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Hillicon Valley: Senate Dems move to force net neutrality vote | AT&T spoke with Mueller’s team about Cohen payments | Chinese firm ZTE ceases operations after US ban | Panel advances bills to secure energy infrastructure

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Welcome to Hillicon Valley, The Hill’s comprehensive newsletter with all you need to know about tech and cybersecurity from Capitol Hill to Silicon Valley.


Welcome! Follow the tech team, Ali Breland (@alibreland) and Harper Neidig (@hneidig), and the cyber team, Morgan Chalfant (@mchalfant16) and Olivia Beavers (@olivia_beavers), on Twitter. Scoops/tips/comments/compliments? Please reach out.


ZTE DOWN FOR THE COUNT: Chinese telecommunications giant ZTE is ceasing all “major operating activities” after being hit by sanctions from U.S. regulators.

The company announced the move in a securities filing on Wednesday. It blamed a decision from the Commerce Department banning U.S. businesses from selling to the Chinese firm, after it pleaded guilty to conspiring to sell technology to Iran in violation of U.S. sanctions.

“As a result of the Denial Order, the major operating activities of the Company have ceased,” ZTE said in the filing.

“The Company and related parties are actively communicating with the relevant U.S. government departments in order to facilitate the modification or reversal of the Denial Order by the U.S. government and forge a positive outcome in the development of the matters.”

A big deal for China: The ban attracted much scrutiny in China. During Treasury Secretary Steve Mnuchin’s trade negotiation trip to China last week, the country asked the U.S. to adjust its penalties on ZTE.

Eurasia group’s Pau Triolo called this: In a story we did this past weekend Triolo said “if the Commerce Department sticks to its ban, the U.S. is essentially killing China’s No. 2 phonemaker.”

Is Huawei next?: China would certainly hope not, but the Department of Justice is opening an investigation into similar potential sanctions violations, so we’ll see.

Why U.S. tech companies are worried: China could very well retaliate. There are many companies like Intel and Qualcomm that China’s tech industry is reliant on. Those companies are worried about blowback. But other companies that aren’t as reliant on China could also become targets.

Read our full story on that here.


A LEGISLATIVE UPDATE: Senate Democrats are officially forcing a vote on a bill that would reinstate the Federal Communications Commission’s net neutrality rules. Senate Minority Leader Charles Schumer (D-N.Y.) and a group of Democrats announced that they had filed a discharge petition that will force the chamber to vote on the bill in the coming days.

“I believe that today kicks off the most important day for the internet that the Senate has ever seen,” Sen. Ed Markey (D-Mass) said at a press conference.

What’s next: The vote could come as early as next week. The effort currently has 50 backers in the Senate — all 49 Democrats plus Sen. Susan Collins (R-Maine). That may be enough to pass the bill if Sen. John McCain (R-Ariz.) is unable to vote while coping with his treatment for brain cancer.

Still, getting the bill to the House floor, let alone passing it, will be another fight altogether. It would take a majority in the House just to force a vote on the resolution, and it’s unclear if Democrats have the support of the 25 Republicans it would take to put them over that threshold.

But even if the bill fails, Democrats still see an upside in forcing Republicans to vote on the issue during a midterm election cycle.

“This bill does one simple thing: it gets every member of the Senate on the record for or against net neutrality,” Sen. Brian Schatz (D-Hawaii) told reporters on Wednesday.

“Republicans are going to regret it from a public policy standpoint and a political standpoint,” Schatz said. “I cannot think of an issue that polls so decisively on one side.”

To read more, click here.


AT&T SPOKE TO MUELLER’S TEAM ABOUT COHEN: AT&T said Wednesday that special counsel Robert Mueller had contacted the company about the payments it previously made to President Trump‘s personal lawyer Michael Cohen.

“When we were contacted by the Special Counsel’s office regarding Michael Cohen, we cooperated fully, providing all information requested in November and December of 2017,” AT&T said in a statement to Reuters and other outlets.

“A few weeks later, our consulting contract with Cohen expired at the end of the year. Since then, we have received no additional questions from the Special Counsel’s office and consider the matter closed.”

Background: AT&T said Tuesday that it had paid Cohen for “insights” on the Trump administration. The payment was first revealed in a report released by Stormy Daniels’ lawyer Michael Avenatti, which stated the firm paid Cohen’s shell company a total of $200,000 from late 2017 to 2018.

Dems want answers on Cohen payments: Two Democratic lawmakers sent a letter to the Department of Justice, raising concerns about AT&T hiring President Trump’s lawyer to consult for it last year.

Sen. Amy Klobuchar (D-Minn.) and Rep. David Cicilline, ranking members on the Senate and House Antitrust Subcommittees wrote the DOJ’s antitrust chief Makan Delrahim over their issues with AT&T paying Trump lawyer Michael Cohen.

The payment was first revealed on Tuesday in a document published by Michael Avenatti, a lawyer for adult-film star Stormy Daniels, who is suing the president and Cohen.

Wired asks: What did AT&T want from Michael Cohen?



ANOTHER MUELLER UPDATE: A Russian company charged in special counsel Robert Mueller’s sprawling probe into Russian interference in the presidential election pleaded not guilty Wednesday to federal charges related to the spreading of divisive content on social media.

A U.S. attorney for the company, Concord Management and Consulting LLC, offered the not guilty plea at an initial appearance and arraignment in federal court in Washington, D.C., before Magistrate Judge G. Michael Harvey.

The indictment unveiled in February alleges that the so-called Internet Research Agency and individuals and entities associated with it knowingly and intentionally conspired with one another “to defraud the United States by impairing, obstructing, and defeating the lawful functions of the government through fraud and deceit for the purpose of interfering with the U.S. political and electoral processes, including the presidential election of 2016.”

It alleges that Concord Management funded the operation of the Internet Research Agency, a Russian troll farm that spread divisive content on social media to U.S. audiences as part of a broader plot to interfere in the 2016 presidential election.

The company is said to be controlled by Yevgeniy Viktorovich Prigozhin, a Russian businessman who has been nicknamed “Putin’s chef” because of his reported close ties to Russian President Vladimir Putin.

The individuals and entities charged in February as part of the Internet Research Agency case were largely thought to be out of the reach of U.S. prosecutors because they are based in Russia.

However, Concord Management notified a federal judge last month that it had retained D.C.-based attorneys to argue on its behalf.

Those attorneys, Eric Dubelier and Katherine Seikaly of the law firm Reed Smith, appeared in court on Wednesday to plead not guilty on the company’s behalf. No representatives from Concord Management were present at the arraignment. 

Click here for more on the developments in the case.


MORE BILLS, BILLS, BILLS: Two House panels on Wednesday marked up a slew of cybersecurity bills.

First up, the House Foreign Affairs Committee approved a bipartisan bill that would incentivize ethical hackers to hunt for vulnerabilities in the State Department’s digital systems. The legislation would direct the department to set up a pilot “bug bounty” program to pay security researchers for discovering and reporting vulnerabilities in the department’s public internet-facing systems.

And the House Energy and Commerce Committee approved several pieces of legislation aimed at securing U.S. energy infrastructure from cyberattacks. One of the proposals, for instance, would establish a new program at the department focused on the physical security and cybersecurity of energy pipelines and liquefied natural gas facilities.

The action on the legislation Wednesday underscores growing concerns in Washington over the physical and digital security of the nation’s critical energy assets.


HOUSE DEM WANTS ANSWERS ON FCC ADVISER INDICTED FOR FRAUD: Rep. Keith Ellison (D-Minn.) is demanding answers from FCC Chairman Ajit Pai after former agency adviser Elizabeth Ann Pierce was arrested for wire fraud last month.

“[If] the allegations are true, it appears that Ms. Pierce may have been engaging in fraudulent behavior related to her own telecommunications company at the same time she was chosen by you to lead — and was leading — an important FCC committee,” Ellison wrote in a letter to Pai on Wednesday.

“This is deeply troubling, raising questions about the process by which members of the committee were chosen, its deliberations, and its recommendations to the FCC commissioners.”

Law enforcement officials are alleging that Pierce, the former CEO of an Alaska telecommunications firm called Quintillion, used forged customer contracts to try to attract investors.

To read more, click here.


MORE FCC: Rep. Gwen Moore (D-Wis.) is circulating a letter among Congressional offices seeking signatures on a letter probing the FCC’s plan to transfer Universal

Service Fund (USF) money from a private bank to the Treasury Department.

See the letter obtained by The Hill here.


TRUMP’S CIA PICK FACES A GRILLING: President Trump’s nominee to lead the CIA, Gina Haspel, faced the Senate Intelligence Committee for her confirmation hearing on Wednesday, which largely focused on her role in the agency’s use of enhanced interrogation techniques during the Bush years. Check out our full coverage.

Haspel had no major stumbles and appeared to bolster her chances of confirmation.


AND ICYMI: The Senate Intelligence Committee late Tuesday evening released its unclassified report on Russian cyberattacks against U.S. voting infrastructure before the 2016 election. To check out all the details, click here.


A LIGHTER CLICK: Now we’ve seen it all: bikes become a hacking target. (Motherboard)


ON TAP FOR TOMORROW: The White House is hosting a summit on artificial intelligence (AI), a meeting that will feature representatives from major tech firms like IBM, Microsoft, Google, Facebook, and Amazon. Read more here.

Gigamon is hosting its third annual Public Sector Cyber Security Summit at the Ronald Reagan Building in Washington.

The Federal Communications Commission will hold its monthly open meeting at 10:30 a.m.



Amazon rolls out model ‘smart’ homes for U.S. shoppers to try out Alexa (Reuters)

Kaspersky Lab software has been removed from all federal systems. (NextGov)

On social media’s fringes, growing extremism targets women (The New York Times)

President Trump’s decision to withdraw from the nuclear deal with Iran has raised concerns about future cyberattacks. (Wired)

How Qatar, UAE use email leaks to journalists to advance their agenda. (BuzzFeed)

Facebook is creating a blockchain team with top execs from Messenger and Snapchat (The Hill)

Tags Amy Klobuchar Brian Schatz Charles Schumer David Cicilline Donald Trump Ed Markey Gwen Moore John McCain Keith Ellison Robert Mueller Susan Collins
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