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Snowden’s Ride, Part 15: Economic Blitzkrieg against U.S. Electronics and Internet Business?


Detroit Today: Sil­i­con Val­ley Tomor­row?

Dave Emory’s entire life­time of work is avail­able on a flash dri­ve that can be obtained here. [2] (The flash dri­ve includes the anti-fas­cist books avail­able on this site.)

COMMENT: In our con­tin­u­ing analy­sis of the adven­tures of Eddie the Friend­ly Spook (Snow­den) we revis­it an aspect of our com­plex analy­sis that con­cerns eco­nom­ic war­fare against the Unit­ed States.

(Our series on this is long, com­plex and mul­ti-lay­ered: Part I [3]Part II [4]Part III [5]Part IV [6]Part V [7]Part VI [8]Part VII [9], Part VIII [10]Part IX [11]Part X [12], Part XI [13], Part XII [14]Part XIII [15]Part XIV [16]Part XV [17]Part XVI [18]Part XVII [19]Part XVIII [20]Part XIX [21], Part XX [22]It is impos­si­ble to do jus­tice to this analy­sis with­in the scope of this post. Please digest the rest of the mate­r­i­al, in order to come to terms with what we are pre­sent­ing.)

For pur­pos­es of the analy­sis pre­sent­ed in this post, sev­er­al pre­vi­ous [13] entries deal­ing with [14] the eco­nom­ic war­fare [19] aspects of this case bear exam­i­na­tion. 

A recent edi­to­r­i­al in The San Jose Mer­cury News (Tues. Sep­tem­ber 10, 2013, p. A9) opined: “Rev­e­la­tions that the Nation­al Secu­ri­ty Agency has cracked the encryp­tion tech­nol­o­gy that was sup­posed to pro­tect Inter­net users’ pri­va­cy is a night­mare for Sil­i­con Val­ley. . .”

The con­cerns expressed by the Mer­cury News and echoed by Sil­i­con Val­ley CEO’s at a recent high tech con­fer­ence go to the thrust of the main part of what we feel is the pri­ma­ry goal of this mul­ti-lay­ered psy-op: to do to the Sil­i­con Val­ley and the U.S. elec­tron­ic busi­ness what the Ger­man and Japan­ese auto­mo­bile indus­try’s cap­ture of much of the U.S. mar­ket did to the city of Detroit.

In this regard, a num­ber of things come to mind: 

“About the Reuters Arti­cle” by Glenn Green­wald; The Guardian; 7/13/2013. [34]

EXCERPT: . . . .A: Snow­den has enough infor­ma­tion to cause more dam­age to the US gov­ern­ment in a minute alone than any­one else has ever had in the his­to­ry of the Unit­ed States. But that’s not his goal. [His] objec­tive is to expose soft­ware that peo­ple around the world use with­out know­ing what they are expos­ing them­selves with­out con­scious­ly agree­ing to sur­ren­der their rights to pri­va­cy. [He] has a huge num­ber of doc­u­ments that would be very harm­ful to the US gov­ern­ment if they were made pub­lic. . . .

“Zucker­berg Says U.S. ‘Blew it’ on NSA Spy­ing” by Bran­don Bai­ley; San Jose Mer­cury News; 9/11/2013. [35]

EXCERPT: Face­book CEO Mark Zucker­berg lashed out at the U.S. gov­ern­ment Wednes­day, say­ing that author­i­ties have hurt Sil­i­con Val­ley com­pa­nies by doing a poor job of explain­ing the online spy­ing efforts of U.S. intel­li­gence agen­cies.

“Frankly I think the gov­ern­ment blew it,” Zucker­berg com­plained dur­ing an onstage inter­view at the tech indus­try con­fer­ence known as Dis­rupt, a week­long event where Yahoo (YHOO) CEO Maris­sa May­er and oth­er promi­nent tech exec­u­tives also spoke out pub­licly and expressed frus­tra­tion in per­son, for the first time, since a series of news leaks revealed the gov­ern­men­t’s con­tro­ver­sial sur­veil­lance pro­grams.

“It’s our gov­ern­men­t’s job to pro­tect all of us and also pro­tect our free­doms and pro­tect the econ­o­my, and com­pa­nies,” Zucker­berg told inter­view­er Michael Arring­ton, “and I think they did a bad job of bal­anc­ing those things.”

He went on to say: “They blew it on com­mu­ni­cat­ing the bal­ance of what they were going for.”

Face­book and oth­er Inter­net com­pa­nies have been under intense pres­sure in recent months after a series of news reports that sug­gest U.S. intel­li­gence agen­cies have gained access to the online activ­i­ties and com­mu­ni­ca­tions involv­ing users of Face­book and oth­er pop­u­lar ser­vices. Some of those reports have sug­gest­ed that unnamed com­pa­nies have coop­er­at­ed with the U.S. efforts, although the details are unclear.

Ana­lysts say those reports could hurt the com­pa­nies finan­cial­ly, espe­cial­ly over­seas, if if con­sumers and busi­ness cus­tomers believe their sen­si­tive infor­ma­tion isn’t safe from gov­ern­ment pry­ing. . . . .

“After Edward Snowden’s Rev­e­la­tions, Why Trust US Cloud Providers?: The NSA’s Activ­i­ties Are a Mas­sive Blow for US Com­puter Busi­ness­es” by John Naughton [The Observ­er]; The Guardian; 9/14/2013. [24]

“It’s an ill bird,” runs the adage, “that fouls its own nest.” Cue the US Nation­al Secu­rity Agency (NSA), which, we now know, has been busi­ly doing this for quite a while. As the Edward Snow­den rev­e­la­tions tum­bled out, the scale of the foul­ing slow­ly began to dawn on us.

Out­side of the Unit­ed States, for exam­ple, peo­ple sud­denly began to have doubts about the wis­dom of entrust­ing their con­fi­den­tial data to cloud ser­vices oper­ated by Amer­i­can com­pa­nies on Amer­i­can soil. As Neel­ie Kroes, Euro­pean Com­mis­sion vice pres­i­dent respon­si­ble for dig­i­tal affairs, put it in a speech on 4 July [36]: “If busi­nesses or gov­ern­ments think they might be spied on, they will have less rea­son to trust the cloud and it will be cloud providers who ulti­mately miss out. Why would you pay some­one else to hold your com­mer­cial or oth­er secrets, if you sus­pect or know they are being shared against your wish­es? Front or back door – it doesn’t mat­ter – any smart per­son doesn’t want the infor­ma­tion shared at all. Cus­tomers will act ratio­nally and providers will miss out on a great oppor­tu­nity.“

Which providers? Why, the big US inter­net com­pa­nies that have hith­erto dom­i­nated the mar­ket for cloud ser­vices – a mar­ket set to dou­ble in size to $200bn [37] (£126bn) over the next three years. So the first own goal scored by the NSA was to under­mine an indus­try that many peo­ple had regard­ed as the next big thing in cor­po­rate com­put­ing [38].


“Microsoft Seeks Calm On Ger­man Secu­rity Pan­ic Over Win­dows 8” by Tom Brew­ster; Tech­week Europe; 8/23/2013. [25]

EXCERPT: Claims that there is a back­door in Win­dows 8 giv­ing access to all ver­sions of the oper­at­ing sys­tem to US intel­li­gence have been gen­tly rebuffed by Microsoft.

A reporter in Zeit had sug­gested the back­door stemmed from the Trust­ed Plat­form Mod­ule, or TPM chip, which seeks to improve secu­rity by pow­er­ing the Secure Boot process that checks for and ignores mali­cious low-lev­el code when a machine starts up. It does this through cryp­to­graphic keys that ensure code can­not be tam­pered with on load­ing and that the code is legit­i­mate.

The Zeit writer had sug­gested the TPM could give the man­u­fac­turer of a device con­trol over it.

He said that in light of the leaks from Edward Snow­den, it would not be a sur­prise if TPM 2.0, the ver­sion used by Win­dows 8, was actu­ally a back­door the Nation­al Secu­rity Agency (NSA) could eas­ily exploit. As the chips pow­er­ing TPM are man­u­fac­tured in Chi­na, the Chi­nese could eas­ily access Win­dows 8 machines too, the report alleged.

The reporter attained doc­u­ments from the Ger­man gov­ern­ment that led him to reach his sup­po­si­tion. But the Ger­man gov­ern­ment has not said there is a back­door in the OS.

The Office for Infor­ma­tion Secu­rity (BSI) lat­er clar­i­fied the government’s posi­tion, and did say the use of TPM 2.0 and Win­dows 8 (TPM is used in oth­er non-Win­dows machines, includ­ing Chrome­books, mak­ing the claims even more ques­tion­able) meant the user had to deal with “a loss of con­trol over the oper­at­ing sys­tem and the hard­ware used”. This could lead to greater risk for the fed­eral gov­ern­ment and crit­i­cal infra­struc­ture, it said.

But the body said it had not warned the gen­eral pub­lic nor gov­ern­ment bod­ies against using Win­dows 8.

It said “the new­ly estab­lished mech­a­nisms can also be used for sab­o­tage by third par­ties”, but appeared only to be talk­ing gen­er­ally about vul­ner­a­bil­ity exploita­tion. There was no sug­ges­tion of a pur­pose­ful back­door, as Zeit had hypoth­e­sised, even if the BIS does have prob­lems with TPM.

Microsoft has respond­ed to the ker­fuf­fle first by deny­ing it has ever pro­vided such access to users’ data and by talk­ing up the secu­rity ben­e­fits of TPM 2.0. It sug­gested gov­ern­ment depart­ments would be wise to use the secu­rity pro­tec­tions it pro­vides by default. But for those gov­ern­ments who want to gain back con­trol of their machines, they can go with OEMs who make Win­dows PCs with­out TPM. . . .

Can Hewlett-Packard Cap­i­tal­ize on Microsoft­’s Mis­steps? by Joshua Bondy; The Mot­ley Fool; 8/28/2013. [39]

EXCERPT: With major indus­tri­al giants like Siemens, Ger­many is no small fry. As of 2012, it was the fourth-largest econ­o­my in the world. The Ger­man gov­ern­men­t’s recent announce­ment [that Win­dows 8 is unsafe due a back­door called the Trust­ed Plat­form Mod­ule], is a dan­ger­ous omen for Microsoft (NASDAQ: MSFT ) .


The growth of open-source com­put­ing is caus­ing major headaches for Microsoft, and this sit­u­a­tion is no dif­fer­ent. Lin­ux is open source, and gen­er­al­ly has few­er secu­ri­ty vul­ner­a­bil­i­ties than Win­dows. Gov­ern­ment and cor­po­rate IT depart­ments are start­ing to real­ize that they can make their oper­a­tions more secure and cut costs by switch­ing from Win­dows to Lin­ux. Using open-source alter­na­tives to Microsoft Office is yet anoth­er way to low­er costs. The City of Munich recent­ly moved 14,000 desk­top PCs to Lin­ux and plans to save $13 mil­lion by using Libre­Of­fice.


Euro­pean Union aus­ter­i­ty is mak­ing gov­ern­ments look for cost sav­ings wher­ev­er pos­si­ble. Microsoft is already feel­ing the pain in its bot­tom line. In 2013, oper­at­ing income for the Win­dows divi­sion fell to $9.5 bil­lion from $12.3 bil­lion in 2011, and falling PC sales paint a grim future. . . .

“Don’t Let Para­noia over the NSA and TPM Weak­en Your Secu­ri­ty” by Ed Bott; ZDNet; 8/23/2013. [27]

EXCERPT: The unin­tended by-prod­uct of Edward Snowden’s NSA doc­u­ment dump is a bull mar­ket in para­noid con­spir­acy the­o­ries.

The lat­est exam­ple is the breath­less report out of Ger­many that Microsoft and the NSA have con­spired to give Amer­i­can spies access to every copy of Win­dows 8, enforced by a mys­te­ri­ous chip called the Trust­ed Plat­form Mod­ule, or TPM. “It’s a back­door!” scream the con­spir­acy the­o­rists.

Appar­ently, Microsoft is so pow­er­ful that it is able to influ­ence even its most bit­ter ene­mies.

. . . .The point is, a TPM is a plat­form-neu­tral device. It pro­vides a secure way to encrypt data so that it can’t be accessed by any­one except you, and it pro­tects your device from being tam­pered with. Both of those fea­tures are high­ly desir­able these days.

But who knows what’s going on in that chip? I mean, they say it’s just a secure place to store encrypt­ed keys, but who knows what else it can do? Obvi­ously the Amer­i­can gov­ern­ment or maybe the Chi­nese have intim­i­dated the chip’s man­u­fac­turer, right?

Uh, maybe not. The most pop­u­lar mak­er of TPM tech­nol­ogy is Infi­neon Tech­nolo­gies AG , which is based in … Neu­biberg, Ger­many. Per­haps those intre­pid Ger­man jour­nal­ists could, you know, hop on a train and head down to Infi­neon to see for them­selves.

“Infi­neon Tech­nolo­gies’; [28]Wikipedia. [28]

EXCERPT: Infi­neon Tech­nolo­gies AG is a Ger­man semi­con­duc­tor man­u­fac­tur­er found­ed on 1 April 1999, when the semi­con­duc­tor oper­a­tions of the par­ent com­pa­ny Siemens AG were spun off to form a sep­a­rate legal enti­ty. As of 30 Sep­tem­ber 2010, Infi­neon has 25,149 employ­ees world­wide. In fis­cal year 2010, the com­pa­ny achieved sales of €3.295 bil­lion. . . .

“The Hunt for the Kill Switch” by Sal­ly Adee; IEEE Spec­trum; 5/1/2008. [29]

Are chip mak­ers build­ing elec­tronic trap­doors in key mil­i­tary hard­ware? The Pen­ta­gon is mak­ing its biggest effort yet to find out . . . .

. . . . Accord­ing to a U.S. defense con­trac­tor who spoke on con­di­tion of anonymi­ty, a ”Euro­pean chip mak­er” recent­ly built into its micro­proces­sors a kill switch that could be accessed remote­ly. French defense con­trac­tors have used the chips in mil­i­tary equip­ment, the con­trac­tor told IEEE Spec­trum. If in the future the equip­ment fell into hos­tile hands, ”the French want­ed a way to dis­able that cir­cuit,” he said. Spec­trum could not con­firm this account inde­pen­dently, but spir­ited dis­cus­sion about it among researchers and anoth­er defense con­trac­tor last sum­mer at a mil­i­tary research con­fer­ence reveals a lot about the fever dreams plagu­ing the U.S. Depart­ment of Defense (DOD). . . .

“The GOP Plan to Crush Sil­i­con Val­ley: What Will Become of Steve Jobs’s Angel?” by John B. Jud­is; The New Repub­lic; 8/20/2013. [33]

EXCERPT: When Con­gress returns from its sum­mer recess in ear­ly Sep­tem­ber, it will have exact­ly nine leg­isla­tive days to agree on a bud­get or the gov­ern­ment will shut down. House Repub­li­cans are seek­ing far greater cuts in non-defense spend­ing than Sen­ate Democ­rats, and some mem­bers of the GOP are threat­en­ing to hold up any bud­get agree­ment until the Oba­ma admin­is­tra­tion aban­dons the Afford­able Care Act. It’s going to be a slog, with all sorts of unseem­ly com­pro­mises. But let me sug­gest an area where Democ­rats should allow exact­ly zero more dol­lars to be excised from the fed­eral bud­get: gov­ern­ment research for sci­ence and tech­nol­ogy. We’ve already seen a 13 per­cent drop in this area over the last two years, and it’s hard to over­state just how dam­ag­ing to the country’s future fur­ther reduc­tions would be.

Many peo­ple still cling to the idea that gov­ern­ment is, with­out excep­tion, a drag upon the pri­vate econ­omy. Con­ser­v­a­tives “know that when it comes to eco­nomic progress,” Arthur Brooks, the pres­i­dent of the Amer­i­can Enter­prise Insti­tute, wrote last year in Nation­al Review, “the best gov­ern­ment phi­los­o­phy is one that starts every day with the ques­tion, ‘What can we do today to get out of Amer­i­cans’ way?’ ” They imag­ine the Unit­ed States as a land of plucky inven­tor-entre­pre­neurs (“We built it!” they cry) who work out of garages and depend sole­ly on their wits. The prob­lem is that this vision of Amer­i­can inven­tive­ness is pure myth.

Steve Jobs, who has near­ly been beat­i­fied in his role as inde­pen­dent busi­ness­man, excelled at design­ing prod­ucts based on gov­ern­ment-fund­ed inven­tions. Some of Apple’s most vaunt­ed achievements—the mouse, a graph­i­cal user inter­face, the touch-screen, even Siri—were all devel­oped in part with fed­eral finances. Or take Google. Its search engine came out of a $4.5 mil­lion dig­i­tal-libraries research grant from the Nation­al Sci­ence Foun­da­tion (NSF). You can also look at the phar­ma­ceu­ti­cal indus­try. Accord­ing to a Con­gres­sional Bud­get Office study, 16 of the 21 “most influ­en­tial drugs” intro­duced between 1965 and 1992 depend­ed on fed­er­ally fund­ed research.

The list goes on. Fed­eral mon­ey helped sup­port the inven­tion of lasers, tran­sis­tors, semi­con­duc­tors, microwave ovens, com­mu­ni­ca­tion satel­lites, cel­lu­lar tech­nol­ogy, and the Inter­net. Now, the feds are prime back­ers of the Human Genome Project (which could trans­form med­i­cine) and nan­otech­nol­ogy (which could trans­form man­u­fac­tur­ing). Sub­tract these kinds of inno­va­tions from America’s future, and you have an econ­omy depen­dent on tourism, the tot­ter­ing super­struc­ture of big finance, and the export of raw mate­ri­als and farm prod­ucts. More to the point, you have a weak­er country—not just in com­par­i­son with its com­peti­tors, but also in its abil­ity to pro­vide its cit­i­zens with rich­er, longer, more imag­i­na­tive lives. . . .