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Theranos investors who pledge not to sue get Elizabeth Holmes’ shares...

After scandals and lawsuits, hobbling company is said to have $150 million left.

Volkswagen boss won’t rule out sale to Fiat-Chrysler

CEO Matthias Mueller has changed his tune from just a week ago.

EPA: Fiat Chrysler diesels have software to thwart emissions controls

Enlarge / STERLING HEIGHTS, MI - AUGUST 26: Fiat Chrysler Automobiles CEO Sergio Marchionne speaks at an event celebrating the start of production of three all-new stamping presses at the FCA Sterling Stamping Plant August 26, 2016 in Sterling Heights, Michigan. (Photo by Bill Pugliano/Getty Images)Bill Pugliano reader comments 89 Share this story On Thursday the US Environmental Protection Agency (EPA) announced that Fiat Chrysler (FCA) diesel vehicles were found to have "at least eight" instances of undisclosed software that modified the emissions control systems of the cars.

The vehicles implicated in the EPA's Notice of Violation (NOV) include 2014, 2015, and 2016 diesel Jeep Grand Cherokees, as well as Dodge Ram 1500 trucks with 3.0-liter diesel engines.

The allegations involve 104,000 vehicles, the EPA said. The EPA says it's still in talks with FCA and hasn't ordered the company to stop selling affected cars yet, nor is it officially calling the software a "defeat device" just yet until FCA provides a more detailed explanation. In a press conference, agency officials said that the undisclosed software was discovered after September 2015, when the EPA and the California Air Resources Board (CARB) began doing additional testing on vehicles in the wake of the Volkswagen Group scandal. VW Group was discovered to have almost 600,000 diesel vehicles on US roads with some kind of illegal software on them.

The software allowed VW Group's cars to pass emissions testing under lab conditions but would reduce the effectiveness of emissions controls under real-world driving conditions, causing the cars to emit nitrogen oxide (NOx) far in excess of federal limits. According to the EPA, FCA's undisclosed software works similarly, too.

EPA Assistant Administrator Cynthia Giles told press Thursday morning that the "software is designed such that, during the emissions test, Fiat Chrysler’s cars meet the standards," for NOx emissions. However, the "software reduces the effectiveness of emissions controls when driving at high speed or for long durations," she added. These kinds of workarounds are not uncommon for car makers to use and are not illegal if they're properly disclosed and approved by the EPA.

But efforts to meet emissions standards have driven automakers to install undisclosed devices illegally for decades.
In fact in the 1970s, Chrysler—along with GM, Ford, American Motors, Nissan, and Toyota—was reprimanded by the EPA for installing defeat devices in its cars to "defeat the effectiveness of emission control systems under conditions not experienced during EPA’s certification testing." In some instances the defeat devices helped the cars start more easily in cold weather, in others, time-delay switches cut the emissions control systems while the cars shifted from low to high gears. In Europe, too, rules allow diesel vehicles to cut the emissions control system under certain conditions like cold weather.

Automakers have toed a line, though, using emissions control software where "cold" weather means as high as 64 degrees Fahrenheit. Giles noted during the EPA's press conference that the agency has tested other diesel vehicles since the Volkswagen scandal was made public and found no violations. "It is by no means impossible to make a clean diesel vehicle that meets our standards," she said. In a statement (PDF), FCA said it would continue to work with the EPA to resolve the issue. "FCA US diesel engines are equipped with state-of-the-art emission control systems hardware, including selective catalytic reduction (SCR).

Every auto manufacturer must employ various strategies to control tailpipe emissions in order to balance EPA’s regulatory requirements for low nitrogen oxide (NOx) emissions and requirements for engine durability and performance, safety and fuel efficiency.

FCA US believes that its emission control systems meet the applicable requirements." FCA added that it had spent "months providing voluminous information" to the EPA and other regulators.

The company said it had also made proposals to fix the issues, including "developing extensive software changes to our emissions control strategies that could be implemented in these vehicles immediately to further improve emissions performance." FCA has not yet been sued, but the EPA says it could be "liable for civil penalties and injunctive relief for the violations alleged in the NOV [Notice of Violation]." Correction: This story originally said the EPA found the software on the FCA diesels was illegal.
In fact, the EPA is still determining whether the software itself was illegal. However, Fiat Chrysler violated EPA rules by not disclosing the software.

10 Things InfoSec Pros Can Celebrate About 2016

There were a few items that passed for good news this year. Let's not rehash all the miserable DDoSes of the past several months or predict the horrors IoT has in store for us in the months to come.

For now let's snuggle up with some hot chocolate and think comforting thoughts. Let's prepare our champagne toasts for New Year's Eve, and celebrate the good times (or what passed for good times in this industry) from 2016:  Feds And Hackers Became Friends: This year, the federal government opened its doors to vulnerability researchers, establishing their very first bug bounty program, "Hack the Pentagon." After paying 117 hackers anywhere from $100 to $15,000, it went on to create Hack The Army too.  Apple Finally Launched a Bug Bounty Program: Perhaps jealous of how cool the federal government is, Apple finally came around to launching a bug bounty program.
It wasn't just them.

Fiat Chrysler also did, showing the increasing recognition by the automotive industry about the importance of cybersecurity.  Google Added Kernel-Level Protections To Android: According to an HP study earlier this year, the Android operating system is the second-most heavily targeted operating system (after Windows), with the second-most vulnerabilities, after Windows.

Fortunately, in July, Google announced new measures to increase memory-level protections and to reduce the overall attack surface of Android’s Linux kernel. The Worst Security Laggards Got Slapped For Their Bad Security: It's no secret that breaches cost companies a pretty penny, but so often the costs are residual -- lost business, breach notifications, fines for late breach notifications -- but not punishments for the bad security itself.

This year, however there were some companies who felt an extra sting for failing to protect their customers in the first place.  Morgan Stanley was hit with a $1 million fine by the SEC.

Catholic Health Care Services got stuck with a $650,000 fine for a HIPAA violation.

And Ruby Corp., which runs the website for breached online dating site Ashley Madison, was found of lax security and agreed to pay a multi-state and Federal Trade Commission settlement of $17.5 million   Some Old Business Got Taken Care Of: Josh Samuel Aaron, one of the alleged masterminds behind the monstrous JP Morgan breach /stock manipulation case of 2014, was indicted in November 2015; he was eventually arrested this month.

The US auctioned off another $1.6 billion in Bitcoin forfeited from Silk Road and other illegal exchanges.    Someone Stood Up To Ransomware Operators: Despite most likely losing money in the process, congratulate the San Francisco Municipal Transit Agency (SFMTA) for sticking up to ransomware operators.
Instead of paying their $73,000 ransom demands, SFMTA gave passengers free rides at affected stations for days, while they dealt with the situation.

Take that, ransomware operators! Some Privacy Victories Were Made (Among the Defeats):  If you ignore some other major threats to privacy, (like the signing of the UK's Snoopers’ Charter) there were some things for privacy advocates to be happy about.

The EU's General Data Protection Directive was officially approved.

And after a long, long, long haul, Microsoft finally won a landmark case over the US Department of Justice that prevented the DoJ from subpoenaing emails of Irish citizens located on Microsoft servers located in Ireland. The Federal Government Finally Decided It Needed a CISO: Sure, maybe the job description and pay grade aren't super-attractive, but nevertheless there is now someone officially charged keeping the federal government's IT systems secure. President Obama called for the creation of the new position this year and for increasing cybersecurity spending by 35 percent in fiscal year 2017, to $19 billion as part of a new Cybersecurity National Action Plan. Security Vendors Started Taking Responsibility For Their Products: Security companies are beginning to make stronger committments to customers that yes, in fact, their products will actually provide security.
SentinelOne upped the ante this year, by offering a $1 million guarantee that it could stop or remediate ransomware. Still Plenty of Job Security:  Half of cybersecurity pros are solicited weekly about a new job, according to an October report by Enterprise Strategy Group (ESG) and the Information Systems Security Association (ISSA). (That doesn't happen in many, or any, fields, take it from me.) The average American chief information security officer is making a cool $273,033 per year, according to a new study by Security Current.

The need for more security people is so great that the industry is always looking for ways to clear a path for more people to enter the field, to improve diversity, attract more women to the job.
It's now possible even to just be a full-time "super bug hunter," taking full advantage of bug bounty programs. So chin up, cybersecurity industry.

There might have been a lot of rough moments throughout 2016, but it wasn't all bad. Sara Peters is Senior Editor at Dark Reading and formerly the editor-in-chief of Enterprise Efficiency. Prior that she was senior editor for the Computer Security Institute, writing and speaking about virtualization, identity management, cybersecurity law, and a myriad ...
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Trump, our next president, promised to block AT&T/Time Warner merger

Enlarge / AT&T will own a bunch of new media properties if it is allowed to buy Time Warner.Aurich Lawson reader comments 86 Share this story Donald Trump’s victory in the presidential election might be big trouble for AT&T’s attempt to buy Time Warner, and it could even threaten Comcast’s 5-year-old acquisition of NBCUniversal. We can’t be certain that Trump will follow through on statements he made during his campaign or whether the people he appoints as regulators will achieve Trump’s desired outcomes. But we do know that just a few weeks ago, Trump said he intends to block the AT&T/Time Warner deal and wants the government to consider breaking up Comcast and NBC. In a speech in October, Trump declared his opposition to both mergers while discussing his dislike of how media organizations covered the election. News organizations were trying to “suppress my vote and the voice of the American people,” Trump said. “As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few,” he said. Shortly after, Trump declared that Comcast shouldn’t be allowed to own NBC. “Comcast's purchase of NBC concentrated far too much power in one massive entity that is trying to tell the voters what to think and what to do,” Trump said. “Deals like this destroy democracy and we'll look at breaking that deal up and other deals like that. That should never, ever have been approved in the first place, they're trying to poison the mind of the American voter." But now that Trump has won, it isn't clear that his administration will follow through. “It’s just impossible to know,” Harold Feld, senior VP of consumer advocacy group Public Knowledge, told Ars today. “Trump has said a lot of contradictory things. There are things that he says that he may not have the capacity to do, but it's impossible to know at this point how real his populist rhetoric is going to be in terms of policy.” The conservative wing of the Republican party that would be expected to approve AT&T/Time Warner "lost very thoroughly in the primaries," Feld noted. But the Republicans serving on the FCC today, Ajit Pai and Michael O'Rielly, don't seem likely to lead opposition to the merger. "The ideal FCC chairman or commissioner for Trump would have to be somebody who is pro-regulatory in a lot of ways and anti-regulatory in a lot of ways," Feld said. At this point, the merger's fate in Washington is "a big maybe," he said. Doug Brake, a telecommunications policy analyst at the Information Technology & Innovation Foundation, agreed that Trump's campaign statement isn't necessarily a guarantee that he will try to stop the merger. "Part of Trump’s election strategy was staying unpredictable—it was hard to pin him down on even some of his most prominent policy positions," Brake told Ars. "So it is unclear how strongly he feels about an AT&T/Time Warner tie-up or really any other telecommunications issue. That said, he was quite clear in his distaste for the merger, and no doubt the odds of its successful completion are lower this morning than yesterday." AT&T's $85.4 billion purchase of Time Warner—a company that is completely separate from the similarly named Time Warner Cable—will be reviewed by the Department of Justice and likely by the Federal Communications Commission. Even if the DOJ doesn't have a strong legal case against the merger, after Trump nominates an attorney general he could issue “instructions to try to pursue something anyway,” Feld said. But there is a big difference between Trump opposing a merger and actually blocking it. "A president cannot simply block a merger by fiat," Brake said. "The Department of Justice would have to bring suit and win in court, or if it does end up in front of the FCC, a Trump chairman could potentially send it to an administrative law judge or propose such onerous conditions that the parties abandon the deal. Either way, this will not be an immediate process." When contacted by Ars about Trump’s opposition to the merger, AT&T pointed to comments made this morning by AT&T CFO John Stephens. “From a company perspective, we really look forward to working with President-elect Trump and his transition team,” Stephens said. “His policies and his discussions about infrastructure investment, economic development, and American innovation all fit right in with AT&T's goals.” The AT&T/Time Warner deal “is all about innovation and economic development, consumer choice, and investment in infrastructure with regard to providing a great 5G mobile broadband experience,” Stephens said. Forcing Comcast and NBC to split is a tall order Breaking up Comcast/NBC would be more complicated than stopping AT&T/Time Warner because the companies already merged in 2011 after a lengthy review by the DOJ and FCC, which imposed conditions to mitigate the merger’s potential effects on competitors. The most famous government-initiated telecom breakup in the US, of course, was the breakup of the AT&T Bell System during President Ronald Reagan’s first term. The Bell System breakup was initiated by the DOJ, which could theoretically take the same role against Comcast/NBC under Trump. “AT&T is the classic breakup case,” economist Hal Singer, a senior fellow at George Washington Institute of Public Policy, told Ars. “You could go after [Comcast/NBC]. But what's weird is [Trump] would have to appoint folks who kind of fit in that populist framework and it doesn’t seem to me that he’s going there.” For example, Trump hired Jeffrey Eisenach of the American Enterprise Institute to help him develop a telecom plan during his campaign. Eisenach is described by Politico as "a crusader against regulation," and he's a staunch opponent of net neutrality rules. “He's been appointing people who are fairly traditional conservatives, but he's been running on this populist notion of going after big companies and concentration of media,” Singer said. The fate of AT&T/Time Warner will also depend heavily on Trump's appointments, he said. It's not just the DOJ that could take aim at Comcast/NBC, Feld said. The FCC could break the company up by imposing rules that limit telecom and media consolidation, he said. “There are a number of means through which the FCC could, by rulemakings, force open the programming contracts, limit the size of the cable operators, go after the bundle of services with rules about cross-ownership of broadcast stations and cable and programming networks and broadband,” Feld said. But Trump is also a declared opponent of net neutrality rules who has promised to issue a temporary moratorium on federal regulations in general. In the telecom policy world, regulators who oppose net neutrality and increased regulation of ISPs aren’t usually the ones trying to stop big telecom mergers. To break up Comcast and NBC, “you’d have to have an FCC that was much more activist than the [Tom] Wheeler FCC," Feld said. Comcast declined comment when contacted by Ars. Populist rhetoric from Trump could end up giving way to a more traditional antitrust review that weighs the competitive effects of a merger. Singer pointed out in a recent article on AT&T/Time Warner that “in the world inhabited by regulators, antitrust lawyers, and economists… merger policy is based on the strict application of rules and precedent to the specific facts of the case.” But it’s still possible that Trump could appoint a DOJ chief who is willing to pursue Trump’s “personal vendetta” against certain media organizations, Singer said. In the same speech in which Trump criticized telecom mergers, he took aim at Amazon’s relationship with The Washington Post. “Amazon, which through its ownership controls The Washington Post, should be paying massive taxes it’s not paying," Trump said. "It’s a very unfair playing field and you see what that's doing to department stores all over the country." Amazon does not own the Post, but the paper is owned by Amazon founder and CEO Jeff Bezos. In any case, Trump’s criticism about Amazon and the Post “is not a traditional antitrust concern. It sounds like more of a personal vendetta,” Singer said. FCC Chairman Wheeler, a Democrat, is likely to step down from his chairmanship after Trump is inaugurated. Trump would then appoint a successor, giving Republicans a majority on the FCC. We’ll have more coverage of the upcoming transition in the near future.

Don’t let banks fool you, the blockchain really does have other...

Gov.UK missing out on the real value? We're shocked, we tell you...
Shocked! Analysis It is a truth universally acknowledged that executives in the financial sector are capable of making the most exciting innovations boring, and in this respect their approach to the blockchain has been exemplary. During 2008's financial crash, a nine-page paper titled Bitcoin: A Peer-to-Peer Electronic Cash System [PDF] was published to the cryptography and policy mailing list at metzdowd. The paper, attributed to Satoshi Nakamoto, offered cypherpunks and anarcho-capitalists a chance to realise their fantasy of a decentralised digital money; in practice, fiat currency backed not by government but by cryptography and collective consent. You know this story: it was going to change the world, and then it wasn't, and around the time bankers realised it wasn't going to change anything they struck upon the notion of getting it to work for them - though with very little idea how. According to Gartner's hype-cycle, this sets blockchain technology near the peak of inflated expectations at the moment, ahead of 4D printing (What? - Ed) but behind virtual reality. Speaking to The Register, fintech consulant Diana Biggs said it seemed "pretty evident that blockchain is very hyped at the moment" and noted a "marked change" from even two years ago, "when no financial institution or professional services firm would speak about it openly." A lot of the discussion (or hype) in the space is also quite surface level, outside of specialist circles, which I would attribute to a number of factors, including the early stage of the technology, the complexity and a lack of understanding [about the technology itself.] Late last week, almost eight years after the Bitcoin paper's publication, Rupert Scofield admitted to The Register over a breakfast briefing in Soho that he really didn't understand what the blockchain was, nor its relationship to Bitcoin, but he believed it was important for fintech companies to look into it. Scofield, the president of Finca International — a microfinance business which seeks to make small loans to businesses in the developing world — is not the first person to be as bewildered at what the business case for the blockchain is as he was excited one could be found. Blockbuster cool Earlier this year, even Blighty's Chief Scientist could be caught advocating that a GDS-built blockchain in the UK could help Her Majesty's Government “collect taxes, deliver benefits, issue passports, record land registries, assure the supply chain of goods and generally ensure the integrity of government records and services.” Sir Mark Walport's 88-page report made little mention of how this would actually be of greater business value for the cited use-cases than a simple transactional database.

Even Scofield's notion of using the blockchain for Finca's “back room” would be obviously better handled by MySQL – something the CEO acknowledged. Yet the hype regarding the blockchain remains. Earlier this year, London-based fintech company GovCoin Systems partnered with Barclays, RWE npower and University College London to trial blockchain tech for the Department for Work and Pensions (DWP).

This trial was subsequently slammed by the Open Data Institute, although it did so on privacy grounds. Painfully slow and expensive? We must have it A more pointed criticism, however, may be the unsuitability of the blockchain to store or process payments at all, because it is very slow and very expensive.
In recording every Bitcoin transaction that has ever occurred, forever, it is meeting the business necessity of establishing trust and user belief in that digital currency. The blockchain prevents double-spending in digital currencies by ensuring that everyone knows where every Bitcoin is all of the time.

Transactions of Bitcoin take place by updating the blockchain so everyone knows that the Bitcoin in question is located somewhere new, with cryptographic hash values computed to validate its location. While this novel method of preventing double-spending has been applauded, the protocol regarding the distribution of information along the blockchain also limits transactions to seven per second.

Compared with the thousands of transactions per second conducted by the payments company VISA, this is crippling quality for. Suggestions for increasing the speed of Bitcoin transactions are regular subjects of debate in the Bitcoin community, but there may always be a critical limit to the speed of transactions as a product of the blockchain's trust requirements. As there is no need to require so much trust from the DWP or any other government department, these transaction limits may be improved — but when trust isn't an issue, the business value of a distributed ledger also seems to evaporate. A statement emailed to The Register after Friday's breakfast briefing with Finca, and attributed to Scofield, accepted that “the financial sector has not properly come to terms with the opportunities that blockchain might present to businesses, and financial institutions need to put a lot more energy into bringing in experts who can make sense of the business case in a rational and sensible way.” A blockchain advisor at Secure Trading, Mustafa Al-Bassam, who is also a doctoral researcher at UCL, told The Register that “sometimes industry receives investment because investors are excited by the buzzwords, despite the fact that blockchain might be incompatible with what they want". Al-Bassam added, “There is large amount of interesting innovation happening in Industry with blockchain and smart contract technology. “For instance, some companies have been looking at smart contracts for financial instruments such as loans, or using a blockchain for inter-bank settlement.

These use cases could be more economically efficient than traditional approaches by removing administration costs or middlemen that take a fee. “Apart from financial use cases of this technology, there are also use cases for internet security,” he said. “For example, the transparency property of distributed ledgers make it quite useful for certificate transparency to make rogue certificates easily detectable.” Not that this has stopped the big corporations from having a go, with Microsoft offering a blockchain-as-a-service product on Azure, and IBM open-sourcing its own blockchain code earlier this year too. Earlier this year, Gartner fellow Ray Valdes told The Register that 2016 was “the year of pointless blockchain projects.” He added that IBM and Microsoft's blockchain-as-a-service efforts were confusing and missed the business-case yet again.

Centralised blockchain hubs defeated the trust problem that the blockchain was invented to solve. Valdes said it was futile trying to pick winners in today's saturated blockchain hypezone because the zone was at a stage similar to that of the web in 1995, back when the first wave of innovators started to build services and win millions of customers. Potential use-cases exist, as Al-Bassam noted, but they don't seem to be on the market yet. Biggs told The Register that her personal opinion was that "there is exciting potential for this technology, but perhaps not in the ways most people think.

And ultimately, new or old technology, it will all come down to business processes, policy and regulation to define what changes and benefits we will get out of this." She added: "In terms of a new underlying protocol, that will also depend on consensus and adoption, and to a much greater extent than in the early days of the internet as we are today more cognisant of the enormity of the potential impact of such technologies and thus more committed to trying to get it right." ®

Apple must pay Ireland $14.5 billion in taxes, rules European Commission

Andrew Cunninghamreader comments 157 Share this story BRUSSELS—Europe’s competition chief has ordered Ireland to reclaim €13 billion (£11.1 billion/$14.5 billion) in back taxes from Apple. It comes despite the US treasury department warning last week that it would “consider its options” in such an eventuality. Speaking at the European Commission’s headquarters in Brussels on Tuesday, Margrethe Vestager said: “Member states cannot give tax benefits to selected companies—this is illegal under EU state aid rules." The investigation, which started in 2014, has technically not found Apple guilty of wrongdoing. Rather it is a judgment that the so-called sweetheart tax deals Apple received from Ireland constitute illegal state aid. Because the commission can order recovery of illegal state aid for up to 10 years before first request for information, Ireland must now recover the unpaid taxes from Apple for the years 2003 to 2014, plus interest. “This is not a penalty, it is unpaid taxes to be paid,” said Vestager who was scathing about Apple’s activities. “The so-called ‘head office’ did no business.
It had no employees, no premises.

But under the tax ruling the so-called head office was attributed all the company’s profits for sales throughout Europe Africa, Middle East, and India,” she added. “Tax rulings cannot endorse a method that fails to reflect economic activity or reality, for that matter,” the commissioner said. Brussels' officials said that Ireland allowed Apple to pay an effective corporate tax rate of one percent on its European profits in 2003 down to 0.005 per cent in 2014.

These were determined by tax rulings granted in 1991 and 2007.

This tax ruling was terminated in 2015. “It is for the Irish authorities to determine the exact amount—working out the interest due—and the modalities of reclamation,” said Vestager. However she stood by the massive €13 billion figure: “There is no discretion for me to choose, it is based on the facts and I hope that if it goes to court it will be upheld as it is based on facts.” Apple established two companies—Apple Operations Ireland and Apple Sales International—but almost all sales profits recorded by these two entities were attributed to a "head office" that Vestager said “existed only on paper and could not have generated such profits,” adding that the “situation did not correspond to economic reality.” Apple Sales International and Apple Operations Europe did make payments to Apple in the US to fund research and development of around $2 billion a year. The amount Apple must pay could be reduced if the US Internal Revenue Service (IRS) determines that the Irish subsidiaries should dish out a larger amount to Apple US to pay for research and development. How much it might be reduced by is unclear, however. “The details on this can be quite difficult to assess, because this is up to the US authorities,” Vestager said. The commission estimates that around €187 billion of profits are not repatriated to the US. “Therefore, only a small percentage of Apple profits were taxed in Ireland, and the rest was taxed nowhere,” it said. Apple's boss Tim Cook, in a lengthy statement rebuffing the ruling, accused the European Commission of trying "to rewrite Apple’s history in Europe, ignore Ireland’s tax laws, and upend the international tax system in the process." He added: The opinion issued on August 30 alleges that Ireland gave Apple a special deal on our taxes.

This claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals. We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don't owe them any more than we've already paid. The commission’s move is unprecedented and it has serious, wide-reaching implications.
It is effectively proposing to replace Irish tax laws with a view of what the commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe. Cook added that Apple would appeal against the ruling, adding: "We are confident that the commission’s order will be reversed." He claimed that the iPhone maker had been singled out by Brussels' officials.

Cook said: In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States.

European companies doing business in the US are taxed according to the same principle.

But the commission is now calling to retroactively change those rules. Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe. Ireland has also said it will appeal against the decision in Europe's courts.

The country's finance minister, Michael Noonan, said he “profoundly” disagreed with the commission’s findings. He said it was “necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.” He added: “It is important that we send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment.” Vestager said there were "many ways for countries to encourage companies to invest in Europe.
It is up to Ireland whether they want to challenge [the ruling] or not." However, she also invited other jurisdictions to look at the commission’s findings to see if they believe Apple owes profits elsewhere.
Such a situation could provoke a free-for-all where other member states vie for a slice of the apple. “This is not about transfer pricing, it is about allocation of profits so it is different to the decisions on Starbucks and Fiat,” Vestager told reporters. The US treasury department will also look closely at the decision to evaluate if Apple’s US tax liability is reduced. “This would effectively constitute a transfer of revenue to the EU from the US government and its taxpayers,” warned a treasury white paper last week. Meanwhile, the commission continues to investigate a similar case relating to Amazon's tax structure. This story was updated after publication with comment from Apple CEO Tim Cook. This post originated on Ars Technica UK

AT&T doesn’t want to repay money it got from alleged overcharges

Mike Mozartreader comments 11 Share this story AT&T is fighting a recent punishment handed down by the Federal Communications Commission. Last month, the FCC issued a Notice of Apparent Liability (NAL) that says AT&T overcharged the Florida school districts of Orange and Dixie by nearly 400 percent. AT&T filed its response today, saying that there is "no legal or factual basis for liability against AT&T." The phone service in question is paid for by US citizens through surcharges on phone bills.

Those surcharges fund the E-rate program that subsidizes telecommunications for schools and libraries. Under this program, the FCC says AT&T is required to charge schools and libraries the lowest available rates.

The commission says AT&T should repay $63,760 it improperly received from the FCC in subsidies and pay an additional fine of $106,425. AT&T argues that it wasn't actually required to charge the school districts the lowest available price, because the school districts decided to buy service on a month-to-month basis instead of signing one-year contracts. The FCC Enforcement Bureau "alleges that AT&T should have provided two school districts rates based on one-year contracts despite the fact that the schools were buying services on a month-to-month basis," AT&T wrote in a blog post describing its opposition to the fine. "Contract term is a regular and routine distinction in rates, and the Commission has previously expressed the view that length of contract is a valid basis to price services differently among customers.
In this case the school districts at issue never asked for annual contracts, never signed annual contracts, and did not behave as though they had annual contracts." The school districts also chose not to purchase service through Florida's E-rate consortium, which gets a lower rate by combining the purchasing power of multiple agencies and organizations, AT&T said.

Besides that, AT&T says the FCC failed to act before the statute of limitations was up. "Sadly, we are seeing rulemaking via Enforcement Bureau fiat far too often," AT&T wrote. The company is also fighting a $100 million fine the FCC proposed after accusing AT&T of throttling the wireless Internet connections of customers with unlimited data plans without adequately notifying the customers about the reduced speeds. That case illustrates just how long the FCC takes to collect: the FCC proposed the $100 million fine in June 2015, and AT&T filed a dispute the next month.

An FCC spokesperson told us today that "the matter is still in process at the FCC." AT&T told us that it is "still awaiting a response" to its rebuttal. Settlements are common, but if the sides can't agree, the commission can vote to assess a fine with a formal Forfeiture Order.

US sends nastygram to European Union over alleged Apple tax dodging

EnlargeSnow White, Disney Films reader comments 47 Share this story Apple's battle with the European Union’s competition watchdog has been backed by the US government, which on Wednesday waded into the complaint over the iPhone maker's tax arrangements. The US treasury warned in a white paper that Brussels' ongoing investigation into Apple’s tax deal with Ireland could “create an unfortunate international tax policy precedent.” On Thursday, the European Commission responded that there was “no bias” against US companies. After two years of investigations, antitrust chief Margrethe Vestager is expected to issue a decision on allegations of tax dodging by Apple in the autumn. The commission is considering whether the company used so-called “transfer pricing arrangements” to move profits around in order to avoid tax.
Ireland is implicated in letting Apple pay a tiny amount of tax.

Technically, this means that it may have benefited from illegal state aid. “Tax rulings may involve state aid within the meaning of EU rules if they are used to provide selective advantages to a specific company or group of companies,” the commission states. But the US treasury warned that Vestager's office was in danger of overstepping its bounds “beyond enforcement of competition and state aid law under the TFEU [Treaty on the Functioning of the EU] into that of a supra-national tax authority.” It said it was considering “potential responses should the commission continue its present course,” adding: “a strongly preferred and mutually beneficial outcome would be a return to the system and practice of international tax cooperation that has long fostered cross-border investment between the United States and EU member states.” Vestager has already ordered the payment of more than €20 million in back taxes from Starbucks and Fiat Chrysler over similar tax deals with the Netherlands and Luxembourg, and Ireland could be instructed to reclaim up to tens of billions of dollars from Apple. The US government's bean counters are worried about the crackdown, however: There is the possibility that any repayments ordered by the commission will be considered foreign income taxes that are creditable against US taxes owed by the companies in the United States.
If so, the companies’ US tax liability would be reduced. To the extent that such foreign taxes are imposed on income that should not have been attributable to the relevant member state, that outcome is deeply troubling, as it would effectively constitute a transfer of revenue to the EU from the US government and its taxpayers. Put another way, the US treasury appears to be saying: "we get to tax our multinationals, not the EU." Apple CEO Tim Cook has always denied any wrongdoing. The commission has also been pursuing a similar investigation against Amazon in Luxembourg and has warned that other cases may be on the way. “A substantial number of additional cases against US companies may lead to a growing chilling effect on US-EU cross-border investment,” the treasury hit back. On Thursday, the commission's spokesperson, Alexander Winterstein, said that it had taken note of the white paper, before drily saying that EU state aid rules have been in place for years. “With regard to the insinuation of bias, let me repeat what commissioner Vestager has been saying, which is that EU law and competition rules apply indiscriminately to all companies operating in Europe, whether they are big companies or small companies, whether they are companies that are European or companies from outside Europe.

There is absolutely no trace of a bias here,” he added. This post originated on Ars Technica UK

Almost every Volkswagen sold since 1995 can be unlocked with an...

Frank Derksreader comments 64 Share this story Over at Wired, Andy Greenberg reports that security researchers have discovered how to use software defined radio (SDR) to remotely unlock hundreds of millions of cars. The findings are to be presented at a security conference later this week and detail two different vulnerabilities. The first affects almost every car Volkswagen has sold since 1995, with only the latest Golf-based models in the clear. Led by Flavio Garcia at the University of Birmingham in the UK, the group of hackers reverse-engineered an undisclosed Volkswagen component to extract a cryptographic key value that is common to many of the company's vehicles. Alone, the value won't do anything, but when combined with the unique value encoded on an individual vehicle's remote key fob—obtained with a little electronic eavesdropping, say—you have a functional clone that will lock or unlock that car. VW has apparently acknowledged the vulnerability, and Greenberg notes that the company uses a number of different shared values, stored on different components. The second affects many more makes, "including Alfa Romeo, Citroën, Fiat, Ford, Mitsubishi, Nissan, Opel, and Peugeot," according to Greenberg. It exploits a much older cryptographic scheme used in key fobs called HiTag2. Again it requires some eavesdropping to capture a series of codes sent out by a remote key fob. Once a few codes had been gathered, they were able to crack the encryption scheme in under a minute. Similar techniques have been linked to a number of car thefts, including most recently in Houston. It seems the power of 1990s-era automotive-grade encryption is helpless in the face of $40 Arduinos and SDR.

Jeep Hackers Return With New Tricks

Jeep parent company Fiat Chrysler Automobiles, meanwhile, says not to worry. A year after Charlie Miller and Chris Valasek disclosed a major security vulnerability that could allow hackers to remotely hijack your Jeep, the infamous auto hackers are a...

Family of Star Trek actor Anton Yelchin sues Fiat Chrysler for...

Gary Dordickreader comments 106 Share this story The family of the late Star Trek actor Anton Yelchin filed a wrongful death lawsuit Tuesday against Fiat Chrysler (FCA), alleging that because of a "defective design and/or manufacture" on his 2015 Jeep, the 27-year-old was killed. According to the lawsuit, Yelchin’s 2015 Jeep Grand Cherokee had a defective monostable gear selector. Last month, Yelchin parked his Jeep at the top of his steep driveway at his home in Studio City, California, believing he had put it properly into park. However, the car seems to have rolled down the driveway quickly, pinning him to the gate, trapping him there, and eventually killing him. The civil complaint, filed in Los Angeles County Superior Court, says that not only was Yelchin’s 2015 Jeep affected, but as family lawyer Gary Dordick noted: As well as the design and/or manufacture of the Subject Gear Selector were defective in that the Subject Gear Selector has an unfamiliar movement that is not intuitive and that provides poor tactile and visual feedback to drivers, increasing the potential for unintended gear selection and vehicle rollaway.

Drivers could exit these vehicles when the engine is running and the transmission is not in PARK, resulting in unattended vehicle rollaway.

Further, the Subject Vehicle - and these other certain vehicles, including the 2012-2014 Dodge Charger, 2012-2014 300, 2014 Dodge Durango, 2014-2015 Jeep Grand Cherokee failed to include sufficient rollaway prevention features as well as sufficient warning features and/or measures so as to prevent drivers from exiting these vehicles with the engine running and the transmission not in PARK and/or to avoid vehicle rollaway. In July 2015, FCA issued a safety recall for Yelchin’s 2015 Jeep over concerns that its onboard computer was vulnerable to hacking. In addition, the National Highway Traffic Safety Administration also reported in June 2016 that it had received hundreds of complaints specifically about the shifter issue.

FCA then recalled the 2014 and 2015 Jeep Grand Cherokees as a result. In that recall, FCA wrote: Your vehicle may roll away, striking and injuring you, your passengers, or bystanders, if the vehicle’s engine is left running, the parking brake is not engaged, and the transmission is not in the "PARK" position before exiting the vehicle. Drivers may inadvertently fail to achieve the "PARK" position before exiting the vehicle.

The electronic shift lever in your vehicle does not move like a conventional shifter. Your shift lever is spring-loaded and returns to the same center position like a joystick, always returning to the center position after the desired gear is selected. FCA did not immediately respond to Ars’ request for comment, but it told The Verge that the company "extends its sympathies to the Yelchin family for their tragic loss" and reminded drivers to consult their owners’ manual and to heed the recall.