Hillicon Valley — Presented by AT&T — Officials warn of threat from Chinese spying | China blamed for Marriott hack | Trump open to intervening in Huawei case | FCC mulls ending merger ban on 'Big Four' networks | California floats tax on texts

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.

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SET WARNING SIGNS TO CHINA: Top security officials issued a stark warning about China's espionage efforts against the United States on Wednesday, labeling the country as one of the greatest threats to the U.S. economy and national security.

During a Senate Judiciary Committee hearing, federal representatives from the FBI, Department of Justice (DOJ), and Department of Homeland Security (DHS) said that while Russia is the threat currently looming in the public consciousness, China is the real long-term threat to watch.

"[China] is the most severe counterintelligence threat facing our country today," said Bill Priestap, the FBI's assistant director of the Counterintelligence Division.

Priestap said China should be at the top of the global threat list. He noted the FBI is working with U.S. agencies, universities, and other groups to educate them about the threat, capabilities, and methodologies of Chinese cyber efforts. 

Read more here.

 

MORE ON CHINA: Chinese hackers were behind the Marriott security breach that left the personal information of up to 500 million hotel guests exposed, investigators have concluded, The New York Times reported on Tuesday.

The hack was part of an intelligence-gathering effort by China that affected millions more Americans, sources familiar with the investigation told the Times. Investigators suspect that the hackers were working for the Chinese Ministry of State Security.

U.S. intelligence has concluded that, since 2014, Chinese hackers have been working to build a database that includes the names of U.S. executives and government officials who have security clearances, government officials told the newspaper. 

More on the hack here.

 

 

SCARED YET? WELL THERE IS ALSO THIS: A hacking group is aggressively targeting critical infrastructure in a new global campaign, a security firm revealed on Wednesday.

The campaign, known as Operation Sharpshooter, has gone after key industries including nuclear, defense, energy and financial groups by using a malicious implant that has links, according to McAfee Labs.

Operation Sharpshooter uses an implant called Rising Sun, which leverages a malicious source code linked to another prominent hacking group -- the Lazarus Group -- that is widely believed to be based out of North Korea.

While their cyber tools overlap, the cybersecurity firm cautioned against linking the newest campaign to the Lazarus Group, warning of potential "false flags." U.S. officials have blamed the group in the past for cyber espionage operations as well as a series of high-profile cyberattacks, including the 2014 cyberattack against Sony Pictures Entertainment.

"Operation Sharpshooter's numerous technical links to the Lazarus Group seem too obvious to immediately draw the conclusion that they are responsible for the attacks, and instead indicate a potential for false flags," researchers at McAfee found, stating that they will leave "attribution to the broader security community."

"According to our analysis, the Rising Sun implant uses source code from the Lazarus Group's 2015 backdoor Trojan Duuzer in a new framework to infiltrate these key industries," it added.

We explain here.

 

TRUMP JUMPS IN: President TrumpDonald John TrumpMueller report findings could be a 'good day' for Trump, Dem senator says Trump officials heading to China for trade talks next week Showdown looms over Mueller report MORE said Tuesday he would intervene in the case involving a top Chinese technology executive if it would help close a trade deal with the country.

Trump, who made the comments in an interview with Reuters, also said he would consider intervening if it were in the national security interests of the U.S.

"Whatever's good for this country, I would do," he said. "If I think it's good for what will be certainly the largest trade deal ever made – which is a very important thing – what's good for national security – I would certainly intervene if I thought it was necessary."

The executive, Huawei chief financial officer (CFO) Meng Wanzhou, was arrested earlier this month by Canadian authorities and faces extradition to the U.S. She has been accused of violating trade sanctions against Iran. 

Read more here.

 

'TIL NEXT TIME: A bipartisan bill that would create a way to detect national security risks in the supply chain likely won't be taken up this Congress, one of the legislation's cosponsors said Wednesday.

Outgoing Sen. Claire McCaskillClaire Conner McCaskillLobbying world Dem candidate has Hawley served subpoena at CPAC Annual scorecard ranks GOP environmental efforts far below Dems in 2018 MORE (D-Mo.), who introduced the bill alongside Sen. James LankfordJames Paul LankfordSenate GOP poised to go 'nuclear' on Trump picks GOP senators eye 'nuclear' move to change rules on Trump nominees Senate GOP goes down to wire in showdown with Trump MORE (R-Okla.) earlier this year, said she doesn't "know if there's going to be a chance to work on that before the end of Congress."

"I can't imagine it's going to get in anything," McCaskill said, adding that "it could, I guess, but I doubt it."

A spokesperson for Lankford said the Republican "is still working to get it done before the end of the year."

If passed, the bill would create the Federal Acquisition Security Council, which would evaluate foreign-made products for any potential threats they pose to national security. 

Read more here.

 

BIG NETWORKS COULD GET BIGGER: The Federal Communications Commission (FCC) voted Wednesday to review media ownership rules and potentially overturn one preventing the four major broadcast networks from merging with each other.

The FCC will seek comments on the rule that prevents mergers among NBC, ABC, CBS and Fox, according to media reports.

The FCC asked Wednesday if the current rule on the "Big Four" is necessary "to promote competition, localism, or viewpoint diversity," according to media reports.

The commission also said in a report that the four networks face competition from tech companies and streaming services such as Netflix, Amazon and YouTube, Reuters reported. 

Read more on the vote here.

 

SPAM SPAM SPAM SPAM: The Federal Communications Commission (FCC) on Wednesday voted to classify text messages as an information service, allowing mobile carriers to block texts in a move that supporters say will help crack down on spam messages.

The proposal was passed in a 3-1 party-line vote, with the lone Democratic commissioner opposing the move.

The order makes clear that Short Message Service (SMS) is an information service as opposed to a telecommunications service, which would carry with it a common carrier designation prohibiting wireless providers from blocking or discriminating against users.

It's similar to how the FCC deregulated internet service providers in overturning its Obama-era net neutrality rules. The commission voted along party lines last year to rid broadband providers of the common carrier tag by classifying them as information services and in the process rolling back protections against discrimination against certain websites. 

Read more here.

 

TAX THOSE TEXTS: California may soon charge its residents a fee for text messaging, according to a report released by state regulators Tuesday.

The report from the California Public Utilities Commission (CPUC) says the tax on text messaging would likely be a flat fee added to a monthly bill instead of a per text tax and the money would be used to fund programs that make phone service available for low-income residents.

Business groups in the state and wireless carriers are against the proposal.

"It's a dumb idea," Jim Wunderman, president of business advocacy group the Bay Area Council, told the San Jose Mercury News. "This is how conversations take place in this day and age, and it's almost like saying there should be a tax on the conversations we have." 

Read more here.

 

SLOW AND STEADY: A new congressional scorecard released this week found that federal agencies are gradually improving in their use of information technology.

The House Oversight and Government Reform committee unveiled its biannual Federal Information Technology Acquisition Reform Act (FITARA) scorecard on Tuesday, finding that 11 agencies had improved their scores on IT since May.

Thirteen departments' scores remained the same, while no agencies saw their scores decrease since the last scorecard earlier this year May -- which lawmakers said is a first.

While lawmakers touted the results during a hearing on Wednesday, they remained critical of agencies that did not have a direct reporting line for IT issues within their department. 

Read more here.

 

MAKE AN ASSANGE OUT OF YOU AND ME: A group of top Democrats is requesting that Secretary of State Mike PompeoMichael (Mike) Richard PompeoUS sanctions Venezuelan bank after Guaidó aide's arrest The Hill's Morning Report — Washington readies for Mueller end game 2020 Dems avoid this year's AIPAC conference MORE brief Congress on his meeting last month with Ecuadorian Foreign Minister Jose Valencia, specifically demanding he provide details on whether WikiLeaks's founder Julian Assange's future in the Ecuadorian Embassy in London was discussed.

In the letter, sent Tuesday, the Democrats -- including Senate Minority Leader Charles SchumerCharles (Chuck) Ellis Schumer4 in 5 Americans say they support net neutrality: poll GOP senator: Trump's criticism of McCain 'deplorable' Schumer to introduce bill naming Senate office building after McCain amid Trump uproar MORE (D-N.Y.) and Senate Foreign Relations Committee ranking member Bob MenendezRobert (Bob) MenendezThe Hill's 12:30 Report: Manafort sentenced to total of 7.5 years in prison Acting Defense chief calls Graham an 'ally' after tense exchange William Barr is right man for the times MORE (D-N.J.) -- wrote that they "remain deeply interested" in whether Pompeo discussed Assange with Valencia.

"As you are aware, in January 2017, the unclassified report by the U.S. Intelligence Community assessed with high confidence that Russian military intelligence used proxies to transfer hacked data obtained in cyber operations to WikiLeaks," the letter reads. "These activities were explicitly intended to interfere in the 2016 U.S. presidential election."

The lawmakers asked Pompeo to inform Congress next week if he asked Valencia to confirm a report that former Trump campaign chairman Paul ManafortPaul John ManafortBill Maher questions whether Democrats put 'too much trust' in Mueller report Trump, Congress brace for Mueller findings CNN's Toobin: 'Swirl of suspicion' about more indictments not justified MORE met with Assange in the Ecuadorian Embassy, as well as for logs and other information tracking Assange's visitors.

Read more here.

 

AMAZON VS. THE REST OF THE WORLD: Grassroots activists in New York have been canvassing Long Island City and other parts of Queens to organize opposition to Amazon's upcoming move there, with hundreds joining a meeting Monday night to protest against the company.

"When our communities are under attack, what do we do?" one speaker asked, according to The New York Times.

"Stand up, fight back!" the room of more than 300 responded.

Volunteers, some of whom are affiliated with the New York City Democratic Socialists of America and canvassed for Rep.-elect Alexandria Ocasio-CortezAlexandria Ocasio-CortezOvernight Energy: Interior reverses decision at heart of Zinke criminal probe | Dem divisions deepen over approach to climate change | GM to add 400 workers to build electric cars 'Washington Monthly' editor says diversity on Capitol Hill starts with interns Why is my party prioritizing an extreme environmental agenda? MORE's (D-N.Y.) congressional campaign, have been knocking on doors to generate opposition to the move.

"A lot of people who volunteered for the campaign are now organizing with us against Amazon," Aaron Taube, a member of Democratic Socialists of America and freelance writer who worked on the Ocasio-Cortez campaign, told the Times. "OK the election is over, how do we keep organizing?" 

Read more here.

 

AN OP-ED TO CHEW ON: Nefarious nations will take the lead on AI if the US doesn't.

 

A LIGHTER CLICK: Every reader counts.

 

NOTABLE LINKS FROM AROUND THE WEB:

Democrats signal growing interest in examining ties between NRA, Russia. (The Hill)

Google's own email filters flag Google's party invite as malicious. (Motherboard)

Google hearing full of uninformed questions and an evasive exec. (BuzzFeed)

NYC Cyber Command may win a permanent spot in city government. (StateScoop)

Bringing Amazon to the table. (Slate)