advertising revenues. In case Google gets too much control, the newspapers which the country knows and loves will be toast.

In other words, the ancient tradition of writing copy on behalf of the major political parties will cease to exist and they won’t any longer be able to be used to knife rivals by showing them leaked papers about alleged corruption. Giovanni Pitruzzella believes there’s a lack of proper rules dealing with electronic commerce, and it’s likely to marginalize the publishing industry.

In fact, the local digital advertising market is now limited by competition from the international members of the web. Giovanni Pitruzzella believes control of the search giant and other social media monopolies like Facebook should be included in any Integrated Communications System.

Meanwhile, Franco Bernabe, the president of Telecom Italy, was pleased that there was recognition that people working online have assumed this can pose significant risks to competition. 

FBI Caught 24 Hackers across 4 Continents

The authorities of the United States have arrested two dozen suspected hackers in four continents accused of stealing credit cards and bank data, and fraud. Overall, the FBI spent 2 years to catch the suspects, who posed as hackers on online forums and saw other users swapping methods for breaching information security walls and using fake credit cards.

According to the FBI, the probe stopped $205 million in possible losses on more than 410,000 compromised credit and debit cards. Media reports that 11 people were arrested in the US, and 13 in other countries.

Manhattan US Attorney, the one who was clearly channeling the Lone Ranger, explained that the hackers operating behind the supposed veil of the worldwide web were still subject to the long arm of the law.

The authorities not just monitored the criminals’ activities, but also contacted many people and institutions who became victims of the hackers. The FBI explained them how to repair their security breaches and protect themselves further.

All 24 hackers turned out to be men aged 18 to 25, and some of them face up to 40 years in prison if the court rules they are liable of conspiracy to commit wire fraud and access device fraud. The criminals were members of a forum “Carder Profit”, which represented an Internet market for registered users where they exchanged stolen account numbers. The market was closed down in May.

One of the suspects’ name is Mir Islam, known online under nickname “JoshTheGod”. 18-year-old Islam had admitted to helping creating hacker outfit called UgNazi. The latter said it had carried out a cyber attack against Twitter a week ago, as the FBI says. The hacker was released on a $50,000 bond. Another suspect, Joshua Hicks, 19, nicknamed “OxideDox”, was charged with one count of access device fraud. 

Evolution of the Digital Market

The Pirate’s Dilemma is the title of the best-seller written by Matt Mason, where the author emphasized the importance of digital markets, pointing to technology experts and their influence in the field.


Actually, users engaged into file-sharing aren’t considered to be thieves, but rather digital entrepreneurs who managed to reshape the content industry into their “image”. Nowadays, the idea of file-sharing has already reached the farthest corners of the globe – even in the countries where file-sharing and the web itself are controlled by abusive regimes, like China or North Korea. The researches have revealed that piracy is really increasing album sales, with people like Sean Parker (the co-founder of Napster) becoming billionaires.

Taking this into account, one can only say that the author was a true visionary of his time, because today he is an executive director of marketing for BitTorrent Inc., a company that many refer to as the biggest file-sharing entity in the world, accounting for over 160 million users. The company also managed to raise over $40 million in funding, and is actively used by other international giants like Wikipedia, Twitter, and Facebook. In other words, BitTorrent is trying to cross the barrier separating it for such a long time from a legitimate business, because it is going to put legal material on the first place, thus monetizing the digital space.

When asked about how he feels about the monetization of material distribution and the future of P2P, Matt Mason pointed out that the published studies showed file-sharers spent more money on content.

The company is currently trying to examine the new business models that the artists are able to build through the BitTorrent ecosystem, and later use the results of those experiments in order to create the instruments for doing so. The web as a place where the creative works can thrive isn’t delivered on today, and so the artists prefer to release their works on the Internet in ways that make sense.

It isn’t easy to connect directly to a fan base, and it’s hard to share large files online with just the BitTorrent protocol. While the consumers can’t find the content they want in the suitable format, the artists can’t deliver that to their fans. That’s why BitTorrent Inc. is busy working on new ways to solve these problems and make everyone happy.

Veteran Rocker Discusses File-Sharing Phenomenon

David Lowery, the founder of the Camper van Beethoven band 30 years ago and co-founder of the Cracker in 1990, had replied on file-sharing in response to Emily White’s post. The latter argued in her essay that the 90’s generation is only looking forward to downloading and streaming music for free, while having no consideration into paying for the work of the performers.


Emily White admitted that she had only purchased 15 CDs in her lifetime, while her entire iTunes library exceeded 11,000 songs. However, she didn’t illegally download most of those songs. Although some of them, admittedly, were from a stint in the 5th grade with the file-sharing client Kazaa, the rest came from her family and friends, with whom she had swapped hundreds of mix CDs.

After having read her essay, David Lowery felt the impulse to respond. He told her that she seemed to have internalized that ripping 11,000 tracks in her iPod compared to her purchase of 15 CDs in her lifetime felt very disproportionate. According to Lowery, she also seemed to recognize that she wasn’t only ripping off the record labels, but directly ripping off the musicians whose music she didn’t buy but took for granted.

It didn’t even matter that White hadn’t taken those tracks from a file-sharing website. This might seem like a neat dodge, but Lowery would suggest to her that from the musician’s point of view, it’s quite irrelevant.

Meanwhile, the Bureau of Labor Statistics says that the median wage of the artist is $22.39 an hour, which totals to $43.000 on a full-time job. Nevertheless, there are too many factors which influence the income of a musician, particularly in that area. David insists that the typical musician signed up with a record label can earn about $35.000 annually in the United States.

When talking about legal services like Amazon, Spotify, or iTunes, an experimental band from Toulouse, called Uniform Motion, made its homework and discovered that Spotify would pay the band with 0.0038 cents per each song played. At the same time, iTunes and Amazon transfer them 30% of the sales, minus an annual fee.

David Lowery also said that they had been discussing putting together a kind of a guide to which technology and Internet companies were ethical towards musicians, and if they weren’t, explain how they unfairly exploit the content creators.

Japan Introduced Stronger File-Sharing Law

Japan’s Parliament, the Diet, has recently approved a new legislation which sets up stricter penalties for people downloading unauthorized material from the web

The Japan Times reported a week ago that the previous revision established that downloading and uploading unauthorized content was against the law. However, nothing was said about the penalties.

According to the new law, people found guilty can go to prison for up to 2 years and get a fine of over $20,000. But these penalties apply only to downloading, while those uploading the illegal content risk the maximum penalty of 10 years jail time and a fine of 10 million yen.

Although the Internet community and legal advisers had criticized the new law, both the music and movie industries were very happy with the changes, because they have been asking for country’s copyright system to be revised for a while now. The new legislation is meant to help the financial situation of the industries, though file-sharing in the country wasn’t very aggressive compared to the rest of the world.

Still, it is not clear how this will affect file-sharing tendencies in the country. At the same time, copyright owners will keep monitoring file-sharing transfers. They will most likely focus on notorious file-sharers, in particular on the uploaders.

Another important provision of the legislation is that before being convicted, the accused individual must be first questioned in order to find out whether they were aware that the downloaded/uploaded material was falling under the copyright laws. This, the experts point out, may become a way for people to escape 10 long years in prison for uploading a few songs.

New Virus Steals AutoCAD Files

The new worm seems to be looking for secret blueprints and marmalade recipes. Security experts have discovered a virus especially designed to steal blueprints, design documents and other content created in the AutoCAD. Eset’s security specialist called the worm ACAD/Medre.A and found it when reading through infected AutoCAD templates. He revealed that the blueprints were mailed to email addresses in China.

The security expert says that the worm’s infection rate is decreasing at this point and it doesn’t look like a part of targeted attack upon a company. The worm first appeared 6 months ago and, mostly interested in machines in Peru.

The worm was written in AutoLISP, a specialized version of AutoCAD scripting language. The hackers used certain URLs to spread the infected template to their targets. Eset’s security expert explained that the plans were to hit the firm and everyone doing business with it. This means that the virus would mostly appear in Peru and nearby countries. It works by modifying the startup file for AutoLISP and going through some configuration routines.

The worm starts sending various AutoCAD drawings received by e-mail to a recipient having an e-mail account at the Chinese 163.com ISP. ACAD/Medre.A uses 22 accounts at 163.com plus 21 accounts at qq.com, another Chinese ISP. The worm accesses smtp.163.com and smtp.qq.com with the different account credentials, and the security expert warns that the users should never allow port 25 to do anything except contacting the Internet service provider and this should be blocked.

According to Kaspersky Labs, the virus was an uncontrolled attack, and at the moment it was hard to identify the target. At least, the worm doesn’t look like government sponsored. 

LulzSec Hacker Admitted Attacks

One of LulzSec hacktivists, Ryan Cleary, has finally admitted the participation in online attacks against several companies, including 20th Century Fox, Nintendo, the NHS, News International, Sony, and even Arizona State Police.

The press reports say that Ryan Cleary, together with another hacker, Jake Davis, also admitted attacking the Westboro Baptist Church, HBGary, Bethesda, Eve Online, PBS, and Infragard. Moreover, Ryan confessed to other charges against him, like infiltrating USAF PCs at the Pentagon.

Nevertheless, Ryan Cleary is denying that he published confidential information to portals like LulzSec.com, The Pirate Bay, or Pastebin for everyone to see. Ryan also denies that he’s involved in 4 other charges under the Computer Misuse Act 1990 that allegedly happened between January 2009 and June 2011.

Despite the fact that Ryan Cleary has escaped an extradition to the United States, he is still fighting charges against him in the United Kingdom, including allegations under the Serious Crime Act 2007. Now time will tell whether the charges against the hacker hold up, and whether they will discourage another hacker group known as Anonymous from starting more DDoS attacks.

Meanwhile, a Forbes journalist covering the hacker group for over a year, presenting in Ryan’s hearing, is sure that the phenomena is far from over. He said that in spite of recent arrests, Anonymous as a phenomenon continues evolving and isn’t leaving any time soon. He added that the upside may be that with this arrest and an obvious risk to some of the hacktivists’ tactics, some of the group’s members may feel encouraged to embrace digital activism by legal means, but their number won’t be significant. 

Bank Robbers Go Online

Now you don’t need a mask or a shooter to rob the bank – praying to Zeus is enough. Indeed, the days of robbers in masks walking into a bank with a sawn off shotgun have passed, and the press says today that a new wave of automated hacking of Internet bank accounts has stolen $78,000,000 in 2011 from people in Europe, Latin America and the US.

Security experts from Guardian Analytics and McAfee claim that modern robbers don’t choose a shooter these days, but rather one of two families of modern malicious software – Zeus and SpyEye. Earlier editions of the software automate the transfer of cash to money mule accounts which are controlled by mates.

Guardian Analytics’ vice-president, whose company specializes in protecting banks, claimed that it looks like the beginning of a new robbery method. It seems that the software in question is sophisticated enough to defeat “chip and PIN” and other two-factor authentication, while not transferring the entire contents of an account at once, because it can trigger an alarm. Automated versions have been detected in European countries, including the United Kingdom, Germany and Italy.

In the meantime, McAfee explains that this method was used by a dozen gangs against numerous consumers and business clients of various financial institutions in Europe, as well as in Colombia, the United States and the Netherlands. Research director at McAfee Labs confirmed that people adapting the malware had insider knowledge as to what the banks were looking for.

Both SpyEye and Zeus viruses are installed on the PCs which visit malicious portals or legitimate pages compromised by hackers. They can also be installed via tainted links in emails.

The editions of the software even manage to capture one-time passwords, like those that you receive from the banks in the form of text message. The bank robbers could use it every time, but they have to be online at the time. One more factor preventing the bank robbers from cleaning up completely is that the robbers still need legitimate accounts to funnel the money as well. The matter is that money mules are very hard to come by especially as they are more likely to be caught.