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EU signals deeper investigation of Google Fitbit deal – Financial Times

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The EU is examining whether Google’s proposed $2.1bn takeover of the fitness-tracking company Fitbit will give the company more data to entrench its search engine and advertising businesses, as consumer groups called for the deal to be blocked.

EU regulators have sent two questionnaires, adding up to around 60 pages, asking Google and Fitbit’s rivals whether the deal will damage competition, disadvantage other fitness tracking apps in Google’s Play Store, or give Google more profiling data to improve its online search and advertising businesses.

The questionnaires also ask rivals to assess the impact of the deal on Google’s growing digital healthcare business.

Separately, 20 consumer groups, including Europe’s umbrella consumer organisation BEUC and the Consumer Federation of America, issued a warning about the deal on Thursday.

“Regulators must assume that Google will in practice utilise the entirety of Fitbit’s currently independent unique, highly sensitive data set in combination with its own, particularly as this could increase its profits, or they must impose strict and enforceable limitations on data use,” they said, in a joint statement.

The detail of the questions posed by the EU suggests that Brussels is gearing up for an extended investigation and may block the transaction, according to people with direct knowledge of the situation.

The EU has until July 20 to make a decision after the end of the initial phase of the investigation, and could waive the deal, extend the investigation or ask for concessions.

The Australian Competition and Consumer Commission raised concerns last month that the deal could lead to a strengthening of Google’s position.

“Past acquisitions by Google, of both start-ups and mature companies like Fitbit, have further entrenched Google’s position,” said Rod Sims, the Australian watchdog’s chair, last month. “The access to user data available to Google has made it so valuable to advertisers that it faces only limited competition.” 

The Australian authority said it is looking into the “uniqueness and potential value” that Fitbit’s data would give Google. 

“The risk is that Google would extend its empire of consumer data also into vital medical data and digital medical services undergo some kind of consumerisation rather than being available to the wider medical community,” said an antitrust expert in Brussels with direct knowledge of the deal.

At the time the deal was announced, Rick Osterloh, senior vice-president for devices and services at Google, said the company “will be transparent about the data we collect and why. We will never sell personal information to anyone. Fitbit health and wellness data will not be used for Google ads. And we will give Fitbit users the choice to review, move, or delete their data.”

Google said: “Throughout this process we have been clear about our commitment not to use Fitbit health and wellness data for Google ads and our responsibility to provide people with choice and control with their data.

“Similar to our other products, with wearables, we will be transparent about the data we collect and why. And we do not sell personal information to anyone.”

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Cyberattack exposes lack of required defenses on U.S. pipelines

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The shutdown of the biggest U.S. fuel pipeline by a ransomware attack highlights a systemic vulnerability: Pipeline operators have no requirement to implement cyber defenses.

The U.S. government has had robust, compulsory cybersecurity protocols for most of the power grid for about 10 years to prevent debilitating hacks by criminals or state actors.

But the country’s 2.7 million miles (4.3 million km) of oil, natural gas and hazardous liquid pipelines have only voluntary measures, which leaves security up to the individual operators, experts said.

“Simply encouraging pipelines to voluntarily adopt best practices is an inadequate response to the ever-increasing number and sophistication of malevolent cyber actors,” Richard Glick, the chairman of the Federal Energy Regulatory Commission (FERC), said.

Protections could include requirements for encryption, multifactor authentication, backup systems, personnel training and segmenting networks so access to the most sensitive elements can be restricted.

FERC’s authority to impose cyber standards on the electric grid came from a 2005 law but it does not extend to pipelines.

Colonial Pipeline, the largest U.S. oil products pipeline and source of nearly half the supply on the East Coast, has been shut since Friday after a ransomware attack the FBI attributed to DarkSide, a group cyber experts believe is based in Russia or Eastern Europe.

The outage has led to higher gasoline prices in the U.S. South and worries about wider shortages and potential price gouging ahead of the Memorial Day holiday.

Colonial did not immediately respond to a query about whether cybersecurity standards should be mandatory.

The American Petroleum Institute lobbying group said it was talking with the Transportation Security Administration (TSA), the Energy Department and others to understand the threat and mitigate risk.

THIN STAFFING

Cyber oversight of pipelines falls to the TSA, an office of the Department of Homeland Security (DHS), which has provided voluntary security guidelines to pipeline companies.

The General Accountability Office, the congressional watchdog, said in a 2019 report that the TSA only had six full-time employees in its pipeline security branch through 2018, which limited the office’s reviews of cybersecurity practices.

The TSA said it has since expanded staff to 34 positions on pipeline and cybersecurity. It did not immediately respond to a request for comment on whether it supports mandatory protections.

When asked by reporters whether the Biden administration would put in place rules, DHS Secretary Alejandro Mayorkas said it was discussing administrative and legislative options to “raise the cyber hygiene across the country.”

President Joe Biden is hoping Congress will pass a $2.3 billion infrastructure package, and pipeline requirements could be put into that legislation. But experts said there was no quick fix.

“The hard part is who do you tell what to do and what do you tell them to do,” Christi Tezak, an analyst at ClearView Energy Partners, said.

U.S. Representatives Fred Upton, a Republican, and Bobby Rush, a Democrat, said on Wednesday they have reintroduced legislation requiring the Department of Energy to ensure the security of natural gas and hazardous liquid pipelines. Such legislation could get folded into a wider bill.

The power grid is regulated by FERC, and mostly organized into nonprofit regional organizations. That made it relatively easy for legislators to put forward the 2005 law that allows FERC to approve mandatory cyber measures.

A range of public and private companies own pipelines. They mostly operate independently and lack a robust federal regulator.

Their oversight falls under different laws depending on what they carry. Products include crude oil, fuels, water, hazardous liquids and – potentially – carbon dioxide for burial underground to control climate change. This diversity could make it harder for legislators to impose a unified requirement.

Tristan Abbey, a former aide to Republican Senator Lisa Murkowski who worked at the White House national security council under former President Donald Trump, said Congress is both the best and worst way to tackle the problem.

“Legislation may be necessary when jurisdiction is ambiguous and agencies lack resources,” said Abbey, now president of Comarus Analytics LLC.

But a bill should not be seen as a magic wand, he said.

“Standards may be part of the answer, but federal regulations need to mesh with state requirements without stifling innovation.”

 

(Reporting by Timothy Gardner; Editing by Cynthia Osterman and Marguerita Choy)

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U.S. senator asks firms about sales of hard disk drives to Huawei

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A senior Republican U.S. senator on Tuesday asked the chief executives of Toshiba America Electronic Components, Seagate Technology, and Western Digital Corp if the companies are improperly supplying Huawei with foreign-produced hard disk drives.

Senator Roger Wicker, the ranking member of the Commerce Committee, said a 2020 U.S. Commerce Department regulation sought to “tighten Huawei’s ability to procure items that are the direct product of specified U.S. technology or software, such as hard disk drives.”

He said he was engaged “in a fact-finding process… about whether leading global suppliers of hard disk drives are complying” with the regulation.

(Reporting by David Shepardson, Editing by Rosalba O’Brien)

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Colonial Pipeline hackers stole data on Thursday

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The hackers who caused Colonial Pipeline to shut down on Friday began their cyberattack against the top U.S. fuel pipeline operator a day earlier and stole a large amount of data, Bloomberg News reported citing people familiar with the matter.

The attackers are part of a cybercrime group called DarkSide and took nearly 100 gigabytes of data out of Colonial’s network in just two hours on Thursday, Bloomberg reported late Saturday, citing two people involved in the company’s investigation.

Colonial did not immediately reply to an email from Reuters seeking comment outside usual U.S. business hours.

Colonial Pipeline shut its entire network, the source of nearly half of the U.S. East Coast’s fuel supply, after a cyber attack that involved ransomware.

 

(Reporting by Aakriti Bhalla in Bengaluru; Editing by Himani Sarkar)

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