Apple faces lawsuits after saying it slows down aging iPhones

A salesman checks a customer's iPhone at a mobile phone store in New Delhi, India, July 27, 2016.

By Paresh Dave

SAN FRANCISCO (Reuters) – Apple Inc. defrauded iPhone users by slowing devices without warning to compensate for poor battery performance, according to eight lawsuits filed in various federal courts in the week since the company opened up about the year-old software change.

The tweak may have led iPhone owners to misguided attempts to resolve issues over the last year, the lawsuits contend.

All the lawsuits – filed in U.S. District Courts in California, New York and Illinois – seek class-action to represent potentially millions of iPhone owners nationwide.

A similar case was lodged in an Israeli court on Monday, the newspaper Haaretz reported.

Apple did not respond to an email seeking comment on the filings.

The company acknowledged last week for the first time in detail that operating system updates released since “last year” for the iPhone 6, iPhone 6s, iPhone SE and iPhone 7 included a feature “to smooth out” power supply from batteries that are cold, old or low on charge.

Phones without the adjustment would shut down abruptly because of a precaution designed to prevent components from getting fried, Apple said.

The disclosure followed a Dec. 18 analysis by Primate Labs, which develops an iPhone performance measuring app, that identified blips in processing speed and concluded that a software change had to be behind them.

One of the lawsuits, filed Thursday in San Francisco, said that “the batteries’ inability to handle the demand created by processor speeds” without the software patch was a defect.

“Rather than curing the battery defect by providing a free battery replacement for all affected iPhones, Apple sought to mask the battery defect,” according to the complaint.

The plaintiff in that case is represented by attorney Jeffrey Fazio, who represented plaintiffs in a $53-million settlement with Apple in 2013 over its handling of iPhone warranty claims.

The problem now seen is that users over the last year could have blamed an aging computer processor for app crashes and sluggish performance – and chose to buy a new phone – when the true cause may have been a weak battery that could have been replaced for a fraction of the cost, some of the lawsuits state.

“If it turns out that consumers would have replaced their battery instead of buying new iPhones had they known the true nature of Apple’s upgrades, you might start to have a better case for some sort of misrepresentation or fraud,” said Rory Van Loo, a Boston University professor specializing in consumer technology law.

But Chris Hoofnagle, faculty director for the Berkeley Center for Law & Technology, said in an email that Apple may not have done wrong.

“We still haven’t come to consumer protection norms” around aging products, Hoofnagle said. Pointing to a device with a security flaw as an example, he said, “the ethical approach could include degrading or even disabling functionality.”

The lawsuits seek unspecified damages in addition to, in some cases, reimbursement. A couple of the complaints seek court orders barring Apple from throttling iPhone computer speeds or requiring notification in future instances.

(Reporting by Paresh Dave; Editing by Leslie Adler)

Apple sees its mobile devices as platform for artificial intelligence

An Apple employee showcases the augmented reality on an iPhone 8 Plus at the Apple Orchard Shop in Singapore September 22, 2017. REUTERS/Edgar Su

By Jess Macy Yu

TAIPEI (Reuters) – Apple Inc  sees its mobile devices as a major platform for artificial intelligence in the future, Chief Operating Officer Jeff Williams said on Monday.

Later this week, Apple is set to begin taking pre-orders for its new smartphone, the iPhone X – which starts at $999 and uses artificial intelligence (AI) features embedded in the company’s latest A11 chips.

The phone promises new facial recognition features such as Face ID that uses a mathematical model of a person’s face to allow the user to sign on to their phones or pay for goods with a steady glance at their phones.

“We think that the frameworks that we’ve got, the ‘neural engines’ we’ve put in the phone, in the watch … we do view that as a huge piece of the future, we believe these frameworks will allow developers to create apps that will do more and more in this space, so we think the phone is a major platform,” Williams said.

He was speaking at top chip manufacturer Taiwan Semiconductor Manufacturing Company’s 30th anniversary celebration in Taipei, which was attended by global tech executives.

Williams said technological innovations, especially involving the cloud and on-device processing, will improve life without sacrificing privacy or security.

“I think we’re at an inflection point, with on-device computing, coupled with the potential of AI, to really change the world,” he said.

He said AI could be used to change the way healthcare is delivered, an industry he sees as “ripe” for change.

Williams said Apple’s integration of artificial intelligence wouldn’t be just limited to mobile phones.

“Some pieces will be done in data centers, some will be on the device, but we are already doing AI in the broader sense of the word, not the ‘machines thinking for themselves’ version of AI,” he said referring to the work of Nvidia Corp, a leader in AI.

Global tech firms such as Facebook, Alphabet Inc, Amazon, and China’s Huawei are spending heavily to develop and offer AI-powered services and products in search of new growth drivers.

Softbank Group Corp, which has significantly invested in artificial intelligence, plans a second Vision Fund that could be about $200 billion in size, the Wall Street Journal reported on Friday.

At Monday’s event, TSMC Chairman Morris Chang described his company’s relationship with Apple as “intense.”

Williams said the relationship started in 2010, the year Apple launched the iPhone 4, with both parties taking on substantial risk.

He credited Chang for TSMC’s “huge” capital investment to ramp up faster than the pace the industry was used to at the time. Apple decided to have 100 percent of its new iPhone and new iPad chips for application processors sourced at TSMC, and TSMC invested $9 billion to bring up its Tainan fab in a record 11 months, he said.

 

(Reporting by Jess Macy Yu, additional reporting by Eric Auchard, Editing by Miyoung Kim and Adrian Croft)

 

Security firm finds some Macs vulnerable to ‘firmware’ attacks

FILE PHOTO: Apple CEO Tim Cook speaks under a graphic of the new MacBook Pro during an Apple media event in Cupertino, California, U.S. October 27, 2016. REUTERS/Beck Diefenbach

By Stephen Nellis

(Reuters) – Since 2015, Apple Inc <AAPL.O> has tried to protect its Mac line of computers from a form of hacking that is extremely hard to detect, but it has not been entirely successful in getting the fixes to its customers, according to research released on Friday by Duo Security.

Duo examined what is known as firmware in the Mac computers. Firmware is an in-built kind of software that is even more basic than an operating system like Microsoft Windows or macOS.

When a computer is first powered on — before the operating system has even booted up — firmware checks to make sure that basic components like a hard disk and processor are present and tells them what to do. That makes malicious code hiding in it hard to spot.

In most cases, firmware is a hassle to update with the latest security patches. Updates have to be carried out separately from the operating system updates that are more commonplace.

In 2015, Apple started bundling firmware updates along with operating system updates for Mac machines in an effort to ensure firmware on them stayed up to date.

But Duo surveyed 73,000 Mac computers operating in the real world and found that 4.2 percent of them were not running the firmware they should have been based on their operating system. In some models – such as the 21.5-inch iMac released in late 2015 – 43 percent of machines had out-of-date firmware.

That left many Macs open to hacks like the “Thunderstrike” attack, where hackers can control a Mac after plugging an Ethernet adapter into the machine’s so-called thunderbolt port.

Paradoxically, it was only possible to find the potentially vulnerable machines because Apple is the only computer maker that has sought to make firmware updates part of its regular software updates, making it both more trackable and the best in the industry for firmware updates, Rich Smith, director of research and development at Duo, told Reuters in an interview.

Duo said that it had informed Apple of its findings before making them public on Friday. In a statement, Apple said it was aware of the issue and is moving to address it.

“Apple continues to work diligently in the area of firmware security, and we’re always exploring ways to make our systems even more secure,” the company said in a statement. “In order to provide a safer and more secure experience in this area, macOS High Sierra automatically validates Mac firmware weekly.”

(Reporting by Stephen Nellis; Editing by Leslie Adler)

Beijing cyber regulators to summon Apple over live streaming: Xinhua

FILE PHOTO: The Apple logo is pictured inside the newly opened Omotesando Apple store at a shopping district in Tokyo June 26, 2014. REUTERS/Yuya Shino/File Photo

BEIJING (Reuters) – Internet regulators in China’s capital plan to summon Apple Inc <APPL.O> to urge the American firm to tighten its checks on software applications available in its Apple Store, the official Xinhua News Agency reported on Wednesday.

The Beijing Cyberspace Administration, together with the Beijing Public Security Bureau and Beijing Cultural Market Administrative Law Enforcement Team, has already met representatives from Apple about the examination of live streaming apps from its app store, Xinhua said.

The U.S. tech firm is turning to selling more apps and services in China amid falling sales and rising competition from domestic smartphone makers.

Apple confirmed this year that it removed the New York Times Co’s <NYT.N> English- and Chinese-language news apps from its iTunes store in China following a request from authorities.

Apple in Beijing could not be reached for comment after normal business hours.

The Beijing Cyberspace Administration and the other two departments separately ordered three domestic live-streaming websites to rectify management loopholes, Xinhua said.

China’s fast-growing live-streaming market produced revenues of more than 30 billion yuan ($4.36 billion) last year, according to investment bank China Renaissance Securities, even as regulators have clamped down on sites that provide illegal content, including pornography.

(Reporting By Matthew Miller and Catherine Cadell; Editing by Robert Birsel)

Obama targets corporate offshore tax avoidance

A 3D printed Apple logo is seen in front of a displayed Irish flag in this illustration

By Jason Lange

WASHINGTON (Reuters) – The Obama administration on Thursday took action to limit the use of foreign tax credits by American multinational companies to reduce their U.S. tax bills, a move that followed an EU order that Apple Inc pay back taxes to Ireland.

The Treasury issued legal guidance reducing the scope companies have to apply foreign tax credits against their U.S. tax obligations. It was not immediately clear how this could affect Apple, which European regulators ordered last month to pay Ireland 13 billion euros ($14.6 billion).

“We are closing another tax loophole that contributes to the erosion of our tax base,” said Treasury Assistant Secretary for Tax Policy Mark Mazur in a statement.

Analysts have speculated whether Apple would be able to cut its U.S. tax bill by claiming foreign tax credits for the extra taxes it has been told to pay in Europe.

The Treasury’s tax notice applies to all companies required by a foreign government to pay additional taxes, a Treasury spokesperson said.

(Reporting by Jason Lange; Editing by Kevin Drawbaugh, Chizu Nomiyama and Meredith Mazzilli)

FBI Unlocking Method Won’t Work on Newer Phones

The Apple logo is pictured at its flagship retail store in San Francisco

Reuters) – The Federal Bureau of Investigation’s secret method for unlocking the iPhone 5c used by one of the San Bernardino shooters will not work on newer models, FBI Director James Comey said.

“We have a tool that works on a narrow slice of phones,” Comey said at a conference on encryption and surveillance at Kenyon University in Ohio late on Wednesday.

Apple’s shares were down 1.3 percent at midday.

Comey added that the technique would not work on the iPhone 5s and the later models iPhone 6 and 6s. The iPhone 5c model was introduced in 2013 and has since been discontinued by Apple as newer models have become available.

The Justice Department said in March it had unlocked the San Bernardino shooter’s iPhone with the help of an unidentified third party and dropped its case against Apple Inc, ending a high-stakes legal clash but leaving the broader fight over encryption unresolved.

As the technique cannot be used to break into newer models, law enforcement authorities will likely have to lean on Apple to help them access the devices involved in other cases.

The Justice Department has asked a New York court to force Apple to unlock an iPhone 5s related to a drug investigation. Prosecutors in that case said they would update the court by April 11 on whether it would “modify” its request for Apple’s assistance.

If the government continues to pursue that case, the technology company could potentially use legal discovery to force the FBI to reveal what technique it used, a source familiar with the situation told Reuters.

Apple and the FBI were not immediately available for comment.

The FBI began briefing select U.S. senators this week about the method used to unlock the San Bernardino iPhone.

Up to Wednesday’s close of $110.96, Apple’s shares had risen more than 5 percent this year.

(Reporting by Narottam Medhora in Bengaluru and Dustin Volz in Washington; Editing by Saumyadeb Chakrabarty)

Apple, Google Products Target of Court Order

Apple Logo inside Corporate offices

SAN FRANCISCO (Reuters) – The American Civil Liberties Union on Wednesday said it had identified 63 cases across the U.S. in which the federal government asked for a court order compelling Apple Inc or Google to help access devices seized during investigations.

The cases predominantly arise out of investigations into drug crimes, the ACLU said, adding that the data indicate such government requests have become “quite ordinary.”

Representatives for the Justice Department and Apple declined to comment.

A spokesman for Google, a unit of Alphabet Inc, declined to say how frequently it has cooperated with All Writs Act requests or orders, and how often it has contested them.

The Justice Department previously disclosed that Apple has received 70 court orders requiring it to provide assistance since 2008, which it obeyed without objection.

However, last October Apple contested a Justice Department demand for assistance in a Brooklyn drug case. Since then, Apple has objected to several other government requests for help accessing devices across the country, the company said in a court filing last month.

A U.S. judge in Brooklyn agreed with Apple and ruled that Congress has not authorized the government to ask for the help it demanded of the company. The Justice Department has appealed that ruling.

The ACLU report comes after the Justice Department withdrew a request for Apple’s assistance in California, saying on Monday it had succeeded in unlocking an iPhone used by one of the shooters involved in a rampage in San Bernardino in December without Apple’s help.

Other cases involving government requests for Apple’s help are still pending.

A variety of Apple and Google products have been targeted by court orders, according to the ACLU report. In one, an Apple iPhone 5 was seized by a man arrested in 2013 for importing methamphetamine from Mexico.

A California court ordered Apple to help the Justice Department bypass the passcode and copy data onto an external hard drive. The order does not specify which operating system was running on the phone.

(Reporting by Dan Levine)

U.S. says it may not need Apple to open San Bernardino iPhone

(Reuters) – U.S. prosecutors said Monday that a “third party” had presented a possible method for opening an encrypted iPhone used by one of the San Bernardino shooters, a development that could bring an abrupt end to the high-stakes legal showdown between the government and Apple Inc.

A federal judge in Riverside, California, late Monday agreed to the government’s request to postpone a hearing scheduled for Tuesday so that the FBI could try the newly discovered technique. The Justice Department said it would update the court on April 5.

The government had insisted until Monday that it had no way to access the phone used by Rizwan Farook, one of the two killers in the December massacre in San Bernardino, California, except to force Apple to write new software that would disable the password protection.

The Justice Department last month obtained a court order directing Apple to create that software, but Apple has fought back, arguing that the order is an overreach by the government and would undermine computer security for everyone.

The announcement on Monday that an unnamed third party had presented a way of breaking into the phone on Sunday – just two days before the hearing and after weeks of heated back-and-forth in court filings – drew skepticism from many in the tech community who have insisted that there were other ways to get into the phone.

“From a purely technical perspective, one of the most fragile parts of the government’s case is the claim that Apple’s help is required to unlock the phone,” said Matt Blaze, a professor and computer security expert at the University of Pennsylvania. “Many in the technical community have been skeptical that this is true, especially given the government’s considerable resources.”

Former prosecutors and lawyers supporting Apple said the move suggested that the Justice Department feared it would lose the legal battle, or at minimum would be forced to admit that it had not tried every other way to get into the phone.

In a statement, the Justice Department said its only interest has always been gaining access to the information on the phone and that it had continued to explore alternatives even as litigation began. It offered no details on the new technique except that it came from a non-governmental third party, but said it was “cautiously optimistic” it would work.

“That is why we asked the court to give us some time to explore this option,” a spokeswoman for the Justice Department, Melanie R. Newman, said. “If this solution works, it will allow us to search the phone and continue our investigation into the terrorist attack that killed 14 people and wounded 22 people.”

It would also likely end the case without a legal showdown that many had expected to reach the U.S. Supreme Court.

An Apple executive told reporters on a press call that the company knew nothing about the Justice Department’s possible method for getting into the phone, and that the government never gave any indication that it was continuing to search for such solutions.

The executive characterized the Justice Department’s admission Monday that it never stopped pursuing ways to open the phone as a sharp contrast with its insistence in court filings that only Apple possessed the means to do so.

Nate Cardozo, staff attorney at the Electronic Frontier Foundation, a civil liberties group backing Apple, said the San Bernardino case was the “hand-chosen test case” for the government to establish its authority to access electronic information by whatever means necessary.

In that context, he said, the last-minute discovery of a possible solution and the cancellation of the hearing is “suspicious,” and suggests the government might be worried about losing and setting a bad precedent.

But George Washington University law professor Orin Kerr, a former Justice Department computer crime prosecutor, said the government was likely only postponing the fight.

“The problem is not going away, it’s just been delayed for a year or two,” he said.

Apple said that if the government was successful in getting into the phone, which might involve taking advantage of previously undiscovered vulnerabilities, it hoped officials would share information on how they did so. But if the government drops the case it would be under no obligation to provide information to Apple.

In opposing the court order, Apple’s chief executive, Tim Cook, and his allies have argued that it would be unprecedented to force a company to develop a new product to assist a government investigation, and that other law enforcement agencies around the world would rapidly demand similar services.

Law enforcement officials, led by Federal Bureau of Investigation Director James Comey, have countered that access to phones and other devices is crucial for intelligence work and criminal investigations.

The government and the tech industry have clashed for years over similar issues, and Congress has been unable to pass legislation to address the impasse.

(Reporting by Joseph Menn, additional reporting by Mari Saito; Editing by Leslie Adler and Andrew Hay)

Apple fight could escalate with demand for ‘source code’

SAN FRANCISCO (Reuters) – The latest filing in the legal war between the planet’s most powerful government and its most valuable company gave one indication of how the high-stakes confrontation could escalate even further.

In what observers of the case called a carefully calibrated threat, the U.S. Justice Department last week suggested that it would be willing to demand that Apple turn over the “source code” that underlies its products as well as the so-called “signing key” that validates software as coming from Apple.

Together, those two things would give the government the power to develop its own spying software and trick any iPhone into installing it. Eventually, anyone using an Apple device would be unable to tell whether they were using the real thing or a version that had been altered by officials to be used as a spy tool.

Technology and security experts said that if the U.S. government was able to obtain Apple’s source code with a conventional court order, other governments would demand equal rights to do the same thing.

“We think that would be pretty terrible,” said Joseph Lorenzo Hall, chief technologist at the nonprofit Center for Democracy & Technology.

The battle between Apple and the U.S Justice Department has been raging since the government in February obtained a court order demanding that Apple write new software to help law enforcement officials unlock an iPhone associated with one of the shooters in the December attack in San Bernardino, California that killed 14 people.

Apple is fighting the order, arguing that complying with the request would weaken the security of all iPhones and create an open-ended precedent for judges to make demands of private companies.

The Justice Department’s comments about source code and signing keys came in a footnote to a filing last week in which it rejected Apple’s arguments. Apple’s response to the DOJ brief is expected on Tuesday.

Justice Department lawyers said in the brief that they had refrained from pursuing the iOS source code and signing key because they thought “such a request would be less palatable to Apple. If Apple would prefer that course, however, that may provide an alternative that requires less labor by Apple.”

The footnote evoked what some lawyers familiar with the case call a “nuclear option,” seeking the power to demand and use the most prized assets of lucrative technology companies.

A person close to the government’s side told Reuters that the Justice Department does not intend to press the argument that it could seize the company’s code, and someone on Apple’s side said the company isn’t worried enough to counter the veiled threat in its brief due Tuesday.

But many people expect the iPhone matter to reach the U.S. Supreme Court, and thus even fallback legal strategies are drawing close scrutiny.

ODDS OF SUCCESS UNCLEAR

There is little clarity on whether a government demand for source code would succeed.

Perhaps the closest parallel was in a case filed by federal prosecutors against Lavabit LLC, a privacy-oriented email service used by Edward Snowden. In trying to recover Snowden’s unencrypted mail from the company, which did not keep Snowden’s cryptographic key, the Justice Department got a court order forcing the company to turn over another key instead, one that would allow officials to impersonate the company’s website and intercept all interactions with its users.

“Lavabit must provide any and all information necessary to decrypt the content, including, but not limited to public and private keys and algorithms,” the lower court ruled.

Lavabit shut down rather than comply. But company lawyer Jesse Binnall said the Fourth Circuit Court of Appeals, which upheld the lower ruling, did so on procedural grounds, so that the Justice Department’s win would not influence much elsewhere.

In any case, full source code would be even more valuable than the traffic key in the Lavabit case, and the industry would go to extreme lengths to fight for it, Binnall said.

“That really is the keys to the kingdom,” Binnall said.

Source code is sometimes inspected during lawsuits over intellectual property, and the Justice Department noted that Apple won permission to review some of rival Samsung’s &lt;005930.KS> code in one such case. In that case and similar battles, the code is produced with strict rules to prevent copying.

No cases brought by the government have led to that sort of code production, or at least none that have come to light.

But intelligence agencies operate under different rules and have wide latitude overseas. Some advanced espionage programs attributed to the United States used digital certificates that were stolen from Taiwanese companies, though not full programs.

U.S. software code may have been sought in other cases, such as investigations relying on the Patriot Act or the Foreign Intelligence Surveillance Act (FISA), which applies within American borders.

Several people who have argued before the special FISA court or are familiar with some of its cases say they know of no time that the government has sought source code.

(Reporting by Joseph Menn; Editing by Jonathan Weber and Cynthia Osterman)

Mac ransomware caught before large number of computers infected

(Reuters) – The first known ransomware attack on Apple Inc’s Mac computers, which was discovered over the weekend, was downloaded more than 6,000 times before the threat was contained, according to a developer whose product was tainted with the malicious software.

Hackers infected Macs with the “KeRanger” ransomware through a tainted copy of Transmission, a popular program for transferring data through the BitTorrent peer-to-peer file sharing network.

So-called ransomware is a type of malicious software that restricts access to a computer system in some way and demands the user pay a ransom to the malware operators to remove the restriction.

KeRanger, which locks data on Macs so users cannot access it, was downloaded about 6,500 times before Apple and developers were able to thwart the threat, said John Clay, a representative for the open-source Transmission project.

That is small compared to the number of ransomware attacks on computers running Microsoft Corp’s Windows operating system. Cyber security firm Symantec Corp observed some 8.8 million attacks in 2014 alone.

Still, cyber security experts said they expect to see more attacks on Macs as the KeRanger hackers and other groups look for new ways to infect Mac computers.

“It’s a small number but these things always start small and ramp up huge,” said Fidelis Cybersecurity threat systems manager John Bambenek. “There’s a lot of Mac users out there and a lot of money to be made.”

Symantec, which sells anti-virus software for Macs, warned on its blog that “Mac users should not be complacent.” The post offered tips on protecting against ransomware.

The Transmission project provided few details about how the attack was launched.

“The normal disk image (was) replaced by the compromised one” after the project’s main server was hacked, said Clay.

He added that “security on the server has since been increased” and that the group was in “frequent contact” with Apple as well as Palo Alto Networks, which discovered the ransomware on Friday and immediately notified Apple and Transmission.

An Apple representative said the company quickly took steps over the weekend to prevent further infections by revoking a digital certificate that enabled the rogue software to install on Macs.

Transmission responded by removing the malicious 2.90 version of its software from its website. On Sunday, it released version 2.92, which its website says automatically removes the ransomware from infected Macs.

Forbes earlier reported on the number of KeRanger downloads, citing Clay.

(Reporting by Jim Finkle; Editing by Cynthia Osterman and Bill Rigby)