money

The Yakuza’s influence in Japan

business, history, law, politics, security / /

From Jake Adelstein’s “This Mob Is Big in Japan” (The Washington Post: 11 May 2008):

Most Americans think of Japan as a law-abiding and peaceful place, as well as our staunch ally, but reporting on the underworld gave me a different perspective. Mobs are legal entities here. Their fan magazines and comic books are sold in convenience stores, and bosses socialize with prime ministers and politicians. …

I loved my job. The cops fighting organized crime are hard-drinking iconoclasts — many look like their mobster foes, with their black suits and slicked-back hair. They’re outsiders in Japanese society, and perhaps because I was an outsider too, we got along well. The yakuza’s tribal features are also compelling, like those of an alien life form: the full-body tattoos, missing digits and pseudo-family structure. …

The Japanese National Police Agency (NPA) estimates that the yakuza have almost 80,000 members. The most powerful faction, the Yamaguchi-gumi, is known as “the Wal-Mart of the yakuza” and reportedly has close to 40,000 members. In Tokyo alone, the police have identified more than 800 yakuza front companies: investment and auditing firms, construction companies and pastry shops. The mobsters even set up their own bank in California, according to underworld sources.

Over the last seven years, the yakuza have moved into finance. Japan’s Securities and Exchange Surveillance Commission has an index of more than 50 listed companies with ties to organized crime.

…

In the good old days, the yakuza made most of their money from sleaze: prostitution, drugs, protection money and child pornography. Kiddie porn is still part of their base income — and another area where Japan isn’t acting like America’s friend.

In 1999, my editors assigned me to cover the Tokyo neighborhood that includes Kabukicho, Japan’s largest red-light district. Japan had recently outlawed child pornography — reluctantly, after international pressure left officials no choice. But the ban, which is still in effect, had a major flaw: It criminalized producing and selling child pornography, not owning it. So the big-money industry goes on, unabated.

…

I’m not entirely objective on the issue of the yakuza in my adopted homeland. Three years ago, [Tadamasa Goto, a notorious Japanese gang boss, the one that some federal agents call the “John Gotti of Japan”] got word that I was reporting an article about his liver transplant. A few days later, his underlings obliquely threatened me. Then came a formal meeting. The offer was straightforward. “Erase the story or be erased,” one of them said. “Your family too.”

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Business models for software

business, technology / /

From Brian D’s “The benefits of a monthly recurring revenue model in tough economic times” (37 Signals: 18 December 2008):

At 37signals we sell our web-based products using the monthly subscription model. We also give people a 30-day free trial up front before we bill them for their first month.

We think this model works best all the time, but we believe it works especially well in tough times. When times get tough people obviously look to spend less, but understanding how they spend less has a lot to do with which business models work better than others.

There are lots of business models for software. Here are a few of the most popular:

* Freeware
* Freeware, ad supported
* One-off pay up front, get upgrades free
* One-off pay up front, pay for upgrades
* Subscription (recurring annual)
* Subscription (recurring monthly)

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Bruce Schneier on identity theft

business, security / /

From Stephen J. Dubner’s interview with Bruce Schneier in “Bruce Schneier Blazes Through Your Questions” (The New York Times: 4 December 2007):

Identity theft is a problem for two reasons. One, personal identifying information is incredibly easy to get; and two, personal identifying information is incredibly easy to use. Most of our security measures have tried to solve the first problem. Instead, we need to solve the second problem. As long as it’s easy to impersonate someone if you have his data, this sort of fraud will continue to be a major problem.

The basic answer is to stop relying on authenticating the person, and instead authenticate the transaction. Credit cards are a good example of this. Credit card companies spend almost no effort authenticating the person — hardly anyone checks your signature, and you can use your card over the phone, where they can’t even check if you’re holding the card — and spend all their effort authenticating the transaction.

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CopyBot copies all sorts of items in Second Life

art, business, history, security, tech in changing society / /

From Glyn Moody’s “The duplicitous inhabitants of Second Life” (The Guardian: 23 November 2006):

What would happen to business and society if you could easily make a copy of anything – not just MP3s and DVDs, but clothes, chairs and even houses? That may not be a problem most of us will have to confront for a while yet, but the 1.5m residents of the virtual world Second Life are already grappling with this issue.

A new program called CopyBot allows Second Life users to duplicate repeatedly certain elements of any object in the vicinity – and sometimes all of it. That’s awkward in a world where such virtual goods can be sold for real money. When CopyBot first appeared, some retailers in Second Life shut up shop, convinced that their virtual goods were about to be endlessly copied and rendered worthless. Others protested, and suggested that in the absence of scarcity, Second Life’s economy would collapse.

…

Instead of sending a flow of pictures of the virtual world to the user as a series of pixels – something that would be impractical to calculate – the information would be transmitted as a list of basic shapes that were re-created on the user’s PC. For example, a virtual house might be a cuboid with rectangles representing windows and doors, cylinders for the chimney stacks etc.

This meant the local world could be sent in great detail very compactly, but also that the software on the user’s machine had all the information for making a copy of any nearby object. It’s like the web: in order to display a page, the browser receives not an image of the page, but all the underlying HTML code to generate that page, which also means that the HTML of any web page can be copied perfectly. Thus CopyBot – written by a group called libsecondlife as part of an open-source project to create Second Life applications – or something like it was bound to appear one day.

…

Liberating the economy has led to a boom in creativity, just as Rosedale hoped. It is in constant expansion as people buy virtual land, and every day more than $500,000 (£263,000) is spent buying virtual objects. But the downside is that unwanted copying is potentially a threat to the substantial businesses selling virtual goods that have been built up, and a concern for the real-life companies such as IBM, Adidas and Nissan which are beginning to enter Second Life.

Just as it is probably not feasible to stop “grey goo” – the Second Life equivalent of spam, which takes the form of self- replicating objects malicious “griefers” use to gum up the main servers – so it is probably technically impossible to stop copying. Fortunately, not all aspects of an object can be duplicated. To create complex items – such as a virtual car that can be driven – you use a special programming language to code their realistic behaviour. CopyBot cannot duplicate these programs because they are never passed to the user, but run on the Linden Lab’s computers.

As for the elements that you can copy, such as shape and texture, Rosedale explains: “What we’re going to do is add a lot of attribution. You’ll be able to easily see when an object or texture was first created,” – and hence if something is a later copy.

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Online criminals pay the most for bank account details

business, security / /

From The Economist‘s “The price of online robbery” (24 November 2008):

Bank details are the most popular single item for sale by online fraudsters, according to a new report by Symantec, an internet-security firm. They are also the priciest, perhaps because the average account for which details are offered has a balance of nearly $40,000. Sales of details of credit cards make up some 30% of all goods and services on offer on “underground” servers, and nearly 60% of their value. Cards without security codes (or CVV2 numbers) are harder to exploit, and are usually cheaper.

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An analysis of Google’s technology, 2005

business, history, science, security, tech in changing society, technology / /

From Stephen E. Arnold’s The Google Legacy: How Google’s Internet Search is Transforming Application Software (Infonortics: September 2005):

The figure Google’s Fusion: Hardware and Software Engineering shows that Google’s technology framework has two areas of activity. There is the software engineering effort that focuses on PageRank and other applications. Software engineering, as used here, means writing code and thinking about how computer systems operate in order to get work done quickly. Quickly means the sub one-second response times that Google is able to maintain despite its surging growth in usage, applications and data processing.

Google is hardware plus software

The other effort focuses on hardware. Google has refined server racks, cable placement, cooling devices, and data center layout. The payoff is lower operating costs and the ability to scale as demand for computing resources increases. With faster turnaround and the elimination of such troublesome jobs as backing up data, Google’s hardware innovations give it a competitive advantage few of its rivals can equal as of mid-2005.

…

How Google Is Different from MSN and Yahoo

Google’s technologyis simultaneously just like other online companies’ technology, and very different. A data center is usually a facility owned and operated by a third party where customers place their servers. The staff of the data center manage the power, air conditioning and routine maintenance. The customer specifies the computers and components. When a data center must expand, the staff of the facility may handle virtually all routine chores and may work with the customer’s engineers for certain more specialized tasks.

Before looking at some significant engineering differences between Google and two of its major competitors, review this list of characteristics for a Google data center.

1. Google data centers – now numbering about two dozen, although no one outside Google knows the exact number or their locations. They come online and automatically, under the direction of the Google File System, start getting work from other data centers. These facilities, sometimes filled with 10,000 or more Google computers, find one another and configure themselves with minimal human intervention.

2. The hardware in a Google data center can be bought at a local computer store. Google uses the same types of memory, disc drives, fans and power supplies as those in a standard desktop PC.

3. Each Google server comes in a standard case called a pizza box with one important change: the plugs and ports are at the front of the box to make access faster and easier.

4. Google racks are assembled for Google to hold servers on their front and back sides. This effectively allows a standard rack, normally holding 40 pizza box servers, to hold 80.

5. A Google data center can go from a stack of parts to online operation in as little as 72 hours, unlike more typical data centers that can require a week or even a month to get additional resources online.

6. Each server, rack and data center works in a way that is similar to what is called “plug and play.” Like a mouse plugged into the USB port on a laptop, Google’s network of data centers knows when more resources have been connected. These resources, for the most part, go into operation without human intervention.

Several of these factors are dependent on software. This overlap between the hardware and software competencies at Google, as previously noted, illustrates the symbiotic relationship between these two different engineering approaches. At Google, from its inception, Google software and Google hardware have been tightly coupled. Google is not a software company nor is it a hardware company. Google is, like IBM, a company that owes its existence to both hardware and software. Unlike IBM, Google has a business model that is advertiser supported. Technically, Google is conceptually closer to IBM (at one time a hardware and software company) than it is to Microsoft (primarily a software company) or Yahoo! (an integrator of multiple softwares).

Software and hardware engineering cannot be easily segregated at Google. At MSN and Yahoo hardware and software are more loosely-coupled. Two examples will illustrate these differences.

Microsoft – with some minor excursions into the Xbox game machine and peripherals – develops operating systems and traditional applications. Microsoft has multiple operating systems, and its engineers are hard at work on the company’s next-generation of operating systems.

…

Several observations are warranted:

1. Unlike Google, Microsoft does not focus on performance as an end in itself. As a result, Microsoft gets performance the way most computer users do. Microsoft buys or upgrades machines. Microsoft does not fiddle with its operating systems and their subfunctions to get that extra time slice or two out of the hardware.

2. Unlike Google, Microsoft has to support many operating systems and invest time and energy in making certain that important legacy applications such as Microsoft Office or SQLServer can run on these new operating systems. Microsoft has a boat anchor tied to its engineer’s ankles. The boat anchor is the need to ensure that legacy code works in Microsoft’s latest and greatest operating systems.

3. Unlike Google, Microsoft has no significant track record in designing and building hardware for distributed, massively parallelised computing. The mice and keyboards were a success. Microsoft has continued to lose money on the Xbox, and the sudden demise of Microsoft’s entry into the home network hardware market provides more evidence that Microsoft does not have a hardware competency equal to Google’s.

…

Yahoo! operates differently from both Google and Microsoft. Yahoo! is in mid-2005 a direct competitor to Google for advertising dollars. Yahoo! has grown through acquisitions. In search, for example, Yahoo acquired 3721.com to handle Chinese language search and retrieval. Yahoo bought Inktomi to provide Web search. Yahoo bought Stata Labs in order to provide users with search and retrieval of their Yahoo! mail. Yahoo! also owns AllTheWeb.com, a Web search site created by FAST Search & Transfer. Yahoo! owns the Overture search technology used by advertisers to locate key words to bid on. Yahoo! owns Alta Vista, the Web search system developed by Digital Equipment Corp. Yahoo! licenses InQuira search for customer support functions. Yahoo has a jumble of search technology; Google has one search technology.

Historically Yahoo has acquired technology companies and allowed each company to operate its technology in a silo. Integration of these different technologies is a time-consuming, expensive activity for Yahoo. Each of these software applications requires servers and systems particular to each technology. The result is that Yahoo has a mosaic of operating systems, hardware and systems. Yahoo!’s problem is different from Microsoft’s legacy boat-anchor problem. Yahoo! faces a Balkan-states problem.

There are many voices, many needs, and many opposing interests. Yahoo! must invest in management resources to keep the peace. Yahoo! does not have a core competency in hardware engineering for performance and consistency. Yahoo! may well have considerable competency in supporting a crazy-quilt of hardware and operating systems, however. Yahoo! is not a software engineering company. Its engineers make functions from disparate systems available via a portal.

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The figure below provides an overview of the mid-2005 technical orientation of Google, Microsoft and Yahoo.

2005 focuses of Google, MSN, and Yahoo

The Technology Precepts

… five precepts thread through Google’s technical papers and presentations. The following snapshots are extreme simplifications of complex, yet extremely fundamental, aspects of the Googleplex.

Cheap Hardware and Smart Software

Google approaches the problem of reducing the costs of hardware, set up, burn-in and maintenance pragmatically. A large number of cheap devices using off-the-shelf commodity controllers, cables and memory reduces costs. But cheap hardware fails.

In order to minimize the “cost” of failure, Google conceived of smart software that would perform whatever tasks were needed when hardware devices fail. A single device or an entire rack of devices could crash, and the overall system would not fail. More important, when such a crash occurs, no full-time systems engineering team has to perform technical triage at 3 a.m.

The focus on low-cost, commodity hardware and smart software is part of the Google culture.

…

Logical Architecture

Google’s technical papers do not describe the architecture of the Googleplex as self-similar. Google’s technical papers provide tantalizing glimpses of an approach to online systems that makes a single server share features and functions of a cluster of servers, a complete data center, and a group of Google’s data centers.

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The collections of servers running Google applications on the Google version of Linux is a supercomputer. The Googleplex can perform mundane computing chores like taking a user’s query and matching it to documents Google has indexed. Further more, the Googleplex can perform side calculations needed to embed ads in the results pages shown to user, execute parallelized, high-speed data transfers like computers running state-of-the-art storage devices, and handle necessary housekeeping chores for usage tracking and billing.

…

When Google needs to add processing capacity or additional storage, Google’s engineers plug in the needed resources. Due to self-similarity, the Googleplex can recognize, configure and use the new resource. Google has an almost unlimited flexibility with regard to scaling and accessing the capabilities of the Googleplex.

…

In Google’s self-similar architecture, the loss of an individual device is irrelevant. In fact, a rack or a data center can fail without data loss or taking the Googleplex down. The Google operating system ensures that each file is written three to six times to different storage devices. When a copy of that file is not available, the Googleplex consults a log for the location of the copies of the needed file. The application then uses that replica of the needed file and continues with the job’s processing.

…

Speed and Then More Speed

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Google uses commodity pizza box servers organized in a cluster. A cluster is group of computers that are joined together to create a more robust system. Instead of using exotic servers with eight or more processors, Google generally uses servers that have two processors similar to those found in a typical home computer.

Through proprietary changes to Linux and other engineering innovations, Google is able to achieve supercomputer performance from components that are cheap and widely available.

…

… engineers familiar with Google believe that read rates may in some clusters approach 2,000 megabytes a second. When commodity hardware gets better, Google runs faster without paying a premium for that performance gain.

…

Another key notion of speed at Google concerns writing computer programs to deploy to Google users. Google has developed short cuts to programming. An example is Google’s creating a library of canned functions to make it easy for a programmer to optimize a program to run on the Googleplex computer. At Microsoft or Yahoo, a programmer must write some code or fiddle with code to get different pieces of a program to execute simultaneously using multiple processors. Not at Google. A programmer writes a program, uses a function from a Google bundle of canned routines, and lets the Googleplex handle the details. Google’s programmers are freed from much of the tedium associated with writing software for a distributed, parallel computer.

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Eliminate or Reduce Certain System Expenses

Some lucky investors jumped on the Google bandwagon early. Nevertheless, Google was frugal, partly by necessity and partly by design. The focus on frugality influenced many hardware and software engineering decisions at the company.

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Drawbacks of the Googleplex

…

The Laws of Physics: Heat and Power 101

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In reality, no one knows. Google has a rapidly expanding number of data centers. The data center near Atlanta, Georgia, is one of the newest deployed. This state-of-the-art facility reflects what Google engineers have learned about heat and power issues in its other data centers. Within the last 12 months, Google has shifted from concentrating its servers at about a dozen data centers, each with 10,000 or more servers, to about 60 data centers, each with fewer machines. The change is a response to the heat and power issues associated with larger concentrations of Google servers.

The most failure prone components are:

  • Fans.
  • IDE drives which fail at the rate of one per 1,000 drives per day.
  • Power supplies which fail at a lower rate.

Leveraging the Googleplex

…

Google’s technology is one major challenge to Microsoft and Yahoo. So to conclude this cursory and vastly simplified look at Google technology, consider these items:

1. Google is fast anywhere in the world.

2. Google learns. When the heat and power problems at dense data centers surfaced, Google introduced cooling and power conservation innovations to its two dozen data centers.

3. Programmers want to work at Google. “Google has cachet,” said one recent University of Washington graduate.

4. Google’s operating and scaling costs are lower than most other firms offering similar businesses.

5. Google squeezes more work out of programmers and engineers by design.

6. Google does not break down, or at least it has not gone offline since 2000.

7. Google’s Googleplex can deliver desktop-server applications now.

8. Google’s applications install and update without burdening the user with gory details and messy crashes.

9. Google’s patents provide basic technology insight pertinent to Google’s core functionality.

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Debt collection business opens up huge security holes

business, law, security, tech in changing society / /

From Mark Gibbs’ “Debt collectors mining your secrets” (Network World: 19 June 2008):

[Bud Hibbs, a consumer advocate] told me any debt collection company has access to an incredible amount of personal data from hundreds of possible sources and the motivation to mine it.

What intrigued me after talking with Hibbs was how the debt collection business works. It turns out pretty much anyone can set up a collections operation by buying a package of bad debts for around $40,000, hiring collectors who will work on commission, and applying for the appropriate city and state licenses. Once a company is set up it can buy access to Axciom and Experian and other databases and start hunting down defaulters.

So, here we have an entire industry dedicated to buying, selling and mining your personal data that has been derived from who knows where. Even better, because the large credit reporting companies use a lot of outsourcing for data entry, much of this data has probably been processed in India or Pakistan where, of course, the data security and integrity are guaranteed.

Hibbs points out that, with no prohibitions on sending data abroad and with the likes of, say, the Russian mafia being interested in the personal information, the probability of identity theft from these foreign data centers is enormous.

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Asheron’s Call had no mechanism for secure trade between players

business, history, tech in changing society / /

From Timothy Burke’s “The Cookie Monster Economy and ‘Guild Socialism’” (Terra Nova: 2 May 2008):

Mechanisms of exchange have evolved in graphical, commercial virtual worlds from some remarkably crude beginnings. Veterans of the early days of the first Asheron’s Call may remember that at one point, there was no mechanic for secure trade between players. You could hand someone else an item, and then wait and hope for payment in kind. Players responded to that certainty by trying to improvise a reputational culture, including players who built reputations as a trustworthy mobile escrow (both players in a trade would hand their items to the escrow player)., who would then verify that the trade met both of their expectations and distribute the items to their new owners.

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How con artists use psychology to work

1 Comment / business, science, security / /

From Paul J. Zak’s “How to Run a Con” (Psychology Today: 13 November 2008):

When I was in high school, I took a job at an ARCO gas station on the outskirts of Santa Barbara, California. At the time, I drove a 1967 Mustang hotrod and thought I might pick up some tips and cheap parts by working around cars after school. You see a lot of interesting things working the night shift in a sketchy neighborhood. I constantly saw people making bad decisions: drunk drivers, gang members, unhappy cops, and con men. In fact, I was the victim of a classic con called “The Pigeon Drop.” If we humans have such big brains, how can we get conned?

Here’s what happened to me. One slow Sunday afternoon, a man comes out of the restroom with a pearl necklace in his hand. “Found it on the bathroom floor” he says. He followed with “Geez, looks nice-I wonder who lost it?” Just then, the gas station’s phone rings and a man asked if anyone found a pearl necklace that he had purchased as a gift for his wife. He offers a $200 reward for the necklace’s return. I tell him that a customer found it. “OK” he says, “I’ll be there in 30 minutes.” I give him the ARCO address and he gives me his phone number. The man who found the necklace hears all this but tells me he is running late for a job interview and cannot wait for the other man to arrive.

Huum, what to do? The man with the necklace said “Why don’t I give you the necklace and we split the reward?” The greed-o-meter goes off in my head, suppressing all rational thought. “Yeah, you give me the necklace to hold and I’ll give you $100” I suggest. He agrees. Since high school kids working at gas stations don’t have $100, I take money out of the cash drawer to complete the transaction.

You can guess the rest. The man with the lost necklace doesn’t come and never answers my many calls. After about an hour, I call the police. The “pearl” necklace was a two dollar fake and the number I was calling went to a pay phone nearby. I had to fess up to my boss and pay back the money with my next paycheck.

Why did this con work? Let’s do some neuroscience. While the primary motivator from my perspective was greed, the pigeon drop cleverly engages THOMAS (The Human Oxytocin Mediated Attachment System). … THOMAS is a powerful brain circuit that releases the neurochemical oxytocin when we are trusted and induces a desire to reciprocate the trust we have been shown–even with strangers.

The key to a con is not that you trust the conman, but that he shows he trusts you. Conmen ply their trade by appearing fragile or needing help, by seeming vulnerable. Because of THOMAS, the human brain makes us feel good when we help others–this is the basis for attachment to family and friends and cooperation with strangers. “I need your help” is a potent stimulus for action.

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A botnet with a contingency plan

business, law, security, tech in changing society / /

From Gregg Keizer’s “Massive botnet returns from the dead, starts spamming” (Computerworld: 26 November 2008):

A big spam-spewing botnet shut down two weeks ago has been resurrected, security researchers said today, and is again under the control of criminals.

The “Srizbi” botnet returned from the dead late Tuesday, said Fengmin Gong, chief security content officer at FireEye Inc., when the infected PCs were able to successfully reconnect with new command-and-control servers, which are now based in Estonia.

Srizbi was knocked out more than two weeks ago when McColo Corp., a hosting company that had been accused of harboring a wide range of criminal activities, was yanked off the Internet by its upstream service providers. With McColo down, PCs infected with Srizbi and other bot Trojan horses were unable to communicate with their command servers, which had been hosted by McColo. As a result, spam levels dropped precipitously.

But as other researchers noted last week, Srizbi had a fallback strategy. In the end, that strategy paid off for the criminals who control the botnet.

According to Gong, when Srizbi bots were unable to connect with the command-and-control servers hosted by McColo, they tried to connect with new servers via domains that were generated on the fly by an internal algorithm. FireEye reverse-engineered Srizbi, rooted out that algorithm and used it to predict, then preemptively register, several hundred of the possible routing domains.

The domain names, said Gong, were generated on a three-day cycle, and for a while, FireEye was able to keep up — and effectively block Srizbi’s handlers from regaining control.

“We have registered a couple hundred domains,” Gong said, “but we made the decision that we cannot afford to spend so much money to keep registering so many [domain] names.”

Once FireEye stopped preempting Srizbi’s makers, the latter swooped in and registered the five domains in the next cycle. Those domains, in turn, pointed Srizbi bots to the new command-and-control servers, which then immediately updated the infected machines to a new version of the malware.

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1st label with more than half of sales from digital

art, business, tech in changing society / /

From Tim Arango’s “Digital Sales Surpass CDs at Atlantic” (The New York Times: 25 November 2008):

Atlantic, a unit of Warner Music Group, says it has reached a milestone that no other major record label has hit: more than half of its music sales in the United States are now from digital products, like downloads on iTunes and ring tones for cellphones.

…

At the Warner Music Group, Atlantic’s parent company, digital represented 27 percent of its American recorded-music revenue during the fourth quarter. (Warner does not break out financial data for its labels, but Atlantic said that digital sales accounted for about 51 percent of its revenue.)

With the milestone comes a sobering reality already familiar to newspapers and television producers. While digital delivery is becoming a bigger slice of the pie, the overall pie is shrinking fast. Analysts at Forrester Research estimate that music sales in the United States will decline to $9.2 billion in 2013, from $10.1 billion this year. That compares with $14.6 billion in 1999, according to the Recording Industry Association of America.

As a result, the hope that digital revenue will eventually compensate for declining sales of CDs — and usher in overall growth — have largely been dashed.

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How Obama raised money in Silicon Valley & using the Net

business, history, law, politics / /

From Joshua Green’s “The Amazing Money Machine” (The Atlantic: June 2008):

That early fund-raiser [in February 2007] and others like it were important to Obama in several respects. As someone attempting to build a campaign on the fly, he needed money to operate. As someone who dared challenge Hillary Clinton, he needed a considerable amount of it. And as a newcomer to national politics, though he had grassroots appeal, he needed to establish credibility by making inroads to major donors—most of whom, in California as elsewhere, had been locked down by the Clinton campaign.

Silicon Valley was a notable exception. The Internet was still in its infancy when Bill Clinton last ran for president, in 1996, and most of the immense fortunes had not yet come into being; the emerging tech class had not yet taken shape. So, unlike the magnates in California real estate (Walter Shorenstein), apparel (Esprit founder Susie Tompkins Buell), and entertainment (name your Hollywood celeb), who all had long-established loyalty to the Clintons, the tech community was up for grabs in 2007. In a colossal error of judgment, the Clinton campaign never made a serious approach, assuming that Obama would fade and that lack of money and cutting-edge technology couldn’t possibly factor into what was expected to be an easy race. Some of her staff tried to arrange “prospect meetings” in Silicon Valley, but they were overruled. “There was massive frustration about not being able to go out there and recruit people,” a Clinton consultant told me last year. As a result, the wealthiest region of the wealthiest state in the nation was left to Barack Obama.

Furthermore, in Silicon Valley’s unique reckoning, what everyone else considered to be Obama’s major shortcomings—his youth, his inexperience—here counted as prime assets.

[John Roos, Obama’s Northern California finance chair and the CEO of the Palo Alto law firm Wilson Sonsini Goodrich & Rosati]: “… we recognize what great companies have been built on, and that’s ideas, talent, and inspirational leadership.”

…

The true killer app on My.BarackObama.com is the suite of fund-raising tools. You can, of course, click on a button and make a donation, or you can sign up for the subscription model, as thousands already have, and donate a little every month. You can set up your own page, establish your target number, pound your friends into submission with e-mails to pony up, and watch your personal fund-raising “thermometer” rise. “The idea,” [Joe Rospars, a veteran of Dean’s campaign who had gone on to found an Internet fund-raising company and became Obama’s new-media director] says, “is to give them the tools and have them go out and do all this on their own.”

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“What’s amazing,” says Peter Leyden of the New Politics Institute, “is that Hillary built the best campaign that has ever been done in Democratic politics on the old model—she raised more money than anyone before her, she locked down all the party stalwarts, she assembled an all-star team of consultants, and she really mastered this top-down, command-and-control type of outfit. And yet, she’s getting beaten by this political start-up that is essentially a totally different model of the new politics.”

Before leaving Silicon Valley, I stopped by the local Obama headquarters. It was a Friday morning in early March, and the circus had passed through town more than a month earlier, after Obama lost the California primary by nine points. Yet his headquarters was not only open but jammed with volunteers. Soon after I arrived, everyone gathered around a speakerphone, and Obama himself, between votes on the Senate floor, gave a brief hortatory speech telling volunteers to call wavering Edwards delegates in Iowa before the county conventions that Saturday (they took place two months after the presidential caucuses). Afterward, people headed off to rows of computers, put on telephone headsets, and began punching up phone numbers on the Web site, ringing a desk bell after every successful call. The next day, Obama gained nine delegates, including a Clinton delegate.

The most striking thing about all this was that the headquarters is entirely self-sufficient—not a dime has come from the Obama campaign. Instead, everything from the computers to the telephones to the doughnuts and coffee—even the building’s rent and utilities—is user-generated, arranged and paid for by local volunteers. It is one of several such examples across the country, and no other campaign has put together anything that can match this level of self-sufficiency.

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But while his rivals continued to depend on big givers, Obama gained more and more small donors, until they finally eclipsed the big ones altogether. In February, the Obama campaign reported that 94 percent of their donations came in increments of $200 or less, versus 26 percent for Clinton and 13 percent for McCain. Obama’s claim of 1,276,000 donors through March is so large that Clinton doesn’t bother to compete; she stopped regularly providing her own number last year.

“If the typical Gore event was 20 people in a living room writing six-figure checks,” Gorenberg told me, “and the Kerry event was 2,000 people in a hotel ballroom writing four-figure checks, this year for Obama we have stadium rallies of 20,000 people who pay absolutely nothing, and then go home and contribute a few dollars online.” Obama himself shrewdly capitalizes on both the turnout and the connectivity of his stadium crowds by routinely asking them to hold up their cell phones and punch in a five-digit number to text their contact information to the campaign—to win their commitment right there on the spot.

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Money involved in adware & clicks4hire schemes

business, security, tech in changing society / /

From Chapter 2: Botnets Overview of Craig A. Schiller’s Botnets: The Killer Web App (Syngress: 2007):

Dollar-Revenue and GimmyCash are two companies that have paid for installation of their Adware programs. Each has a pay rate formula based on the country of installation. Dollar-Revenue pays 30 cents for installing their adware in a U. S. Web site, 20 cents for a Canadian Web site, 10 cents for a U.K. Web site, 1 cent for a Chinese Web site, and 2 cents for all other Web sites. GimmyCash. com pays 40 cents for U. S. and Canadian Web site installs, 20 cents for 16 European countries, and 2 cents for everywhere else. In addition, GimmyCash pays 5 percent of the webmaster’s earnings that you refer to GimmyCash.

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The various participants in phishing schemes

business, law, security, tech in changing society / /

From Chapter 2: Botnets Overview of Craig A. Schiller’s Botnets: The Killer Web App (Syngress: 2007):

Christopher Abad provides insight into the phishing economy in an article published online by FirstMonday.org (http://www.firstmonday.org/issues/ issue10_9/abad/). The article, “The economy of phishing: A survey of the operations of the phishing market,” reveals the final phase of the phishing life cycle, called cashing. These are usually not the botherders or the phishers. The phishers are simply providers of credential goods to the cashers. Cashers buy the credential goods from the phishers, either taking a commission on the funds extracted or earned based on the quality, completeness, which financial institution it is from, and the victim’s balance in the account. A high-balance, verified, full-credential account can be purchased for up to $100. Full creden- tials means that you have the credit card number, bank and routing numbers, the expiration date, the security verification code (cvv2) on the back of the card, the ATM pin number, and the current balance. Credit card numbers for a financial institution selected by the supplier can be bought for 50 cents per account. The casher’s commission of this transaction may run as much as 70 percent. When the deal calls for commissions to be paid in cash, the vehicle of choice is Western Union.

The continuation of phishing attacks depends largely on the ability of the casher’s to convert the information into cash. The preferred method is to use the credential information to create duplicate ATM cards and use the cards to withdraw cash from ATM terminals. Not surprisingly the demand for these cards leans heavily in favor of banks that provide inadequate protections of the ATM cards. Institutions like Bank of America are almost nonexistent in the phisher marketplace due to the strong encryption (triple DES) used to protect information on its ATM cards.

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Earn $750,000 per month sending spam

business, security, tech in changing society / /

From Chapter 2: Botnets Overview of Craig A. Schiller’s Botnets: The Killer Web App (Syngress: 2007):

Most people can’t understand how anyone could make money sending out spam. It is the global scope of the Internet that makes it possible. When Jeremy Jaynes was arrested as one of the top ten spammers in the world authorities say he earned $750,000 a month selling fake goods, services, and pornography via spam. Evidence presented during the trial showed that he had made $24 million through various e-mail schemes. For every 30,000 e-mails he sent one person bought what he was selling, earning him $40. It is estimated that he sent over 10 million e-mails. He was arrested in December 2003 and convicted in November 2004.

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The life cycle of a botnet client

security, tech in changing society, technology / /

From Chapter 2: Botnets Overview of Craig A. Schiller’s Botnets: The Killer Web App (Syngress: 2007):

What makes a botnet a botnet? In particular, how do you distinguish a botnet client from just another hacker break-in? First, the clients in a botnet must be able to take actions on the client without the hacker having to log into the client’s operating system (Windows, UNIX, or Mac OS). Second, many clients must be able to act in a coordinated fashion to accomplish a common goal with little or no intervention from the hacker. If a collection of computers meet this criteria it is a botnet.

…

The life of a botnet client, or botclient, begins when it has been exploited. A prospective botclient can be exploited via malicious code that a user is tricked into running; attacks against unpatched vulnerabilities; backdoors left by Trojan worms or remote access Trojans; and password guessing and brute force access attempts. In this section we’ll discuss each of these methods of exploiting botnets.

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Rallying and Securing the Botnet Client

Although the order in the life cycle may vary, at some point early in the life of a new botnet client it must call home, a process called “rallying. “When rallying, the botnet client initiates contact with the botnet Command and Control (C&C) Server. Currently, most botnets use IRC for Command and Control.

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Rallying is the term given for the first time a botnet client logins in to a C&C server. The login may use some form of encryption or authentication to limit the ability of others to eavesdrop on the communications. Some botnets are beginning to encrypt the communicated data.

At this point the new botnet client may request updates. The updates could be updated exploit software, an updated list of C&C server names, IP addresses, and/or channel names. This will assure that the botnet client can be managed and can be recovered should the current C&C server be taken offline.

The next order of business is to secure the new client from removal. The client can request location of the latest anti-antivirus (Anti-A/V) tool from the C&C server. The newly controlled botclient would download this soft- ware and execute it to remove the A/V tool, hide from it, or render it ineffective.

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Shutting off the A/V tool may raise suspicions if the user is observant. Some botclients will run a dll that neuters the A/V tool. With an Anti-A/V dll in place the A/V tool may appear to be working normally except that it never detects or reports the files related to the botnet client. It may also change the Hosts file and LMHosts file so that attempts to contact an A/V vendor for updates will not succeed. Using this method, attempts to contact an A/V vendor can be redirected to a site containing malicious code or can yield a “website or server not found” error.

One tool, hidden32. exe, is used to hide applications that have a GUI interface from the user. Its use is simple; the botherder creates a batch file that executes hidden32 with the name of the executable to be hidden as its parameter. Another stealthy tool, HideUserv2, adds an invisible user to the administrator group.

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Waiting for Orders and Retrieving the Payload

Once secured, the botnet client will listen to the C&C communications channel.

…

The botnet client will then request the associated payload. The payload is the term I give the software representing the intended function of this botnet client.

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Social engineering a bank robbery

security / /

From Ernesto Londono and Clarence Williams’s “Md., D.C. Banks Duped By Phony Cash Courier” (The Washington Post: 12 January 2008):

And on Thursday, about 9:30 a.m., a man dressed as an employee of the security company Brink’s walked into a Wachovia branch in downtown Washington and walked out with more than $350,000.

The man had a badge and a gun holster on his belt, said Debbie Weierman, a spokeswoman for the FBI’s Washington field office. He told officials at the bank, at 801 Pennsylvania Ave. NW, that he was filling in for the regular courier.

About 4 p.m., when the real guard showed up, a bank official told him that someone had picked up the cash, D.C. police said. The guard returned to his office and told a supervisor that he did not make the pickup at the bank. The supervisor called a Wachovia manager, who in turn notified authorities. Police were called nearly 11 hours after the heist.

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Cheating, security, & theft in virtual worlds and online games

business, law, security, social software, tech in changing society, technology / /

From Federico Biancuzzi’s interview with security researchers Greg Hoglund & Gary McGraw, authors of Exploiting Online Games, in “Real Flaws in Virtual Worlds” (SecurityFocus: 20 December 2007):

The more I dug into online game security, the more interesting things became. There are multiple threads intersecting in our book: hackers who cheat in online games and are not detected can make tons of money selling virtual items in the middle market; the law says next to nothing about cheating in online games, so doing so is really not illegal; the kinds of technological attacks and exploits that hackers are using to cheat in online games are an interesting bellwether; software is evolving to look very much like massively distributed online games look today with thick clients and myriad time and state related security problems. [Emphasis added]

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In Brazil, a criminal gang even kidnapped a star MMORPG player in order to take away his character, and its associated virtual wealth.

The really interesting thing about online game security is that the attackers are in most cases after software running on their own machine, not software running on somebody else’s box. That’s a real change. Interestingly, the laws we have developed in computer security don’t have much to say about cheating in a game or hacking software on your own PC.

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An analysis of splogs: spam blogs

business, security, tech in changing society / /

From Charles C. Mann’s “Spam + Blogs = Trouble” (Wired: September 2006):

Some 56 percent of active English-language blogs are spam, according to a study released in May by Tim Finin, a researcher at the University of Maryland, Baltimore County, and two of his students. “The blogosphere is growing fast,” Finin says. “But the splogosphere is now growing faster.”

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A recent survey by Mitesh Vasa, a Virginia-based software engineer and splog researcher, found that in December 2005, Blogger was hosting more than 100,000 sploggers. (Many of these are likely pseudonyms for the same people.)

…

Some Title, the splog that commandeered my name, was created by Dan Goggins, the proud possessor of a 2005 master’s degree in computer science from Brigham Young University. Working out of his home in a leafy subdivision in Springville, Utah, Goggins, his BYU friend and partner, John Jonas, and their handful of employees operate “a few thousand” splogs. “It’s not that many,” Goggins says modestly. “Some people have a lot of sites.” Trolling the Net, I came across a PowerPoint presentation for a kind of spammers’ conference that details some of the earnings of the Goggins-Jonas partnership. Between August and October of 2005, they made at least $71,136.89.

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In addition to creating massive numbers of phony blogs, sploggers sometimes take over abandoned real blogs. More than 10 million of the 12.9 million profiles on Blogger surveyed by splog researcher Vasa in June were inactive, either because the bloggers had stopped blogging or because they never got started.

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Not only do sploggers create fake blogs or take over abandoned ones, they use robo-software to flood real blogs with bogus comments that link back to the splog. (“Great post! For more on this subject, click here!”) Statistics compiled by Akismet, a system put together by WordPress developer Mullenweg that tries to filter out blog spam, suggest that more than nine out of 10 comments in the blogosphere are spam.

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Maryland researcher Finin and his students found that splogs produce about three-quarters of the pings from English-language blogs. Another way of saying this is that the legitimate blogosphere generates about 300,000 posts a day, but the splogosphere emits 900,000, inundating the ping servers.

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Another giveaway: Both Some Title and the grave-robbing page it links to had Web addresses in the .info domain. Spammers flock to .info, which was created as an alternative to the crowded .com, because its domain names are cheaper – registrars often let people use them gratis for the first year – which is helpful for those, like sploggers, who buy Internet addresses in bulk. Splogs so commonly have .info addresses that many experts simply assume all blogs from that domain are fake.

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