The Edward Snowden documents exposed a new spy scandal last week. The Intercept reported how the National Security agency and its U.K. counterpart stole the “SIM” codes that power many mobile phones.
In one sense, this is nothing new. Thanks to Snowden, we all know our electronic communications are almost never private. Many Americans seem to have made peace with that idea – but they shouldn’t.
Investors have already lost billions of dollars because of the government’s actions. They will lose billions more when this latest news puts at least one company out of business.
Gemalto, the Dutch-domiciled French firm that NSA penetrated, calls itself “World Leader in Digital Security.” That tagline that is now laughably wrong. Worse, SIM chips, cardkeys and payment cards are practically its entire business.
If The Intercept’s reporting is correct, every product Gemalto sold since at least 2010 has a fatal flaw. They are not secure. They don’t deliver the benefit Gemalto claimed.
Customers – which in this case are 400+ telecom companies all over the globe – will
almost certainly demand refunds. Customers who think they were hacked will file lawsuits. Regulators will order phone providers to replace SIM chips.
Can Gemalto afford all this? Probably not. Add in the fact that no telecom in its right mind will ever again buy Gemalto products, and I don’t see how the company can survive.
The way in which NSA hacked Gemalto is even more alarming. They intercepted the personal e-mail and Facebook messages of various employees to identify who had access to the desired information.
These employees were not terrorists or even terror suspects. They were law-abiding citizens whose only mistake was to work for a law-abiding company that had information the U.S. government wanted. The NSA, with some British help, invaded their privacy and took it.
Just to make it all more perfect, those workers will probably lose their jobs in the coming Gemalto layoffs.
No one needs that kind of economic stimulus.
President Obama said this in a January 2014 speech: “[P]eople around the world, regardless of their nationality, should know that the United States is not spying on ordinary people who don’t threaten our national security.”
That’s simply false. The United States DOES spy on “ordinary people who don’t threaten our national security.”
Aside from the threat to democracy posed by a president with such low regard for truth, this is a problem in two different ways.
First, it gives people and businesses all over the world one more reason not to trust American or even European technology. Our companies will lose billions more in revenue as a result.
Second, it tells America’s tech leaders that they cannot trust the Obama administration’s word on cybersecurity. The tense relationships between federal agencies and the private sector prevent them from sharing important information.
If you were a tech company CEO, would you call the government to help you stop hackers - knowing the government may well BE the hackers? Of course not. The result is that everyone is more vulnerable to online fraud and theft.
Tech executives have bigger worries, too. They have to wonder if the NSA might give them the Gemalto treatment – or may have already done so.
They’re right to wonder. The government that put Gemalto on corporate death row could easily do the same to them.
How do you have a vibrant economy under these conditions? You can’t – nor can you have a functional democracy with rule of law. Those qualities made the U.S. the world’s economic leader. Don’t expect us to keep the crown much longer.
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