China eyes ‘black tech’ to boost security as parliament meets

March 10, 2018

By Pei Li and Cate Cadell

BEIJING (Reuters) – At a highway check point on the outskirts of Beijing, local police are this week testing out a new security tool: smart glasses that can pick up facial features and car registration plates, and match them in real-time with a database of suspects.

The AI-powered glasses, made by LLVision, scan the faces of vehicle occupants and the plates, flagging with a red box and warning sign to the wearer when any match up with a centralized “blacklist”.

The test – which coincides with the annual meeting of China’s parliament in central Beijing – underscores a major push by China’s leaders to leverage technology to boost security in the country.

That drive has led to growing concerns that China is developing a sophisticated surveillance state that will lead to intensifying crackdowns on dissent.

“(China’s) leadership once felt a degree of trepidation over the advancement of the internet and communication technologies,” said David Bandurski, co-director of the China Media Project, a media studies research project at the University of Hong Kong.

“It now sees them as absolutely indispensable tools of social and political control.”

Wu Fei, chief executive of LLVision, said people should not be worried about privacy concerns because China’s authorities were using the equipment for “noble causes”, catching suspects and fugitives from the law.

“We trust the government,” he told Reuters at the company’s headquarters in Beijing.

Reuters was able to verify that the glasses were being used in tests by the police to help identify suspect individuals and vehicles in the Beijing area in recent days.

China, under President Xi Jinping, is making a major push to use artificial intelligence, facial recognition and big data technology to track and control behavior that goes against the interests of the ruling Communist Party online and in the wider world.

Xi is expected to cement his power base this weekend as a reform to remove term limits is pushed through. That would in effect allow him to stay in his post indefinitely.

Delegates and visitors entering the Great Hall of the People, the venue for the parliament, the National People’s Congress, have to go through facial scanners. The same happened to those attending the related advisory body, the Chinese People’s Political Consultative Conference.

“This year, security at the two sessions has some freshly-baked ‘black tech’ coming online,” wrote the state-run Science and Technology Daily newspaper, using a comic-book term in China for futuristic surveillance gadgets.

The paper said cameras at the event had been upgraded to capture, analyze and compare suspicious faces in around two seconds, powered by a system called “Skynet” – which has a national database of blacklisted individuals.

“The plot of sci-fi film ‘Minority Report’ is now basically becoming a part of daily life,” the newspaper added, referring to the Tom Cruise movie set in a futuristic society where crimes are solved and punished before they even happen.

ROBOTS AND DRONES

China has been deploying a growing arsenal of security technology, fuelling the growth of a domestic industry and worrying civil rights defenders about the growing intrusion on individual privacy.

A key concern is that blacklists could include a wide range of people stretching from lawyers and artists to political dissidents, charity workers, journalists and rights activists.

The new technologies range from police robots for crowd control, to drones to monitor border areas, and artificially intelligent systems to track and censor behavior online. There are also scanners to forcibly read mobile phone data and even police dogs with virtual reality cameras.

A recent Human Rights Watch report said China was also expanding a biometric voice database to boost voice recognition capabilities.

Surveillance measures long-used in restive areas such as Xinjiang in the northwest are also being rolled out more widely around the country, with a planned drive to centralize and standardize powerful but fragmented systems over the next year.

At the meeting of the NPC, most delegates said the increasing use of technology to improve state security was a positive, and that the benefits far outweighed privacy concerns.

“This is a good thing, it means our technology is really leading the world,” said Lu Yaping, a delegate from Jiangsu province in eastern China. “I don’t have any concerns about safety.”

(Reporting by Pei Li and Cate Cadell in BEIJING; Additional reporting by Thomas Sun; Writing by Adam Jourdan; Editing by Martin Howell)

Panasonic considers selling security camera factory in China: Nikkei

March 10, 2018

TOKYO (Reuters) – Panasonic Corp is considering selling a Chinese plant that makes security cameras in a deal it hopes will fetch over $450 million, the Nikkei reported on Saturday.

Panasonic is looking to close first-round bidding in early April, and potential buyers include U.S. equity fund Carlyle Group and British funds Permira and CVC Capital Partners, the Nikkei said, without citing sources.

Panasonic expects to gain over 50 billion yen ($468 million) from selling the plant in Suzhou, a city in southeast China’s Jiangsu province, money that could be used in its other key businesses such as automotive batteries, the Nikkei said.

The firm may end talks if it does not receive an agreeable bid, the Nikkei added.

A Panasonic official said the firm was considering various options to strengthen its security systems business, but that nothing has been decided. Carlyle and CVC Capital Partners could not be reached for comment, while Permira declined to comment.

Panasonic, the exclusive battery cell supplier for Tesla Inc’s mass-market Model 3 sedan, has been pushing to expand its range of advanced driving-related products to better compete with top suppliers such as Bosch and Continental AG.

Aiming to reduce its dependence on Tesla, Panasonic last year partnered with Toyota Motor Corp to develop and supply batteries for electric vehicles.

(Reporting by Minami Funakoshi, additional reporting by Makiko Yamazaki; Editing by Stephen Coates)

PBOC governor says Bitcoin not a legitimate method of payment

March 9, 2018

BEIJING (Reuters) – China does not recognize Bitcoin and other digital currencies as legitimate forms of payment, the central bank governor, Zhou Xiaochuan, said on Friday.

“We do not currently recognize Bitcoin and other digital currencies as a tool like paper money, coins and credit cards for retail payments,” Zhou told reporters on the sidelines of the annual parliament session.

“The banking system does not accept it.”

China has taken a string of steps in recent months to clamp down on the cryptocurrency market, including closing exchanges and banning so-called initial coin offerings (ICOs) – digital, token-based fundraising rounds.

Zhou’s remarks added to pressure on Bitcoin after the United States on Thursday said “potentially unlawful” online trading platforms for cryptocurrencies, may be giving investors an unearned sense of safety and should be registered with the regulator.

The price of Bitcoin had fallen more than 13 percent in the 24 hours to 1030 GMT on Friday.

Zhou said China paid close attention to the blockchain and distributed ledger technologies that Bitcoin is built on, but that some applications of the technology had grown too quickly.

“If they spread too rapidly, it may have a big negative impact on consumers. It could also have some unpredictable effects on financial stability and monetary policy transmission,” said Zhou.

(Reporting by Kevin Yao, Se Young Lee and Yawen Chen; Writing by Elias Glenn; Editing by Robert Birsel)

Hold the iPhone! Amazon primed to be larger than Apple

March 9, 2018

By Noel Randewich

SAN FRANCISCO (Reuters) – Apple Inc, the world’s most valuable publicly listed company, is in danger of being beaten by Amazon.com Inc to the $1 trillion mark.

Wall Street’s optimism about last year’s 10th anniversary iPhone had propelled Apple’s stock 24 percent higher over the past 12 months, giving it a market capitalization of $893 billion.

That is $141 billion more than the $752 billion market value of Amazon, the world’s third most valuable publicly listed company, but Amazon has been quickly closing the gap.

(For graphic on Market Capitalization: Apple vs Amazon.com vs Alphabet, click: http://reut.rs/2Fn9hzA)

Amazon’s stock has surged 83 percent over the past year, bolstered by scorchingly fast revenue growth as more shopping moves online and businesses shift their computing operations to the cloud, where Amazon Web Services leads the market.

In January, Amazon announced that it, Berkshire Hathaway Inc and JPMorgan Chase & Co would form a company to cut health care costs for their employees, which was widely seen as a threat to the existing U.S. healthcare system and underscored Amazon’s ability to disrupt markets.

Amazon dislodged Microsoft Corp as the No. 3 U.S. company by market capitalization in February.

At $783 billion, Alphabet Inc has the second largest market capitalization. The Google parent company’s stock has grown about 33 percent over the past year, faster than Apple but far slower than Amazon.

Meanwhile, optimism about Apple’s iPhone X has given way to concerns that demand for the $1,000 device may be weaker than expected.

To be sure, past stock gains are not a reliable predictor of future performance, and the surge in Amazon shares in recent years has been exceptional by most standards.

But if Amazon’s stock were to keep growing on the trajectory seen over the past year, the company’s market capitalization would hit $1 trillion in late August. Apple would reach $1 trillion around a week later if its stock price continued to rise at the same pace seen over the past year.

Alphabet would not reach $1 trillion until 2019 if its stock price continued to rise at the same pace seen over the past year.

(For graphic on race to $1 Trillion Market Cap, click: http://reut.rs/2DbhQYq)

Most Wall Street analysts are not quite that enthusiastic about the growth of Apple and Amazon. Analysts on average expect Apple’s stock price to rise 11 percent and reach $195 within the next 12 months, which would put its market capitalization at $989 billion, according to Thomson Reuters data.

Analysts covering Amazon on average expect its stock to rise 10 percent within the next year to reach $1,700, which would give it a market value of $823 billion.

Apple on Thursday was up 0.60 percent at $176.05, while Amazon rose 0.31 percent to $1,549.90.

(For graphic on Analyst Price Targets: Apple Vs Amazon Market Cap, click: http://reut.rs/2FtMBtO)

(Reporting by Noel Randewich; Editing by Meredith Mazzilli)

U.S. appeals court in San Francisco will hear net neutrality appeal

March 8, 2018

By David Shepardson

WASHINGTON (Reuters) – A federal judicial panel said on Thursday that challenges to the Federal Communications Commission’s repeal of the Obama era open internet rules will be heard by an appeals court based in San Francisco.

The U.S. Judicial Panel on Multidistrict litigation said it randomly selected the U.S. Ninth Circuit Court Nth circuit to hear the consolidated challenges. The FCC declined to comment on the decision.

A dozen challenges have been filed by 22 state attorneys general, public interest groups, internet companies, a California county and the state’s Public Utilities Commission seeking to block the Trump administration’s repeal of landmark rules designed to ensure a free and open internet from taking effect.

The suits were filed in both the Ninth Circuit and District of Columbia appeals court. Of the Ninth Circuit court’s 24 active judges, 18 were appointed by Democratic presidents and six by Republican President George W. Bush. There are six current vacancies and President Donald Trump has nominated two candidates.

The FCC published its order overturning the net neutrality rules in the Federal Register on Feb. 22, a procedural step that allowed for the filing of legal challenges.

The Republican-led FCC in December voted 3-2 to overturn 2015 rules barring service providers from blocking, slowing access to or charging more for certain content on the internet.

Trump in January criticized opponents for filing cases in the Ninth Circuit and asserted in a tweet they “almost always” win before being reversed.

New York, California, Illinois, Massachusetts, New Jersey and Pennsylvania are among the states challenging the decision, arguing the FCC cannot make “arbitrary and capricious” changes to existing policies and that it misinterpreted and disregarded “critical record evidence on industry practices and harm to consumers and businesses.”

FCC Chairman Ajit Pai has said he is confident the order will be upheld.

The White House Office of Management and Budget still must sign off on some aspects of the FCC reversal before it takes legal effect. That could take months.

The repeal of the net neutrality rules was a victory for internet service providers like AT&T Inc, Comcast Corp and Verizon Communications Inc, conferring power over what content consumers can access.

On the other side, technology companies including Alphabet Inc and Facebook Inc have thrown their weight behind a congressional bid to reverse the net neutrality repeal.

(Reporting by David Shepardson; Editing by Cynthia Osterman)

EU aims to boost fintech with crowdfunding ‘passports’

March 8, 2018

By Huw Jones

LONDON (Reuters) – The European Union’s executive has proposed a draft law to offer crowdfunding platforms bloc-wide access to customers as part of efforts to boost growth in the financial technology sector.

Crowdfunding allows start-ups to tap small sums of money from many individuals as an alternative to a bank loan, still the main source of funding for small and medium sized companies.

“An EU crowdfunding license would help crowdfunding platforms scale up in Europe,” the bloc’s financial services commissioner Valdis Dombrovskis said in a statement.

“It will help them match investors and companies from all over the EU, giving more opportunities for firms and entrepreneurs to pitch their ideas to a wider base of funders.”

The draft law is among the measures published by the commission on Thursday to encourage growth and job creation in fintech to wean the region’s economy off its heavy reliance on bank funding.

Britain, a top fintech hub in Europe, leaves the bloc next year and Brussels is keen to make the EU an attractive location for fintech firms. Without a favorable trade deal, UK-based fintech firms won’t be able to serve EU customers from Britain.

Currently there are no EU rules for crowdfunding, meaning they must deal with a patchwork of national rules, which can make operating in more than one country costly.

The EU draft law from the European Commission introduces an optional, pan-EU regime whereby a crowdfunding platform that wants to operate across the bloc could obtain a “passport” license from the European Securities and Markets Authority.

“Instead of having to comply with different regulatory regimes, platforms will have to comply with only one set of rules, both when operating in their home market and in other EU member states,” the commission said.

“For investors the proposal will further provide legal certainty as regards the applicable investor protection rules.”

The draft rules cover crowdfunding “campaigns” of up to a million euros over 12 months. Raising higher sums would come under the bloc’s existing prospectus and securities rules.

(Reporting by Huw Jones; Editing by Elaine Hardcastle)

Japan punishes seven cryptocurrency exchanges over regulatory lapses

March 8, 2018

By Taiga Uranaka and Thomas Wilson

TOKYO (Reuters) – Japan on Thursday punished seven cryptocurrency exchanges, ordering two of them to suspend business, in an effort to shore up consumer protection after the $530 million theft of digital money from Tokyo-based Coincheck Inc.

The Financial Services Agency criticized the exchanges for lacking the proper internal control systems, and ordered them to make improvement in areas from risk management to preventing the criminal use of digital money.

The exchanges included Coincheck, served with its second such notice since it was targeted in the late-January heist, and GMO Coin, run by GMO Internet Inc <9449.T>. Two exchanges, Bit Station and FSHO, were ordered to halt operations for a month from Thursday.

The punishments represent the FSA’s widest response yet to concerns over security flaws at Japanese cryptocurrency exchanges, which first grew from the 2014 collapse of the Mt. Gox exchange and resurfaced with the Coincheck heist.

The regulator said Coincheck lacked proper systems for dealing with risks such as money laundering and terrorism financing. It gave the exchange until Mar. 22 to submit a report on how it would improve.

Coincheck said it would hold a press conference at 1600 local time (0700 GMT).

“We will carry out a far-reaching review of our internal control and management systems to ensure proper and reliable business operations from the viewpoint of customer protection,” it said in a statement.

The sanctions knocked the price of bitcoin lower while a lawmaker from the country’s ruling party criticized what she saw as flaws in Japan’s registration regime for cryptocurrency exchanges.

Bitcoin fell as much as 5.7 percent, before recovering to $9,812 at 0600 GMT. The virtual currency hit a peak of $19,458 in December but has since fallen by more than half following a series of crackdowns by regulators across the globe on the digital coin trade.

The theft from Coincheck, one of the biggest digital money heists ever, underscored the risks policymakers across the globe face in regulating cryptocurrency trading, and drew attention to Japan’s pioneering system of regulating the exchanges.

UNREGISTERED EXCHANGES

Japan last year became the world’s first country to regulate cryptocurrency exchanges. Some 16 exchanges are currently registered, while a further 16 – including Coincheck – were allowed to continue operating while their applications are checked.

Five of the seven exchanges punished by the FSA are unregistered, including the two forced to suspend business, Bit Station and FSHO. A senior employee at Bit Station used customers’ bitcoin for their own purposes, the FSA said, adding that the exchange has now dropped its registration application.

Bit Station and FSHO did not immediately respond to emailed requests for comment.

The head of the ruling Liberal Democratic Party’s cybersecurity taskforce said it was not ideal that exchanges that had not registered with the governments should be allowed to continue operations.

“It’s problematic that these 16 unregistered exchanges have been able to continue trading,” Sanae Takaichi told Reuters. “In the first place, should they have been allowed to operate while their applications for registrations are still incomplete?”

On GMO Coin, which was registered, the FSA said that problems with its systems had occurred frequently but the company had not sufficiently analyzed the causes. The regulator ordered it to submit a report by Mar. 22.

Shares in GMO Internet fell as much as 5.6 percent. The benchmark Nikkei average <.N225> closed up 0.5 percent.

“We will look again at our system risk management, and take thorough steps to improve to regain users’ trust,” a spokeswoman for GMO said.

(Reporting by Taiga Uranaka and Thomas Wilson; Editing by Chris Gallagher and Sam Holmes)

BlackBerry sues Facebook, WhatsApp, Instagram over patent infringement

March 7, 2018

By Ahmed Farhatha

(Reuters) – BlackBerry Ltd on Tuesday filed a patent infringement lawsuit against Facebook Inc and its WhatsApp and Instagram apps, arguing that they copied technology and features from BlackBerry Messenger.

Litigation over patent infringement is part of BlackBerry Chief Executive John Chen’s strategy for making money for the company, which has lost market share in the smartphone market it once dominated.

“Defendants created mobile messaging applications that co-opt BlackBerry’s innovations, using a number of the innovative security, user interface, and functionality enhancing features,” Canada-based BlackBerry said in a filing with a Los Angeles federal court.

“Protecting shareholder assets and intellectual property is the job of every CEO,” BlackBerry spokeswoman Sarah McKinney said in an email. However, she noted that litigation was “not central to BlackBerry’s strategy.”

The lawsuit followed years of negotiation and BlackBerry has an obligation to shareholders to pursue appropriate legal remedies, she added.

Facebook Deputy General Counsel Paul Grewal said in a statement that the company intended to fight the lawsuit.

“Blackberry’s suit sadly reflects the current state of its messaging business,” Grewal said. “Having abandoned its efforts to innovate, Blackberry is now looking to tax the innovation of others.”

BlackBerry is trying to persuade other companies to pay licensing royalties to use its trove of more than 40,000 global patents on technology including operating systems, networking infrastructure, acoustics, messaging, automotive subsystems, cybersecurity and wireless communications.

BlackBerry is also selling cybersecurity software for self driving cars.

BlackBerry sued Nokia Corp in February 2017, alleging infringement of patents relating to 3G and 4G wireless communications technology. That case is still pending in federal court in Delaware.

Last year Qualcomm Inc agreed to pay BlackBerry $940 million to resolve arbitration over royalty payments.

In October 2017 BlackBerry announced a confidential settlement with Blu Products Inc, a Florida-based maker of low-cost mobile devices it had also sued for patent infringement.

(Reporting by Ahmed Farhatha in Bengaluru, Jan Wolfe in New York, and Jim Finkle in Toronto; Editing by Sai Sachin Ravikumar and Richard Chang)

FCC wants nearly $1 billion to revamp Puerto Rico, Virgin Islands communications networks

March 6, 2018

WASHINGTON (Reuters) – Federal Communications Commission chairman Ajit Pai proposed on Tuesday directing $954 million toward restoring and expanding communications networks in Puerto Rico and the U.S. Virgin Islands heavily damaged during the 2017 hurricane season. 

In September, 95 percent of cell sites were out of service in Puerto Rico and 75 percent in the U.S. Virgin Islands. Pai said the funds are aimed at providing additional short-term assistance for restoring communications networks and longer-term support for expanding broadband access throughout the islands.

(Reporting by David Shepardson; editing by Diane Craft)

Facebook hires former BuzzFeed, Pinterest executives for video content

March 6, 2018

(Reuters) – Facebook Inc hired the former head of BuzzFeed Studios to lead its global video content and a former Pinterest executive as in charge of its video content platform Facebook Watch, they said in separate social media posts on Monday.

The appointments come after the social media giant expanded video offerings in August last year to compete in the television market.

BuzzFeed Studios former head Matthew Henick will lead Facebook’s global video content strategy and planning, he said in a Facebook post on Monday.

Mike Bidgoli, who worked at image-based searching and sharing website Pinterest for nearly two years, will lead the Facebook Watch product team, he said in a blog post on Medium. http://bit.ly/2HbdJ15

Facebook Watch was made available initially to a limited group in the United States on the company’s mobile app, website and television apps, the company said in August last year.

The programming ranges from professional women’s basketball to a safari show and a parenting program.

The Menlo Park, California-based company faces a crowded video content market, where traditional television networks compete with newer players such as Netflix Inc, Amazon.com Inc’s Prime Video and Alphabet Inc’s YouTube alongside Twitter Inc and Snap Inc.

Facebook had signed deals last year with millennial-focused news and entertainment creators Vox Media, BuzzFeed, ATTN, Group Nine Media and others to make shows for its video service as part of its efforts to buy and license original content.

(Reporting by Philip George in Bengaluru; Editing by Amrutha Gayathri)