Bloomberg Fear: All Has Been Lost to Chinese

Anyone remember the controversy in Europe over Americans stealing commercial secrets? I’m not talking about Budweiser, Cheddar Cheese, Parmesan Cheese, Champagne, assembly lines or the millions of others ideas ruthlessly transfered to the American market in the 1800s and 1900s without any credit or attribution to the European sources they came from. I doubt any American you ask today knows Cheddar is from a town called Cheddar, England or even knows that such a town exists. The AP framed that old problem by quoting a prominent trade expert in America.

Gary Litman, vice president for European affairs for the U.S. Chamber of Commerce, said it’s too late to rename imitation Italian products that are already firmly established. “You cannot change history that easily,” he said.
Litman said most American buyers probably don’t care whether the cheese was made in Parma. “No one thinks it’s coming from Parma. They don’t even know where Parma is. They couldn’t find it on a map.”

No, not that controversy about imitations and knowledge transfer. I actually am talking about a different one; the much more recent case as described by the BBC in 2000 as “Big brother without a cause

The Echelon spy system, whose existence has only recently been acknowledged by US officials, is capable of hoovering up millions of phone calls, faxes and emails a minute.

Hoovering secrets? Why would America want to do that? Surely it is only for the safety and defense of the country. They can’t possibly be using it to steal secrets about cheese.

Its owners insist the system is dedicated to intercepting messages passed between terrorists and organised criminals.

But a report published by the European Parliament in February alleges that Echelon twice helped US companies gain a commercial advantage over European firms.


Mr Campbell believes that when the Cold War ended, this under-employed intelligence apparatus was put to use for economic gain.

“There’s no safeguards, no remedies, ” he said. “There’s nowhere you can go to say that they’ve been snooping on your international communications. It is a totally lawless world.”

Now that’s just crazy talk. Lawless world? Or is it…? Are there other examples of this kind of problem?

A lengthy Bloomberg article has just appeared that tries to paint the U.S. as innocent victim of Chinese lawless behavior. I find a strikingly familiar style to the story. Note this quote, for example.

“The situation we are in now is the consequence of three decades of hands-off approach by government in the development of the Internet,” Falkenrath said.

I think he means the lawless world that Campbell warned about in 2000. Falkenrath’s quote is vague so here’s an even better quote.

“What has been happening over the course of the last five years is that China — let’s call it for what it is — has been hacking its way into every corporation it can find listed in Dun & Bradstreet,” said Richard Clarke, former special adviser on cybersecurity to U.S. President George W. Bush, at an October conference on network security. “Every corporation in the U.S., every corporation in Asia, every corporation in Germany. And using a vacuum cleaner to suck data out in terabytes and petabytes. I don’t think you can overstate the damage to this country that has already been done.”

In contrast, U.S. cyberspies go after foreign governments and foreign military and terrorist groups, Clarke said.

“We are going after things to defend ourselves against future attacks,” he said.

Well, it is not like the U.S. is going to go around saying “hey everyone, we’re stealing your secrets” even if they were. So Clark could honestly believe what he is telling the press but it doesn’t change the fact that the U.S. might continue denying corporate espionage while actually performing it.

Ok, I know what you’re thinking. China has spies funded with state money. That makes it different from American spies because in America the spies are unorganized and beg on the street for pennies, right? Ashcroft paying Choicepoint tens of millions (before they payed him) to collect information on companies around the world and sell it to the government, that was an exception to the rule about funding spies with state money, right?

The Chinese are said to now be going at it with a national determination not seen since…the “hoovering” by Echelon.

Segmented tasking among various groups and sophisticated support infrastructure are among the tactics intelligence officials have revealed to Congress to show the hacking is centrally coordinated, the person said. U.S. investigators estimate Byzantine Foothold is made up of anywhere from several dozen hackers to more than one hundred, said the person, who declined to be identified because the matter is secret.

If they run that “sophisticated support infrastructure” anything like Choicepoint then all the U.S. has to do is get on the phone to China, give some random identity of a false company and offer to buy the data. Bada bing.

But seriously, the Bloomberg story starts off strong and repeats an old scary picture of a vacuum cleaner (vacuum one, vacuum two, vacuum three, vacuum four, vacuum five, etc.) sucking all the data out of America. Is it any coincidence that a company in Hong Kong acquired Hoover in 2007?

Then Bejtlich gets in a quote that changes the tone completely.

“The guys who get in first tend to be the best. If you can’t get in, the rest of the guys can’t do any work,” said Richard Bejtlich, chief security officer for Mandiant Corp., an Alexandria, Virginia-based security firm that specializes in cyber espionage. “We’ve seen some real skill problems with the people who are getting the data out. I guess they figure if they haven’t been caught by that point, they’ll have as many chances as they need to remove the data.”

The attackers have skill problems with their vacuum cleaner? The imagery is ruined. Who needs skill to use a vacuum? Now I see a bunch of guys running around in circles with USB drives, bumping into each other and falling down.

Such tracing is sometimes possible because of sloppiness and mistakes made by the spies, said another senior intelligence official who asked not to be named because the matter is classified. In one instance, a ranking officer in China’s People’s Liberation Army, or PLA, employed the same server used in cyberspying operations to communicate with his mistress, the intelligence official said.

Cue Benny Hill

But seriously, again, the story does have an interesting counterpoint to my point in a recent blog post. I asked if there was no risk of retribution and China has unlimited human resources then why the U.S. military is trying to convince us that there are a small number of attackers.

Bloomberg brings up the possibility of large numbers of Chinese entrepreneurs hacking for profit.

Driving China’s spike in cyberspying is the reality that hacking is cheaper than product development, especially given China’s vast pool of hackers, said a fourth U.S. intelligence official. That pool includes members of its militia, who hack on commission, the official said. They target computing, high technology and pharmaceutical companies whose products take lots of time and money to develop, the official said.

They don’t target our food and beverage industry?

Oh, right, they probably just go to Europe to steal the original information and not American knock-offs. I’m only being half-facetious. Europe obviously has a lot of IP at risk and innovation as good or even better than in America.

We heard complaints about Americans spying on European companies in 2000. The French complained in 2005 about China and there was a fair bit of discussion in 2010 about Renault. Why don’t we hear anything now from the European security experts, or from the European Generals and politicians, similar to the arguments by the U.S.? Where is the comparable outrage about the need to retaliate and fight the Chinese spies; why hasn’t Bloomberg included targets outside the U.S.?

Although I like the WSJ treatment of the topic far better than Bloomberg, they too fail to mention the European angle let alone other areas of the world with innovation (e.g. India, who is often trading harsh words with China). The reports from Europe seem to be far more cloak and dagger, as if their computers are impenetrable.

…an unnamed French company realised too late that a sample of its patented liquid had left the building after the visit of a Chinese delegation. It turned out one of the visitors had dipped his tie into the liquid to take home a sample in order to copy it.

Well then I guess we are left to imagine a Chinese cyberarmy squad throwing up their hands in disgust. American companies all were easily penetrated with just a simple email attachment but now, unable to get through through the French company’s defenses, one of the Chinese agents says “that’s it, I’m putting on a tie and going in”.

And then there is the case of Chinese students paying tuition and attending class to learn about vacuum cleaner technology from the British. What kind of elite cyberarmy agent pays tuition and actually goes to class? Those British computers must be seriously hardened to force students to attend classes. At least now we know where spies get the latest vacuuming techniques from…

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