The South China Sea is an increasingly dangerous place to be in cyberspace. And as China is involved in territorial disputes over the area that bears its name with virtually all of its neighbours, there are no shortages of targets for its army of state-sponsored operatives.
F-Secure is the latest security vendor to confirm what most of us know already – that Chinese hackers, most likely working for the state, have been systematically stealing data from organisations with interests in the region for years now. It’s new report, NanHaiShu: RATing the South China Sea, details a new piece of information-stealing malware used in campaigns targeting government and private sector firms. Why? They were all involved, directly or indirectly, in a recent UN tribunal over ownership of a group of rocks in the South China Sea. Victims included the Department of Justice of the Philippines, the organisers of the Asia-Pacific Economic Cooperation (APEC) Summit and a major international law firm involved in the tribunal
F-Secure cyber security adviser, Erka Koivunen, told me he suspects a nation state was behind the attacks, although definitive attribution is always hard.
“Admittedly the malware itself may not be the most sophisticated piece of code there is. That doesn’t however mean that the operation wasn’t sophisticated,” he said via email. “The lack of zero-days and bleeding edge alien technology may admittedly seem a bit boring, but in fact is a sign of cold calculation and professionalism on the level of execution.”
This report is the latest of a long line of similar intelligence highlighting extensive cyber espionage in the region related to Beijing’s interests in the South China Sea and the rocks, reefs and islands that dot the landscape. Late last year a ThreatConnect report revealed an alleged PLA cyber espionage campaign dating back five years and targeting the Philippines, Singapore, Thailand, Vietnam and many others in the region. US interests have also been attacked.
William Glass, threat intelligence analyst at FireEye, believes this is just the beginning, as China begins to flex its muscles in the region.
“More recently, we have seen the list of targets expand to energy companies, legal firms, and even GitHub, targeted by China’s Great Cannon in March 2015,” he told me. “Beyond simply stealing information, Beijing has found there are benefits to using cyberspace to propagandise and attempt to influence behaviour.”
He claimed that the army’s new Strategic Support Force may see disputes in the area as the perfect opportunity to test its significant capabilities, which could range from range from “typical cyber espionage to learn of plans and intentions of commercial companies to efforts designed to influence companies’ decisions to invest or operate in the South China Sea.”
“Recently, the Chinese media has singled out Australia and Japan for particularly harsh criticism following the tribunal ruling,” Glass explained.
“It’s possible that China-based groups—with or without official government backing—will target Australian and Japanese commercial interests in retaliation for perceived interference or in an attempt to force Canberra and Tokyo to more carefully consider any follow-on action.”
For starters, firms working in the energy, logistics and shipping, and political and legal advocacy sectors in the region would do well to redouble their cyber security efforts. But the truth is that any organisation that deals with China or works in an industry where Chinese companies have interests – which is virtually every organisation – should consider the threat of state-sponsored attacks from the East. Yes, it’s more likely they’ll encounter ransomware than an info-stealing RAT guided by the PLA. But the threat is there, and as UK organisations increasingly look to the Middle Kingdom in this post-Brexit world, it’s one they should all take seriously.
Confession time: I’m one of the few people on the planet who hasn’t played Minecraft yet. But researching the digital Lego phenomenon for an upcoming feature yielded some interesting analyst insights I thought I’d share.
Minecraft hit 100 million users recently – not bad for a title many thought Microsoft was a little ill-advised to pay $2.5bn for two years ago.
For IDC gaming research director, Lewis Ward, the purchase was made with one eye on showing off the Windows 10 OS – then in development.
“The ulterior motive was the idea of Windows 10-based Universal Apps, and this idea of Xbox Play Anywhere (XPA) games on Windows 10,” he told me. “Minecraft is a living example of how Microsoft’s new OS can support apps with the same codebase that works on multiple terminals, including PCs, game consoles and mobile devices. So it’s become Microsoft’s poster child in gaming for these types of apps and I think that was a big part of what led Microsoft to buy the company.”
There’s also plenty of debate at the moment about the future of Minecraft. Redmond recently signed a deal with Netease to license its mobile and PC versions, which could increase the game’s user base exponentially. There are also major opportunities in the AR and VR space. The synergies with Microsoft’s HoloLens AR platform and its ambitions in the education sector are obvious, according to Ward.
“If Lego helped me learn as a kid how to build stuff with others while having fun and being creative, and I remember playing with Lego all the time in first grade and crying when my parents forced me to sell my big bag of Lego around fourth grade, then Minecraft is the modern day equivalent and has a place in early education,” he argued.
“It’s a very accessible game and one that stresses the positive things in life; one that has truly universal appeal. I’m sure there are lots of great minds up in Redmond thinking about how the franchise can be used in certain vertical markets and business-centric scenarios.”
Microsoft released an Education Edition of the game earlier this year – a statement of intent if ever there was one. Minecrafters will be watching eagerly to see what it’s next play will be.
It’s hard to find an optimist in the cyber security industry in these post-referendum days. I spoke to a fair few for an upcoming feature for Infosecurity Magazine and the consensus seems to be that a Brexit will be bad for staffing, the digital economy and the financial stability of UK-based security vendors.
That’s not even to mention the legal and compliance implications. Chatham House associate fellow, Emily Taylor, recommended firms continue on the road to compliance with the European General Data Protection Regulation. Aside from the fact that any firms with EU customers will still need to comply with the far-reaching law, she reckons that if we want to protect the free flow of digital information between the EU and UK, we’ll need to continue following European laws in this area.
Snoopers gonna snoop
However, a Brexit would cause other problems, notably in that the current Snooper’s Charter looks like it will enshrine in legislation the principle of bulk surveillance – the very thing which effectively led to the scrapping of the Safe Harbour agreement between the US and EU. If this bill goes through as is and we go out of Europe but stay in the single market, we’ll have to change that bit, Taylor told me.
“A case brought by David Davis and Tom Watson questioning the legality of bulk surveillance powers under the old DRIPA laws is currently being considered by the CJEU,” she explained.
“It’s not clear which way the CJEU will go on this, because many member states have lined up to support the British approach. However, if CJEU follows its recent decisions, it could strike down bulk data collection. If we wanted to stay in the single market, we’d have to amend our IP Bill in response.”
Even if we broke away from Europe completely and adopted the status of a “third country” like the US, we’d still have to adopt measures “to give equivalent protection to EU citizens’ data as they enjoy within the EU,” she argued. And bulk surveillance would certainly be a no-no in this scenario.
The uncertainty – which could continue potentially for years while Brexit deals are worked out – is also viewed by many as damaging to the cyber security industry, and tech in general. Immigration lawyer and partner at MediVisas, Victoria Sharkey, claimed firms may be unwilling to employ skilled workers if there’s a chance they might have to leave in a couple of years’ time.
“This is certainly going to be the case where significant training and investment is involved,” she added.
In fact, EU nationals are apparently already packing their bags.
“I am already seeing EU nationals who have been here for years make plans to leave and either go home or go to another EU country. They are worried for their jobs, are worried that they will be told to leave and so would rather leave on their own terms, and they are also being made to feel unwelcome,” Sharkey continued.
“I feel that when we do leave that it is going to become significantly harder for UK employers to encourage the best in their industry to come and work in the UK.”
This, for an industry which has always struggled with skills gaps and shortages, is potentially catastrophic.
Can we overcome?
Philip Letts, CEO of global enterprise services platform blur Group, has run businesses in Silicon Valley and the UK. He also pointed out the potential damage that political and financial uncertainty could have on the industry.
“The politicians are in unchartered territory. We don’t yet have a clear timetable for the triggering of Article 50, nor the trade deals that are going to have to be negotiated. There is a political vacuum. Business confidence is low and many will hunker down, try to avoid risk and wait for this to play out,” he told me.
“Globally, the US tech heavyweights will want to remain in the UK and the EU, and they will do both, operating across different European centres. But the EU market is more lucrative than the UK, so things may shift over time.”
So is the tech and cyber security sector really doomed? Not so, according to KPMG UK head of technology, Tudor Aw.
“I believe the resilient UK tech sector can withstand the challenges of Brexit and thrive,” he told me.
“Technology is increasingly a key sector that underpins all other sectors – whether it be back office systems or strategic enablers such as IoT and data analytics. Companies will need to invest in technology to drive efficiencies and strategic growth – one only has to look at developments across a diverse range of sectors such as healthcare, automotive, property, retail and the military to see that technology spend will only increase regardless of Brexit.”
It’s a moot point now, but I wonder how much better it could have thrived had we not voted out on 23 June.
China’s head honcho when it comes to censorship recently stepped down. This being China, no-one seems to know whether he was effectively sacked, or asked to move to a new bigger and better role. But what we do know is that things aren’t going to get any better for those inside the Great Firewall.
Over the past three years, Lu Wei has been a constant thorn in the side of rights groups, diplomats and Silicon Valley bosses. His aggressive defence of China’s sovereign right to do with its internet what it sees fit – most notably at the laughably titled World Internet Conference in Wuzhen – has been jarring at times. The Cyberspace Administration of China (CAC) he headed up also runs root CA and .cn operator the Chinese Internet Network Information Center (CNNIC). As such, it was blamed by Google last year for issuing unauthorized TLS certificates for several of its domains, which were subsequently used in man-in-the-middle (MITM) attacks.
Even more damning, the CAC was accused of launching Man in the Middle attacks on Outlook users last year in response to its migration to HTTPS, which the authorities can’t monitor. And then it was pegged for a DDoS attack on anti-censorship organisation Greatfire.org – a constant thorn in the side of the authorities in Beijing.
I spoke to Greatfire.org co-founder Charlie Smith about the reasons for and implications of Lu’s departure.
“If it ain’t broke, don’t fix it, right? We probably just had the quietest anniversary of Tiananmen [Square massacre] yet, in terms of online dissent and discussion. There is more censorship in general. Less circumvention because of a crackdown on VPNs. And fewer foreign companies are trying to challenge the status quo,” he told me via email.
“We know controlling the medium is pretty near the top of [president] Xi Jinping’s agenda. So why make a change now? The timing likely indicates that this was a planned and not a rash decision. There was no need to unsettle things before the 4 June anniversary and the change happens well before the next ‘World’ Internet Conference in Wuzhen.”
Smith went on to argue that, even though Lu presided over an unprecedented crack down on internet freedom – primarily through a new regulation banning the spread of “rumours” online – he didn’t go far enough.
“Lu was not perfect. As we have shown, it is impossible to completely block all information for those inside China,” Smith continued. “Maybe in this regard, Lu was being blamed and Xi decided he wanted somebody who can get the job done. Maybe Xi was upset about being ‘vilified as a murder suspect’ and could not comprehend why Lu Wei was unable to scrub information from the Chinese internet.”
Lu’s removal, if that is what it was, may also have been an attempt by Xi at curbing his growing influence – after all, propaganda is at the heart of the Party’s power and everyone inside knows it. His replacement, Xu Lin, is a Xi Jinping acolyte and one time deputy secretary of Tibet’s Shigatse Prefecture who will certainly toe the presidential line.
As Smith put it, “if Xu Lin fails to quell ‘rumours and slander’ Xi does not have to second-guess whether or not Xu is doing everything within his power to stop these attacks.”
So what prospects for the future? Pretty grim if you’re inside China and are a fan of human rights and internet freedom.
Beijing was one of a few countries – Russia, India, Indonesia included – that voted against a non-binding resolution at the UN this week stating all individuals must be afforded the same rights online as offline and that the universal right to freedom of expression should be upheld online.
As Smith said, if Xu Lin “handles information control on the Chinese internet the same way the authorities handle information control in Tibet then the situation could even get worse.”
There is some hope for businesses and individuals which need to leap the Great Firewall.
The hope is that it will encourage greater use of VPNs and help developers improve their circumvention products, as well as provide a much needed additional source of revenue for Greatfire.
The concern is that if it gets popular enough, Beijing will do all it can to put it out of action.
News emerged a few days ago that Foxconn had effectively laid off 60,000 workers in China and replaced them with robots. “So what?” you might think. And to be honest, if it keeps the cost of our tech devices down, then good for Foxconn, right? Well, unfortunately it’s not that simple.
The changing dynamics of the Chinese labour market could have a profound effect on us here in the West, and even portend similar disruption to our own workforce in the not-too-distant future.
These stories have been doing the rounds for years because – well – contract manufacturers like Foxconn and others have been investing significant sums into robotics for years. Why? The answer’s pretty simple, according to IHS analyst, Alex West.
“Robots don’t need to stop working, but they don’t get drowsy, distracted or depressed either, so quality and consistency of manufacturing is enhanced. With the developments in AI and predictive analytics, robots are also far less likely to get ‘sick’, reducing downtime,” he told me.
To that I’d add that they don’t go on strike, commit suicide or complain to the papers about poor working conditions – all problems Foxconn for one has encountered. But robots can also add value in other ways, such as helping firms win business from their rivals, according to West.
“Robots are evolving, becoming more intelligent as AI solutions help them to ‘learn’ on the job, but also becoming far easier to program and integrate on production lines,” he continued. “Collaborative robots are also making robotic solutions safer and easier to install without the additional safety concerns and equipment.”
There’s clearly a drive for this in China, the tech manufacturing centre of the world. The Chinese government has made investment in robotics a priority in its 13th Five-Year Plan, with IHS forecasting a 30% CAGR. But this threatens to create social instability as human workers are shelved in favour of machines. Foxconn and others claim bots are only used for repetitive tasks that humans don’t want anyway. But there’s no guarantee that there are enough skilled roles to fill the gap.
“Dull, repetitive jobs on the plant floor will be replaced by a range of higher-skilled positions such as robot/systems integrators, programmers, and data scientists supporting enhanced AI,” argued West.
“However, there will be less of these more advanced roles, and some of the type that existing workers will not have the skillsets to be able to transition to.”
This might seem a long way from the UK. But our workforce is also facing a robot invasion – not from these industrial bots, but service robots like Softbanks’ Pizza Hut-serving Pepper. In fact, a Deloitte study has claimed that 35% of UK jobs have a high chance of being automated in the next decade or two.
Robots still only account for 0.3% of all machinery produced in China last year, according to West, so there’s still a long way to go. But it’s probably time to start getting nervous in the UK.
What is Microsoft’s future in the mobile space? It’s a question that’s generated more than a few column inches over recent years. Now with Redmond agreeing to sell the feature phone division to Foxconn and licence the Nokia name, things have perhaps started to get a little clearer.
First, the bad news. IDC is predicting Windows Phone’s market share for 2016 will stand at just 1.2% this year – that’s down from 2% last year, 2.7% the previous year, and 3.3% in 2013. The firm is clearly not getting any OEMs on board for future devices anytime soon, and there was no mention of new Lumias in the Foxconn announcement – just that it would support current devices. From this – and speaking to a few experts for an upcoming feature – I think the smart money’s on a Surface handset.
Surface has done pretty well in the tablet/laptop space – albeit after a few iterations. And a high-end Surface handset would show off the best features of Windows 10 Mobile, as Microsoft finally harmonises its OS across all platforms. It could have crack at competing with the Samsung Galaxy range and potentially the iPhone. Whether this is enough to prop up Microsoft’s mobile hardware business is unsure, however, and more job cuts could be on the way.
A Surface smartphone could appeal in particular to business executives and the like, according to IDC analyst Susana Santos. “It’s a strategy that makes sense, but it takes time. It’s too early to say if it’ll work or not. It certainly won’t help with its volumes. These devices are more expensive and not as easy to sell,” she told me.
With the business market set to rise only to 20% of the global smartphone market, according to IDC, this is also a concern if Microsoft can’t persuade those BYOD consumer/employees to migrate away from their iOS or Android handsets. It’s been said many times before, but Microsoft is in many ways still a victim of its lack of vision a decade ago, which let Apple and Google steal the hearts, minds and wallets of consumers.
And what of its chances of getting those sought-after OEMs on board?
“Of all companies, Microsoft knows the value of a developer and application ecosystems, but has been poor to drive this agenda in the mobile realm. I’d expect it to continue with Windows phone, but play mostly in the higher-end,” Quocirca’s Rob Bamforth told me by email. “The words it has used seem to indicate an interest in mobile computing devices, with telephony capabilities, rather than emphasis on ‘handsets’, so I think that means higher-end pricing and positioning – and perhaps a closer connection to Lync/Skype for Business and Skype Meeting. Perhaps we might be looking for a Skype Surface.”
The question is whether Redmond can maximise its IP and engineering talent in this space, “gluing the bits together in a way that Apple seems to mange elsewhere”, according to Bamforth. If it can, it’ll be the greatest comeback in the history of computing.
What does the future of virtual reality hold? I’ve got to say it’s not a question that has particularly bothered me from a corporate IT perspective – a feeling I’m sure shared by many CIOs out there. But the truth is that VR – and its slightly more sensible cousin, augmented reality – is already beginning to transform the way organisations work and engage with their customers.
Putting together a recent feature for IT Pro in Hong Kong, I spoke to several experts about the kind of use cases that VR and AR might best fit, and some of the key challenges facing manufacturers.
It’s pretty clear from most of the analysts I spoke to that those smartphone-based VR headsets like Samsung Gear VR and Google Cardboard are going to get end user traction much quicker than the high-end Oculus Rift, HTC Vive and others.
“Everyone has a smartphone so it makes the entry barrier for VR very low and affordable,” IDC European associate director, Chrystelle Labesque, told me. “Does it offer the best experience? Maybe not. But it does give people the chance to have their first VR experience.”
From a manufacturer’s point of view, each major player in the space – and virtually all of the world’s biggest tech companies have a stake in VR/AR – faces a difference set of challenges according to their commercial priorities, argued IHS Technology head of games research, Piers Harding-Rolls.
Samsung, for example is using VR to drive sales of its premium smartphones, he told me.
“We have already seen Samsung diversifying further with the Gear 360 camera to build of its VR ecosystem offer and to continue to differentiate as more and more smartphone vendors bring their own VR headsets to market,” Harding-Rolls added.
“Samsung is now using the Gear VR as a promotional and bundling tool to sell more phones, but the value of this offer may become diluted over time. So for Samsung the challenges centre on staying differentiated and building out the ecosystem successfully in the face of additional competition.”
As for those high-end players, it’s all about trying to drive down their prices to appeal to a broader market.
“Oculus has courted developers for over two years, but still does not have the scale of distribution and user base of Valve’s Steam or Sony’s PlayStation Network, so must build its own content and compete from a less established position,” he claimed. “As you can see the challenges differ from platform to platform.”
But this is talking about VR/AR from a consumer-focused perspective. The truth is that it’s already being used both inside companies and to create differentiated experiences for customers.
Labesque referenced a British Museum project last year that allowed visitors to experience the Bronze Age through Samsung Gear VR headsets, for example.
The Marriott hotel chain has also been an early adopter – using the power of Oculus Rift VR to transport users to far flung destinations, and in so doing build its brand and even drive potential sales.
When it comes to internal use cases, AR has the edge, according to the experts. Digital overlays can help with training, working to meet strict compliance requirements, and collaboration, among other things, Labesque explained.
On this front, Microsoft’s Hololens already has some impressive big name case studies to brag about.
So there you have it. If you’re a CIO and have the money and motivation – VR/AR is probably something you should be considering right now as part of a multi-year innovation project. If not, it won’t be long till your CEO is knocking at your door to find out why.