Bitcoin ransoms just are not what they used to be

(Reuters) – Give me bitcoin or your life. Seriously?

FILE PHOTO: A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration taken December 8, 2017. REUTERS/Benoit Tessier/File Photo

The people behind a rash of bomb threats made across the United States and Canada on Thursday demanded a $20,000 ransom to be paid in bitcoin. Authorities said none of the threats – emailed to hundreds of businesses, public offices and schools – appeared credible.

Frankly, the perpetrators would have been better off asking for Turkish lira.

Bitcoin and other cryptocurrencies have long been a favorite ransom tender for cyber criminals thanks to the currencies’ anonymous nature. U.S. cyber security firm Chainalysis estimates that from 2012 through 2017, global ransom payments using bitcoin totaled at least $31 million.

Anonymity aside, of course, the big appeal was an incredible run-up in bitcoin’s value over that time. It shot from $5 a coin at the start of 2012 to nearly $20,000 at this time last year, according to data from Bitstamp, one of the larger bitcoin exchanges.

Today? Not so hot.

Bitcoin on Thursday was trading at around $3,250, down more than 80 percent from its record high. In the last three months alone it has plunged 50 percent.

Even the currencies of some crisis-hit economies like Turkey have done better: The lira is up 30 percent since August.

(GRAPHIC: Bitcoin falls on hard times – tmsnrt.rs/2zWLEJH)

Reporting by Gertrude Chavez-Dreyfus and Anna Irrera in New York; Writing by Dan Burns; Editing by Matthew Lewis

U.S. tribunal to review ruling on Qualcomm request for iPhone ban

WASHINGTON (Reuters) – The U.S. International Trade Commission (ITC) said on Wednesday it would review a ruling that a ban on imports of some iPhones into the United States was not in the public interest, even if Apple Inc (AAPL.O) infringed a Qualcomm (QCOM.O) patent.

FILE PHOTO: People look at iPhones at the World Trade Center Apple Store during a Black Friday sales event in Manhattan, New York City, U.S., November 23, 2018. REUTERS/Andrew Kelly

Apple and Qualcomm are locked in a wide-ranging legal dispute in which Apple has accused Qualcomm of unfair patent licensing practices. Qualcomm has in turn accused Apple of patent infringement.

Qualcomm initiated the ITC case against Apple in July 2017, alleging that iPhones containing Intel (INTC.O) chips infringed six patents describing technology that helps smartphones perform well without draining the battery.

Qualcomm did not allege that Intel chips violate its patents, but that the way Apple implemented them in the iPhone does. It later dropped three of the six patents from the case.

Administrative law judge Thomas Pender, a now-retired member of the ITC tribunal that hears patent infringement cases, ruled in September that Apple infringed one of the patents, but cleared the company of infringing the other two.

Pender recommended the agency not grant Qualcomm the relief the San Diego, California-based chipmaker had sought, saying it was not in the U.S. interest.

The ITC said on Wednesday it would review whether the one patent was indeed infringed and also whether it was right to not grant Qualcomm relief. Pender’s decision on the other two patents would not be reviewed, it said.

The agency would also consider how long it would take Apple to design around Qualcomm’s patented battery-saving technology, what national security concerns would be implicated by an sales ban and whether a limited import ban could be adopted, it said.

“We are pleased that the Commission is going to review the Administrative Law Judge’s recommendation that no ITC remedy should result from a finding of infringement,” Don Rosenberg, Qualcomm’s executive vice president and general counsel, said in a statement after the announcement.

Apple declined to comment.

A final ruling is due before February 19, the ITC said.

Reporting by Jan Wolfe; Editing by Sonya Hepinstall

Hertz and Clear Bring Facial Recognition to the Rental Car Industry

The pain of car rentals could soon get easier thanks to a new program from Hertz that lets members bypass the counter, and drive away using nothing more than their face.

On Tuesday, Hertz announced a plan to install facial recognition units at airports around the country, beginning this week at Hartsfield–Jackson International Airport in Atlanta. In 2019, the company will roll out the service, known as Hertz Fast Lane, to 40 more airports, including ones in New York (JFK), San Francisco (SFO), and Los Angeles (LAX).

Hertz is launching the service in partnership with the biometrics company Clear, which is already a fixture at many airport security lines and a growing number of sports stadiums around the company.

Using the facial recognition checkout requires the rental to be a member of Hertz Gold Plus and also to enroll inClear. According to a company spokesperson, eligible customers can simply walk to the vehicle they have reserved and drive to a check out terminal. Here’s how that looks in practice:

Customers will also have the option of using a fingerprint instead of their face to prove their identity at checkout.

“The new service…uses biometrics to drastically speed up the car rental process, so travelers can get through the exit gate and on the road in 30 seconds or less—a time saving of at least 75 percent,” said Herz in a statement.

If facial recognition catches on at airport terminals, it’s likely to spread to other car rental locations. While the technology raises numerous privacy issues, it appears many consumers are willing to tolerate that risk in favor of the greater convenience it provides.

Cyber Saturday—Marriott’s Data Breach Baloney, Quora Hack, Aussie Encryption Law

Happy weekend, Cyber Saturday readers.

I’m back stateside after a week-and-a-half stay in China, where I helped host Fortune‘s 2018 Global Tech Forum. I hope you understand the absence of last weekend’s dispatch; following the event, I took an impromptu vacation in Hong Kong. Thankfully, I did not stay at a Marriott hotel. Speaking of which.

As you have no doubt heard by now, Marriott disclosed a massive data breach that exposed up to 500 million customer records. Hackers accessed information in the company’s Starwood reservation system, which affected brands such as W Hotels, St. Regis, Sheraton Hotels & Resorts, Westin Hotels & Resorts, and other properties in the Starwood portfolio, the company said. The intrusion apparently began in 2014, two years before Marriott acquired Starwood. This oversight in the M&A process calls to mind another recent, post-acquisition hacker-surprise: Yahoo, whose two mega-breaches remained undetected when the company sold to Verizon last year. Coincidentally, Marriott’s hack is the biggest suffered by a corporation, second only to those at Yahoo.

After news of the Marriott breach came out, Sen. Charles E. Schumer (D-N.Y.) called on the hotel chain to foot the bill and replace people’s passports which were potentially compromised as part of the breach. Marriott quickly promised to cover the cost for as many as 327 million people whose passport numbers may have been exposed. At a fee of $110 per passport, that would put Marriott on the hook to pay up to $36 billion—a price tag equivalent to the value of the entire company, per its market capitalization. A devastating payout.

Here’s the thing though: While seemingly noble, Marriott’s promise is a bunch of baloney. The company said it will follow through on reimbursement only in instances where it “determine[s] that fraud has taken place.” What this caveat conveniently excludes is that Marriott’s hack likely had little to do with fraud and everything to do with espionage. In other words, if you’re a victim, don’t expect remuneration.

As Reuters reported, investigators believe the perpetrators of this attack were Chinese spies. The breach used tools, tactics, and procedures that matched Beijing’s style. The intrusion is said to have begun shortly after a breach of the government’s Office of Personnel Management, which government officials have attributed to China. The Starwood database represents a massive trove of potential intelligence: information on who is staying where, when—a bonanza for building up profiles of targets and tracking people of interest.

Geng Shuang, China’s Ministry of Foreign Affairs spokesperson, issued a statement saying the country “opposes all forms of cyber attack,” per Reuters. He said the country would investigate the claims, if offered evidence. Meanwhile, Connie Kim, a Marriott spokesperson, said “we’ve got nothing to share” about the Chinese attribution claim.

The Marriott breach—which took place quietly over years, as spies prefer—does not appear to have been a cybercriminal score. The passport payment pledge is probably bunk; nevertheless, if you think you might have been affected, it won’t hurt to follow these steps to refresh your cybersecurity hygiene and better protect yourself.

Have a great weekend.

Robert Hackett

@rhhackett

[email protected]

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.

Marriott Says It Will Pay for Replacement Passports After Data Breach. Here’s Why That’s Likely Baloney.

As you have no doubt heard by now, Marriott disclosed a massive data breach that exposed up to 500 million customer records. Hackers accessed information in the company’s Starwood reservation system, which affected brands such as W Hotels, St. Regis, Sheraton Hotels & Resorts, Westin Hotels & Resorts, and other properties in the Starwood portfolio, the company said. The intrusion apparently began in 2014, two years before Marriott acquired Starwood. This oversight in the M&A process calls to mind another recent, post-acquisition hacker-surprise: Yahoo, whose two mega-breaches remained undetected when the company sold to Verizon last year. Coincidentally, Marriott’s hack is the biggest suffered by a corporation, second only to those at Yahoo.

After news of the Marriott breach came out, Sen. Charles E. Schumer (D-N.Y.) called on the hotel chain to foot the bill and replace people’s passports which were potentially compromised as part of the breach. Marriott quickly promised to cover the cost for as many as 327 million people whose passport numbers may have been exposed. At a fee of $110 per passport, that would put Marriott on the hook to pay up to $36 billion—a price tag equivalent to the value of the entire company, per its market capitalization. A devastating payout.

Here’s the thing though: While seemingly noble, Marriott’s promise is a bunch of baloney. The company said it will follow through on reimbursement only in instances where it “determine[s] that fraud has taken place.” What this caveat conveniently excludes is that Marriott’s hack likely had little to do with fraud and everything to do with espionage. In other words, if you’re a victim, don’t expect remuneration.

As Reuters reported, investigators believe the perpetrators of this attack were Chinese spies. The breach used tools, tactics, and procedures that matched Beijing’s style. The intrusion is said to have begun shortly after a breach of the government’s Office of Personnel Management, which government officials have attributed to China. The Starwood database represents a massive trove of potential intelligence: information on who is staying where, when—a bonanza for building up profiles of targets and tracking people of interest.

Geng Shuang, China’s Ministry of Foreign Affairs spokesperson, issued a statement saying the country “opposes all forms of cyber attack,” per Reuters. He said the country would investigate the claims, if offered evidence. Meanwhile, Connie Kim, a Marriott spokesperson, said “we’ve got nothing to share” about the Chinese attribution claim.

The Marriott breach—which took place quietly over years, as spies prefer—does not appear to have been a cybercriminal score. That’s why the passport payment pledge is probably bunk; nevertheless, if you think you might have been affected, it won’t hurt to follow these steps to refresh your cybersecurity hygiene and better protect yourself.

A version of this article first appeared in Cyber Saturday, the weekend edition of Fortune’s tech newsletter Data Sheet. Sign up here.

U.S. accuses Huawei CFO of Iran sanctions cover-up

VANCOUVER/LONDON (Reuters) – Huawei Technologies Co Ltd’s chief financial officer faces U.S. accusations that she covered up her company’s links to a firm that tried to sell equipment to Iran despite sanctions, a Canadian prosecutor said on Friday, arguing against giving her bail while she awaits extradition.

The case against Meng Wanzhou, who is also the daughter of the founder of Huawei, stems from a 2013 Reuters report here about the company’s close ties to Hong Kong-based Skycom Tech Co Ltd, which attempted to sell U.S. equipment to Iran despite U.S. and European Union bans, the prosecutor told a Vancouver court.

U.S. prosecutors argue that Meng was not truthful to banks who asked her about links between the two firms, the court heard on Friday. If extradited to the United States, Meng would face charges of conspiracy to defraud multiple financial institutions, the court heard, with a maximum sentence of 30 years for each charge.

Meng, 46, was arrested in Canada on Dec. 1 at the request of the United States. The arrest was on the same day that U.S. President Donald Trump met in Argentina with China’s Xi Jinping to look for ways to resolve an escalating trade war between the world’s two largest economies.

The news of her arrest has roiled stock markets and drawn condemnation from Chinese authorities, although Trump and his top economic advisers have downplayed its importance to trade talks after the two leaders agreed to a truce.

A spokesman for Huawei had no immediate comment on the case against Meng on Friday. The company has said it complies with all applicable export control and sanctions laws and other regulations.

Friday’s court hearing is intended to decide on whether Meng can post bail or if she is a flight risk and should be kept in detention.

The prosecutor opposed bail, arguing that Meng was a high flight risk with few ties to Vancouver and that her family’s wealth would mean than even a multi-million-dollar surety would not weigh heavily should she breach conditions.

Meng’s lawyer, David Martin, said her prominence made it unlikely she would breach any court orders.

“You can trust her,” he said. Fleeing “would humiliate and embarrass her father, whom she loves,” he argued.

Huawei CFO Meng Wanzhou, who was arrested on an extradition warrant, appears at her B.C. Supreme Court bail hearing in a drawing in Vancouver, British Columbia, Canada December 7, 2018. REUTERS/Jane Wolsak

The United States has 60 days to make a formal extradition request, which a Canadian judge will weigh to determine whether the case against Meng is strong enough. Then it is up to Canada’s justice minister to decide whether to extradite her.

Chinese Foreign ministry spokesman Geng Shuang said on Friday that neither Canada nor the United States had provided China any evidence that Meng had broken any law in those two countries, and reiterated Beijing’s demand that she be released.

Chinese state media accused the United States of trying to “stifle” Huawei and curb its global expansion.

IRAN BUSINESS

The U.S. case against Meng involves Skycom, which had an office in Tehran and which Huawei has described as one of its “major local partners” in Iran.

In January 2013, Reuters reported that Skycom, which tried to sell embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator, had much closer ties to Huawei and Meng than previously known.

Slideshow (9 Images)

In 2007, a management company controlled by Huawei’s parent company held all of Skycom’s shares. At the time, Meng served as the management firm’s company secretary. Meng also served on Skycom’s board between February 2008 and April 2009, according to Skycom records filed with Hong Kong’s Companies Registry.

Huawei used Skycom’s Tehran office to provide mobile network equipment to several major telecommunications companies in Iran, people familiar with the company’s operations have said. Two of the sources said that technically Skycom was controlled by Iranians to comply with local law but that it effectively was run by Huawei.

Huawei and Skycom were “the same,” a former Huawei employee who worked in Iran said on Friday.

A Huawei spokesman told Reuters in 2013: “Huawei has established a trade compliance system which is in line with industry best practices and our business in Iran is in full compliance with all applicable laws and regulations including those of the U.N. We also require our partners, such as Skycom, to make the same commitments.”

U.S. CASE

The United States has been looking since at least 2016 into whether Huawei violated U.S. sanctions against Iran, Reuters reported in April.

The case against Meng revolves around her response to banks, who asked her about Huawei’s links to Skycom in the wake of the 2013 Reuters report. U.S. prosecutors argue that Meng fraudulently said there was no link, the court heard on Friday.

U.S. investigators believe the misrepresentations induced the banks to provide services to Huawei despite the fact they were operating in sanctioned countries, Canadian court documents released on Friday showed.

The hearing did not name any banks, but sources told Reuters this week that the probe centered on whether Huawei had used HSBC Holdings (HSBA.L) to conduct illegal transactions. HSBC is not under investigation.

U.S. intelligence agencies have also alleged that Huawei is linked to China’s government and its equipment could contain “backdoors” for use by government spies. No evidence has been produced publicly and the firm has repeatedly denied the claims.

The probe of Huawei is similar to one that threatened the survival of China’s ZTE Corp (0763.HK) (000063.SZ), which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to Iran. ZTE paid a $892 million penalty.

Reporting by Julie Gordon in Vancouver and Steve Stecklow in London; Additional reporting by Anna Mehler Paperny in Toronto, David Ljunggren in Ottawa, Karen Freifeld in New York, Ben Blanchard and Yilei Sun in Beijing, and Sijia Jiang in Hong Kong; Writing by Denny Thomas and Rosalba O’Brien; Editing by Muralikumar Anantharaman, Susan Thomas and Sonya Hepinstall

U.S. accuses Huawei CFO of Iran sanctions cover-up; hearing adjourned to Monday

VANCOUVER/LONDON (Reuters) – Huawei Technologies Co Ltd’s chief financial officer faces U.S. accusations that she covered up her company’s links to a firm that tried to sell equipment to Iran despite sanctions, a Canadian prosecutor said on Friday, arguing against giving her bail while she awaits extradition.

After nearly six hours of arguments and counter-arguments, no decision was reached and the hearing was adjourned until Monday 10:00 a.m. Pacific Time (1800 GMT).

The case against Meng Wanzhou, who is also the daughter of the founder of Huawei [HWT.UL], stems from a 2013 Reuters report here about the company’s close ties to Hong Kong-based Skycom Tech Co Ltd, which attempted to sell U.S. equipment to Iran despite U.S. and European Union bans, the prosecutor told a Vancouver court.

U.S. prosecutors argue that Meng was not truthful to banks who asked her about links between the two firms, the court heard on Friday. If extradited to the United States, Meng would face charges of conspiracy to defraud multiple financial institutions, the court heard, with a maximum sentence of 30 years for each charge.

Meng, 46, was arrested in Canada on Dec. 1 at the request of the United States. The arrest was on the same day that U.S. President Donald Trump met in Argentina with China’s Xi Jinping to look for ways to resolve an escalating trade war between the world’s two largest economies.

The news of her arrest has roiled stock markets and drawn condemnation from Chinese authorities, although Trump and his top economic advisers have downplayed its importance to trade talks after the two leaders agreed to a truce.

A spokesman for Huawei had no immediate comment on the case against Meng on Friday. The company has said it complies with all applicable export control and sanctions laws and other regulations.

Friday’s court hearing is intended to decide on whether Meng can post bail or if she is a flight risk and should be kept in detention.

The prosecutor opposed bail, arguing that Meng was a high flight risk with few ties to Vancouver and that her family’s wealth would mean than even a multi-million-dollar surety would not weigh heavily should she breach conditions.

Meng’s lawyer, David Martin, said her prominence made it unlikely she would breach any court orders.

“You can trust her,” he said. Fleeing “would humiliate and embarrass her father, whom she loves,” he argued.

The United States has 60 days to make a formal extradition request, which a Canadian judge will weigh to determine whether the case against Meng is strong enough. Then it is up to Canada’s justice minister to decide whether to extradite her.

Huawei CFO Meng Wanzhou, who was arrested on an extradition warrant, appears at her B.C. Supreme Court bail hearing in a drawing in Vancouver, British Columbia, Canada December 7, 2018. REUTERS/Jane Wolsak

Chinese Foreign ministry spokesman Geng Shuang said on Friday that neither Canada nor the United States had provided China any evidence that Meng had broken any law in those two countries, and reiterated Beijing’s demand that she be released.

Chinese state media accused the United States of trying to “stifle” Huawei and curb its global expansion.

IRAN BUSINESS

The U.S. case against Meng involves Skycom, which had an office in Tehran and which Huawei has described as one of its “major local partners” in Iran.

In January 2013, Reuters reported that Skycom, which tried to sell embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator, had much closer ties to Huawei and Meng than previously known.

In 2007, a management company controlled by Huawei’s parent company held all of Skycom’s shares. At the time, Meng served as the management firm’s company secretary. Meng also served on Skycom’s board between February 2008 and April 2009, according to Skycom records filed with Hong Kong’s Companies Registry.

Huawei used Skycom’s Tehran office to provide mobile network equipment to several major telecommunications companies in Iran, people familiar with the company’s operations have said. Two of the sources said that technically Skycom was controlled by Iranians to comply with local law but that it effectively was run by Huawei.

Slideshow (9 Images)

Huawei and Skycom were “the same,” a former Huawei employee who worked in Iran said on Friday.

A Huawei spokesman told Reuters in 2013: “Huawei has established a trade compliance system which is in line with industry best practices and our business in Iran is in full compliance with all applicable laws and regulations including those of the U.N. We also require our partners, such as Skycom, to make the same commitments.”

U.S. CASE

The United States has been looking since at least 2016 into whether Huawei violated U.S. sanctions against Iran, Reuters reported in April.

The case against Meng revolves around her response to banks, who asked her about Huawei’s links to Skycom in the wake of the 2013 Reuters report. U.S. prosecutors argue that Meng fraudulently said there was no link, the court heard on Friday.

U.S. investigators believe the misrepresentations induced the banks to provide services to Huawei despite the fact they were operating in sanctioned countries, Canadian court documents released on Friday showed.

The hearing did not name any banks, but sources told Reuters this week that the probe centered on whether Huawei had used HSBC Holdings (HSBA.L) to conduct illegal transactions. HSBC is not under investigation.

U.S. intelligence agencies have also alleged that Huawei is linked to China’s government and its equipment could contain “backdoors” for use by government spies. No evidence has been produced publicly and the firm has repeatedly denied the claims.

The probe of Huawei is similar to one that threatened the survival of China’s ZTE Corp (0763.HK) (000063.SZ), which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to Iran. ZTE paid a $892 million penalty.

Reporting by Julie Gordon in Vancouver and Steve Stecklow in London; Additional reporting by Anna Mehler Paperny in Toronto, David Ljunggren in Ottawa, Karen Freifeld in New York, Ben Blanchard and Yilei Sun in Beijing, and Sijia Jiang in Hong Kong; Writing by Denny Thomas and Rosalba O’Brien; Editing by Muralikumar Anantharaman, Susan Thomas and Sonya Hepinstall

'Our airplanes are safe,' Boeing says as officials push training

JAKARTA/SEATTLE (Reuters) – Aviation authorities in Indonesia and India on Thursday pushed for more simulator training for Boeing Co 737 MAX pilots following the deadly Lion Air crash, while the world’s largest planemaker reiterated that its top-selling jetliner was safe.

FILE PHOTO: Dennis Muilenburg, CEO, Boeing speaks during a roundtable discussion on defense issues with U.S. President Donald Trump at Luke Air Force Base, Arizona, U.S., October 19, 2018. REUTERS/Jonathan Ernst

Boeing Chief Executive Officer Dennis Muilenburg told a CNBC interviewer on Thursday he was “very confident” in the safety of the 737 MAX, the newest version of a jet that has been a fixture of passenger travel for decades.

“We know our airplanes are safe,” Muilenburg said. “We have not changed our design philosophy.”

Muilenburg’s comments came the same day that India’s aviation regulator said 737 MAX pilots should be trained on a simulator that replicates the suspected scenario that led to the crash, while Indonesia’s Transport Ministry said it would immediately impose new requirements for simulator training.

Also on Thursday, Lion Air confirmed an earlier Reuters report that it was considering cancelling 737 MAX orders after the jetliner plunged into the Java Sea on Oct. 29, killing all 189 people onboard.

Lion Air, a privately owned budget airline, has 190 Boeing jets worth $22 billion at list prices waiting to be delivered, on top of 197 already taken, making it one of the largest U.S. export customers. Other MAX customers, including large U.S. carriers, have reiterated they are confident in the plane.

Crash investigators are focusing on the possibility that a new anti-stall system that repeatedly pushed the Lion Air jetliner’s nose down was being fed by erroneous data from a faulty sensor left in place after a previous hazardous flight.

Boeing has said cockpit procedures that were applied on the previous flight are already in place to tackle such a problem. But U.S. regulators have said Boeing was also examining a possible software fix, after coming under fire for not outlining recent changes to the automated system in the manual for the 737 MAX.

SIMULATOR TRAINING

Extra training has also become a key focus after the crash.

Lion Air expects to have its own 737 MAX simulator next year, Managing Director Daniel Putut said last week.

A simulator can cost between $6 million and $15 million depending how it is customized and take about a year to be delivered, aviation training firm CAE said.

CAE has sold about 30 737 MAX simulators to airlines around the world – four of which were in service so far, the company said.

Southwest Airlines Co said it had one MAX simulator on order before the Lion Air crash, while American Airlines said it was working with pilots on training.

Separately, American Airlines has added to its mandatory pilot training materials discussion of the scenario faced by the Lion Air pilots and differences between the MAX and its predecessor, the 737NG, said Dennis Tajer, a spokesman for the Allied Pilots Association (APA), which represents American Airlines pilots.

Boeing’s shares closed down about 3 percent at $331.90 amid broader concerns of U.S-China tensions over trade.

Reporting by Cindy Silviana in Jakarta and Eric M. Johnson in Seattle; Additional reporting by Tracy Rucinski in Chicago, Sonam Rai in Bengaluru, Aditi Shah in New Delhi and Allison Lampert in Montreal; Writing by Eric M. Johnson; Editing by Peter Cooney

SoftBank's Vision Fund to hire China team, set up mainland office: sources

HONG KONG (Reuters) – The SoftBank-led Vision Fund is hiring an investment team to be based in China as the $100 billion investment giant expands in one of the world’s most vibrant tech markets, two people with direct knowledge of the move told Reuters.

FILE PHOTO: The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato/File Photo

The Vision Fund plans to open its first China office in Shanghai next year, followed by Beijing and Hong Kong. Altogether it hopes to hire about 20 people, said the people, who declined to be named as the information was confidential.

The Vision Fund raised more than $93 billion at its first close last May with investors including the sovereign wealth funds of Saudi Arabia and Abu Dhabi, Apple Inc and Hon Hai Precision Industry Co Ltd (Foxconn).

In a statement at the time, SoftBank said the fund was targeting a total of $100 billion within six months.

Earlier this year, the fund hired Eric Chen, who last worked as a Hong Kong-based managing director at private equity firm Silver Lake before setting up his own venture, to head its upcoming China team, the people added.

Chen joined SoftBank Investment Advisers, which oversees Vision Fund, as a partner in March and is based in San Francisco, according to his LinkedIn profile and confirmation from the people. He could not be reached for comment.

A SoftBank spokesman declined to comment.

Already this year the Vision Fund has moved to open offices in India, where it has spent $5 billion betting on the future of technology, and Saudi Arabia, home to its biggest backer – sovereign wealth fund PIF.

The openings come as the fund must manage its sprawling web of portfolio companies covering everything from shared working space to insurance and healthcare.

SoftBank is no stranger in China. Founder Masayoshi Son was an early backer of e-commerce giant Alibaba Group in 2000. Since 2013, SoftBank has invested over $13 billion in Chinese companies such as ride-hailing champion Didi Chuxing. The Vision Fund has made five investments in China, according to Refinitiv data.

Since its first close on May 17 last year, the Vision Fund has invested in truck-hailing company Man Bang Group, Ping An Healthcare and Technology Co, a one-stop healthcare platform backed by Ping An Insurance Group, and most recently Beijing Bytedance Technology Co, China’s largest media start-up managing news aggregator Toutiao and online short-video streaming app TikTok, the data showed.

Bytedance is valued at $75 billion in its latest fundraising, Reuters has reported.

The fund has also invested $500 million in the Chinese unit of U.S.-based shared working space provider WeWork Cos in July, as part of its support for WeWork’s global push.

Reporting by Kane Wu in Hong Kong, adiditonal reporting by Sam Nussey in Tokyo; Editing by Jennifer Hughes and Stephen Coates

A Sleeping Tesla Driver Highlights Autopilot's Biggest Flaw

As technology advances, so must policing. Last week, when a couple of California Highway Patrol officers spotted a man apparently sleeping in the driver’s seat of a Tesla Model S going 70 mph down Highway 101 in Palo Alto around 3:30 am, they moved behind the car and turned on their siren and lights. When the driver didn’t respond, the cops went beyond their standard playbook. Figuring the Tesla might be using Autopilot, they called for backup to slow traffic behind them, then pulled in front of the car and gradually started braking. And so the Tesla slowed down, too, until it was stopped in its lane.

“Our officers’ quick thinking got the vehicle to stop,” says CHP public information officer Art Montiel. The officers arrested the driver, identified in a police report as 45-year-old Alexander Joseph Samek of Los Altos, for driving under the influence of alcohol.

Neither the cops nor Tesla has confirmed whether the Model S had Autopilot engaged at the time. It seems likely it was, though, since the vehicle was staying in its lane and responding to vehicles around it, even though its driver didn’t wake up until the cops knocked on his window.

Tesla clearly tells its customers who pay the extra $5,000 for Autopilot that they are always responsible for the car’s driving, and that they must remain vigilant at all times. Driving drunk is illegal. And the vehicle’s sorta-self-driving tech may have prevented a crash. But if Autopilot did allow a slumbering and allegedly drunk driver to speed down the highway, it brings up another question: Is Elon Musk’s car company doing enough to prevent human abuse of its technology?

It’s long-standing but still-relevant criticism. Last year, a National Transportation Safety Board investigation into the 2016 death of an Ohio man whose Tesla hit a semi-truck while Autopilot was engaged concluded that Tesla bore some of the blame. When the oncoming truck turned across the path of the Tesla, the sedan didn’t slow down until impact. “The combined effects of human error and the lack of sufficient system controls resulted in a fatal collision that should not have happened,” NTSB Chairman Robert Sumwalt said at the time.

Since then, Tesla has restricted how long a driver can go without touching the steering wheel before the receiving a warning beep. If they don’t respond, the system will eventually direct the car to stop and hit its hazard lights. That makes this incident a bit confusing, as Musk noted in a tweet:

The sensors in the steering wheel that register the human touch, though, are easy to cheat, as YouTube videos demonstrate. A well-wedged orange or water bottle can do the trick. Posters in online forums say they have strapped weights onto their wheels and experimented with Ziplock bags and “mini weights.” For a while, drivers even could buy an Autopilot Buddy “nag reduction device,” until the feds sent the company a cease-and-desist letter this summer.

All of which makes the design of similar systems offered by Cadillac and Audi look rather better suited to the task of keeping human eyes on the road, even as the car works the steering wheel, throttle, and brakes. Cadillac’s Super Cruise includes a gumdrop-sized infrared camera on the steering column that monitors the driver’s head position: Look away or down for too long, and the system issues a sharp beep. Audi’s Traffic Jam Pilot does the same with an interior gaze-monitoring camera.

Humans being human, they will presumably find ways to cheat those systems (perhaps borrowing inspiration from Homer Simpson) but it’s clear a system that monitors where a driver is looking is more robust for this purpose than one that can be fooled by citrus.

It’s possible Tesla will give it a shot. The Model 3 comes with an interior camera mounted near the rearview mirror, and though the automaker hasn’t confirmed what it’s for, don’t be surprised if an over-the-air software update suddenly gives those cars the ability to creep on their human overlords.

And if that doesn’t work, well, there’s always the Ludovico Treatment. Or a car that does all the driving, no human needed.


More Great WIRED Stories

China will likely publish rules for new tech board in January: 21st Century

FILE PHOTO: A customer takes a picture as robotic arms collect pre-packaged dishes from cold storage, done according to the diners’ orders, at Haidilao’s new artificial intelligence hotpot restaurant in Beijing, China, November 14, 2018. REUTERS/Jason Lee

SHANGHAI (Reuters) – China will likely publish rules for Shanghai’s planned “technology innovation board” in January, and will launch the new tech board before June, the 21st Century Business Herald reported on Tuesday, citing unidentified sources close to the Shanghai Stock Exchange.

Companies with core technologies can start submitting listing applications as soon as in March or April, but firms with unproven technologies such as blockchain, or in traditional industries such as finance or real estate will be disqualified for listing on the new board, the newspaper added.

Plans for the technology innovation board were unveiled by Chinese President Xi Jinping early last month. The board will adopt a loosely-regulated mechanism for initial public offerings (IPOs), potentially competing with Hong Kong, or even New York.

According to the newspaper, applicants will not be required to be profitable, but must meet certain threshold in terms of revenue and capitalization.

The new board may also adopt a more flexible trading system, granting stocks more room to rise or fall, and allowing investors to sell shares on the same day of purchase, according to the article. Currently, Chinese stocks are allowed to rise or fall a maximum of 10 percent on a single trading day, and investors can not sell shares on the day of purchase.

Reporting by Samuel Shen and John Ruwitch; Editing by Subhranshu Sahu

Fintech company Calastone to shift fund network to blockchain

LONDON (Reuters) – Calastone, an investment funds transaction network, said on Monday it will shift its entire system to blockchain in May, a move that could slash costs for the sector by billions of dollars a year.

London-based Calastone provides back and middle-office services to more than 1,700 firms such as JP Morgan Asset Management, Schroders and Invesco, helping them sell their funds across the world through banks and other local financial advisors.

The shift will see more than 9 million messages a month between those counterparties – worth more than 170 billion pounds ($217 billion)- completed on blockchain, marking a move into mainstream finance for a technology whose hype has rarely been matched by widespread usage in major industries.

Currently three separate messages are sent digitally between firms as they buy into a fund: one to place orders, another to confirm receipt, and a third to confirm the price.

Though more reliable than manual methods of communicating like faxes – still used by some in the industry – that messaging process is still cumbersome and time-consuming.

Moving to blockchain could slash as much as 3.4 billion pounds ($4.3 billion) a year in global fund industry costs by pooling trading and settlement processes, Calastone said, citing research by consultants Deloitte.

Savings on such a scale would be a boon to the fund industry as it is buffeted by investor pressure to lower fees – its main source of revenue – and rising costs, much of it linked to tougher regulations after the financial crisis.

“The more you can automate, the more you de-risk, you more you streamline, the more you speed up,” said Andrew Tomlinson, chief marketing officer at Calastone.

FROM HYPE TO REALITY?

Originally conceived to underpin the cryptocurrency bitcoin, blockchain is a shared database that can process and settle transactions in minutes. It does not need middlemen for checks and its entries cannot be changed, making it highly secure.

Proponents say it has the power to revolutionise industries from finance to shipping by making back office jobs more efficient. That prospect has sparked tests by banks and other financial companies across the world over the last few years.

But despite the hype, few blockchain projects have been put into practice in the finance sector, due in part to worries over costs, regulation and how widely used it can become.

Banks and asset managers are also concerned about the security of blockchain, said Matthias Huebner at consulting firm Oliver Wyman in Frankfurt.

“How secure is the technology? Is there a risk of fraud? Is there a risk of data just getting lost?” he said.

Still, Calastone said all of its users would see their trades move to the blockchain.

JP Morgan Asset Management and Invesco – listed as clients on Calastone’s website – declined to comment on the shift when contacted by Reuters. Schroders, also listed as a client, did not respond to a request for comment.

Beyond finance, the majority of blockchain projects launched so far have been in peripheral industries such as ticketing or food supply chains.

Recently, though, others have been launched in the commodities sector, suggesting that the technology is catching on in major sectors.

Big oil companies and trading firms, for instance, are now able to finalise crude oil deals on a blockchain-based platform.

Reporting by Tom Wilson and Simon Jessop, editing by Louise Heavens

New Valve Agreement Gives Developers a Bigger Share of Profits

Valve just made a change to how it splits up revenue from games on its Steam platform that will share more money with developers.

Valve announced the change Friday night, which details updates to its distribution agreement and reveals a new revenue share tier system. After a game makes more than $10 million on Steam, 25% of earnings will go to Steam. At $50 million, 20% will go to Steam. This includes revenue from game packages, downloadable content, in-game sales, and Community Marketplace game fees. This is for revenue from Oct. 1, 2018 and onward, but will not take into account any revenue made prior to that date.

Prior to this change, Steam would take about 30% of all revenue, as noted by The Verge. This was largely true across the board at any revenue level, with exceptions only made for smaller developers that participate in its Steam Direct program, which allows new developers to easily submit their games to the platform.

The move comes as more competitors look to dismantle Steam’s dominance, which for a long time was the main source of PC gaming. EA, one of the largest game developers, has its own Origin platform, Discord, a chat service used heavily in the gaming community announced its competitor The Discord Store just over a month ago, and more developers are self-releasing titles to avoid splitting its revenue.

Alibaba's Jack Ma is a Communist Party member, China state paper reveals

SHANGHAI (Reuters) – Jack Ma, the head of e-commerce giant Alibaba Group Holding Ltd and China’s best-known capitalist, is a Communist Party member, the official Party newspaper said on Monday, debunking a public assumption the billionaire was politically unattached.

FILE PHOTO: Alibaba Group co-founder and Executive Chairman Jack Ma attends the World Trade Organization (WTO) Forum “Trade 2030” in Geneva, Switzerland, October 2, 2018. REUTERS/Denis Balibouse/File Photo

The People’s Daily revealed Ma’s Party membership in a list of 100 people it said had helped drive the country “reform and opening up” process. Ma is China’s richest man with a fortune of $35.8 billion, according to Forbes.

It was unclear why the paper chose to mention Ma’s affiliation now but it comes amid a push by Beijing to bring the country’s private enterprises more in line with Party values, especially in the technology sector that has grown rapidly, driven by the successes of private firms.

Ma, who announced in September he would step down as Alibaba chairman next year, is China’s highest-profile business leader. He has acted as an adviser to political leaders in Asia and Europe and fostered big ambitions in the United States.

He has driven Alibaba to become a $390 billion giant, which dominates China’s online retail market, stretches from logistics to social media, and has spawned a separate fintech empire around popular payment platform Alipay.

Ma’s political affiliation came as a surprise to many.

Results from domestic search engine Baidu Inc, when asked “is Jack Ma a Communist Party member”, also mostly said that he was not.

Alibaba declined to comment on Ma’s Party membership, but said political ties did not impact the firm’s operations.

“Political affiliation of any executive does not influence the company’s business decision-making process,” a spokesperson said in emailed comments to Reuters on Tuesday.

“We follow all laws and regulations in countries where we operate as we fulfil our mission of making it easier for people to do business anywhere in the digital era.”

The People’s Daily list also included Baidu head Robin Li and Tencent Holding Ltd chief Pony Ma, though did not name either of them as Party members. Baidu, Alibaba and Tencent together make up the “BAT” trio of China’s top tech firms.

The paper did not say when Ma had become a Party member.

Reporting by Adam Jourdan and John Ruwitch; Editing by Emelia Sithole-Matarise and Himani Sarkar

Attention Passengers: Your Next Flight Will Likely Arrive Early. Here's Why

As frequent fliers, Kellogg’s Jan Van Mieghem and Yuval Salant have seen the same scene unfold numerous times: Their plane touches down and the pilot announces over the loudspeaker that the flight arrived ahead of schedule. Upon hearing about this stroke of good luck, the passengers immediately perk up.

“Everybody is smiling,” says Van Mieghem.

But are these smiles due to more than good luck? Van Mieghem, the Stuart professor of managerial economics and operations, and Salant, an associate professor of managerial economics and decision sciences, began to wonder whether airlines were strategically adjusting their schedules to make early arrivals more likely.

In a new study with Assistant Professor Dennis Zhang of Washington University in St. Louis, the researchers analyze two decades of data on 43 million domestic U.S. flights. They discover that published flight times–the flight duration that consumers see when they shop for plane tickets–increased 8.1 percent between 1997 and 2017, amounting to an additional 341 million passenger hours.

But when the researchers break down what caused that increase, they find that planes are not flying slower than they used to.

Rather, nearly half of the additional time comes from airlines strategically padding their schedules. Late planes are bad for business–so, by adding time to their predicted flight lengths, airlines can increase the odds that their planes will arrive on time. This schedule padding is especially common on flight routes with less competition, the researchers find.

In Search of Lost Time

The team looked at historical data from the Bureau of Transportation Statistics containing detailed data on 43 million flights over the last 21 years. They analyzed changes in flight duration for the same route operated by the same carrier year over year.

On paper, it appeared that the same flights now take significantly longer than they did in the ’90s.

The researchers knew that there were several possible explanations for this. Planes may be spending more time circling in the air waiting for an open landing strip, or more time on the ground waiting for a gate to become available. Another possibility is that air travel has become less predictable–if so, airlines could be adding more buffer time to guard against increasingly frequent delays from bad weather or other unplanned events.

A final possibility was “strategic padding”: airlines might extend their scheduled flight times not for any logistical reason, but as a matter of sheer business strategy. 

“When flights arrive on time or ahead of schedule, you get happy customers,” says Van Mieghem. 

However, Salant notes, “there are costs associated with that.” For one, if an airline pads too much, a competitor can undercut them by offering a shorter flight. Furthermore, flight crew members are often paid for the full scheduled flight duration, regardless of how long the flight actually takes.

The researchers created a mathematical model to tease out how much each factor–air time, ground time, unpredictability, and strategic padding–contributed to the increase in published flight times. 

They found that planes spend roughly the same amount of time in the air as they did 21 years ago. And unpredictability did not seem to be playing much of a role in the increase, either.

Ground time was a different story. “Passengers were spending more time on the plane waiting for take-off, or waiting for a gate after landing, possibly because of increased air traffic,” Salant says.

But that increase in ground time explained about half of the increase in published flight times, leaving more than 150 million passenger hours unaccounted for. The researchers concluded that this remaining time was the result of strategic padding.

“We find that the missing time is not due to physical constraints like air time and ground time or variability. It’s due to strategic decision-making by airlines. They’re padding their schedules, and they’re doing it for a reason.”

— Jan Van Mieghem

Less Competition Means Longer Flight Times

Why has strategic padding become more common? The researchers suspected that part of the reason is dwindling competition. 

“If you have plenty of competitors, logic dictates that you will seek to offer customers the most efficient route from A to B. You’ll cut back your scheduled flight time,” Van Mieghem explains.

But due to bankruptcies and mergers, there are fewer large U.S. airlines today than in 1997. So airlines today may feel less competitive pressure to offer shorter flight times.

To test this theory, the researchers looked at how published flight times changed after competitors either started or stopped offering flights on a particular route. 

As predicted, when competition grew stiffer, airlines cut down travel time. Conversely, Van Mieghem says, “as the playing field thins out, less competition makes it easier for airlines to do the opposite.

A Silver Lining to Schedule Padding?

Walk around O’Hare airport, for example, and you are likely to come across a billboard advertising the “reliability” of United Airlines’ flights.

“But it’s not really about reliability,” Van Mieghem says. “If airlines really wanted to improve reliability, they’d focus their efforts on enhancing their operations. What our study shows is that this is not the case. What they’re going for instead is the easier–and cheaper–option of schedule padding.”

Nonetheless, the researchers stress that schedule padding has its benefits. After all, a flight that usually takes 90 minutes may indeed take 120 on an unlucky day. By publishing a time closer to two hours, the researchers explain, airlines are simply erring more on the side of caution.

In fact, schedule padding may actually help travel go more smoothly. Passengers are not only more likely to experience the joy of an on-time arrival, but also get more buffer time to make a connecting flight.

And the paper’s revelations suggest that there is an opportunity for passengers to be strategic, too, says Van Mieghem.

“We tend to allow a little extra time for delays or hold-ups when we’re travelling,” he notes. But if consumers know that their flight is likely to get in on time, they might save time by reducing that buffer in their schedule. “Of course,” he adds, “this is a question of our individual tolerance for risk.”