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What Businessweek got wrong about Apple

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Re: What Businessweek got wrong about Apple

#31

Post by hyperrail »

Tomte wrote: post #17
CalChris wrote: post #14

Earlier quoted context omitted.

Similar question, but should BW turn out to be correct and Apple was for lack of a better word, lying, aren't they on the hook as a public company?

Matt Levine likes to say that "everything is securities fraud".

Funnily enough, he actually covered this angle yesterday!

Regular readers know that a major theme of this newsletter is Everything Is Securities Fraud, so in that vein, let us consider a hypothetical. What if:

1. Everything in the Businessweek story is true, Chinese spies planted hardware backdoors in computers built and used by major American companies, and the FBI investigated along with those companies and discovered the backdoors.

2. It is a national-security secret and the companies were instructed by the FBI never to acknowledge it.

3. The companies are patriotically but falsely denying the hack.

If that is true—and I have no particular reason to think it is, it’s just the sort of hypothetical we like around here—then, obvious question: Is it securities fraud? (Assuming that the hack is potentially material to the companies’ business?) I do not think that the securities laws explicitly allow companies to make false statements of material fact if required for national security, but you could see giving them a pass here.

https://www.bloomberg.com/view/articles/2018-10-04/computer-...

Re: What Businessweek got wrong about Apple

#32

Post by hyperrail »

PhilWright wrote: post #22
CalChris wrote: post #14

Earlier quoted context omitted.

Similar question, but should BW turn out to be correct and Apple was for lack of a better word, lying, aren't they on the hook as a public company?

Apple would need to show that they had lost business as a result of the false story and hence claim damages. Businessweek would defend themselves based on it being in the public interest and they cannot reveal their confidential sources. Probably hard for Apple to prove they have lost money because of the story and it would need to be enough to warrant the time and hassle of a court case. Not to mention they would pr…

Think you meant to reply to jdorfman (parent poster to the post you actually replied to).

Re: What Businessweek got wrong about Apple

#33

Post by IshKebab »

whatever1 wrote: post #27

I mean what was the alternative? To admit that your supply chain is compromised and blame directly the government of the country where you produce (and sell to a level) all of your hardware? That would be a huge blow in the credibility of the company and would raise serious questions on why they did not move the manufacturing elsewhere.

If this were true I would have expected some corporate waffle like "Apple takes supply chain security very seriously and regularly audits suppliers. We cannot comment on internal security matters but customers should be assured that blah blah blah."

I wouldn't have expected this extremely strong denial which is one step short of outright calling Bloomberg liars.

Re: What Businessweek got wrong about Apple

#34

Post by hef19898 »

chillax wrote: post #23

The Norwegian National Security Authority ( https://nsm.stat.no/english/ ) is quoted in a norwegian paper today saying they knew about problems with Super Micro since at least june. https://www.vg.no/nyheter/i/xRkLep/storavis-hevder-kina-inst...

It is an interessting story indeed, espiacially with third country sources more or less confirming the general story but not the specific details. I personally have a hard time to believe Bloomberg went public with it without a thourough due dilligence. They should be totally aware of the consequences if they did.

At least for Amazon, having jepardiced servers, this goes strait to the core of their business namely customer trust. Until now Amazon did not have any data breaches of customer data which they did pride themselves a lot for. If the Bloomberg story is true, this ould be at risk. So, yeah, a strong denial is exactly what one could expect. I'm curious to see that story unfold.

Re: What Businessweek got wrong about Apple

#35

Post by guywhocodes »

Jerry2 wrote: post #12

Both Apple and Amazon have released VERY STRONG denial statements that bring the whole Bloomberg narrative into question. It's also convenient that no one has yet been able to verify or find any of these mysterious Chinese chips on any of the Supermicro servers in the wild. So what is the real story here? Did Bloomberg reporters deliberately deceive everyone or were they deceived by the US IC ("intelligence community…

I'm not convinced which story is strictly the correct one yet but I don't think the strength of the denial is an argument for either. It just shows that it's important that your narrative wins, truth or not.

Re: What Businessweek got wrong about Apple

#37

Post by hef19898 »

hyperrail wrote: post #31
Tomte wrote: post #17

Earlier quoted context omitted.

Matt Levine likes to say that "everything is securities fraud".

Funnily enough, he actually covered this angle yesterday! Regular readers know that a major theme of this newsletter is Everything Is Securities Fraud, so in that vein, let us consider a hypothetical. What if: 1. Everything in the Businessweek story is true, Chinese spies planted hardware backdoors in computers built and used by major American companies, and the FBI investigated along with those companies and discove…

It will definetly be bad for the business of these companies, especially for Amazon, as it undermines customer trust. In the case of Amazon also the most profitable division, AWS, which provided the majority of profits in 2017.

Re: What Businessweek got wrong about Apple

#38

Post by mikekchar »

Jerry2 wrote: post #12

Both Apple and Amazon have released VERY STRONG denial statements that bring the whole Bloomberg narrative into question. It's also convenient that no one has yet been able to verify or find any of these mysterious Chinese chips on any of the Supermicro servers in the wild. So what is the real story here? Did Bloomberg reporters deliberately deceive everyone or were they deceived by the US IC ("intelligence community…

My general response whenever there is something like this: Look at the past stories by the reporter. Bloomberg handily lists them for you. https://www.bloomberg.com/authors/AQrv1y2ieI0/jordan-roberts...

Take a look at those stories in the strong light of being able to see them in retrospect and decide for yourself if this reporter is prone to going to press without a full understanding of the situation.

I have my opinion, but it's best for people to form their own.

Re: What Businessweek got wrong about Apple

#39

Post by nacho2sweet »

Jerry2 wrote: post #12

Both Apple and Amazon have released VERY STRONG denial statements that bring the whole Bloomberg narrative into question. It's also convenient that no one has yet been able to verify or find any of these mysterious Chinese chips on any of the Supermicro servers in the wild. So what is the real story here? Did Bloomberg reporters deliberately deceive everyone or were they deceived by the US IC ("intelligence community…

Straight up some hardware/embedded nerd that posts on here would have one of these chips in the wild and already have posted a hardware break down blog post under a microscope of one.

They kinda seem like a Tom Clancy fantasy. But I dunno.

Re: What Businessweek got wrong about Apple

#40

Post by whatever1 »

IshKebab wrote: post #33
whatever1 wrote: post #27

I mean what was the alternative? To admit that your supply chain is compromised and blame directly the government of the country where you produce (and sell to a level) all of your hardware? That would be a huge blow in the credibility of the company and would raise serious questions on why they did not move the manufacturing elsewhere.

If this were true I would have expected some corporate waffle like "Apple takes supply chain security very seriously and regularly audits suppliers. We cannot comment on internal security matters but customers should be assured that blah blah blah." I wouldn't have expected this extremely strong denial which is one step short of outright calling Bloomberg liars.

No offense, but I think that your suggested statement would only lead to serious escalation for media enquiries, especially since this story came 2 days after the interview of the Apple CEO [1], where he underlined that privacy (and the relevant security measures) constitutes the core value of the company.

[1] https://www.youtube.com/watch?v=VD1cP8SK3Q0

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