Artificial IntelligenceCryptocurrencyMetaverseCybersecurityTech Forward

America’s Slipping Edge—Cyber Saturday

October 5, 2019, 8:02 PM UTC

The Aspen Cyber Group, a nonprofit organization that convenes a security-focused partnership between the public and private sectors in the U.S., released a report this week warning that the conditions that led to American prosperity—and supremacy—in the post-World War II era “no longer exist and are unlikely to be seen again.”

The paper hits like a bucket of ice-cold water. It’s a painful reality check—and an alarming wake-up call urging the nation not to rest on its laurels. If America does not lead in innovation in the years ahead, the world runs the “risk that new technologies will be developed and implemented by nations that do not share values of liberty and freedom.”

The subtext of the report is, obviously, China. While the paper does not directly state the most worrisome concerns—that new technologies, created abroad, could propel censorship, surveillance, and the persecution of state-disfavored populations—it does chide the U.S. for falling behind in many basic areas of economic investment. China is, in contrast, pouring loads of money into infrastructure, research and development, and science and engineering education. In case one needed any convincing, the strategy is deliberately “designed to leapfrog the United States and Europe.”

The paper echoes concerns that Michael Kratsios, the White House’s chief technology officer, shared with me in a recent meeting at Fortune’s offices. If there is one thing that needs more coverage by business news media, he said, it is the threat that up-and-coming technologies will not be designed with “American values” in mind. Sure, the U.S. came out ahead in decades past, pioneering transformational technologies such as transistors, personal computers, the Internet, GPS, and countless other innovations. But a whole new set of technologies are coming onto the scene, and they’re poised to upend the world as we know it: artificial intelligence, quantum computing, 5G networking, and plenty else.

America faces a major competitive threat these days, and we all would do well to remember how inextricably linked are national security, economic security, and cybersecurity. I will leave you with some concluding thoughts from the Aspen Cyber Group. “We cannot wait for the next Sputnik moment—whether in quantum computing, artificial intelligence (AI), or some yet-to-be-discovered technology—to focus our national attention and efforts,” the paper says. “Much is at stake.”

Robert Hackett | @rhhackett | robert.hackett@fortune.com

THREATS

Crypto wars redux. U.S. Attorney General William Barr is pressing Facebook not to proceed with its plan to implement end-to-end encryption across its apps in an open letter signed alongside his counterparts in the UK and Australia. He has asked for Facebook to delay the technology's rollout until the company can figure out how to provide governments with access to their services for purposes of investigations. Security experts warn that "backdoors" are bad ideas

Foreign meddling. Microsoft has been tracking a hacking campaign, believed to originate in Iran, that is targeting a 2020 U.S. presidential candidate. The attacks, which happened between August and September, managed to compromise four people's accounts, but none were associated with the election campaign. TechCrunch notes that the campaigns of President Donald Trump and rival Mark Sanford both use Microsoft products.

The Masked Avengers. In an effort to get months of protests under control, the government of Hong Kong invoked an emergency ordinance to ban the wearing of face masks. Defiant protestors took to the streets in opposition, despite threats of $3,000 in fines and year-long prison sentences. Anonymity is seen as essential to the movement's survival.

Leaving on a jet plane. The Department of Homeland Security wants to start testing airplanes for potential cybersecurity vulnerabilities, the Wall Street Journal reports. Few details have been released about the new program, which will be managed in conjunction with the Pentagon and the Transportation Department. Meanwhile, French planemaker Airbus has been fending off months of (suspected Chinese) cyber attacks.

Pay up or the computer gets it. A number of hospitals reported being hit with ransomware infections in the past week, forcing them to close. Three were in Alabama and seven were in Australia. Meanwhile, a Danish hearing aide manufacturer told investors that it expects to lose $95 million to a recent "cyber-crime" incident, believed to involve ransomware. Hundreds of ransomware attacks have targeted local governments, healthcare providers, and school districts this year.

AHHHHHHHHHHHHHHHHH.

Share today’s Cyber Saturday with a friend: http://fortune.com/newsletter/cybersaturday/ 

Looking for previous Data Sheets? Click here.

ACCESS GRANTED

What bubble? We write a lot about the business of cybersecurity in this weekend newsletter. In recent columns, I have covered instances of market consolidation and the emergence of business winners and losers. If you read those takes as just a bunch of glum doom-saying, then consider the following contribution by Oren Yunger, an investor at the venture capital firm GGV, as a counterpoint. Yunger writes for TechCrunch that he remains highly optimistic that the cybersecurity bubble won't be popping anytime soon. 

It is true that the security market is highly fragmented, some companies are overvalued and not every new security tool will be a big success. But as our world becomes more software-driven, cybercrime will inevitably intensify, leading to new matter entering the security bubble. This will propel security into a significantly larger market at an even greater rate, visible by investors, leadership teams and company boards. Instead of bursting, the cybersecurity market will only keep developing and growing.

FORTUNE RECON

Secretive Defense Tech Startup Anduril Is Building Weapons by Polina Marinova

Instagram’s New Messaging App Can Use Your Phone’s Sensors to Auto-Update Your Status by Danielle Abril

Google Maps Unveils a Pro-Privacy ‘Incognito Mode’ to Keep Users Off-the-Grid by Lisa Marie Segarra

‘We’ll Definitely Do It’: Vladimir Putin Jokes About Upcoming Election Meddling by Chris Morris

Google’s New Password Security Tool Flags Compromised Websites by Jeff John Roberts

Some ‘Amazon’s Choice’ Security Cameras Pose ‘Huge’ Hacking Risk, Study Says by Alyssa Newcomb

Facebook’s $5 Billion Privacy Settlement Argued Consumers Weren’t Harmed. Experts Think the Damage Was Incalculable by Danielle Abril

Comcast, Mastercard, and Samsung Are Pouring Millions Into This Password-Killing Startup by Robert Hackett

From Premium Speakers to Privacy, Amazon Has a Plan to Make Alexa Sound Even Better by JP Mangalindan

ONE MORE THING

"OMG Cable." An enterprising hacker has developed a knock-off Lightning cable, the wired charger for Apple iPhones, designed to compromise computers, Vice Motherboard reports. The creator, who goes by the alias "MG," originally sold handmade versions for $200 at this year's Def Con hacker conference in Las Vegas. Hak5, the company that plans to sell the now industrially manufactured product, calls them "mischief gadgets."