READ MORE: Microsoft Wins Big in Fight for User Privacy as Irish Search Warrant Found Invalid

Microsoft sued the Justice Department and Attorney General Loretta Lynch in April, escalating a feud with the U.S. over customer privacy and its ability to disclose what it’s asked to turn over to investigators. Last week, Microsoft persuaded an appeals court to overturn an order to turn over e-mails stored on servers in Ireland as part of a Manhattan drug prosecution.

The Justice Department’s reply Friday underscores the government’s willingness to fight back against tech companies it sees obstructing national security and law enforcement investigations. Tensions remain high following a series of court confrontations between the FBI and Apple Inc. over whether the company could be compelled to help unlock iPhones in criminal probes, including a phone used by one of the attackers in last December’s terrorist attack in San Bernardino, California.

The industry’s push against government intrusion into their customers’ private information began at least two years ago, in the wake of Edward Snowden’s disclosures about covert data collection that put them all on the defensive.

SEE ALSO: Microsoft Rises Most in Nine Months After Profit Beat Estimates

Microsoft and Apple argue the very future of mobile and cloud computing is at stake if customers can’t trust that their data will remain private, while investigators seek digital tools to help them fight increasingly sophisticated criminals and terrorists savvy at using technology to communicate and hide their tracks.

Kathy Roeder, a spokeswoman for Microsoft, didn’t immediately respond to an e-mail after regular business hours Friday seeking comment on the filing.

Court Orders

“Microsoft’s challenge effectively asks this court to adjudicate the lawfulness of thousands of such court orders from across the U.S., without regard to the basis for, and terms of, those orders, which necessarily vary from case to case,” the Justice Department said in Friday’s court filing.

The government said Microsoft doesn’t have the authority to sue over whether its users’ constitutional protections against unlawful search and seizure are being violated, the U.S. said.

Secrecy orders on government warrants for access to private e-mail accounts generally prohibit Microsoft from telling customers about the requests for lengthy or even unlimited periods, the company said when it sued. At the time, federal courts had issued almost 2,600 secrecy orders to Microsoft alone, and more than two-thirds had no fixed end date, cases the company can never tell customers about, even after an investigation is completed.

Microsoft conceded that there may be times when the government is justified in seeking a gag order to prevent customers under investigation from tampering with evidence or harming another person. Still, the Redmond, Washington-based company says the statute authorizing the gag orders is too broad and sets too low of a standard for secrecy.

The case is Microsoft Corp. v. U.S. Department of Justice, 16-cv-00538, U.S. District Court, Western District of Washington (Seattle).

Source: TheWHIR

SEE ALSO: Google Launches Its First Cloud Data Center on West Coast

The moves are part of a broader push by Google to use its lead in AI technology to improve existing services and products, develop new ones and ultimately build new businesses. It recently used cutting-edge AI developed by its DeepMind subsidiary to improve the efficiency of its data centers.

The products introduced Wednesday also increase competition with Microsoft, which is making AI tools available via its Azure cloud, and set Google apart from Amazon Web Services, which has focused on letting customers program their own AI tools.

Google’s two new AI tools let companies analyze language and convert speech into text. U.K.-based grocery delivery service Ocado Group Plc has used them to help it rank and respond to customer queries, the internet company said.

Businesses can use the technologies to automatically “prioritize the most irate customers first” by spotting language from e-mails and phone calls associated with feelings like anger, frustration and irritation, said Rob Kraft, a product manager for Google Cloud Platform.

The products will cost a few cents per use, he said. The company expects people to mix-and-match its various AI offerings. For example, a business could transcribe a phone call using the speech service, interpret the tone of it, and figure out which product the call relates to, no human required.

The current emphasis of Google’s AI services is to help automate aspects of conversations, said Kraft. In the future, he thinks interesting work could be done in fraud prevention and cybersecurity for other companies.

The company also announced that customers can now rent storage, computing power and other cloud services from its data center in Oregon, giving people on the West Coast of the U.S. faster access. That’s part of a plan by cloud chief and board-member Diane Greene to add 12 new data centers over the next 12 to 18 months.

Source: TheWHIR

READ MORE: Microsoft Wins Big in Fight for User Privacy as Irish Search Warrant Found Invalid

The Big Picture

Nadella, well into his third year at the helm, has been reorienting Microsoft’s business around cloud and productivity services to fuel growth as traditional software sales shrink. Annualized revenue from commercial cloud products was more than $12.1 billion in the recent quarter, a number that Microsoft has pledged will reach $20 billion by fiscal 2018. The company is relying on the switch to recurring cloud contracts to help make up for weaker one-time corporate software purchases, which are still on course to decline but came in stronger than the company projected in the recent quarter.

CFO Interview

Microsoft continues to see businesses moving to the cloud and subscription-based software and services, Chief Financial Officer Amy Hood said via telephone. Transactional purchases of legacy products were “a little better this quarter,” she said. “There’s a structural trend and shift to the cloud,” she said. In traditional products, “quarter to quarter, you see some volatility in the results.” “The PC market was a little better than we had expected three months ago,” she said. “We saw it more specifically in more developed markets.”

SEE ALSO: Not So Fast: Microsoft Azure Could Surpass AWS as Most Used Public Cloud by 2019

The Detail

Corporate versions of the Office 365 cloud-based productivity software saw revenue increase by 54 percent in the fiscal fourth quarter, the Redmond, Washington-based company said. Net income was $3.12 billion, or 39 cents a share, including the Nokia-related charges, compared with a loss of $3.2 billion a year earlier. Revenue in the Intelligent Cloud division rose 6.6 percent to $6.71 billion, compared with the $6.58 billion average estimate of analysts polled by Bloomberg. In the current period, Microsoft forecast unit sales of $6.1 billion to $6.3 billion. Productivity group sales gained 4.6 percent to $6.97 billion. Analysts had projected $6.64 billion. In the fiscal first quarter, the company expects to report $6.4 billion to $6.6 billion. More Personal Computing division sales, which include Windows and Xbox, fell 3.7 percent to $8.9 billion in the recent period, slightly better than the $8.87 billion average analyst estimate. Revenue will be $8.7 billion to $9 billion in the current quarter, Microsoft said. Fourth-quarter unearned revenue, a measure of future sales, was $33.9 billion. Five analysts polled by Bloomberg expected an average of $30.88 billion. Microsoft’s profit was boosted in the recent period by a more favorable tax rate. Minus the effects of that gain, profit would have been 63 cents a share, according to a research note from UBS Group AG analyst Brent Thill. Microsoft in June agreed to buy professional networking service LinkedIn Corp. for $26.2 billion.

Street Takeaways

“What’s comforting is the key underlying trends are in place,” said Sid Parakh, a fund manager at Becker Capital Management, which owns Microsoft stock. “At least the long-term trajectory is intact here. There was concern last quarter.” “Deferred revenue growth was pretty decent,” Parakh said.

Source: TheWHIR

READ MORE: Mobile Malware, Extortion Among Top 2016 Cybersecurity Trends

The deal will give Prague-based Avast more opportunities in internet security-related business, providing it with more scale and an increased geographical reach in both its core business and newer areas such as Internet of Things, according to the statement. The Internet of Things is the name used to refer to the network connecting physical devices, ranging from fridges to cars and clothes, to the internet, a growing area of focus for companies.

The deal between the two companies, both of which were founded in the Czech Republic more than 20 years ago, will provide Avast with 400 million so-called endpoints, 160 million of which are mobile. Avast says it protects 230 million people and businesses with its applications.

Bankers from Jefferies International Ltd. advised Avast, while White & Case LLP and De Brauw Blackstone Westbroek NV provided legal advice. Morgan Stanley is AVG’s financial adviser and Bridge Street Securities LLC is advising AVG’s supervisory board. Orrick, Herrington & Sutcliffe LLP and Allen & Overy LLP are legal advisers to AVG.

Private-equity firm TA Associates, AVG’s biggest shareholder with a 13 percent stake, has agreed to tender its shares. Avast plans to fund the transaction using cash on hand and debt financing. Credit Suisse Group AG, Jefferies and UBS AG agreed to provide $1.69 billion in financing. Avast also has contributed $150 million in equity investment.

Closely held Avast planned an initial public offering in 2012, but canceled the sale because of market conditions.

Source: TheWHIR

SEE ALSO: UK Cybersecurity Budgets Fail to Match Growing Threats: Report

The rules “will help prevent cyberattacks on Europe’s important interconnected infrastructures,” said Andreas Schwab, a German member of the 28-nation EU Parliament who steered the measures through the assembly. EU governments have already supported the legislation.

Network-security incidents resulting from human error, technical failures or cyberattacks cause annual losses of 260 billion euros ($288 billion) to 340 billion euros, the EU Parliament said, citing estimates by the bloc’s agency for network and information security.

READ MORE: Brexit and Europe: Business as Usual

Source: TheWHIR

“Demand for all our services is growing across all Europe. For us it’s business as usual,” Stephen Orban, head of enterprise strategy at Amazon Web Services, said in an interview at a customer conference Thursday in Frankfurt.

TRENDING: AWS Expansion Just Getting Started, CEO Andy Jassy Says

Britain’s vote last week to break away from the EU has raised concerns about how data-storage regulations in Europe and the U.K. will evolve. Orban confirmed Amazon’s planned U.K. data center would open despite the uncertainty, opening later this year or early next as planned.

“We’re watching the situation but I can’t speculate how everything is going to unfold,” Orban said. AWS is discussing the matter with the EU’s Article 29 working group on data protection, he said.

READ MORE: Brexit and Europe: Business as Usual

Britain’s decision to leave the EU could make using the planned London center more complicated for customers if the U.K. adheres to different rules than the rest of Europe about storing and safeguarding data. The Brexit process raises concerns that Europe’s new General Data Protection Regulation, approved in April and set to take effect in 2018, will no longer apply in the U.K. once it leaves the EU. If the U.K. needs to create its own set of protection rules it could complicate business in Europe for cloud providers such as AWS, Microsoft Corp.’s Azure service, and data businesses.

Customer Considerations

“We were considering using the U.K. one, mostly for U.K. customers,” said Charles Phillips, Chief Executive of Infor, a New York-based business software company that’s one of AWS’s biggest customers. “It’s less likely given what’s going on. I don’t want to rush in there and then have customers tell us to do something different.”

Phillips, a former high-ranking executive at Oracle Corp., said Infor plans to keep hosting British customers’ data from Amazon’s Dublin center, though he had hoped Amazon’s U.K. center would offer faster Web response times.

“Most of our customers we know are OK with Ireland,” he said. “We don’t know if they’re OK with the U.K.”

Orban said European customers that don’t want to tap computing capacity from the upcoming U.K. cluster of data centers could still host their applications in Amazon’s Frankfurt and Dublin locations.

Amazon’s cloud division, which the company says is on track for $10 billion in revenue this year, rents computing capacity and software that businesses can tap online instead of installing and maintaining their own servers. Amazon serves customers from 13 data-center clusters worldwide and plans to open four additional locations in the coming year.

“Everything new we’re building on AWS,” said Eric Bowman, vice-president of engineering at Zalando SE, the fast-growing Berlin-based Web apparel retailer. Each of its 110 developer teams has its own AWS account, which lets the company build new capabilities quickly without getting tangled in one another’s code or waiting weeks for new servers to arrive.

The U.K. cluster would offer EU customers “strong data sovereignty,” Amazon’s chief technology officer, Werner Vogels, said in a blog post last year. That’s an important issue in Europe, where regulations require data resides on computers in the EU, and many businesses, especially in Germany, insist it say in their own country.

Source: TheWHIR

SEE ALSO: VentraIP Grabs 4,000 Hosting Customers as Part of Servers Australia Deal

The deal will give Vocus a fiber backhaul network that covers 17,000 kilometers and connects capital cities in Australia to remote and regional areas, according to the statement. The company will also gain the NWCS project to build a 2,000 kilometer submarine cable from Darwin to Port Hedland that will service the mining and offshore oil and gas industries in Western Australia, and a 4,600-kilometer submarine cable project connecting Singapore, Jakarta and Perth.

The deal continues a wave of consolidation by Australia’s second-tier telecommunications providers as they try to compete with Telstra Corp., the largest mobile company. Last year, Vocus agreed to buy fiber-optics carrier Amcom Telecommunications Ltd. and also took control of rival M2 Group Ltd. in a A$1.93 billion deal.

Nextgen Networks is controlled by Ontario Teachers’ Pension Plan, while CIMIC, formerly known as Leighton Holdings Ltd., owns 29 percent.

Source: TheWHIR

SEE ALSO: 5 Cybersecurity Stories You Need to Know Now, June 27

If I wanted to use that Wi-Fi connection to reach the outside world, though, things deteriorated pretty quickly. I could search on Bing, but not Google. Sometimes my Bloomberg e-mail functioned OK, but Gmail never did. Evernote worked, Dropbox didn’t. And if I wanted to check Facebook or Twitter, or read something on a Western news site, or — God forbid — watch a show on Netflix, I was completely out of luck.

Such are the workings of the Great Firewall — the Chinese government’s way of keeping the free-for-all of the internet within bounds it finds comfortable. For most people in China, I get the sense that the firewall seldom interferes with their shopping and gaming and digital socializing. For Chinese internet companies, it may even be a net positive, providing a defense against the colonization by U.S.-based internet giants that has been experienced in most of the rest of the world.

READ MORE: Baidu Creates Own Indexes to Paint Picture of China’s Economy

For foreigners visiting or living in China, or for Chinese citizens trying to maintain business or personal relationships outside the country, it’s a different story. This isn’t my first visit to China, but it’s the first when I’ve tried to keep doing my job while here, and I can testify that the Great Firewall is a gigantic pain. Lots of China-based businesspeople I’ve talked to report similar aggravation.

There are workarounds. Virtual private networks that connect users directly to servers outside the country are a necessity for those aiming to remain connected to the outside world. But while the VPN I subscribe to has worked — slowly — about a third of the time at my hotel in Tianjin, it’s been completely blocked at the World Economic Forum meeting.

Cellular data networks are another option for visitors. It’s easy for Chinese mobile operators to tell which users are from other countries, so non-Chinese smartphones are allowed to bypass the firewall. But cellular is slower and can be expensive. Also, the fact that Chinese cellular operators can easily identify foreigners isn’t necessarily good news; some people buy phones just for China and discard them when they leave because they’re worried about inadvertently downloading spyware.

In past years, the World Economic Forum was allowed to bypass the Great Firewall and give participants at its summer Davos meetings unfettered internet access. But with the continuing tightening of control under President Xi Jinping, and lots of Chinese citizens at the meetings, that’s apparently no longer an option.

This is pretty remarkable, when you think about it. The Annual Meeting of the New Champions, now in its 10th year, is one of China’s biggest opportunities to showcase the country to the global elite. Yet the government is now perfectly willing to deny that global elite access to Google.

This strikes me as a useful indication of how China’s current leadership sees its relationship with the rest of the world. It wants to participate in globalization, but to do so entirely on its own terms. If that means it’s a place where it’s really difficult for outsiders to do business and live their lives, well, tough.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Source: TheWHIR

Of 208 organizations surveyed, 69 percent “experienced an attempted or realized data theft or corruption by corporate insiders” over the past 12 months, the survey found, compared to 57 percent that experienced similar risks from external sources. Media and technology firms, and enterprises in the Asia-Pacific region reported the highest rates — 77 percent and 80 percent, respectively.

READ MORE: Basic Security Training for Employees Not Enough to Stop Data Breaches: Report

“Everyone’s always known that part of designing security starts with thinking that your employees could be a risk but I don’t think anyone could have said it was quite that high,” Omar Abbosh, Accenture chief strategy officer, said in an interview in Tel Aviv, where he announced Accenture’s purchase of Maglan Information Defense & Intelligence Group, an Israeli security company.

Each year, businesses currently spend an estimated $84 billion to defend against data theft that costs them about $2 trillion — damage that could rise to $90 trillion a year by 2030 if current trends continue, Abbosh forecast. He recommended that corporations change their approach to cybersecurity by cooperating with competitors to develop joint strategies to outwit increasingly sophisticated cyber-criminals.

SEE ALSO: Shadow IT: Embrace Reality – Detect and Secure the Cloud Tools Your Employees Use

“There’s a huge business rationale to share and collaborate,” he said. “If one bank is fundamentally breached in a way that collapses its trust with its customer base, I could be happy and say they’re all going to come to me, but that’s a false comfort” because “it pollutes the whole sphere of customers because it makes everyone fearful,” he said.

Despite recent high-profile data breaches of Sony Corp., Target Corp. and the U.S. Office of Personnel Management, many corporations do not yet consider cybersecurity a top business priority, Accenture found. Seventy percent of the survey’s respondents said they lacked adequate funding for technology, training or personnel needed to maintain their company’s cybersecurity, while 36 percent said their management considers cybersecurity “an unnecessary cost.”

Source: TheWHIR