The Cyberlaw Podcast: Serious Threats, Unserious Responses

It was a week of serious cybersecurity incidents paired with unimpressive responses. As Melanie Teplinsky reminds us, the U.S. government has been agitated for months about China’s apparent strategic decision to hold U.S. infrastructure hostage to cyberattack in a crisis. Now the government has struck back at Volt Typhoon, the Chinese threat actor pursuing that strategy. It claimed recently to have disrupted a Volt Typhoon botnet by taking over a batch of compromised routers. Andrew Adams explains how the takeover was managed through the court system. It was a lot of work, and there is reason to doubt the effectiveness of the effort. The compromised routers can be re-compromised if they are turned off and on again. And the only ones that were fixed by the U.S. seizure are within U.S. jurisdiction, leaving open the possibility of DDOS attacks from abroad. And, really, how vulnerable is our critical infrastructure to DDOS attack? I argue that there’s a serious disconnect between the government’s hair-on-fire talk about Volt Typhoon and its business-as-usual response.

Speaking of cyberstuff we could be overestimating, Taiwan just had an election that China cared a lot about. According to one detailed report, China threw a lot of cyber at Taiwanese voters without making much of an impression. Richard Stiennon and I mix it up over whether China would do better in trying to influence the 2024 outcome here.  

While we’re covering humdrum responses to cyberattacks, Melanie explains U.S. sanctions on Iranian military hackers for their hack of U.S. water systems. 

For comic relief, Richard lays out the latest drama around the EU AI Act, now being amended in a series of backroom deals and informal promises. I predict that the effort to pile incoherent provisions on top of anti-American protectionism will not end in a GDPR-style triumph for Europe, whose market is now small enough for AI companies to ignore if the regulatory heat is turned up arbitrarily. 

The U.S. is not the only player whose response to cyberintrusions is looking inadequate this week. Richard explains Microsoft’s recent disclosure of a Midnight Blizzard attack on the company and a number of its customers. The company’s obscure explanation of how its technology contributed to the attack and, worse, its effort to turn the disaster into an upsell opportunity earned Microsoft a patented Alex Stamos spanking. 

Andrew explains the recent Justice Department charges against three people who facilitated the big $400m FTX hack that coincided with the exchange’s collapse. Does that mean it wasn’t an inside job? Not so fast, Andrew cautions. The government didn’t recover the $400m, and it isn’t claiming the three SIM-swappers it has charged are the only conspirators.

Melanie explains why we’ve seen a sudden surge in state privacy legislation. It turns out that industry has stopped fighting the idea of state privacy laws and is now selling a light-touch model law that skips things like private rights of action.

I give a lick and a promise to a “privacy” regulation now being pursued by CFPB for consumer financial information. I put privacy in quotes, because it’s really an opportunity to create a whole new market for data that will assure better data management while breaking up the advantage of incumbents’ big data holdings. Bruce Schneier likes the idea. So do I, in principle, except that it sounds like a massive re-engineering of a big industry by technocrats who may not be quite as smart as they think they are. Bruce, if you want to come on the podcast to explain the whole thing, send me an email!

Spies are notoriously nasty, and often petty, but surely the nastiest and pettiest of American spies, Joshua Schulte, was sentenced to 40 years in prison last week. Andrew has the details.

There may be some good news on the ransomware front. More victims are refusing to pay. Melanie, Richard, and I explore ways to keep that trend going. I continue to agitate for consideration of a tax on ransom payments.

I also flag a few new tech regulatory measures likely to come down the pike in the next few months. I predict that the FCC will use the TCPA to declare the use of AI-generated voices in robocalls illegal. And Amazon is likely to find itself held liable for the safety of products sold by third parties on the Amazon platform. 

Finally, a few quick hits:

• Amazon has abandoned its iRobot acquisition, thanks to EU “competition” regulators, with the likely result that iRobot will cease competing

• David Kahn, who taught us all the romance of cryptology, has died at 93 

• Air Force Lt. Gen. Timothy Haugh is taking over Cyber Command and NSA from Gen. Nakasone 

• And for those suffering from Silicon Valley Envy (lookin’ at you, Brussels), 23andMe offers a small corrective. The company is now a rare “reverse unicorn” – having fallen in value from $6 Billion to practically nothing

Download 490th Episode (mp3)

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