Toshiba weighing options in case chip unit sale not completed by March

CHIBA CITY, Japan (Reuters) – Toshiba Corp (6502.T) said it is considering various measures in case the $ 18 billion sale of its chip unit does not close by the end of the financial year and leaves the embattled conglomerate short of funds needed to ensure it stays listed.

FILE PHOTO: The logo of Toshiba is seen as a shareholder arrives at Toshiba’s extraordinary shareholders meeting in Chiba, Japan March 30, 2017. REUTERS/Toru Hanai/File Photo

The deal needs to close by end-March or Toshiba will likely report negative net worth – where liabilities exceed assets – for a second year running. That could trigger an automatic delisting from the Tokyo Stock Exchange.

“Nothing has been decided, but it’s true that we are considering potential measures,” CEO Satoshi Tsunakawa said at an extraordinary general meeting where shareholders approved the sale to a consortium led by Bain Capital LP.

Proceeds from the sale are crucial to cover billions of dollars in liabilities arising from the conglomerate’s now bankrupt U.S. nuclear unit Westinghouse.

But a deal was only agreed last month after a long and contentious auction, and chances are high that it will not receive regulatory approvals by end-March as such reviews usually take at least six months.

Tsunakawa did not elaborate on what measures Toshiba may take but his comments follow the Tokyo Stock Exchange’s decision this month to remove the firm from a special watchlist which had prevented it from issuing new shares on the market.

Analysts believe, however, that ordinary investors are unlikely to get behind a firm that lurched from a 2015 accounting scandal to a full-blown financial meltdown last year.

“It may issue preferred shares worth several hundreds of billions of yen to investors such as Bain Capital or it might ask its banks for debt-to-equity swaps,” said Kentaro Harada, a credit analyst at SMBC Nikko Securities.

The sale of the unit – the world’s No. 2 producer of NAND semiconductors – is also facing legal challenges from Toshiba’s chip joint venture partner Western Digital (WDC.O), which opposes any deal without its consent and has sought an injunction with the International Court of Arbitration.

Toshiba said in a statement on Tuesday that it “remains fully determined to resolving the issue through the arbitration process.”

Harada said that if Western Digital did gain an injunction order, that could harm banks’ willingness to provide Toshiba with any further financial support.

In addition to the chip unit sale, shareholders also approved Toshiba’s earnings report for the past business year and the appointment of 10 executives to the board, including Tsunakawa and seven other incumbent board members.

The earnings report has been controversial.

Filed in August after months of delays, it received an unusual “qualified opinion,” or limited endorsement, from Toshiba’s auditor, which said it thought Toshiba was late in booking losses at its Westinghouse unit. Proxy advisory firms Glass Lewis and ISS had recommended this month that Toshiba’s shareholders should not give their approval given the auditor’s mixed review.

Japan’s securities watchdog is also investigating accounting in its earnings report to see if it properly handled losses incurred by its U.S. nuclear unit, a source with knowledge of the matter has said.

Reporting by Makiko Yamazaki; Editing by Edwina Gibbs

Our Standards:The Thomson Reuters Trust Principles.

Tech

How You Swipe and Hold Your Phone May Be a Critical Clue to Stop Fraudsters

People are creatures of habit. This applies to daily routines, but also to small details like how they use their phones.

The angle they usually hold their phones as well as how they use the screen to scroll and swipe is often predictable enough to create individual profiles of users’ behavior. And in this data-driven age, it’s no surprise that companies are doing just that by compiling dozens of signals related to consumers’ phone habits in order to create so-called behavioral biometrics that prevent fraud.

The latest example came on Monday when a company called BioCatch announced that it has partnered with Samsung SDS to integrate behavioral biometrics to detect fraud on popular mobile apps.

Frances Zelazny, the vice president of BioCatch, said her company doesn’t only look at swiping or scrolling patterns to verify that someone logging in to, say, a banking app is who they are supposed to be. She says the company also relies on “subconscious decisions” such as the way someone toggles between menu options. BioCatch even introduces “invisible tests”—briefly freezing a phone screen, for instance, to see how someone reacts—as part of its project to map phone users’ behavior.

Get Data Sheet, Fortune’s technology newsletter.

Part of what makes this all work is the power of smartphones to act as data-collection devices. For instance, technology like the gyroscope (a component found in every phone) can measure the angle users hold their phones. This in turn provides an additional data point that firms like BioCatch can add to hundreds of other attributes that, when taken together, make up a distinct behavioral profile.

On a practical level, these profiles deter fraud because a crook trying to impersonate a real user will display aberrant behavior—say by swiping in an unfamiliar pattern or by tilting the phone in an unusual way. When such red flags are detected, says Zelazny, the app will respond by implementing additional security measures.

According to BioCatch and Samsung SDS, the combination of behavioral biometrics and other new forms of phone-based ID verification (such as fingerprint and, in Apple’s new iPhone X, facial recognition) will eventually replace the password as a form of security.

The introduction of behavioral biometrics is also part of a larger initiative backed by the FIDO Alliance—a group of companies that include Samsung, Google and RSA, which are working to create strong authentication protocols across different devices.

BioCatch did not state exactly when its behavioral biometrics tools will deployed in the apps consumers use every day. Here are a few additional details from the company’s press release:

BioCatch’s unique technology will be integrated into and complement Nexsign, Samsung SDS’s FIDO-certified, enterprise-grade biometric authentication software. The integration will fill the major security loopholes exposed when seamless interfaces of today’s most popular mobile applications don’t require a user to login multiple times to validate their identity.

BioCatch will use risk-based authentication to continuously monitor Samsung SDS’ users by mapping their behavioral patterns after log-in, to better distinguish between an authorized user, and that of an unauthorized user or an automated BOT or malware.

Tech

Saudi Prince Alwaleed bin Talal optimistic about Twitter investment: CNBC

RIYADH (Reuters) – Saudi Prince Alwaleed bin Talal, who owns investment firm Kingdom Holding, said in an interview with CNBC on Monday that he was optimistic about his investment in Twitter.

FILE PHOTO: Saudi Arabian Prince Al-Waleed bin Talal arrives at the Elysee palace in Paris, France, to attend a meeting with French President, September 8 , 2016. REUTERS/Philippe Wojazer

“It’s not going to be easy because they face some difficulties, but our entry point was very reasonable, so right now it’s holding on a breakeven point,” he said.

Reporting by Katie Paul; Editing by David Goodman

Our Standards:The Thomson Reuters Trust Principles.

Tech

JPMorgan partners with data start-up to boost fixed-income trading

NEW YORK (Reuters) – JPMorgan Chase & Co has partnered with data analytics start-up Mosaic Smart Data to help its fixed-income sales and trading business become more profitable.

A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015. REUTERS/Mike Segar/Files

The bank, whose fixed-income trading revenue slumped last quarter, has signed a multi-year deal to use Mosaic Smart Data’s technology division globally, the companies said in a joint statement released on Sunday.

The London-based start-up has developed technology that aggregates and analyzes vast amounts of data from the fixed-income trading division of investment banks to help them make more informed decisions and gain a competitive edge.

That includes helping traders decide which clients to focus on in a given day or enabling management to assess which trader, or trading desk has been performing better.

The partnership underscores the growing demand by banks for technology that can help them gain greater insight from the large quantity of data they produce and store.

“One of the key things the banks are starting to realize is that some of their biggest competitive advantages are locked within their data,” said Matthew Hodgson, Mosaic Smart Data’s founder and chief executive.

Banks are seeking solutions to deal with a liquidity crunch in fixed-income markets. Stricter capital requirements imposed after the 2008 financial crisis have made it more expensive for banks to act as market makers in corporate bonds, leading their fixed-income divisions to slump.

JP Morgan’s fixed-income markets revenue fell 27 percent in the three months ended in September, compared with the same period last year.

Troy Rohrbaugh, global head of macro at JPMorgan, said in a statement that Mosaic Smart Data’s technology could make the bank’s teams “quickly make better informed decisions.”

Mosaic Smart Data is the first company to complete JPMorgan’s “In-Residence” program for fintech start-ups, which was launched in 2016. The program gives young fintech companies support in helping commercialize their products and services.

Hodgson said the idea for the company came from his own experience heading trading at large banks.

“The problem banks face is how do you run your business and understand everything in real time, whether it is research or inventory, and be able to anticipate rather than react to client needs,” he said.

Reporting by Anna Irrera; Editing by Peter Cooney

Our Standards:The Thomson Reuters Trust Principles.

Tech

Scientists Are Rewriting the History of Photosynthesis

Researchers have caught their best glimpse yet into the origins of photosynthesis, one of nature’s most momentous innovations. By taking near-atomic, high-resolution X-ray images of proteins from primitive bacteria, investigators at Arizona State University and Pennsylvania State University have extrapolated what the earliest version of photosynthesis might have looked like nearly 3.5 billion years ago. If they are right, their findings could rewrite the evolutionary history of the process that life uses to convert sunlight into chemical energy.

Quanta Magazine


author photo

About

Original story reprinted with permission from Quanta Magazine, an editorially independent publication of the Simons Foundation whose mission is to enhance public understanding of science by covering research developments and trends in mathematics and the physical and life sciences.

Photosynthesis directly or indirectly powers and sustains almost every organism on Earth. It is responsible for the composition of our atmosphere and forms the foundation of the planet’s many interwoven ecosystems. Moreover, as Wolfgang Nitschke, a biologist at the French National Center for Scientific Research in Paris, noted, photosynthesis liberated cells to grow and evolve boundlessly by letting them derive energy from a new, inexhaustible, nonterrestrial source. “When photosynthesis entered the picture, life connected up to the cosmos,” he said.

Scientists want to figure out what made that possible. In its current form, the machinery that converts light energy to chemical energy in photosynthesis—a protein complex called a reaction center—is incredibly sophisticated. The evidence suggests, however, that its design, which stretches back almost to the root of the tree of life, was once very simple. Researchers have been trying for decades to fill that enormous gap in their understanding of how (and why) photosynthesis evolved.

To that end, they have turned their attention to existing organisms. By studying the molecular details of the reactions that green plants, algae and some bacteria use to photosynthesize, and by analyzing the evolutionary relationships among them, scientists are trying to piece together a cogent historical narrative for the process.

The muddy soils around geothermal hot springs in Iceland, like the Geysir spring pictured here, are the natural habitat for primitive photosynthetic heliobacteria. Scientists are now studying those organisms for insights into the early evolution of photosynthesis.

Arctic-Images/Getty Images

The latest important clue comes from Heliobacterium modesticaldum, which has the distinction of being the simplest known photosynthetic bacterium. Its reaction center, researchers think, is the closest thing available to the original complex. Ever since the biologists Kevin Redding, Raimund Fromme and Christopher Gisriel of Arizona State University, in collaboration with their colleagues at Penn State, published the crystallographic structure of that protein complex in a July edition of Science, experts have been unpacking exactly what it means for the evolution of photosynthesis. “It’s really a window into the past,” Gisriel said.

“This is something we’ve been waiting for for 15 years,” Nitschke said.

In Search of a Common Ancestor

At first, most scientists did not believe that all the reaction centers found in photosynthetic organisms today could possibly have a single common ancestor. True, all reaction centers harvest energy from light and lock it into compounds in a form that’s chemically useful to cells. To do this, the proteins pass electrons along a transfer chain of molecules in a membrane, as though skipping along a series of stepping stones. Each step releases energy that’s ultimately used down the line to make energy-carrier molecules for the cell.

But in terms of function and structure, the photosystem reaction centers fall into two categories that differ in almost every way. Photosystem I serves mainly to produce the energy carrier NADPH, whereas photosystem II makes ATP and splits water molecules. Their reaction centers use different light-absorbing pigments and soak up different portions of the spectrum. Electrons flow through their reaction centers differently. And the protein sequences for the reaction centers don’t seem to bear any relation to each other.

Both types of photosystem come together in green plants, algae and cyanobacteria to perform a particularly complex form of photosynthesis—oxygenic photosynthesis—that produces energy (in the form of ATP and carbohydrates) as well as oxygen, a byproduct toxic to many cells. The remaining photosynthetic organisms, all of which are bacteria, use only one type of reaction center or the other.

So it seemed as though there were two evolutionary trees to follow—that was, until the crystal structures of these reaction centers began to emerge in the early 1990s. Researchers then saw undeniable evidence that the reaction centers for photosystems I and II had a common origin. Specific working components of the centers seemed to have undergone some substitutions during evolution, but the overall structural motif at their cores was conserved. “It turned out that big structural features were retained, but sequence similarities were lost in the mists of time,” said Bill Rutherford, the chairman in biochemistry of solar energy at Imperial College London.

“Nature has played small games to change some of the functions of the reaction center, to change the mechanisms by which it works,” Redding added. “But it hasn’t rewritten the playbook. It’s like having a cookie-cutter design for a house, building that same house over and over again, and then changing how the rooms are arranged, how the furniture is positioned. It’s the same house, but the functions inside are different.”

Researchers began to make more detailed comparisons between the reaction centers, searching for clues about their relationship and how they diverged. Heliobacteria have brought them a few steps closer to that goal.

Harkening Back to an Earlier Time

Since it was discovered in the soil around Iceland’s hot springs in the mid-1990s, H. modesticaldum has presented researchers with an interesting piece of the photosynthesis puzzle. The only photosynthetic bacterium in a family with hundreds of species and genera, heliobacteria’s photosynthetic equipment is very simple—something that became even more apparent when it was sequenced in 2008. “Its genetics are very streamlined,” said Tanai Cardona, a biochemist at Imperial College London.

Robert Blankenship, a photosynthesis researcher at Washington University, looks at a flask of cultured cyanobacteria. The organizational simplicity of heliobacteria, he said, “harkens back to an earlier evolutionary time.”

Washington University in St. Louis

Heliobacteria have perfectly symmetrical reaction centers, use a form of bacteriochlorophyll that’s different from the chlorophyll found in most bacteria, and cannot perform all the functions that other photosynthetic organisms can. For instance, they cannot use carbon dioxide as a source of carbon, and they die when exposed to oxygen. In fact, their structure took nearly seven years to obtain, partly because of the technical difficulties in keeping the heliobacteria insulated from oxygen. “When we first started working on it,” Redding said, “we killed it more than once.”

Taken together, “heliobacteria have a simplicity in their organization that’s surprising compared to the very sophisticated systems you have in plants and other organisms,” said Robert Blankenship, a leading figure in photosynthesis research at Washington University in St. Louis. “It harkens back to an earlier evolutionary time.”

Its symmetry and other features “represent something quite stripped down,” Redding added, “something we think is closer to what that ancestral reaction center would have looked like three billion years ago.”

A Glimpse of the Past

After carefully taking images of the crystallized reaction centers, the team found that although the reaction center is officially classified as type I, it seemed to be more of a hybrid of the two systems. “It’s less like photosystem I than we thought,” Redding said. Some people might even call it a “type 1.5,” according to Gisriel.

One reason for that conclusion involves greasy molecules called quinones, which help transfer electrons in photosynthetic reaction centers. Every reaction center studied so far uses bound quinones as intermediates at some point in the electron transfer process. In photosystem I, the quinones on both sides are tightly bound; in photosystem II, they are tightly bound on one side, but loosely bound on the other. But that’s not the case in the heliobacterium reaction center: Redding, Fromme and Gisriel did not find permanently bound quinones among the electron transfer chain’s stepping stones at all. That most likely means its quinones, although still involved in receiving electrons, are mobile and able to diffuse through the membrane. The system might send electrons to them when another, more energetically efficient molecule isn’t available.

Raimund Fromme, Christopher Gisriel and Kevin Redding (from left to right) are researchers in the School of Molecular Sciences at Arizona State University. With colleagues at Pennsylvania State University, they recently determined the crystallographic structure of the energy-producing reaction center in the simplest known photosynthetic bacterium.

Arizona State University

This finding has helped the research team deduce what early reaction centers may have been doing. “Their job was likely to reduce mobile quinones,” Redding said. “But they weren’t doing a very good job of it.” In the researchers’ scenario, tightly bound quinone sites are a more recent adaptation, and today’s type I and type II reaction centers represent alternative evolutionary strategies, embraced by different lineages of organisms, for improving on the ancestral system’s sloppy, less-than-ideal work.

“But then the question is, why has nature changed this kind of electron transfer chain?” Fromme asked. His work supports the hypothesis that it might have something to do with oxygen.

When an organism is exposed to too much light, electrons build up in the transfer chain. If oxygen is around, this buildup can lead to a harmfully reactive oxygen state. Adding a firmly bound quinone to the complex not only provides an additional slot to deal with potential traffic jams; the molecule, unlike others used in the transfer chain, also does not pose any risk of producing that deleterious form of oxygen. A similar explanation works for why reaction centers became asymmetric, Gisriel added: Doing so would have added more stepping stones as well, which would have similarly buffered against damage caused by the accumulation of too many electrons.

One of the researchers’ next steps is to put time stamps on when this asymmetry and these tightly bound quinones came into the picture, which would help them determine when oxygenic photosynthesis became possible.

All Roads Lead to Oxygen

Cardona, who was not involved in the recent study but has begun interpreting its results, thinks he may have found a hint in the heliobacterium reaction center. According to him, the complex seems to have structural elements that would have later lent themselves to the production of oxygen during photosynthesis, even if that wasn’t their initial purpose. He found that a particular binding site for calcium in the heliobacteria’s structure was identical to the position of the manganese cluster in photosystem II, which made it possible to oxidize water and produce oxygen.

Tanai Cardona, a biochemist at Imperial College London, suspects that cells may have been producing oxygen through photosynthesis for about a billion years longer than scientists usually assume.

Imperial College London

“If the ancestral [calcium] site at some later stage turned into the manganese cluster,” Cardona said, “that would suggest that water oxidation was involved in the earliest events in the divergence between type I and type II reaction centers.” That, in turn, would mean oxygenic photosynthesis was far more ancient than expected. Scientists have commonly supposed that oxygenic photosynthesis appeared shortly before the Great Oxygenation Event, when oxygen began to build up in Earth’s atmosphere and caused a mass extinction 2.3 to 2.5 billion years ago. If Cardona is right, it may have evolved nearly a billion years earlier, shortly after photosynthesis made its debut.

That timing would have been early enough to predate the cyanobacteria typically credited as the first organisms to perform oxygenic photosynthesis. According to Cardona, it may be the case that a lot of bacteria could do it, but that after mutations, divergences and other events, only cyanobacteria retained the ability. (Cardona published a paper this year citing other molecular evidence for this hypothesis. He has not yet formally presented arguments about the potential link involving calcium for peer review, but he has written about the idea in blog posts on his website and on a scientific networking site for researchers, and he recently began working on a paper about it.)

That hypothesis contradicts one of the widely held ideas about the origins of photosynthesis: that species incapable of photosynthesis suddenly obtained the capacity through genes passed laterally from other organisms. According to Cardona, in light of the new discoveries, horizontal gene transfer and gene loss may both have played a role in the diversification of reaction centers, although he suspects that the latter may have been responsible for the earliest events. The finding, he said, might suggest that “the balance skews toward the gene-loss hypothesis”—and toward the idea that photosynthesis was an ancestral characteristic that some groups of bacteria lost over time.

Not everyone is so sure. Blankenship, for one, is skeptical. “I don’t buy that,” he said. “I don’t see any data here that suggests that oxygenic photosynthesis occurred that much earlier.” To him, the work by Redding, Fromme and their collaborators has not answered these questions; it has only conjectured about what may have happened. To solve that puzzle, scientists will need the reaction center structures of other bacteria, so they can continue evaluating the structural differences and similarities to refine the twisting roots of their evolutionary trees.

“I think it’s entirely a possibility that what [Cardona] is saying is correct,” Gisriel said, “but I also think the field should sit with it for a while, do some more analysis and see if we understand more about how this structure works.”

Going the Synthetic Route

Some researchers aren’t waiting for the publication of the next structure. This one took seven years, after all. They’re pursuing synthetic experimentation instead.

Rutherford and his colleagues, for example, are using a “reverse evolution” technique: They hope to predict the sequences of missing-link reaction centers, using structural information like Redding’s to gain an understanding of their architecture. They then plan to synthesize those hypothetical ancestral sequences and test how they evolve.

Meanwhile, Redding and his team have just begun artificially converting the symmetric reaction center of heliobacteria into an asymmetrical one, following in the footsteps of two researchers in Japan, Hirozo Oh-Oka of Osaka University and Chihiro Azai of Ritsumeikan University, who have spent more than a decade doing this in another type of photosynthetic bacterium. The groups believe their work will clarify how these adaptations would have occurred in real life in the distant past.

Twenty years ago, Nitschke stopped working on the evolution of photosynthesis and turned his attention to other problems. “It seemed so hopeless,” he said. But the research done by Redding, his team and these other groups has rekindled those ambitions. “As they say, your first love always stays with you,” Nitschke said. “I’m really excited about this new structure and plan to go back to thinking about all this again.”

Original story reprinted with permission from Quanta Magazine, an editorially independent publication of the Simons Foundation whose mission is to enhance public understanding of science by covering research developments and trends in mathematics and the physical and life sciences.

Tech

Tanium CEO’s Refreshingly Honest Take on the State of Internet Security

[unable to retrieve full-text content]

On Tuesday, the wood-smoke air of California’s wildfires descended on the Bay Area as cybersecurity professionals gathered at the Palace Hotel for an industry event.

I spent the morning interviewing Orion Hindawi, CEO of Tanium, the world’s highest privately valued cyber startup (worth $ 3.75 billion at last appraisal in May), for a fireside chat at his company’s second annual conference, Converge 2017. Hindawi has a no-nonsense approach to business–a suffer-no-fools attitude that landed him in the sights of a couple of unflattering stories about his management style earlier this year. (He later apologized for being “hard-edged.”)

On stage the chief exec delivered his peculiarly unvarnished view of the state of Internet security. “The idea that we’re going to give you a black box and it auto-magically fixes everything, that’s a lie,” Hindawi told the audience. (One could almost hear a wince from part of the room seating his PR team.) “All I can tell you is we can give you better and better tooling every day. We can make it harder for the attackers to succeed. That’s the best I can offer.”

Hindawi is a realist through-and-through. His outlook is perhaps best summed up by his response to a question about whether he subscribes to a glass-half-full or glass-half-empty view of the cyber threatscape. His reply would become a running joke for the rest of the conference. He said simply, “It’s just a glass, dude.”

Other tidbits of wisdom from Hindawi: not all hackers are Russian spies (the majority are lowly criminals). Unsecured Internet of Things devices pose a risk to everyone. And sometimes cyber insurance is the way to go when old systems are all but impossible to patch; the decision boils down to managing “operational risk, like earthquakes,” he said.

Hacking is not a dark miasma that penetrates all things, although it can sometimes feel that way. Companies, like Tanium, that are building the tools to swing the balance back in defenders’ favor without over-promising provide hope. Enjoy the weekend; I will be heading north of San Francisco, visiting friends who, luckily, were unharmed by the area’s recent conflagrations.

Robert Hackett

@rhhackett

robert.hackett@fortune.com

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach me 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.

THREATS

Always use (advanced) protection. Google debuted an opt-in mode for high-risk users who wish to lock down their accounts on services such as Gmail, Google Drive, and YouTube with extra security. (Paging John Podesta.) The feature requires people to log-in using a special USB key (or Bluetooth dongle for mobile devices), it prevents third-party applications from accessing your Google data, and it adds beefed up malware-scanning of incoming documents. This author plans to sign up.

Gather ’round the good stuff. Pizza Hut warned customers that their personal information and payment card data may be at risk after hackers gained access to the company’s website and app for a 28-hour period starting on Oct. 1. An estimated 60,000 customers are thought to have been impacted. The company is offering victims free credit monitoring for a year.

Unicorn? More like Duo-corn. Duo Security, a Mich.-based cybersecurity startup whose tools help companies manage people’s digital identities, said it raised $ 70 million at a $ 1.17 billion valuation (including the capital raised) this week. Th round catapults the firm into “unicorn” territory, the swelling ranks of private firms occupied by young guns valued at $ 1 billion or more. Alex Stamos, Facebook’s security chief, recently praised Duo as the maker of his favorite cybersecurity product.

KRACKing Wi-Fi. A couple of Belgian researchers published a paper containing proof of concept code that exploits vulnerabilities in the way cryptographic keys are exchanged over Wi-Fi, allowing hackers to steal people’s data. Big tech companies like Microsoft issued a patch for the so-called KRACK bug on Oct. 10, Apple is in the middle of testing patches for iOS and macOS, and Google, whose Android 6.0 devices are the most vulnerable, said it would release a patch in early Nov.

Cyber insurers are going to get Mercked. Cyber insurers might be on the hook to cough up $ 275 million to cover damage to drugmaker Merck as a result of a June cyber attack, dubbed “NotPetya,” according to one firm’s forecast. The companies at issue have not yet disclosed figures themselves.

Surprise! It is depressingly easy for penetration testers to break into places where they are not supposed to be.

Share today’s Data Sheet with a friend:

http://fortune.com/newsletter/datasheet/

Looking for previous Data Sheets? Click here.

ACCESS GRANTED

Boycotts are hardly an option: To opt out of a credit score is to opt out of modern financial life itself. As Equifax’s now former CEO Richard Smith testified in October, if consumers were allowed to abandon the credit system, it would be “devastating to the economy.” The better answer is systemic reform to the credit oligopoly.

–Fortune’s Jeff John Roberts and Jen Wieczner explain what practical recourse consumers and regulators have when it comes to dealing with the major credit bureaus in the wake of a massive data breach at Equifax.

ONE MORE THING

The adventures of John Titor. Namesake of a bygone Internet hoax, “John Titor” claimed to be a man sent from the future to retrieve a portable computer. Titor sent faxes to an eccentric radio program, Coast to Coast AM, that specialized in the paranormal. Here’s an oral history of that running joke; the pseudo-scientific explanations of time travel are delightful.

Tech

Scared of Amazon? You Got It Backwards. Amazon Should Be Scared of You

Can you compete with Amazon? Nope. No way, no how. But the good news is, Amazon can’t compete with you either. And, especially as we head into the holiday season, that last sentence should not only give you some hope, it should also give you a sense of confidence that the big bad, bookselling bogeyman from the Pacific Northwest is maybe just so much hot air.

If anyone should be scared, it’s Amazon.

Oh sure, I can hear you now: “What you been smoking there, Strauss?” But before you write me and my crackpot theory off, consider this:

What if I’m right?

Let’s begin with my first proposition, that you can’t compete with Amazon. There is nary a small business owner in the land who would disagree with that one. Picking the low-hanging fruit here. What Amazon.com does just about better than anyone — heck, let’s be frank — definitely better than anyone, is offer a gazillion things for miniscule prices.

By undercutting the competition, Amazon drove Barnes and Noble out of business yesterday, is doing the same to Sears today, and just may do it again to grocery stores tomorrow. There is simply no way that you will ever be able to offer the inventory that Jeff Bezos has, or compete against his low, low prices.

But here’s the rub: why in the heck would you ever want to?

You didn’t start a small business to become a giant behemoth, and I bet it is also safe to say that you don’t really want to be known as the cheapest store in town, as the “low cost leader.” Most entrepreneurs have figured out that competing on price is a risky one-way ticket to Low Marginville; a town where it’s really tough to make a buck and you better sell a lot — again, and again, and again — if you ever hope to live in the nice part of town.

So, there is part one of my premise, and it’s not so half-baked: You can’t compete with Amazon, but nor should you want to.

Now let’s get to the fun part: Amazon can’t compete with you either. What is Amazon really, other than a humungous website with cheap prices for lots of things you will never buy? Whoop-de-freakin-do, they offer “free” two-day delivery. Well, guess what? People can go into your store or shop, be greeted with a smile, and have free immediate delivery. They can take their purchase home with them as soon as they leave.

Can Amazon create a buying experience where customers are warmly greeted by name by a live human being? No. Can Amazon look customers in the eye, crack a joke, and create rapport? Nope. Can Amazon look at what a customer is purchasing and suggest that something else might better suit their needs, or that there is something in the back that would go perfect with that purchase? Hmm, let’s think . . . no; no automaton website can do that, no matter how much AI it has at its disposal.

Amazon can never make a customer feel all warm and fuzzy after a purchase like you can.

Indeed, what small business can do, and does best, is precisely the thing Amazon cannot do, namely, give customers a positive, warm, real, physical experience. People buy from places for all sorts of reasons, price indeed being one of them, but that’s the thing – it is only one of many considerations. Chalk that one up for Amazon. You can win all the others.

This holiday season, let’ see Amazon open the doors to a warm, snuggly store serving hot chocolate and wafting holiday music. Oh, wait, it can’t?

Exactly.

That’s why my last proposition makes the most sense: Amazon should be afraid of you.

Tech

Japan's Mitsubishi, U.S. partner to invest $1.8 billion in data centres: media

TOKYO (Reuters) – Japanese trading house Mitsubishi Corp (8058.T) plans to set up a joint venture with U.S. data centre operator Digital Realty Trust (DLR.N) and build around 10 data centres in Japan by 2022 for 200 billion yen ($ 1.8 billion), the Nikkei said on Saturday.

The logo of Mitsubishi Corp is pictured at its head office in Tokyo, Japan August 2, 2017. REUTERS/Kim Kyung-Hoon – RC1E7B85B0E0

Tokyo-based Mitsubishi expects the centres to help meet growing demand for information storage from customers of California-based Digital Realty and generate sales of around 20 billion yen to 30 billion yen in 2022, the business daily reported, without citing sources.

The two companies could invest an additional 300 billion yen in the medium term, the Nikkei reported.

Mitsubishi could not be reached for comment.

Reporting by Osamu Tsukimori; Editing by Tom Hogue

Our Standards:The Thomson Reuters Trust Principles.

Tech

Apple's $1,000 iPhone Taught Us A Very Important Business Lesson

Everyone is going crazy over Apple’s new iPhone — for better or for worse. Now, whether you like Apple or not, we can all agree that the price of the newly released iPhone is quite the shocker. That might turn off some customers, but I will make the bet that it’s a smart move for them. Why? A $ 1000 phone actually strengthens what their brand stands for: the highest quality brand, with the best customer experience.

This reputation is what helped them become the most profitable company in the world, and the first US company to hit $ 800 billion in market value, according to Bloomberg Technology. So, what can we learn from Apple? Price is not the first thing most customers care about.

In fact, at my company we actually did a double blind marketing study and here’s what we found that price (surprisingly) came in as the 9th most important factor when people were considering buying a garage door. Let me say that again, Not the first, second, third most important… but nineth.

So, stop obsessing over how you can slash your prices. Instead, create and price your products at a premium. Then, deliver an awesome customer experience. That is how you will become the Apple of your industry.  

Check out my two-step process that will help you do just that:

1. Create a brand that is irreplaceable.

Many new entrepreneurs make the mistake of comparing themselves with their competitors, when they should be focusing on their company instead. Any competitor can come in and copy your products, or try to outprice you. (Patents don’t necessarily make you safe, because there are ways to get around these.) But if you dominate  a niche,  your customers will remember you easier.

Here’s an example: popular Chinese phone manufacturer Oppo blatantly copies Apple’s iPhone designs, and sells lookalikes at significantly lower prices. How did Apple respond? Did they come up with new designs? Overhaul their product line? Cut their prices? Nope, none of the above. Apple’s strategy was to stick to its guns, and continue selling its products at a premium. This paid off handsomely – despite fierce competition from Oppo (and other Chinese smartphone brands), Apple still dominated in terms of profit.

When I started my business a decade ago, I knew that we had to go niche as well. It didn’t make sense for us to try to cater to everyone. Instead, I made the call to focus on higher ticket jobs (such as custom garage doors), and turn down cheap assignments. Today, we’re known as a premium garage door service, and our reputation speaks for itself.

Take a minute to reflect on your company and ask yourself: What is the one thing you want your brand to be known for, which you know no one can deliver as well as you can?

2. Create a killer customer experience.

Once you nail your branding, follow through with a killer customer experience. Here’s the harsh reality of things: it’s simply not enough to sell high quality products. Heck, if that was all there is to running a successful business, Apple wouldn’t exist today.

Apple clearly knows that people buy experiences, not products. From the iPhone product box to the people they hire to staff the Apple physical store, Apple deliberately designs a customer experience that exceeds customer expectations. Not only that, Apple staff go through 10 days of Apple’s “Core” program, 10 more days of Apple Bootcamp, and then finally, a shadowing program in which they learn hands-on from a veteran employee.

At our company, we also train our employees to prioritize our customer’s experience. One thing our employees always do do is to take our time to talk with the customer even after we’re done with installations. This helps us make sure the customer is happy with our service. In addition to this, we also follow up with our customers based on the CRM data we have on hand (checking to see if the door we previously installed for them needs a repair, etc.)

Here’s an easy way to get ideas which will help you improve your customers’ experience: Ask yourself, what could you do to get your customer to leave you a 5-star review?

A few final words

You don’t need to compete on price. You don’t even need to compete with your competitors. What you need to do is do a great job with your branding and customer experience. Then, watch your profits skyrocket. It won’t happen overnight, but once you’re the Apple of your industry, you will thank yourself for all the hard work.

Tech

Alphabet's CapitalG leads Lyft's latest $1 billion funding

(Reuters) – Lyft Inc has raised $ 1 billion in fresh financing, the ride-services company said on Thursday, in a round led by one of Alphabet Inc’s (GOOGL.O) investment funds, further complicating the convoluted world of ride-hailing alliances and dealing a blow to rival Uber Technologies Inc.

The round was led by CapitalG, the growth investment fund of Alphabet that has also backed large tech companies such as home-renting platform Airbnb and payments firm Stripe. Six months ago, Lyft raised a $ 600 million from a conglomeration of investors. Lyft said the latest round boosts its valuation to $ 11 billion from $ 7.5 billion.

Reuters in September reported investment talks between the companies.

CapitalG partner David Lawee will join the company’s board, Lyft said, bringing it to a total of 10 directors. (lft.to/2zB1NCw)

“Ridesharing is still in its early days and we look forward to seeing Lyft continue its impressive growth,” Lawee said in a statement.

Lyft, which runs a distant second to Uber [UBER.UL] in both size and valuation, has pushed expansion this year, adding more than 100 new cities since January. It says it is available across 41 states and is completing more than a million rides a day.

Lyft and Alphabet already have a relationship through a partnership Lyft struck with Waymo, Alphabet’s self-driving car unit, in May. The two companies are collaborating on bringing autonomous vehicle technology to market, but they have not provided many details.

Spokespeople for Lyft and Alphabet have said the latest investment will not have any bearing on the Waymo partnership.

Alphabet also has ties to Uber through its second investment arm, GV, which backs young startups. GV invested in Uber in 2013 but has since had a strained relationship with the ride-hailing company, as Uber began to develop autonomous cars and compete directly with Alphabet. Last year, Alphabet executive David Drummond stepped down from the Uber board as the relationship soiled.

“It is another punch by Alphabet at Uber,” said Erik Gordon, an entrepreneurship expert at the University of Michigan’s Ross School of Business.

Lyft is close to hiring an initial public offering advisory firm, in the first concrete step by the company to become publicly listed, Reuters reported in September.

This funding round may delay Lyft’s IPO plans, as the capital will allow Lyft to continue growing its business privately.

“We will go public when it’s right for us,” said Lyft spokeswoman Alexandra LaManna.

Reporting by Heather Somerville in Los Angeles and Arjun Panchadar and Munsif Vengattil in Bengaluru; Editing by Bernard Orr and David Gregorio

Tech

Taiwan chipmaker TSMC's third-quarter net profit falls 7.1 percent, beats estimates

TAIPEI (Reuters) – Apple Inc supplier Taiwan Semiconductor Manufacturing Co Ltd on Thursday said net profit fell 7.1 percent in the three months through September, slightly better than analyst estimates.

The world’s largest contract chipmaker booked third-quarter profit of T$ 89.925 billion ($ 2.98 billion), from T$ 96.76 billion in the same period a year earlier. The result compared with the T$ 88.19 billion average of 21 analyst estimates, Thomson Reuters Eikon showed.

Revenue rose 1.5 percent from a year earlier to $ 8.32 billion, slightly better than the $ 8.12 billion to $ 8.22 billion forecast TSMC issued in July.

The results come just days before the chipmaker celebrates its 30th anniversary and about a week before pre-orders begin for Apple’s latest iPhones, which are widely expected to carry TSMC-made chips.

They are the first results since Chairman Morris Chang – widely regarded as the father of Taiwan’s chip industry – said he would retire in June. He will be succeeded by current co-Chief Executive Officer Mark Liu, leaving C.C. Wei as sole CEO.

Following his announcement in early October, Chang told Reuters that TSMC would increase capital spending by 5 to 10 percent over the next five years.

Just over a week earlier, TSMC said it would build a new fabrication plant in Taiwan.

Shares of TSMC closed up 1.5 percent ahead of the earnings announcement.

Reporting by Jess Macy Yu; Editing by Christopher Cushing

Tech

Pentagon chief asks Congress to not hinder cyber defense

WASHINGTON (Reuters) – U.S. Secretary of Defense James Mattis this week asked Congress to halt pending legislation that would compel the U.S. to alert foreign governments when the Pentagon has decided to combat certain cyber attacks, according to a letter sent to lawmakers.

The letter, sent to members of Congress on Tuesday and seen by Reuters, comes as lawmaker’s finalize the Department of Defense’s 2018 spending plan, also known as the National Defense Authorization Act for fiscal year 2018, or NDAA.

“The nature of cyber-attacks is ever evolving, and we need to maintain our ability to take decisive action against this increasingly dangerous threat,” Mattis wrote.

Language in a draft of the NDAA says that when a cyber attack transits a third party country’s infrastructure or relies upon its networks the U.S. should encourage that nation to take action to eliminate the threat. However, the draft NDAA say the U.S. reserves the right to act unilaterally if needed.

Mattis’ letter, dubbed the “heartburn” letter because it highlights the Pentagon’s concerns with the budget, has often been used by previous Pentagon chiefs to attempt to influence lawmakers’ legislation while it is still under consideration.

In the letter, Mattis repeated an earlier request to Congress that they consider closing bases in 2021, for an estimated savings of $ 2 billion annually. Congress, fearful of the economic impact from base closings in their districts, are generally not sympathetic to those efforts.

Mattis also said he opposed the formation of an additional military service dubbed Space Corps, which he called an “additional organizational layer.” Space Corps would be a new military branch and absorb the Air Force’s military efforts in space.

The U.S. Senate passed its version of a $ 700 billion defense policy bill in September backing President Donald Trump’s call for a bigger, stronger military but setting the stage for a battle over government spending levels.

The House of Representatives passed its version of the NDAA at a similar spending level in July.

The two versions are now being reconciled before Congress can consider a final version. A fight over spending is expected because Senate Democrats have vowed to block big increases in funds for the military if spending caps on non-defense programs are not eased as well.

The two versions of the bill increase military spending well beyond what current spending caps allow.

Reporting by Mike Stone; Editing by Chizu Nomiyama

Tech

Want to Work at Amazon? Here's How to Answer the Most Important Interview Questions

Is Amazon’s second North American headquarters coming to a city near you? Dozens of communities around North America are making their pitches this week–hoping to land a $ 5 billion complex and 50,000 new high-paying jobs.

If your city lands the new HQ, or if you’re willing to relocate even if it doesn’t, a career at Amazon might be worth looking into. So check out their current listings here, and prepare for their interviewing process.

Here’s some advice on how to do that–based on published discussions with Amazon executives and interviewers, and the experiences of people who have been through the process.

1. It’s not really about the questions

On message boards and social media forums, you’ll see a lot of people searching for the common interview questions that Amazon will ask. Of course, there are technical questions pertaining to every role, but many potential applicants seem to be obsessed with finding the cultural and hypothetical questions they might encounter.

The best advice? Don’t worry about it. It’s far better to focus on the answers that the interviewers will want to hear, regardless of what questions they ask.

While applicants largely have to sign nondisclosure agreements that make revealing the questions a breach, Amazon goes out of its way to explain the answers its interviewers want to hear. In fact, as we’ll see, they’ve even prepared a one-page cheat sheet of sorts, and published it on their jobs website.

2. The answer, always: Customer first, competition second

This comes direct from Jeff Wilke, the so-called “second most important Jeff at Amazon,” who is also the CEO of Amazon’s worldwide consumer business. In a recent interview with The Wall Street Journal, he was asked how he uses interview questions to gauge whether someone will be a good cultural fit at Amazon. His answer:

“In an interview situation, we use the leadership principles as a guide to help us evaluate whether somebody would fit in. There are lots of situations where you could decide to optimize for the customer or to get ahead of the competitor. We want to pay attention to competitors, but we obsess over customers. If I detect that they are too focused on competitors, they probably aren’t going to be a great fit.”

Here’s a link to the Amazon leadership principles; sure enough, it starts off with “Customer Obsession.” Even if you’re a bit cynical about whether Amazon practices this in reality, they’re telling you right upfront that this is what they want to aspire to. Again: “obsess over customers.”

3. What to say about decisions you don’t agree with

Somewhere in the interview process, perhaps many times, you’ll likely be confronted with a question about a time in your career when you thought your employer was headed in the wrong direction, and you had to decide how to react to that decision.

Your answer, assuming you want to be hired, should be that you first forcefully, respectfully objected–but that once the decision went against you, you fully committed to trying to make it happen. Maybe even use the phrase: “disagreed and (yet) committed.”

The second-to-last Amazon leadership principle? “Have Backbone; Disagree and commit.” My colleague Justin Bariso wrote about it earlier this year. And in that same Wall Street Journal article, Wilke seizes the chance to talk about how he “disagreed and committed” with Jeff Bezos about launching the Kindle.

I don’t know how many more times Amazon can tell you, but this is the answer they want to hear!

4. Demonstrate curiosity and hunger for growth

Amazon has an interesting category of employees called “bar raisers,” whose work as specialized interviewers, interviewing people in entirely different roles from their departments (but all in addition to their regular jobs). One of the human resources employees who helped create the program said that among its most important goals is to identify and reject one-dimensional applicants.

“You want someone who can adapt to new roles in the company, not just someone who can fill the role that’s vacant. It can be an expensive process because it takes longer, but think of how expensive it is to hire the wrong person,” the former Amazon HR employee, John Vlastelica, told the Wall Street Journal.

Lo and behold, these characteristics are woven throughout the Amazon leadership principles–from “Invent and Simplify” to “Learn and Be Curious.”

Again, maybe you’re skeptical about whether these principles really are deeply held within the company, but you’ll only learn that first hand if and when you accept a position. Until then, these are the values the company at least claims to aspire to–and the ones they want to hear you espouse in an interview.

5. Remember: they need you as much or more than you need them

It’s daunting applying for any job sometimes, but remember: When Amazon opens this new facility, it reportedly plans to hire 50,000 people. Some say that Austin, Texas is the frontrunner; if so, well, that’s a city of just under 1 million, meaning Amazon would apparently be trying to hire a workforce equal to 5 percent of the entire population of its new (second) home.

Statistically, if you land an interview for a non-warehouse job with Amazon, your odds of getting hired have been roughly 40 percent. (I’m basing this on an interview with Dave Clark, Amazon senior vice president, who said the company typically needs 75,000 interviews to hire 30,000 new workers.)

Even if those numbers are off slightly, the bottom line is that Amazon needs a ton of people. And as one (anonymous) bar raiser reported, “While recruiting, we consider the candidate as our customer and strive to make their interviewing experience delightful.”

6. Remember: you might not need (or want) them at all

This isn’t to throw shade on Amazon, but the company itself spends a ton of effort weeding out applicants who might be technically proficient, but not at all a fit culturally. As one business school professor put it, if an applicant finds the interviewing process off-putting, “that’s a probably a good sign that they don’t belong there.”

Thus, you’re probably doing yourself a favor if you realize this yourself and take yourself out of the running. Besides, if Amazon opens its second North American headquarters in your city, a lot of other opportunities will be created as well–maybe even the opportunity to start something of your own.

Tech

Startup Magic Leap raises half a billion in new funding

(Reuters) – Magic Leap, a well-funded and secretive startup, said on Tuesday it has raised $ 502 million in a new capital funding round led by Temasek Holdings [TEM.UL], an investment firm owned by the government of Singapore.

New investors in the latest series D funding also include EDBI, a Singapore-based global fund, Grupo Globo from Brazil, and Janus Henderson Investors, Magic Leap said in a statement. (bit.ly/2zvsF74)

The new financing round comes as Magic Leap readies a long-awaited debut product, a headset that shows images overlaid against the real world, known as augmented reality.

According to a corporate filing earlier this month, the Florida-based startup was seeking to raise up to $ 1 billion in fresh funding.

Magic Leap said some existing investors were also part of the latest funding. They included Alibaba Group Holding Ltd, Fidelity Management and Research Co, Google LLC, J.P. Morgan Investment Management and T. Rowe Price Group Inc.

Bloomberg reported last month that Temasek was considering to participate in a new financing round of more than $ 500 million, valuing Magic Leap close to $ 6 billion.

Reporting by Aishwarya Venugopal in Bengaluru; Editing by Shounak Dasgupta

Tech