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Corporate America Fights Back Against (Chinese) Hackers

Rick Newman
The Exchange

We’ve heard all about American companies providing data to U.S. spy agencies; this has ruffled a lot of feathers lately. But there may be some good news in the secret partnerships between corporate America and the spooks in Washington.


Bloomberg reports that “thousands of technology, finance and manufacturing companies” routinely provide sensitive technological information to the government, to help with spying and counterespionage. Unlike the Prism and Blarney programs run by the National Security Agency to gather data from phone and Internet firms, the big corporate data-sharing programs don’t appear to be geared toward counterterrorism. And there’s no customer data involved, according to Bloomberg. Instead, Big Business and the U.S. government appear to be teaming up to defeat hackers, especially those sponsored by foreign governments. Think China.

Cross-border corporate espionage and government-sponsored hacking have become a booming, if mysterious, black-market business. Since the dawn of computers, governments have tried to penetrate each other’s networks as a routine part of Spy v. Spy. What’s new is a surge of electronic attacks against companies and other private-sector organizations, some out of mere mischief but many others intended to steal trade secrets and detect vulnerabilities in America’s electronic infrastructure.

A real concern

The Obama administration is so concerned about foreign hacking of U.S. companies that the White House issued a report earlier this year stating that “trade secret theft threatens American businesses, undermines national security, and places the security of the U.S. economy in jeopardy.” Among other threats, U.S. firms are now dealing with “an onslaught of computer network intrusions that have originated in China,” according to the report. Big companies such as Ford (F), DuPont (DD), General Motors (GM), Dow Chemical (DOW), Cargill, Motorola, the New York Times (NYT) and Wall Street Journal have been hacked, and since most firms don’t want such information to become public, the list of hacking victims is sure to be considerably longer.

It’s hard to trace computer attacks precisely, but many attacks originating in China are believed to come from special cyber units belonging to the Chinese military. A recent report by Mandiant, a northern Virginia cybersecurity firm, identified a Chinese military detachment known as Unit 61398 as one of the “most prolific” hacking groups in the world. The military link suggests China considers economic dominance a matter of national defense, raising the stakes for any western firms it targets.

For all the squealing about Chinese hacking, there’s been little public discussion of U.S. countermeasures or America’s own cyber espionage efforts, even though Washington’s cyber capabilities are presumably the best in the world. But now we’re seeing hints that America isn't exactly the passive, blameless victim of Chinese hacking that public reports suggest. Edward Snowden, the former contractor who leaked details of the NSA’s domestic-surveillance programs, told the South China Morning Post the United States conducts the same kind of hacking in China that American officials complain about Chinese hackers doing on U.S. networks. China is now asking for an explanation (which it's unlikely to get).

The partnerships described by Bloomberg involve firms such as Microsoft (MSFT), Intel (INCT), Google (GOOG) and many others that reportedly exchange data with the government that helps identify vulnerabilities in networks, plus ways to exploit those vulnerabilities. In exchange, those firms occasionally get information from the feds that can help them defend their own networks, including warnings of imminent threats. Since U.S. firms build and control much of the world’s electronic infrastructure, it’s obvious that insights from preeminent technical firms could give Washington an important edge in terms of defeating outside cyber attacks, and conducting their own.

A bigger advantage

It would provide an even bigger advantage if dozens of prominent U.S. firms could pool their relevant knowledge in some sort of clearinghouse that allowed analysts to probe for patterns and anomalies. "The more sharing, the better," says Laura Galante, an intelligence analyst with Mandiant. "The government or private industry alone isn’t going to be able to get the whole picture, but if you're able to share specific indicators, the fuller a picture you can paint." It’s also highly beneficial for government agents to have private-sector experts at their disposal, since even spies are subject to bureaucratic blockages that may be less of a problem at (some) private-sector firms.

There’s still a ton we don’t know about cooperation between corporate interests and intelligence agencies, and with anything secret, there’s more than enough room for abuse. Insider trading could take on a whole new meaning — for example, if secret information from government sources gave one company an advantage over another. And giving some business leaders immunity from prosecution — as the government seems to have done in order to make them more comfortable cooperating with spy agencies — could backfire if those people were to abuse such privileges, which has been known to happen.

Still, this is one revelation that seems to indicate the American establishment is fighting back against the growing threat posed by hackers. The less you hear of this in the future, the more effective it is likely to be.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.