tv Bloomberg West Bloomberg November 16, 2015 6:00pm-7:01pm EST
forces in the wake of friday's terror attacks in paris would be in his words a serious mistake that would set the u.s. on an unsustainable path. the instead will double down on washington's current strategy for taking on the terror group. he's asking for patients to let military, economic, and diplomatic pressure take effect. the brother of two men believed to have helped carry out friday's attacks is speaking out. he expressed disbelief two of his brothers were involved in the carnage that left at least 129 people dead. one of his brothers died friday after allegedly decimating his vest -- detonating his destiny suicide bombing. the other is a fugitive and subject of a global manhunt. secretary of state john kerry is in paris to show american solidarity with france. journalists accompanying him were not allowed to report about his planned visit, the first such restriction for a secretary
of state's travel to a european council -- capital. france is off-limits to u.s. troops and employees on their free time. banband of military -- involves military members, family numbers, and civilian contractors. i am mark crumpton. ♪ emily: i am emily chang and this is "bloomberg west" live from new york today. coming up, the new age of disaster response. tech companies lend a helping hand in the wake of the paris terror attacks. plus, gaming systems are a new battle line in the fight against terror. how the islamic state may be evading authorities with encrypted communication. we will take a closer look at the state of cybersecurity
regulation in light of friday's attacks. could policy changes be in the works in washington? first, to our lead. i want to bring in our global tech editor brad stone who was in paris friday night, joining us from san francisco. we thought of you immediately knowing you were traveling in the area. in paris, two miles from shooting, police cars heading in every direction. i know you checked in on facebook saying you were safe. what was it like from your perspective? i was bywas -- brad: no means in the center of it. i was over a mile away at a restaurant. of myly cause more my -- more american-style eating habits, the nation up -- finishing up around this time this was happening. . there were sirens on the right back -- ride back. i saw the video from the stadium was a bombing. it was not until later i tuned into social media that i saw the
millions of posts on twitter, all the activity on facebook, and we started to understand the gravity of what was going on. emily: as i understand it, facebook reached out to you in paris and suggested you check-in that you are safe. airbnb also made policy changes. tell us what it was like from your perspective. brad: it was remarkable, this new tool facebook has, are you safe? they can see i was posting from the area. there was this automatic signal. i posted i was safe. i felt a little ambivalent about it. i could see how it could be an incredible tool for big, regional disasters. everyone on myed feet into a version of my jewish mother. lots of people expressing concern when by that point, i was miles away. but certainly a powerful tool facebook can bring to these situations. emily: i might have been one of those people. thank you for responding quickly.
i want to bring in john mclaughlin. a former deputy director of central intelligence. he worked at my c.i.a. for more than 30 years starting in 1972. i want to talk about the ways these terrorists may have been communicating using encrypted communications, a suggestion they may have been on gaming networks. our intelligence officials going back to the drawing board to figure out how this ended up happening with no fair warning? james: the communications he's of intelligence has been more complicated since the snowden events. terrorists really know they have to be careful with communications. they have tightened their communications security. this drives them to things like the path you mentioned. they also can benefit from the much more tightly encrypted bymunications introduced
commercial suppliers in the wake of the snowden events in order to guarantee more security to customers. that is something that has benefits, but it also has this great negative side. that makes it harder for these guys to hide in the communications wilderness. emily: u.s. officials have said this incident is an example that these terrorists have gone to school. they know how the n.s.a. is monitoring them. would you say they are far and away ahead of our own intelligence when it comes to how they communicate? james: i would not say they are ahead of our intelligence. with a certainly are aware now impressivermous and capabilities in the monitoring area. yes, they are practicing means of security in there can indications which we now have to figure out how to break, how to catch. revelationu have a
of how we do our business, this is why we talk about sources and methods of the time, eventually we figure out a way to beat that system. but it makes the job of intelligence much harder. it has become harder and harder, particularly as these guys have multiplied and as their training and stealth has increased. it is a tough job. brad: it is brad stone from san francisco. do we know for sure weaker encryption could have facilitated law-enforcement in preventing these attacks? james: no. i personally do not know. intelligence has had time to figure out the communications piece of this. i am not saying we absolutely know that. a matteryou think as of principle this is the right time to have a debate about stronger or weaker encryption, considering emotions are running so high in the wake of the attacks? i think it is a debate
the f.b.i. director started in july, so it has been underway for quite a while. it is a time for people to stop and think about how they feel personally about the trade-offs between security and what they judge to be their privacy. i think the whole concept of privacy is changing in the social media age. and also changing in the era when commercial companies know a great deal about our private business. and enormous amount, in fact. dramatically more than the n.s.a. knows or wants to know. or cares to know. i think if these guys were able to hide the way he suggested at the beginning, i think it gives new urgency to the issue of where we want to put that line in the trade-off. emily: john, can you give us an example of things intelligence officials are doing now when it
combing calling -- messaging systems or trying to get into the sony playstation network to see if terrorists were communicating their? officials in belgium said before this incident they were concerned terrorists were using gaming networks, sony playstation, to communicate. james: at this point, there will be more in the intelligence playbook than just communications. on the communications side, they will be looking at everything we have access to and seeking to gain access legally with permission if needed to systems that may also allow them to hide. bear in mind to step aside for a second on this that the french themselves for some weeks have had a very intrusive monitoring system, far more intrusive than ours in terms of traditional community edition's. they can go in and look at e-mail and phone messages
without a court order as they wish. which makes it more impressive given the french are among the best in the world at counter the best counterterrorism. impressive they were able to pull this off. that is what we will do on the communications side. there is also the human side. all of the services involved will now be dropping barriers to exchange among european countries and with us. hopefully, we are bringing the russians into this as well, who have sources and intelligence. dropping the barriers to exchange, and we will be looking at reports from human sources as well trying to collate those. in the intelligence business, there's something called tipping and queuing, meaning you get a tip from a human source which cues you to go and look at another source, may be a communications source. you are not continuously on a fishing expedition. you would be overwhelmed. brad: president hollande said
he's willing to break the bank and breach the european union's budget deficit arrangements to combat this threat. where do you think these resources are best spent? where do i think they are best spent on intelligence per se? brad: that is right and combating this threat. james: well, i don't know what amounts we are talking about. i believe he is serious in saying france is at war with this print we are all at what was this phenomenon. as the president pointed out today, war is very expensive. there will be needs for everything from technical systems on the intelligence side, which are costly, to weapons systems for particularly special operators, to surveillance systems to gather information in the theater if we ramp up operations. if i were establishing
priorities, i would probably put them in the community should area. typically communications intelligence tends to be the foundation of intelligence upon which you build everything else, which is one reason why it is so worrisome we've had so many revelations in that field and so much controversy. emily: the director of the c.i.a. said we should not consider this a one-off event. we know it has also happened in lebanon and russia. he said i would anticipate this is not the only operation that isis has in the pipeline. how confident are you that we can get in front of the next attack, given what we know now? james: well, look. we have had a lot of practice at this since 9/11. our country is probably better prepared to detect and report -- thwart these plots than most countries. tried a great effort
to get across at the time of 9/11 is you cannot count on intelligence to catch everything. this has to be a partnership between intelligence doing its best to catch these guys, and on the other hand a very systematic attempt by other authorities such as the department of homeland security, which has done to read -- terrific work in the last 10 years, to seek out the vulnerabilities in a country and think about the targets and what we need to do to harm them. that means guards, people watching. for average citizens, there is an important point. homeland security always says if you see something, say something. that is an important part of this. we have stopped a number of plots i citizens who have seen something, spoken up, and cued the police or intelligence officials to go and stop something. emily: john mclaughlin, former acting director of the c.i.a., thanks so much. brad stone, thank you for that first-person account. glad you are home safe.
watching,tory we are anonymous has declared war on islamic state in a video posted on youtube. in the video, an individual wearing a guy fox mask tells isis to expect massive cyberattacks tweeting anonymous is at war and won't stop opposing islamic state. we are also better hackers. it is a derogatory term for isis. made similarts threats after the "charlie hebdo" attacks in january.
the elaborate coronation of the attacks in paris is raising questions about how the terrorists use technology to avoid detection. the ability of officials to detect, catch, and understand new and different forms of technology has come into question. whether it is encrypted messaging or gaming networks. joining me to discuss, brian white. we have been hearing about these thatpted messaging apps these guys may have been using to plan the attack. what have you been able to glean from what has been reported about how to medication was conducted? brian: thanks for having me on. i think it is clear they are going to use all forms of communication that we use to try to attack us. that is fundamental. think about the communications we use every day from twitter to facebook to even the sony playstation. they are using these to try to do harm against us. that is a challenge in itself. second, many of these
applications self populate and work together and signal each other in the application. so if you don't know what you are looking for, it is that much harder to even find the person or intercept the communication that may be the communities of interest indicating something may be happening. emily: what do you make of this idea the sony playstation gaming network could have been a playground for terrorists where you can send messages and have voice conversations? you can talk within games? brian: exactly. i had to get educated on playstation today. when i was able to determine is reports indicates at least 110 million people have sony playstation accounts. second, they are able to self-associate in the game. i may be able to invite you to play in a certain game. i may be able to invite my friends in syria and china and
iran to join me even though i am sitting in the u.s. to play in a certain game. within that game, you are able to open up a separate communications threat that allows you to e-mail, text, and communicate via voice in that same application. that presents a couple of different challenges. first, people are going to self-associate. if you know who you are going to work with, you can do that via the application. second, that communication occurring in that group looks to be encrypted. if you don't know what you are looking for, you cannot do blanket interception. even if you do know what you are looking for, you have to have the keys to unlock that communication. emily: the documents revealed by edward snowden showed the c.i.a. and f.b.i. have been looking into these gaming networks. had they found this is really happening? what sort of progress have they made in terms of surveilling people via gaming? brian: reports indicate they
have been planting people inside game rooms. that was the accusation. that they had people hiding amongst legitimate users trolling around like they do on various terrorist websites, looking to see who may be posting comments, where they may be sympathizing. that is how we stay ahead. in terms of if they are actively monitoring, i think it is fair to say they're looking at all forms of communication. in terms of what they're able to do in sony versus other modalities, i think it is undetermined. is making it harder is we have to get back to where we started. there were a few of them. it looks there were eight to 10. they were trying to evade detection. they worked with great operation dismal -- discipline and control. whichf they did use sony, reports indicate he did not, they probably used multiple services to communicate because they were cognizant people were probably on to them. emily: obviously, this store is
emily: it is shaping up to be another busy week in the tech sector. wednesday, both will be pricing their respective ipo's after the close. investors will be watching both firms amid continuing questions over valuations in private tech companies. also wednesday, salesforce reports third quarter results. joining me in new york for a look ahead, alex barinka who covers ipo's and anurag rana. square and match coming up. what are you hearing from investors? how much enthusiasm is there?
>> one thing they will have to get through is something we saw friday. the online mortgage depot canceled their ipo, so there's a little bit of overhang going on. we have seen volatile equity markets. square has been on the roadshow. match has been on the roadshow. focus on square for a second. we are continuing to ask, do they fetch a valuation of payment processors or do they get some of that hook in there for the tech premium? analysts are saying we are kind of viewing them more as a payment processor. that is what they do. yes, they have cool technology underlying it. it is something we heard the c.f.o. talk about on the roadshow video. they also have the brand recognition that i don't think other payment processors have. who knows about first data or had -- heartland. they have name recognition, especially for smaller companies. investors will be looking at the
fundamentals of the underlying business. you are a payment processor with a 29% margin. how does that compare to peers? what is that going to look like going forward? is this a risk i should be taking buying into the stock? emily: what about match? >> matches more of a pure play tech company. we literally love all of their dating sites. the question with them will be where is the growth. they own 2/3 of the market. what they have done before is by other dating companies. the question will be, what is next? what is the next tender? they are aging and looking to make money. the millennial generation is a fickle group. this was big for them to years ago. now the question is starting to be, what is next? they are a money making business, but is this going to be a cash cow bet or is the
current chairman going to be able to continue what the parent company does well, buying up properties on the cheap, expanding, and figuring out how to make money? emily: salesforce coming up this week. what are the main things you will be watching? >> last time, they had a good quarter. we will be looking at what happens to large yields, how the ancillary products are doing. on the seen infrastructure side really good results from amazon and microsoft. now we want to see how they do in the application. emily: that brings up a question. use the amazon, microsoft, oracle, the giants trying to get a piece of the cloud. then there are smaller companies. how well-positioned is land salesforce in that landscape? wrecks microsoft and -->> microsoft and amazon focus more on infrastructure. oracle is getting big and
applications and moving to the cloud. i think that is where competition has started to heat up. the last quarter, they had very good numbers. i was expecting last quarter to be a tussle between them and the others. but they did really well last quarter. emily: microsoft and amazon also had strong cloud numbers last quarter. we will be watching that. thank you both. securitiesintel c.t.o. connects the dots between the coordinator terror attacks in paris and cyberthreats we are likely to see in the coming years. ♪
watching the latest development here in paris. authorities are continuing to hunt the gang responsible for the attack. most of the attention is turning to belgium. several of the attackers came from brussels. a belgium national is expected to be the national -- mastermind. the french president said france will destroy islamic state. he calls syria the biggest terrorist sanctuaries world has ever known. he called for a global effort to beat terrorism. has needed for patients, the current strategy will work. he has ruled out sending troops to syria. that would commit the u.s. to longtime military occupation of the middle east and north africa. he will soon touchdown in
manila. we started hearing about what was going on in paris. how have the attacks impacted the apec summit? what is the impact are we seeing throughout the region? : these attacks come in the midst of summit season. manila sees the highest level of security possible. airports andty at seaports in train stations as well. we are seeing tens of thousands of extra police and soldiers on the streets. it's expected to dominate discussions. there is some debate over where there will be a statement issued over terrorism. we expect it to be mentioned in the final communique. emily: are you seeing any impact on tourism? enthusiasticow how
chinese tourists are about france. there are enormous numbers of lucrative chinese tourists. there is some concern there will be cancellations. back to you. emily: thank you so much that update. staying with the attacks on paris. we are talking about how playstation 4 apps may play roles and how the terrorists communicate. steve is with us now from intel headquarters to connect the dots. i am curious about your reaction to what we are learning in paris, how the terrorists may have communicated and how that is impacting your forecast for the big cypress threats.
seen in thise are case from all sides is ciber is inherently asymmetric. any group that is well-funded and well organized can threaten or issue cyberattacks. what we have tried to do is look at what are the next set of tech takes, technologies they will be using. they will have higher levels of impact if it's attacking nonstandard devices or the cloud. this could be just the untraditional pcs and servers. anything you've learned that surprised you? maybe it was something you had not thought of. are they going by the playbook? steve: this is what we wrote in the report. a good example is we talk a lot about how to visit him. the motivation for using cyberattacks is going to evolve.
it will just be about a cyber criminal looking for monetary gain. there will be all sorts of reasons the different groups and entities will issue an attack during the one of the key examples we see in what's playing out now are groups with a motivation to protest so the acts of have happened in paris. they are talking about using techniques to launch cyber campaigns. i think that's very much in line with what we predicted from a motivation perspective. emily: you write that cyber warfare capabilities will grow in scope and sophistication. affectd hot attacks will power structures around the world. this will trickle down to organize crime. what do you mean by that? steve: what we are saying is when we see highly sophisticated
attack, ite a cyber creates a playbook that many other actors can use to execute similar types of attacks and capabilities. part of a we talk about in the report is we see these progressing beyond traditional malware. it's not about files and detecting bad files. it's also about protecting things like cloud, public cloud infrastructure, even platforms themselves. needing to comprehend defensive measures. against actors going after the platforms at lower levels within the hardware. either to inflict damage or to persist and prevent detection. emily: something else we have talked about is the hacker group anonymous. they have declared war on the
islamic state. they say they will take down the twitter accounts. what can anonymous really do here? steve: there are a lot of things any dedicated actor can do. ist of the reason for that we've seen the industrialization of hacking. whereis a broad ecosystem vulnerabilities are openly sold and attacks are openly sold. cyberattacks can be operationally managed by different groups. craftllows any entity to a cyber offensive in order to meet their goals. if they are a hack to this group, whether they have the technical knowledge themselves or if they outsourced that to another entity, there really is quite an easy means for them to move forward with that attack scenario. on alternatives payment solutions like apple pay
or square going public this week. about the concerns and the security issues you see there. steve: what we have seen and able certain types of cybercrime is the ability to anonymize various elements of it. with coin.se ransom it's much harder to coin -- money goes.the the actual operations of the cybercrime is shielded and is essentially anonymized, making it harder for law enforcement to track down. it's the sorts of innovations that in many cases were built for good legitimate purposes, whether it's payment systems or more viable open network for things like communication in countries that have qwest communications.
we have seen bad actors use the same technologies for malicious purposes, things like ransom. emily: is square secure? should investors be worried? steve: we see a lot of evolution in the payment industry. whether it's a electronic payment forms, the evolution of payment cards with the move to evm. in general, there is a cap and mouse game going on. we payevolving the way for things, making that much more efficient and secure in many ways. time, the cyber criminals are improving their arsenal of tools and techniques they have to go after these environments. emily: interesting stuff. that's really interesting to on what'sthoughts
unfolded over the last few days. now we are watching a text upgrade pandora has agreed to buy assets from its rival for $75 million. they are buying tech and intellectual property. some of the staff will be offered roles within pandora. they will add streaming music, but it's not getting licenses as part of the deal. the stock has been under serious pressure. ofre sales fell short analysts. they settled a legal dispute with the music industry. coming up, facebook acts fast after the paris attack. they get some backlash as well. that story is next. of russia'se ceo company joins tom keene. is on bloomberg
emily: executives from facebook and google were in the hot seat. representatives from the two companies as well as other firms were testifying about the strategy they used to reduce their tax bills in europe. google executives denied any wrongdoing. said they make use of tax structures that are well known and widely accessible and employed by all multinational
companies. and -- they have been investigating a number of top global companies following reports that note go shaded -- negotiated lower deals. social media played a critical role at the paris terror attack friday. facebook turned on its safety check feature. it allowed people to notify the network they were safe. it curated the news and images from paris as it happened. it told the public where people could find shelter in the crisis. joining me from san francisco are reporters sara. tell me what facebook did, how they rolled it out. sara: they have used safety check in the past. for natural disasters, earthquakes, big things that affect large people.
this is the first time they've done it for a human caused tragedy. that was something they have discussed with their employees on the ground. they said this would be great if we had it. facebook got plenty of praise at first for acting so quickly to let people know that they were safe. emily: there was some backlash. they did not roll this out in root.se to a root -- the -- lebanon. are they going to roll is up more often? sarah: zuckerberg said you're right. we did this for human tragedy. we have not done this for others. perhaps we should. they are broadening the definition of what safety check will be used for. the problem this presents for facebook is they have to be the arbiter of what global tragedy
is something they need safety check for, even if it's in a country where they don't have many users, even if the conflict is in a non-western a country where it they are going to have to decide if it's significant enough. emily: twitter has #during, you have issa supporters who are active on twitter. there are two sides to this story. sara: it's been very difficult for these companies to weed out all of the people who might be part of isis or part of a threat. backed eitherot terms of service. they would say they don't harbor
terrorists on twitter. it's hard to find them all. it's hard to shut them down. if you shut down one account, they will start up another one. it's been a real challenge. if you're trying to police a network as vast as twitter or facebook, to really find the ways to do this. emily: the you think what happened in paris has anybody at facebook or twitter rethinking some of their strategies? could you see them taking a more active approach into monitoring these accounts? mentioned today that it's helping us cope with these disasters. maybe they will help prevent them. governments around the world have been asking facebook and twitter for more information. the government has done some compliance. they are not trying to go above and beyond to give away
information on users. there is a safety and privacy concern. decisionslot of hard to be made about how much they are willing to reveal their encryption tactics. how much will they give access to profiles? emily: there is a fine line to walk. we will continue to monitor that situation. thank you for bringing up the view from social media. she covers facebook and twitter for us. mark andreessen and continues to unload his holes in the social network. over 1.5 million shares of facebook in the last two weeks. that totals $160 million. is 73% of his total ownership in the country. the company beat earnings stillations and there is
following edward snowden's revelations, tech companies have taken a hard line on government intervention. creativegetting more with eluding detection. is thesman jim himes ranking member of the committee on intelligence. thank you so much for joining us, congressman. out,the revelations came the pendulum swung so far in the other direction and people are so upset about the government potentially monitoring our data. the you see it swinging back after this? congressman: it will. after the snowden revolutions, these pendulum swung too far back. i had to disabuse people of the notion that the nsa was listening to their phone calls. at the end of the day, the process worked we passed the usa
freedom act. it dialed back the patriot act. it got rid of the meta-data collection program. as they areearful now. the pendulum does swing. as in everything else, i response to these terrorists, we need to call matt fear and continue to deal with this and do it in an intelligent way. lay out some ways you think policy should change? congressman: i would say we've got a lot of work we need to do with the government level. and theaw from the hack loss of that data within the government. companies like sony, the list is long and we can make our networks more secure. we are only five or six years into concentrating on this. individually, there's a lot we
can do. i know people who open attachments from e-mail addresses they don't recognize. there is a lot we can achieve while the have that debate. propose a convention. can you explain what that is and what progress you have seen? congressman: the idea is in the actual kinetic realm, we have rules of war. there are the geneva conventions. people understand what an act of war is. people know with their obligations are two prisoners. even in the context of a war. in the cyber war realm, we don't have any of those norms. we don't know if the stealing of data is an act of war. the shutting down a network that doesn't hurt anybody, is that an been wear? my point has need to get together with the people with whom we have a lot in common and say let's at least
set basic norms for what is an active nor -- war. that does not help us with people who don't observe those laws. we should at least come up with a set of norms and agreements. emily: how do we find the right line, the balance between privacy and security? it seems the way we have been operating is very reactionary. we need to be getting ahead of these things. congressman: the pendulum does swing. after snowden, everybody thought there was a massive surveillance apparatus that was targeting every american. now we are swinging in the other direction. this is a debate we are not going to answer. 20 years ago, who imagined texting, facebook?
we are not going to and this debate. it's a difficult debate to have. many of the capabilities for surveillance are by nature secret. people know about them. -- if people know about them, it's not useful surveillance. line, weok at the won't get it right. it's important that we focus on maintaining two values we don't want to sacrifice. address the vast majority of these communications 1000% innocent? congressman: how'd you address the fact that even if we wanted to go back to a world where the fbi could read all text and e-mails? where youa world now
don't have to be all that intelligent to come up with an app that will allow for strong encryption. technologicalw world that is going to require us to think differently about how we respond to new technology. emily: thank you so much for joining us. that does it for this edition of "bloomberg west." we will see you again tomorrow from new york. you can catch us on tv or our ipad ♪ app.
>> from our studios in new york city, this is "bloomberg west." is dexter of me the new yorker magazine. he has reported from the region and i am pleased to have him back at this table. you wrote about the kurds in the new yorker magazine piece. was it about them that has made them a model in terms of the government? their effectiveness as a fighting force? dexter in, they have a lot of practice.