Hillicon Valley: Justice Department appeals AT&T-Time Warner ruling | New report on election security | FBI agent testifies in marathon hearing

Hillicon Valley: Justice Department appeals AT&T-Time Warner ruling | New report on election security | FBI agent testifies in marathon hearing
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Welcome to Hillicon Valley, The Hill's newsletter detailing all you need to know about the tech and cyber news from Capitol Hill to Silicon Valley.

Welcome! Follow the cyber team, Olivia Beavers (@olivia_beavers) and Morgan Chalfant (@mchalfant16), and the tech team, Harper Neidig (@hneidig) and Ali Breland (@alibreland).

DOJ APPEALS AT&T-TIME WARNER RULING: The Justice Department on Thursday filed to appeal a federal judge's decision to approve the $85 billion AT&T-Time Warner merger.


In a massive blow to prosecutors, Judge Richard Leon of the U.S. District Court for the District of Columbia said last month that the merger could move forward without any conditions attached.

The two companies closed the deal days later.

The Justice Department sued to block the deal in November 2017, alleging that the combination would allow AT&T, the largest pay-TV provider in the country, to use Time Warner's stable of popular entertainment offerings to suppress competitors.

Among the networks under Time Warner's umbrella are HBO, CNN, TNT and TBS. Prosecutors argued that AT&T could inflate the price of HBO for other content distributors.

Leon dismissed their arguments and the economic forecasting they relied upon that showed the merger would raise prices for consumers and hurt competition.

Instead he backed AT&T's claims that the merger would allow the companies to marry the telecom giant's trove of consumer data with Time Warner content in order to deliver targeted advertising — a market that's currently dominated by web giants like Facebook and Google.

But last week, critics seized on reports that AT&T was already planning to raise prices on DirecTV Now streaming service. The company said the increase was meant to bring rates in line with the market.


AT&T said Thursday that it's prepared to keeping fight for the merger.

“The Court’s decision could hardly have been more thorough, fact-based, and well-reasoned," David McAtee, AT&T's general counsel, said in a statement about Leon's ruling.

"While the losing party in litigation always has the right to appeal if it wishes, we are surprised that the DOJ has chosen to do so under these circumstances. We are ready to defend the Court’s decision at the D.C. Circuit Court of Appeals.”

Looking ahead: The decision was considered a boon for the wave of concentration sweeping the media and telecom industries, but a reversal could embolden the administration’s antitrust enforcers.

Read more here.

A NEW ELECTION SECURITY REPORT: Democrats on the House Administration Committee on Thursday released a new work on states’ preparedness on election security. The report analyzes states’ current election infrastructure, the money allotted to them by Congress to make election security upgrades and their plans for election security going forward.

It labels the five states that rely exclusively on voting machines that do not produce a paper train that can be audited as among those with the “most serious” vulnerabilities in regards to election security.

The report concludes that it will cost substantially more than the $380 allocated by Congress to secure state voting systems from potential cyber sabotage.

“While this money is a useful down payment, we have found that it will cost an additional $1.4 billion over ten years for states to be able to take all the steps required to secure their election systems,” the report says. Read more from it here.

FBI AGENT TESTIFIES AS REPUBLICANS CHARGE ANTI-TRUMP BIAS AT THE BUREAU: A controversial FBI counterintelligence agent spent hours testifying before two powerful House committees on Thursday, in what represented a highly contentious affair between Republicans on the committee and Peter Strzok, the official.

As of the publication of this newsletter, the hearing is still going on. But in one key moment, Strzok offered a vehement defense of himself and the FBI, as GOP lawmakers stepped up charges that anti-Trump text messages Strzok exchanged with a former lover are evidence of bias at the bureau.

The suggestion that Strzok’s personal opinions about Trump influenced his decisions at the bureau, he said “deeply corrodes what the FBI is in American society, the effectiveness of their mission, and it is deeply destructive.”

Catch our live coverage here, and some of the top moments here, here and here.

FRACAS AT THE FCC: The Federal Communications Commission passed a proposal to overhaul the agency's procedures for processing consumer complaints Thursday in a contentious party-line vote.


Commissioners clashed over the plan with the Republican majority insisting that the new rules are only clarifying longstanding procedures for filing and responding to complaints.

But Democrats at the agency and on Capitol Hill say the change will make the FCC less responsive to informal complaints, and force consumers to go through a formal proceeding to file grievances that costs $225.

“This is bonkers,” Jessica Rosenworcel, the sole Democrat on the commission, said at the FCC’s open meeting Thursday. “No one should be asked to pay $225 for this agency to do its job.”

The new rules largely focus on formal complaints, making changes intended to streamline the agency’s process for adjudicating them. But the new order also eliminates text from existing rules regarding the “Commission’s disposition” in handling informal complaints. Read more here.

BROADCOM WON’T SLINK AWAY QUIETLY: Broadcom is making another run at buying a U.S. tech company just months after President TrumpDonald John TrumpSanders urges impeachment trial 'quickly' in the Senate US sending 20,000 troops to Europe for largest exercises since Cold War Barr criticizes FBI, says it's possible agents acted in 'bad faith' in Trump probe MORE blocked the firm’s hostile takeover of Qualcomm.

The company announced on Wednesday an all-cash deal to buy CA Technologies, a software firm based in New York City, for $18.9 billion, with CA investors receiving $44.50 per share.

The agreement comes in the wake of Trump’s order blocking its bid for Qualcomm, citing national security concerns. The administration said it was worried that Broadcom, which was based in Singapore at the time, would hamper efforts to develop next-generation wireless technology.


Broadcom, which had tried to vigorously push back on regulators’ worries, has since relocated its headquarters to San Jose, Calif.

"This transaction represents an important building block as we create one of the world's leading infrastructure technology companies,” Broadcom CEO Hock Tan said in a statement.

Read more here.

FACEBOOK FIGHT: A Twitter spat broke out between representatives of Facebook, Infowars founder Alex Jones and reporters from CNN and BuzzFeed after a Wednesday on-the-record briefing with the social media giant's staffers and reporters.

The back and forth started in a meeting at Facebook’s New York office.

CNN reporter Oliver Darcy attended the meeting along with other reporters and Facebook’s chief of newsfeed John Hegeman and product manager Sarah Su.

Darcy pressed the company on why, despite its push to push fake news sources off its site, it still played home to Infowars, a site notorious for creating and spreading hoaxes and unsubstantiated conspiracies.


Jones jumped in: “CNN & BuzzFeed are pissed off at Facebook because Facebook announced that it supports free speech. Let that sink in,” he tweeted.

-The fiasco could have been have been avoidable for Facebook. Infowars has always posted and perpetuated aggressive conspiracy theories. Facebook is partially responsible for helping bring the long-fringe platform to the mainstream and is now afraid to confront the beast it’s created out of fear of the backlash.

FACEBOOK’S TREASON MISTAKE: Facebook removed “treason” as an advertising tag on Wednesday after its algorithm automatically labeled 65,000 Russian users as interested in the category, potentially putting them at risk for government retaliation.

“Treason was included as a category, given its historical significance. Given it’s an illegal activity, we’ve removed it as an interest category,” a Facebook spokesperson told The Guardian.

The tag was based on categories Facebook automatically assigns to users based on their behavior on the site.

Though Russia does not censor its citizens' internet accessibilities, the tag raises concern among those who fear Russian authorities using such data to track down and repress users labeled with the tag.

FACEBOOK’S MYANMAR TEST: Facebook officials tell The Hill they are making a serious effort to prevent their platform from being used to stir ethnic violence in Myanmar after mounting criticism.

Critics have long complained the company failed to take quick action to block hate speech they say incites genocide. Now Facebook says it's working to address these concerns and make sure its platform is no longer used to help spread violence.

With human rights groups watching, the situation in Myanmar is becoming a public test of the company's ability to respond quickly in real time to prevent its platform from being hijacked for political or divisive ends.

Sara Su, a product manager at Facebook for their News Feed product, spoke to The Hill on Tuesday about a trip she took last month to Myanmar with other high-profile company execs led by public policy vice president Simon Milner.

Read more here.


BIPARTISAN HOUSE INTEL BILL PASSES: The House on Thursday passed legislation authorizing appropriations for intelligence activities for fiscal years 2018 and 2019 in a bipartisan 363-54 vote.

In addition to authorizing intelligence-related funding, the legislation increases congressional oversight by requiring the Department of Defense (DOD) and the intelligence community to develop a plan to assess "numerous roles, missions and functions of the Defense Intelligence Agency."

The bill aims to improve injury benefits for CIA employees, allocate funds to fight against potential election interference, creates an Infrastructure Security Center within the Department of Energy to coordinate intelligence and increases pay for certain employees in an attempt to improve retention within agencies for "critical cyber missions," according to the Permanent Select Committee on Intelligence.

Under the legislation, Congress would require the intelligence community to provide reports on investigations into classified leaks, timelines for security clearances,  Russian influence on elections and the process used to review information on computer vulnerabilities.

While the White House praised the legislation for providing the means to carry out its national security strategy, it expressed concerns about 10 different provisions — including reporting requirements on classified information and language requiring a policy for minimum insider threat standards — ahead of the vote. Read more here.

SENATORS PUSH TRUMP ON ZTE: A bipartisan group of senators is urging negotiators on Capitol Hill to retain a provision in the annual defense policy bill that would block President Trump’s deal to save Chinese telecommunications giant ZTE.

“We strongly oppose the June 2018 deal with ZTE negotiated by the Commerce Department’s Bureau of Industry and Security (BIS) to lift the seven-year ban against the export of U.S. parts and components to ZTE,” the senators wrote in a letter Thursday to the chairmen and ranking members of the House and Senate Armed Services committees.

The letter was signed by Sens. Marco RubioMarco Antonio RubioOvernight Health Care — Presented by That's Medicaid — Deal on surprise medical bills faces obstacles | House GOP unveils rival drug pricing measure ahead of Pelosi vote | Justices to hear case over billions in ObamaCare payments Justices to hear ObamaCare case with billions at stake Here are the Senate Republicans who could vote to convict Trump MORE (R-Fla.), Chris Van HollenChristopher (Chris) Van HollenDemocrats rip Barr over IG statement: 'Mouthpiece' for Trump The Hill's Morning Report - Dem dilemma on articles of impeachment Graham, Van Hollen warn Pompeo that 'patience' on Turkey sanctions 'has long expired' MORE (D-Md.), Tom CottonThomas (Tom) Bryant CottonTikTok chief cancels Capitol Hill meetings, inflaming tensions Lawsuits pose new challenge for TikTok TikTok's leader to meet with lawmakers next week MORE (R-Ark.), Mark WarnerMark Robert WarnerTikTok chief cancels Capitol Hill meetings, inflaming tensions Watchdog report finds FBI not motivated by political bias in Trump probe Ex-Rep. Scott Taylor to seek old Virginia seat MORE (D-Va.), Roy BluntRoy Dean BluntSenate braces for brawl on Trump impeachment rules Trump's legal team huddles with Senate Republicans Overnight Defense: Trump cancels presser, cuts short NATO trip | Viral video catches leaders appearing to gossip about Trump | Dem witnesses say Trump committed impeachable offenses | Trump reportedly mulling more troops in Middle East MORE (R-Mo.) and Bill NelsonClarence (Bill) William NelsonBottom Line Bottom Line Media and candidates should be ashamed that they don't talk about obesity MORE (D-Fla.). Read more here.


Former FBI lawyer Lisa Page is expected to testify behind closed doors before the House Judiciary and Oversight Committees Friday afternoon.    


A lighter Twitter click: Unprecedented.



Border agent investigated over misuse of government computers. (New York Times)

The White House is making moves to secure the federal supply chain. (Inside Cybersecurity)

Kaspersky makes a last-ditch effort to thwart federal ban. (NextGov)

Britain demands EU keep sharing intelligence on cybersecurity. (Bloomberg)

PayPal Letter To Deceased Customer: 'You Should Read This Notice Carefully' (NPR)

Broadcom’s shares sink after merger announcement. (Wall Street Journal)