EU to decry Apple's Irish tax deal

29 September 2014 Last updated at 14:33

The European Commission will set out its case on Tuesday against Apple's tax arrangements in Ireland.

The report is part of a broader EU investigation into tax policies in Ireland, Netherlands and Luxembourg.

The Commission is examining whether these countries have unfairly favoured multinational companies including Apple, Fiat and Starbucks.

The EU will make its case that Apple's tax arrangements with Dublin amount to illegal state aid.

On Tuesday, the Commission will also outline its reasons for launching an investigation into Fiat Finance and Trade, which is resident for tax purposes in Luxembourg.

The Commission will argue that backroom tax deals it believes were struck between Apple and the Irish government and Fiat and the Luxembourg government could constitute a breach of EU regulations on state aid.

'Not state aid'

"Ireland is confident that there is no breach of state aid rules in this case and has already issued a formal response to the Commission earlier this month, addressing in detail the concerns and some misunderstandings contained in the opening decision," Ireland's Department of Finance said.

Ireland's corporate tax rate is set at 12.5%, but Apple enjoys an effective rate of tax of 2%, due to the way it channels overseas sales through its subsidiaries.

Ireland's flexible approach to tax is designed to attract investment and jobs to the country. But other European countries say their treasuries lose out, as corporations funnel profits through Irish registered companies that are not resident for tax anywhere.

Apple has denied that the company agreed any special tax arrangements with Dublin.

"There's never been anything that would be construed as state aid," Apple's chief financial officer, Luca Maestri, told the Financial Times newspaper.

Apple says it pays all the tax it owes.

'No selective treatment'

Under EU law, state financing for individual companies is heavily restricted. However, previously, tax arrangements have not been considered.

In June, when the Commission announced it would be conducting in-depth investigations into Fiat's tax affairs in Luxembourg, Starbucks' in the Netherlands and Apple's in Ireland, Joaquin Almunia, vice-president for competition policy, said state aid rules should be applied to taxation.

"Under the EU's state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the member state were applied in a fair and non-discriminatory way," he said.

When the inquiry was first announced in June, Apple said: "We have received no selective treatment from Irish officials.

"Apple is subject to the same tax laws as scores of other international companies doing business in Ireland."

Payback?

Commission spokesman Antoine Columbani confirmed that the outline of the case against Ireland's tax policy towards Apple would be made public on Tuesday.

"The decision will set out the Commission's reasons for opening an in-depth investigation," he said.

Following publication in the Commission's Official Journal in a few weeks' time, interested parties will have one month to submit responses.

Once the Commission has reached a judgement the EU has the right to recover illegally granted state aid from the company in question. This could amount to billions of euros if Apple is found to have received benefits it was not entitled to.

The EU's move comes as the Organisation for Economic Co-operation and Development begins a broader crackdown on aggressive tax avoidance by multinational companies.

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Apple says bent iPhones are 'rare'

25 September 2014 Last updated at 20:31 By Leo Kelion Technology desk editor

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WATCH: Marc Cieslak puts the iPhone 6 Plus through some stress tests, in an unscientific experiment

Apple has responded to claims that its new handsets are prone to bending by saying such damage would be "rare" during normal use.

Media outlets across the globe had reported that several iPhone 6 owners had complained of handsets becoming misshapen after being carried in trousers pockets without a case.

Several of the US firm's rivals have also helped publicise the claims.

Apple said nine customers had told it their iPhone 6 Plus phones had bent.

In a statement the company noted that the handsets' shells had been constructed out of "anodised aluminium, which is tempered for extra strength" and also featured stainless steel and titanium parts to reinforce the areas of the phones likely to experience the most stress.

"We chose these high-quality materials and construction very carefully for their strength and durability," it added.

"We also perform rigorous tests throughout the entire development cycle.

"iPhone 6 and iPhone 6 Plus meet or exceed all of our high quality standards to endure everyday, real life use.

"With normal use a bend in iPhone is extremely rare and through our first six days of sale, a total of nine customers have contacted Apple with a bent iPhone 6 Plus. As with any Apple product, if you have questions please contact Apple."

The BBC understands that one of the checks that Apple had carried out before launching the models was a "sit test", which is designed to simulate the effects of a user sitting down on a hard surface with the phone in their back pocket thousands of times over the course of several years.

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Russell Holly, who works for tech site geek.com, told the BBC on Wednesday that his iPhone 6 had bent

The company also carried out a torsion test, which involved clamping a phone at both ends and then applying a twisting force 8,000 times.

Stock drop

Apple's share price has fallen following the publicity generated by users posting photos of bent iPhones to the internet.

News that it had also pulled an iOS 8 operating system update after iPhone 6 users complained it made their phones unable to make or receive calls had also caused concern.

However, one analyst highlighted that the company had been much quicker to respond to reports about bending than it had back in 2010, when customers complained about the iPhone 4 dropping calls when gripped on its left-hand side.

"It took too long in the antenna case - I don't know if this is organisational memory or not, but here Apple is going out and saying it did do tests and is stating the facts," said Ken Dulaney, who covers the mobile phone sector for the research firm Gartner.

"But this is probably something Apple has to look into more.

"It probably did all the tests it said it did - I don't ever find that Apple really lies about anything - but I think the people reporting the problem aren't lying either."

Apple's competitors have taken advantage of its troubles.

The official Twitter accounts of LG, HTC and Samsung have all posted messages alluding to the controversy, with LG going so far as to use the hashtag "bendgate", which other members of the public had used to refer to the claims.

Record demand

Apple had previously announced that it had sold more than 10 million units of the iPhone 6 and its larger sibling the iPhone 6 Plus.

"While our team managed the manufacturing ramp better than ever before, we could have sold many more iPhones with greater supply and we are working hard to fill orders as quickly as possible," its chief executive Tim Cook said in a press release on Monday.

It highlighted the "all-new dramatically thin" design of the handsets - a factor some users had speculated might be the cause of them bending.

However, it has also been pointed out that handsets by Sony, Samsung, Blackberry and others have also bent in the past, and several analysts have cautioned that it was too early to say if the incidents involving the new iPhones were more widespread.

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Web attacks exploit Shellshock bug

26 September 2014 Last updated at 11:39

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Liam O'Murchu, Symantec: "US government has rated this 10 out of 10 from severity point of view"

A series of attacks on websites and servers using the serious Shellshock bug has been spotted.

Millions of servers use software vulnerable to the bug, which lets attackers run commands on that system.

So far, thousands of servers have been compromised via Shellshock and some have been used to bombard web firms with data, said experts.

The number of attacks and compromises was likely to grow as the code used to exploit the bug was shared.

The Shellshock bug was discovered in a tool known as Bash that is widely used by the Unix operating system and many of its variants, including Linux open source software and Apple's OSX.

Apple said it was working on a fix for its operating system and added that most users would not be at risk from Shellshock.

Attackers have been spotted creating networks of compromised machines, known as botnets, that were then put to other uses.

Honeypots

One group used their Shellshock botnet to bombard machines run by Akamai with huge amounts of junk data to try to knock them offline. Another group used its botnet to scan for more machines that are vulnerable.

Evidence of the scanning and attacks came from honeypots run by security companies. These are computers that have been set up to look vulnerable but which catch information about attackers.

Jaime Blasco, a researcher at security firm AlienVault, said its honeypot had seen scans and attacks that used Shellshock. The scans simply informed attackers that a server was vulnerable, he wrote, but others attempted to install malware to put that machine under an attacker's control.

The control that Shellshock gave to attackers made it potentially more of a problem than the serious Heartbleed bug discovered in April this year, said security researcher Kasper Lindegaard from Secunia.

Continue reading the main story

"This is going to unfold over the coming weeks and months"

End Quote Marc Maiffret BeyondTrust

"Heartbleed only enabled hackers to extract information," he told tech news site The Register. "Bash enables hackers to execute commands to take over your servers and systems."

The seriousness of the bug has also led governments to act quickly. The UK government said its cybersecurity response team had issued an alert to its agencies and departments giving Shellshock the "highest possible threat ratings".

It had this rating, said the alert, because vulnerable systems would "inevitably" include machines that formed part of the UK's critical national infrastructure.

The US and Canada are believed to have issued similar alerts and told technology staff to patch systems as quickly as possible. Amazon, Google, Akamai and many other tech firms have also issued advisories to customers about the bug.

As well as software patches for vulnerable systems, security firms and researchers are also producing signatures and filter lists to help spot attacks based around it.

Early reports suggest up to 500 million machines could be vulnerable to Shellshock but, wrote Jen Ellis from security firm Rapid7, this figure was now being revised downwards because of the "number of factors that need to be in play for a target to be susceptible".

"This bug is going to affect an unknowable number of products and systems, but the conditions to exploit it are fairly uncommon for remote exploitation," said Ms Ellis.

Marc Maiffret, chief technology officer at security firm BeyondTrust, expressed a similar view.

"There is a lot of speculation out there as to what is vulnerable, but we just don't have the answers," he said. "This is going to unfold over the coming weeks and months."

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FBI 'concerned' by phone encryption

26 September 2014 Last updated at 12:39

Plans by Apple and Google to do more to protect customers' privacy have made the FBI "very concerned".

Speaking to reporters, FBI boss James Comey said the plans to enable encryption by default could thwart law enforcement investigations.

Lives could depend on police forces continuing to get access to the data on devices used by criminals and terrorists, he said.

The FBI was talking to both Apple and Google about its fears, said Mr Comey.

Protect privacy

The conversations with tech firms needed to be had before the day when police forces lost access to those devices, he said.

"I'd hate to have people look at me and say, 'Well how come you can't save this kid?' 'How come you can't do this thing?'" said Mr Comey in a briefing.

His comments came in reaction to a decision by Apple to enable a file encryption system on its iOS 8 software for which it has no keys. This means it would not be able to comply with any official request to help police get at the data on those devices.

Google has said it too is planning to enable a similar encryption system by default on the next version of Android.

Mr Comey said he was "very concerned" about these plans because of what they would allow people to do.

"What concerns me about this is companies marketing something expressly to allow people to place themselves beyond the law," he said.

"I am a huge believer in the rule of law, but I am also a believer that no-one in this country is beyond the law," he added.

Apple and Google have yet to respond to Mr Comey's comments.

Ten days prior to Mr Comey's press statement, iOS data forensics expert Jonathan Zdziarski pointed out that Apple's encryption system would not stop police getting at data on portable devices.

Specifically weakening security systems just to aid the police was a bad decision, he said.

"For the sake of privacy and overall security, the only logical solution is to make products as secure as possible, and let good detective work do the crime solving, rather than an easy button," he wrote in a blogpost.

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Google urged to change privacy rules

26 September 2014 Last updated at 16:30

European data privacy regulators have put renewed pressure on Google to alter its privacy policy.

It follows changes to the policy two years ago which regulators felt breached European rules.

Among other things, it says Google must tell users exactly what data is collected and with whom it is shared.

Google said it was working with regulators to "explain its privacy policy changes".

The dispute has been running since March 2012 when Google consolidated its 60 privacy policies into one and started combining data from YouTube, Gmail and Google Maps.

Users were given no means to opt out of the changes.

Although Google has not been directly accused of acting illegally, it has been accused of providing "incomplete and approximate" details raising "deep concerns about data protection and the respect of the European law".

Google did make some changes to its privacy policy in March this year, linking to individual services from its main privacy document.

"It has made some changes but our investigation won't end until we believe it is fully compliant," said a spokesman for the UK's information commissioner's office (ICO).

In a letter addressed to Google's chief executive Larry Page, the European Union's data protection working party wrote: "Google must meet its obligations with respect to the European and national data protection legal frameworks and has to determine the means to achieve these legal requirements."

A spokesman for Google told the Reuters news agency that it was looking forward to discussing the new guidelines.

"We have worked with different data protection authorities across Europe to explain our privacy policies," he said.

'Shameful'

Regulators in Italy, France, Spain, Germany, Britain and the Netherlands have launched investigations into Google's privacy policies and, in January, France fined Google 150,000 euros (£117,000) for failure to comply with its privacy rules.

"It is disappointing that two years of deliberation has led to the preparation of a document that is the equivalent of selling cucumbers to the gardener," said Anna Fielder, chairwoman of trustees at campaign group Privacy International.

"The guidelines are fundamental basics that Google should have implemented years ago, and the weakness of the language used in framing this will mean Google will do nothing to comply.

"These guidelines are doing nothing more than stating the obvious, and it is shameful that it took the Article 29 Working Party two years to come up with something that Google should already have been complying with," she said.

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Third batch of nude celeb photos leaked

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Aid sought for pioneering hacker

29 September 2014 Last updated at 11:15

A fund has been started to help legendary hacker John Draper, aka Captain Crunch, recover after a long stay in hospital.

Mr Draper was in hospital getting treatment for a variety of age-related medical conditions.

Now 71, he was one of the first "phone phreaks" who hacked US phone networks.

Most famously, Mr Draper told Steve Wozniak and Steve Jobs about phone hacking which helped them generate cash to found Apple.

Apple aid

The campaign on Qikfunder is aiming to raise $5,000 (£3,000) to help pay Mr Draper's day-to-day costs while he recovers.

The fund was started, said the page, so he could focus on getting better. So far, it is not clear who started the funding drive as the page only credits unnamed "friends".

Qikfunder is a relative newcomer to the crowdfunding world and a small number of campaigns have been run through it.

On Twitter, Mr Draper thanked from "the bottom of my heart" the people who set up the fund-raising account. So far, about 25% of the target total has been raised.

Mr Draper's age and a degenerative spine condition landed him in hospital in mid-August where he underwent surgery twice to tackle his back problem. Complications after surgery meant he was in hospital for a month.

Mr Draper got the name of Captain Crunch because he found out that a toy whistle given away with the cereal of the same name generated a tone at a frequency that controlled some functions on AT&T's phone network.

Experimenting with the whistle led Mr Draper to develop an electronic "blue box" that could generate other tones which, when played down a phone line, gave owners limited control over the US phone networks. Many people used the boxes to get free phone calls.

Mr Wozniak and Mr Jobs learned the secrets of "phone phreaking" from Mr Draper and started a business selling blue boxes to college students.

Once Apple was founded, Mr Draper was regularly used as a software programmer and worked on ways to connect early Apple machines to phones and on the EasyWriter word processing program.

After leaving Apple's employ, he spent many years working in Silicon Valley and elsewhere in California at a variety of established tech firms and start-ups.

Update 29 September, 2014: The Qikfunder campaign surpassed its goal at the weekend. More than $6,900 has been raised, but the site is set to continue accepting donations for another 52 days. On Sunday, Mr Draper took part in a Reddit "ask me anything" chat, in which he revealed he was also hoping to raise money to pay for a professional writer to help with his memoirs.

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Microsoft beats Sony to China launch

29 September 2014 Last updated at 12:40 By Dave Lee Technology reporter, BBC News

Microsoft has launched the Xbox One in China - becoming the first major console maker to enter what could be a massively lucrative market.

The first consoles were sold in Shanghai, priced at 4,299 yuan ($699, £430). Sony and Nintendo are yet to launch their respective products.

In January, the Chinese government lifted a 14-year ban on consoles, made because of worries over content.

However, many popular titles, such as Call of Duty, will still be banned.

Only 10 games were available to buy on the Xbox One's release - but Microsoft has said 70 titles are in the pipeline.

Beating its rivals to the market may give Microsoft a much-needed sales boost. Its console is currently being outsold by Sony's PlayStation 4 in all major markets.

But Piers Harding-Rolls, a games analyst from IHS, told the BBC: "There's advantages and disadvantages in being first.

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The BBC's Martin Patience reports as the Xbox console goes on sale in China

"There's obviously potential. Overcoming the issues of piracy, overcoming the issues of pricing, having the right content to connect with the local audience - those are all big issues."

Sony has set up business partnerships to launch the PS4 in China, but a date has not yet been set.

Both companies will compete with a thriving black market in illegally imported consoles playing pirated versions of games.

The firms will also come up against mobile games, which are not banned in China and are extremely popular.

Ticking the boxes

The Xbox One launch was originally set to happen last week but was delayed - Microsoft did not give a reason why.

The US firm is currently the focus of an anti-monopoly investigation relating to its Office software.

The company's chief executive Satya Nadella visited the country last week, and pledged to help the government with its investigation.

Getting games to market is likely to require negotiation with regulators, who favour educational games over those with violent themes.

But that could play well for Microsoft thanks to its recent acquisition of Minecraft - a block-building online game that is massively popular in the Western world, particularly with young children.

"I don't think Minecraft has been heavily exposed to the Chinese market," Mr Harding-Rolls said.

"It ticks all the boxes for regulatory requirements in China. It's educational, it's not heavily violent.

"I would suspect that they're thinking very seriously about bringing it to China. It sits well with the regulatory demands."

Microsoft bought Minecraft's Swedish developer Mojang earlier this month for $2.5bn (£1.5bn).

Follow Dave Lee on Twitter @DaveLeeBBC

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Instagram appears blocked in China

29 September 2014 Last updated at 11:52

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Micha Benoliel, CEO of the firm that makes Firechat, spoke to BBC Trending about the app's surge in popularity in Hong Kong

Instagram has reportedly been blocked in China following a weekend of pro-democracy protests in Hong Kong.

Photos shared on Weibo, a microblogging platform similar to Twitter, also seem to be hidden if they contain certain keywords.

Searches for phrases like "Occupy Central" and "Hong Kong students" are blocked, says the BBC's Beijing bureau.

The Occupy Central movement and students in Hong Kong are leading the protest.

Instagram told the BBC it was aware of the reports and was looking into the situation.

"It's commonplace for China's internet censors to go into overdrive during politically sensitive events," said Celia Hatton, the BBC's correspondent in Beijing.

"However, the decision to block Instagram, a relatively popular photo-sharing application, takes the attempt to manage communications around the Hong Kong protests one step further, revealing Beijing's fears that some in mainland China might be inspired by activists in Hong Kong."

Following a call from student activist leader Joshua Wong, 100,000 people downloaded Bluetooth-powered messenger app Firechat, founding company Open Garden told news website Tech in Asia.

Firechat allows users to take part in group chats with between two and 10,000 people, without the need for an internet connection.

Using a technology known as mesh networking, messages can be sent to people within the immediate vicinity, as long as they too have the app installed. However, discussions are not private, and can be seen by anyone in the area.

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Snapchat hit by weightloss spam scam

29 September 2014 Last updated at 16:31 By Dave Lee Technology reporter, BBC News

Accounts on messaging service Snapchat have been hijacked to send spam - but the site has said it was not the victim of a hack.

User profiles were used to send out advertisements for a weightloss site.

It's not clear how many people have been affected, but Snapchat users in several countries took to Twitter to complain about the problem.

Snapchat has suffered breaches in the past, including the leak of 4.6m usernames and phone numbers in January.

In that instance, a website called SnapchatDB released the personal data but censored the last two digits of phone numbers. Those behind it said they wanted to raise awareness of a vulnerability that Snapchat had not fixed.

In a statement, Snapchat said the latest incident was due to user credentials being found on other sites.

"We have seen evidence that hackers who have access to a trove of credentials leaked from other websites, have started using them to gain access to Snapchat accounts," the service told the BBC.

"In many instances, our defences have notified the user that their account has been compromised.

"We recommend using a unique and complex password to access your Snapchat account."

Wojciechowski

The breach takes control of a person's account to send an image to everyone in a user's contact list.

Users who log back into their accounts are then emailed by Snapchat, warning that they should change their password.

The image sent out does not appear to cause any harm to the sender or recipient, and instead promotes a website offering suspect weightloss products.

The web address is registered under the name of Stanislaw Wojciechowski - the former president of Poland.

Snapchat, which launched in 2011, has been hit by a number of security set-backs.

The app is designed to send pictures and messages that self-destruct after a short time. However, an app called Snapchat Hack allowed users to save messages permanently.

Security researcher Brian Honan said the service's track record was not encouraging - and that it could soon put users off.

"One thing that moves people off apps is if it's not cool anymore, or it's been replaced by another fantastic service. Or that people have lost confidence in it.

"For apps like Snapchat, they're competing with other applications and newcomers - if people lose confidence in them, they're going to stop using them."

Follow Dave Lee on Twitter @DaveLeeBBC

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