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Data Sheet—Why the Case Against Huawei Looks Trumped Up

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The Justice Department’s case against Huawei Technologies, unveiled in Washington Monday, consists of two separate indictments. One alleges senior Huawei executives, including chief financial officer Meng Wanzhou, defrauded global banks to evade U.S. sanctions against Iran. The other involves a bizarre tale of conspiracy to steal the designs of a T-Mobile testing robot named “Tappy.”

And yet the case—announced by acting attorney general Matt Whitaker fronting heads of several other federal agencies—also feeds China’s suspicions that charges against Huawei have been trumped up as part of a broader U.S. government strategy to destroy China’s biggest telecom equipment manufacturer and halt the rise of China itself as a technological power.

The Tappy charges reopen a seven year-old dispute between Huawei and T-Mobile, the U.S. wireless services provider, that reads as if it were cribbed from an episode of Silicon Valley.

The indictment alleges that between June 2012 and September 2014, Huawei tried repeatedly to steal information about the robot, which was designed to test the performance of mobile devices. The 10-count indictment recounts a series of Keystone capers in which Huawei engineers tried multiple times to sneak into T-Mobile’s Bellevue lab, got caught, were banned from the lab, and eventually regained access—enabling one to steal Tappy’s robotic arm and send photos back to China. (You’ll find detailed summaries of the whole saga in these reports from NPR and Business Insider.)

The Tappy affair certainly casts Huawei in an ugly light. The indictment depicts a corporate culture with no respect for intellectual property rights, and claims Huawei even had a formal policy of awarding bonuses employees who stole confidential information from competitors.

But it’s also old news. In a 2017 civil lawsuit, Huawei was ordered to pay T-Mobile $4.8 million in damages. The two companies later reached a private settlement. In a statement, Huawei, which denies wrongdoing, says allegations in the Tappy case were “already the subject of a civil suit that was settled by the parties after a Seattle jury found neither damages nor willful and malicious conduct on the trade secret claim.”

Alex Lo, a columnist for the Alibaba-owned South China Morning Post, argues that the Trump administration’s claims against Huawei are every bit as contrived as the Bush administration allegations that Iraqi dictator Saddam Hussein possessed weapons of mass destruction. “Disguising the state-sponsored attack against China’s leading telecoms company and 5G provider as criminal charges may convince those who already harbor anti-China biases,” he wrote, “but will not blind others who are clear-sighted about America’s tactics and intentions.”

The Tappy indictment left some Western analysts puzzled, as well. “If Tappy is as far as they’ve gotten (on intellectual property) theft, that seems to be pretty thin gruel for waging a large campaign against Huawei,” Council on Foreign Relations cybersecurity expert Adam Segal told the Associated Press.

Clay Chandler
@claychandler
clay.chandler@timeinc.com

NEWSWORTHY

Every move you make. Another day, another Facebook scandal. The beleaguered social network was paying people (including teenagers) up to $20 a month to install an app that deeply tracked all of their mobile activity, perhaps violating Apple’s app store rules, TechCrunch reports. Facebook said it would shut down the iOS version of the program after the article appeared. And if you’re not a fan of Facebook and looking for confirmation, it sounds like venture capitalist Roger McNamee’s new book, Zucked, will provide more fodder.

Every move you make, II. Check out the amazing graphic that the Washington Post created to illustrate all of Elon Musk’s private jet travels last year. It depicts 150,000 in total miles covered by the controversial Tesla and SpaceX CEO.

Every breath you take. How scammy is the world of digital currencies? Pretty scammy, according to the latest report from security firm CipherTrace. Cryptocurrency holders lost $1.7 billion to thieves and hackers in 2018, the firm says.

I’ll be watching you. You may have heard there was some news about some phonemaker last night. Apple offered sweet relief for its shareholders, confirming the 5% sales drop it had warned of a few weeks ago, but disclosing that its fast-growing services segment grew 19% and had a 63% profit margin. CEO Tim Cook also offered a series of short-term moves to bolster Apple’s sales. The stock jumped 5% in premarket trading on Wednesday.

Every smile you fake. Aside from Apple, telecom giant Verizon just missed analyst expectations for sales even as it added twice as many wireless subscribers as expected. Revenue increased 1% to $34.3 billion, below the $34.4 billion Wall Street forecast, and the number of postpaid phone customers grew 653,000. But weak guidance for this year spooked investors, and Verizon shares lost 7%. Chipmaker AMD saw sales jump 6% to $1.4 billion, also just below analyst expectations. But a forecast of modest growth for 2019 was a relief to investors who feared the worst after Nvidia’s earlier report. Shares of AMD gained 10% in premarket trading on Wednesday. Shares of GameStop plummeted 27% after the company said it couldn’t find anyone who would buy the struggling retail chain.

Every vow you break. A federal court rejected rejected Yahoo’s proposed $50 million settlement for users hit by the massive hacking breach disclosed in 2016. “Yahoo’s history of nondisclosure and lack of transparency related to the data breaches are egregious,” District Judge Lucy Koh wrote. “Unfortunately, the settlement agreement, proposed notice, motion for preliminary approval, and public and sealed supplemental filings continue this pattern of lack of transparency.”

Every claim you stake. Data technology startup Collibra reached unicorn status after raising $100 million in venture capital backing at a valuation of over $1 billion, Fortune reports. CapitalG, an investment arm of Google parent Alphabet, led the round for the company, which specializes in data governance technology that lets companies manage their data so they adhere to regulatory standards. Longtime unicorn Stripe raised $100 million, too, but the deal brought its valuation to $22 billion.

FOOD FOR THOUGHT

Apple likes to tout the privacy and security of its devices, which do appear to be more secure than those from many competitors. But spy agencies and perhaps others had access over the past few years to a secret hacking tool known as Karma that could extract almost all of the data on a target iPhone, including photos, emails, text messages, and location tracking, Reuters reporters Joel Schectman and Christopher Bing explain in a new investigative story. The story details how the United Arab Emirates used the tool to follow activists, diplomats, and rival foreign leaders. Apple declined to comment for the story.

Three former operatives said they understood Karma to rely, at least in part, on a flaw in Apple’s messaging system, iMessage. They said the flaw allowed for the implantation of malware on the phone through iMessage, even if the phone’s owner didn’t use the iMessage program, enabling the hackers to establish a connection with the device.

To initiate the compromise, Karma needed only to send the target a text message—the hack then required no action on the part of the recipient. The operatives could not determine how the vulnerability worked. A person with direct knowledge of the deal confirmed Karma’s sale to the Emiratis from an outside vendor, details of its capabilities, and its reliance on an iMessage vulnerability.

IN CASE YOU MISSED IT

Facebook Under Pressure to Show Users Are Sticking Around Despite Scandals By Danielle Abril

Apple and Aetna’s New Tracking App Will Reward Healthy Behavior By Don Reisinger

Uber Has a New Money-Making Scheme Ahead of Its IPO By Erik Sherman

E-Sports Is the New Premed By Lisa Marie Segarra and Devin Hance

Google Redesigns Gmail App to Match Its G Suite Siblings By Laura Stampler

Porsche to Offer Free Charging on Its First Fully Electric Vehicle By Jaclyn Trop

Amazon Will Fund Computer Science Classes in New York City and Virginia Schools By Erin Corbett

BEFORE YOU GO

NASA’s Opportunity Rover touched down on Mars in 2004 with plans to roll around and explore the red planet for 90 days. It lasted 14 years, but has been out of contact since being hit by a massive dust storm last summer. Now NASA is making one final effort to revive Opportunity by transmitting a series of new commands, a strategy it calls “sweep and beep.” If the effort fails, Opportunity will remain dark and will just have to wait for Mark Watney to arrive in another decade or two.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.