Tag Archives: Department of Justice

U.S. Weighs Google Breakup In Historic Big Tech AntiTrust Case

google,

The U.S. Justice Department is considering asking a federal judge to force Google to sell off parts of its business in what would be a historic breakup of one of the world’s biggest tech companies, Bloomberg reported.

Antitrust enforcers are weighing a breakup to mitigate the Alphabet Inc. business’s dominance in search, the agency said in a court filing on Tuesday, confirming an earlier Bloomberg News report. Judge Amit Mehta could also order Google to provide access to the underlying data it used to build its search results and artificial intelligence products, it said.

The Justice Department “is considering behavioral and structural remedies that would prevent Google from using products such as Chrome, Play, and Android to advantage Google search and Google search-related products and features,” the agency said.

The DOJ said in the filing that Google gained scale and data benefits from its illegal distribution agreements with other tech companies that made its search engine the default option on smartphones and web browsers. Google’s Android business encompasses the operating system used on smartphones and devices as well as apps

The Verge reported: After winning a fight to get Google’s search business declared an unlawful monopoly, the Department of Justice has released its initial proposal for how it’s thinking about limiting Google’s dominance — including breaking up the company.

The government is asking Judge Amit Mehta for four different types of remedies to Google’s anticompetitive power in search engines. They include behavioral remedies, or changes to business practices, as well as structural remedies, which would break up Google.

And they’re focused particularly on generative AI. While AI might not be a substitute for search engines, the DOJ warns, it “will likely become an important feature of the evolving industry.” And it aims to prevent Google from using its power in the industry to regain unfair control.

The government sees four areas where it can constrain Google’s power. In these, it’s asking Judge Mehta to limit the kinds of contracts Google can negotiate, require rules for nondiscrimination and interoperability, and change the structure of its business.

“Fully remedying these harms requires not only ending Google’s control of distribution today, but also ensuring Google cannot control the distribution of tomorrow,” the government says. 

Google, for it’s part, calls the government proposals “radical” and believes they’re “signaling requests that go far beyond the specific legal issues in this case.”

The Times reported: The term “structural remedies” doesn’t sound too intimidating for the uninitiated. In competition circles, however, it’s a corporate bombshell, giving it is shorthand for a forced-breakup.

The US Department of Justice has said it is considering pushing for this radical move to tackle the market dominance of Google, a $2 trillion business that processes 90 per cent of international searches in the United States.

If a break-up goes ahead — and that is far from certain — it would be the first such move in the US in more than 20 years when a move against Microsoft failed.

In my opinion, the potential break-up of Google will cause problems that Alphabet/Google didn’t want to face. 

Justice Department Risks Picking The Wrong Fight With Apple

Apple,

With its lawsuit against Apple, the Justice Department focuses on outdated issues and irrelevant points, missing an opportunity to address more pressing concerns, Bloomberg reported.

According to Bloomberg, despite the friendly image that Apple Inc. cultivates, it’s a hard-driving company behind the scenes. Just ask the many suppliers that Apple has abruptly dropped or the app developers it has put out of business.

Apple also hasn’t been one to welcome openness or competition. It refused to bring its iMessage app to Android phones and only agreed to adopt the cross-platform RCS messaging system under mounting pressure. Apple makes developers use its in-app purchase system, shuns cloud-gaming services, and has been reluctant to open up its tap-to-pay chip to outside apps — all because it wants to protect its kingdom from rivals.

That’s provided the U.S. Department of Justice with plenty of fodder for its antitrust lawsuit, which was filed on Thursday. But the case relies mostly on outdated arguments and cites problems that Apple is already resolving. It even levels the dubious claim that Apple makes its products worse in order to harm rivals.

Bloomberg reported: Here are the five main issues that the Justice Department is hanging its hat on:

  • Apple has hindered the development of “super apps,” software like WeChat in China that includes several mini apps.
  • The company hasn’t supported cloud streaming game services, which run off a data center and can be delivered to the iPhone for playback.
  • Apple has barred third-party texting apps on the iPhone from sending SMS messages, and its own messaging software doesn’t work on Android.
  • There’s a lack of support on the iPhone for third-party smartwatches, including the ability to get some notifications.
  • Apple doesn’t let third-party apps use its tap-to-pay technology to make in-person payments.

Impending innovation. Reducing consumer choice. Extending dominance to other markets. These are accusations that the Justice Department leveled against a technology giant it accused of running an illegal monopoly. But they aren’t from this week’s antitrust lawsuit against Apple — they’re from the case the department brought against Microsoft in 1998, The New York Times reported.

The move against Apple is, along with the Justice Department’s 2020 lawsuit against Google over search, perhaps the most ambitious tech antitrust battle since the Clinton administration’s effort to open up Microsoft’s Windows operating system.

And federal prosecutors are explicitly connecting the Apple lawsuit to that earlier fight. 

According to the New York Times, the Justice Department sees a direct connection between the two cases. “Microsoft” appears 26 times in the Apple complaint. And prosecutors say Apple wouldn’t have achieved its current towering success had it not been for the government’s fight against Microsoft:

“The iPod did not achieve widespread adoption until Apple developed a cross-platform version of the iPod and iTunes for Microsoft’s Windows operating system, at the time, the dominant operating system for personal computers. In the absence of the consent decree in United States v. Microsoft, it would have been more difficult for Apple to achieve this success and ultimately launch the iPhone.”

In my opinion, it seems like the Department of Justice is very interested in going after Apple. And now, we wait and see what happens.

DOJ Says Apple Discriminated Against U.S. Citizens In Hiring

Apple,

Apple illegally discriminated against US citizens and other US residents in its hiring and recruitment practices for certain types of positions that went to foreign workers, the US Department of Justice said yesterday, ArsTechnica reported.

Apple discriminated “against US citizens and certain non-US citizens whose permission to live in and work in the United States does not expire,” the agency said. The $25 million payment was called the largest ever collected by the Justice Department under the anti-discrimination provision of the Immigration and Nationality Act (INA).

Apple is required to pay $6.75 million in civil penalties and create an $18.25 million fund to provide back pay to those harmed by its hiring practices. Apple did not admit guilt in the settlement, but the company acknowledged in a statement that it had “unintentionally not been following the DOJ standard,” according to Reuters.

The Department of Justice posted a press release titled: “Justice Department Secures $25 Million Landmark Agreement with Apple to Resolve Employment Discrimination Allegations Based on Citizenship Status”. From the press release:

The Justice Department announced today that it has secured a landmark agreement with Apple Inc. (Apple) to resolve allegations that Apple illegally discriminated in hiring and recruitment against U.S. citizens and certain non-U.S. citizens whose permission to live and work in the United States does not expire.

Under the agreement, Apple is required to pay up to $25 million in backpay and civil penalties, the largest award that the department has recovered under the anti-discrimination provision of the Immigration and Nationality act (INA).

“Creating unlawful barriers that make it harder for someone to seek a job because of their citizenship status will not be tolerated,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This resolution reflects that Civil Rights Division’s commitment to ending illegal discriminatory employment practices.”

The settlement agreement resolves the department’s determination that Apple violated the INA’s anti-discrimination requirements during Apple’s recruitment for positions falling under the permanent labor certification program (PERM). The PERM program is administrated by the Department of Labor an the U.S. Department of Homeland Security.

It allows employers to sponsor workers for lawful permanent resident status in the United States after completing recruitment and meeting other program requirements. Any U.S. employer that utilizes PERM program cannot legally discriminate in hiring or recruitment based on citizenship or immigration status…

The Hill reported that, according to the Department of Justice, Apple did not advertise positions that it sought to hire through the PERM program on its external job website and required candidates to mail in paper applications, often resulting in fewer or no submissions by those who would be eligible for the program.

According to The Hill, the settlement agreement that Apple maintains it “adhered to the recruitment steps” required by the program and “any alleged failures were the result of inadvertent error and not intentional discrimination.”

In my opinion, a company as large as Apple should have known better than to (intentionally or unintentionally) discriminate against workers. As a result, Apple now has to pay a lot of money to fix the problems it caused to potential workers.

FTC Says Elon Musk May Have Jeopardized Data Privacy And Security

X, ,

Court filings have revealed new details about the FTC’s investigation into Elon Musk over his handling of privacy and security issues at X. In newly public court documents, the Department of Justice says Musk fostered a “chaotic environment” at Twitter, now known as X, that prevented officials from complying with their obligations to the FTC, Engadget reported.

According to Engadget, the FTC investigation stems from a 2022 settlement between FTC and Twitter over the company’s use of deceptive ad targeting under the leadership of Jack Dorsey. Prior to Musk’s takeover, the company paid a $150 million fine and signed on to an agreement to implement specific privacy and security measures. It was this additional data protection measures that apparently fell by the wayside once Musk took control, triggering new scrutiny from the regulator.

In March, the FTC began investigating the rushed rollout of Twitter Blue, which reportedly launched without the privacy and security review required under the FTC order, as well as Musk’s handling of the so-called “Twitter Files.”

CNN reported that Elon Musk should be forced to testify in an expansive US government probe of X, the company formerly known as Twitter, the US government said.

The government said mass layoffs and other decisions Musk made raised questions about X’s ability to comply with the law and to protect users’ privacy.

According to CNN, the US government’s attempt to compel Musk’s testimony is the latest turn in an investigation that predates Musk’s acquisition of X that has intensified due to Musk’s own actions, according to a court filing by the Justice Department on behalf of the Federal Trade Commission.

The court filing dated Monday cites depositions with multiple former X executives, including its former chief information security officer and former chief privacy officer, who testified that a barrage of layoffs and resignations following Musk’s $44 billion takeover may have hindered X from meeting its security obligations under a 2011 FTC consent agreement.

The Guardian reported that the US Department of Justice alleged in a legal filing on Tuesday that depositions from former employees at Twitter, now rebranded X, raised “serious questions” about whether the company was complying with an order imposed by the consumer and competition watchdog, the Federal Trade Commission (FTC).

“The information obtained revealed a chaotic environment at the company that raised serious questions about whether and how Musk and other leaders were ensuring X Corp’s compliance with the 2022 administrative order,” the filing said.

According to The Guardian, Twitter’s former director of security engineering, Andrew Sayler, testified that he had “ongoing questions about Elon’s commitment to the overall security and privacy of the organization” because he thought “the manner in which Elon was requesting us to grant access to third parties that had not undergone our regular vetting process … [had] some degree of disregard for the overall sensitivity and security at that level of access”.

In a further example from the filing, another employee said the Tesla CEO “insisted on launching the new Twitter Blue user verification services on an accelerated basis, despite staffing limitations.” Musk, according to the testimony, insisted that the service had to launch “right now” even though Twitter’s staffing was reduced so drastically that remaining employees were “struggling to keep up.”

Personally, I think that Elon Musk should have slowed down the changes he made on (then) Twitter (and later) X. I think this lawsuit could have been avoided if Elon Musk didn’t try to do a speed-run of scattered policies shortly after he purchased Twitter.

Department of Justice Won’t Prosecute White Hat Security Researchers

Information,

The U.S. Department of Justice (DOJ) announced a new policy for charging cases under the Computer Fraud and Abuse Act (CFAA). The purpose appears to be to allow White Hat security researchers to continue doing what they do, without getting arrested for it.

From the DOJ press release:

The policy for the first time directs that good-faith security research should not be charged. Good faith security research means accessing a computer solely for purposes of good-faith testing, investigation, and/or correction of a security flaw or vulnerability, where such activity is carried out in a manner designed to avoid any harm to individuals or the public, and where the information derived from the activity is used primarily to promote the security or safety of the class of devices, machines, or online services to which the accessed computer belongs, or those who use such devices, machines, or online services.

Deputy Attorney General Lisa O. Monaco said, “Computer security research is a key driver of improved cybersecurity. The department has never been interested in prosecuting good-faith computer security research as a crime, and today’s announcement promotes cybersecurity by providing clarity for good-faith security researchers who root out vulnerabilities for the common good.”

The DOJ policy clarifies that hypothetical CFAA violations that have concerned some courts and commentators are not to be charged. This includes: embellishing on an online dating profile contrary to the terms of service of the dating website; creating fictional accounts on hiring, housing, or rental websites; using a pseudonym on a social networking site that prohibits them; checking sports scores at work; paying bills at work; or violating an access restriction contained in a terms of service are not sufficient to warrant federal criminal charges.

In addition, the DOJ made it clear that “the new policy acknowledges that claiming to be conducting security research is not a free pass for those acting in bad faith. For example, discovering vulnerabilities in devices to extort their owners, even if claimed as ‘research’, is not in good faith.”

Vice reported that the new policy addresses decades of uncertainty around the law and security research. According to Vice, the policy comes into effect immediately and all federal prosecutors who wish to charge cases under the CFAA are required to follow the policy.

TechCrunch reported: The Computer Fraud and Abuse Act, or CFAA, was enacted in 1986 and predates the modern internet. The federal law dictates what constitutes computer hacking – specifically “unauthorized” access to a computer system – at the federal level.

According to TechCrunch, CFAA has long been criticized for its outdated and vague language that does little to differentiate between good-faith researchers and malicious actors who set out to extort companies or individuals or otherwise cause harm.

I think the policy change made by the DOJ will help clarify what is considered to be beneficial (such as good-faith research) as compared to those who discover vulnerabilities in devices for the purpose of using to to extort the device’s owner. I’m hoping that the list of things that make courts and commentators confused should now be easier for them to understand.

DOJ Seized $3.6 Billion in Stolen Cryptocurrency

Crime,

The U.S. Department of Justice (DOJ) has arrested two individuals for an alleged conspiracy to launder cryptocurrency that was stolen during the 2016 hack of Bitfinex, a virtual currency exchange. According to the DOJ, the cryptocurrency that was seized is presently valued at $4.5 billion. Law enforcement has seized over $3.6 billion in cryptocurrency linked to the Bitfinex hack.

“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said Deputy Attorney General Lisa O. Monaco. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.”

The Wall Street Journal reported that the two people were both arrested without incident Tuesday morning in Manhattan. They have promoted themselves on social media as entrepreneurs with deep knowledge of tech and a love of travel.

According to The Wall Street Journal, at the couple’s appearance in Manhattan court, U.S. Magistrate Judge Debra Freeman set bond at $5 million for Mr. Lichtenstein and $3 million for Ms. Morgan, requiring that their parent’s homes be posted as security. The judge also ordered that they not have devices with internet access and prohibited them from conducting cryptocurrency transactions.

The two are facing charges related to conspiracy to commit money laundering and conspiracy to defraud the U.S. They were not charged with the hack of Bitfinex.

IBM explains that the blockchain has an immutable record of transactions. No participant can change or tamper with a transaction after it’s been recorded to the shared ledger. Transactions are recorded only once, eliminating the duplication of efforts that’s typical of traditional business records.

In short, the couple who allegedly attempted to launder a large amount of cryptocurrency left a trail of transactions that the Department of Justice used to discover the scheme. I’ve seen people on social media suggest that the blockchain is private and untraceable. However, the DOJ was very able to find the information they needed.

U.S. Department of Justice Unveiled Civil Cyber-Fraud Initiatives

Legal,

The U.S. Deputy Attorney of the Justice Department, Lisa Monaco, unveiled two new enforcement initiatives aimed at targeting cryptocurrencies and government contractors who fail to report cyber breaches, Reuters reported. The U.S. Department of Justice website calls it the Civil Cyber-Fraud Initiative.

The initiative will combine the Justice Department’s expertise in civil fraud enforcement, government procurement and cybersecurity to combat new and emerging cyber threats to the security of sensitive information and critical systems.

Reuters reported that Deputy Attorney of the Justice Department, Lisa Monaco, gave a virtual speech at the Aspen Cyber Summit, about the new initiative. It includes a mix of anti-money laundering and cybersecurity experts. In addition, the initiative will focus on cryptocurrency.

“Cryptocurrency exchanges want to be the banks of the future, well we need to make sure that folks can have confidence when they’re using these systems and we need to be poised to root out abuse,” Monaco said. “The point is to protect consumers.”

According to Reuters, Deputy Attorney of the Justice Department, Lisa Monaco, also announced the use of a cyber fraud initiative, which will “use civil enforcement tools to pursue companies, those who are government contractors, who receive federal funds, when they fail to follow recommended cybersecurity standards.”

Personally, I think the Civil Cyber-Fraud Initiative could be a good thing. It sounds like it will enact enforcement against companies that are aware a breach occurred – but don’t tell their customers about it. Cryptocurrency is relatively new, and should have some regulation attached to in order to prevent fraud.

Some things the Cyber-Fraud Initiative includes:

  •  Use of False Claims Act to pursue cybersecurity related fraud by government contractors and grant recipients.
  •  A False Claims Act is the government’s primary civil tool to redress false claims for federal funds and property involving government programs and operations.
  •  A whistleblower provision, which allows private parties to assist the government in identifying and pursuing fraudulent conduct and to share in any recovery and protects whistleblowers who bring these violations and failures from retaliation.