The Morning Download: Reuters IT Failed to Secure Blog Platform

[Michael Hickins]

The Morning Download cues up the most important news in business technology every weekday morning. Send us your tips, compliments and complaints.

Good morning. Patching security vulnerabilities in software has never been more important, yet in many organizations, other activities get a higher priority. Case in point: Thomson Reuters, which suffered a breach to its WordPress blog platform Friday, ignored security notifications and failed to update an older version that has known security issues.

“If organizations… stay on an outdated version, then they put themselves at risk of these sorts of breaches,” Mark Jaquith, one of the lead software developers at WordPress, told CIO Journal.

The irony is rich. Security concerns were one of the factors holding companies back from adopting cloud services such as WordPress, but once they take that step, many customers relinquish security responsibilities to their vendors. Cloud customers “think [security is] somebody else’s problem,” says Dave Bartoletti of Forrester Research. But the buck ultimately stops with the CIO, whether it’s to contain a loss of confidential or financial information, to explain an embarrassing breach, or to satisfy a compliance audit — no matter who hosts the application or infrastructure.

How CIOs can help manage disruptive technology. Companies often blame legacy infrastructure for their failure to embrace new technologies and applications that would let them get new offerings to market and/or improve their productivity, CIO Journal Guest Contributor Irving Wladawsky-Berger writes. The CIO has a major role to play in working out a phased implementation strategy for the new innovations. While large companies can’t hope to match the speed and focus of start-ups, they can integrate the new into the old. “With few exceptions, the assets that have made a company successful over the years are invaluable if properly deployed,” he says.


Apple shares its secrets in court. Apple‘s insistence that rival Samsung copied its designs has forced one the world’s most secretive companies to explain its creative process, the WSJ’s Ian Sherr reports. Apple shared details on how it created the iPhone and the iPad, provided accounts on how much it spends on advertising and even hinted at a conversation concerning building a car last week in federal court.

Zynga struggles to shift to mobile. Virtual game maker Zynga is banking on mobile games to turn around its flagging business – but still doesn’t have a clear plan for doing so. Making money from mobile games is particularly tricky, says the WSJ’s Shayndi Raice, because smaller screens mean less room for ads, and people who play games on their phones aren’t as willing to shell out for ways to advance to higher levels as more dedicated players on PCs.

Add a lawsuit to Zynga’s mounting troubles. Electronic Arts is suing Zynga for allegedly infringing on its Facebook game “The Sims Social” with the new Zynga game “The Ville.” Both games allow players to create virtual characters known as avatars and build homes for them. The suit comes as EA, a game maker known for PC and console games, moves more game development efforts to social networks like Facebook, competing directly against Zynga, reports WSJ’s Ben Fox Rubin.

Microsoft explains Azure outage. Microsoft blamed a system configuration mistake for an outage that hit Windows Azure customers in Western Europe. The outage was caused by a “safety valve” mechanism designed to prevent network failures, reports IDG’s Juan Carlos Perez.

Reuters hacked blog featured false reports. The breach suffered by Thomson Reuters Friday resulted in multiple false posts to its website, including a fake interview with a Syrian rebel army leader, reports the WSJ’s Shalini Ramachandran. Reuters did not share information about who was responsible for the attack, but the Free Syrian Army blamed the Syrian government for the hack.

ATT winds down 2G. ATT is shutting down its 2G wireless networks by 2017 as it continues to upgrade its systems to faster technology and better use its limited airwaves, the WSJ’s Thomas Gryta reports. An ATT spokesman said the company no longer sells 2G handsets to contract or prepaid customers. Along with phones, ATT does have some other devices connected to its 2G networks, but it also expects that they will transition to more modern technology in coming years.

Chip makers target cheaper phones. A key battlefield is emerging for suppliers of mobile chips—the low-end smartphone market in developing countries. Chip makers like Qualcomm, Intel and Taiwan-based MediaTek are focusing on low-priced phones that typically cost less than $200, because the fast-growing market offers high volumes of sales, reports the Journal’s Shara Tibken. As a result, the companies are working with handset vendors in China and other emerging countries to increase their presence in the segment. According to ABI Research, cheap smartphones should make up about 42% of global smartphone shipments in 2017, up from about 14% in 2010. By comparison, high-end devices costing more than $400 should stay steady at about 23%.

Nasdaq: Facebook glitch could get more expensive. Nasdaq said it may have to spend more cash fighting lawsuits and making technical changes as a result of Facebook’s glitch-riddled May 18 IPO, Bloomberg reports. Last month the exchange proposed a $62 million fund to reimburse members who suffered losses as a result of the glitch.

Apps promise farm aid. Several start-ups are applying the software-as-a-service model to the farming business, the NYT’s Randall Stross reports. The apps allow agriculture and livestock farmers to take their iPads into the field (literally) to help track and measure their businesses activities. While the apps give farmers instant access to sources they frequently use, vendors in this new niche must contend with the fact that farming income arrives in big lumps rather than a steady stream. “That could make it hard to persuade farmers who are now using notebooks or spreadsheets for record-keeping to add a new and recurring expense category, software-as-a-service, even if the amount is tiny when compared with annual income,” Stross writes.

Google Glass spotted in the wild. A Google engineer named Steve Lee was seen riding the San Francisco area’s transit system wearing Google’s futuristic glasses, which layers data on top of what the wearer is looking at. Business Insider’s Owen Thomas, who spotted Lee wearing the glasses, notes that the project showcases both Google’s ability to process huge amounts of information and its increasingly large hardware ambitions.

Internet pirates will always win. Stopping online piracy is like playing the world’s largest game of Whac-A-Mole, writes the NYT’s Nick Bilton. “Hit one, countless others appear. Quickly. And the mallet is heavy and slow.” Now people are also beginning to share files that contain the schematics for physical objects on BitTorrent sites, using 3-D printers that can produce physical objects to produce them. Bilton says that content owners will “find themselves stuck behind ancient legal walls when trying to stop people from downloading objects online as copyright laws do not apply to standard physical objects deemed ‘noncreative.’”


Where was the ‘kill-switch,” Knight Capital critics ask. Securities and Exchange Commission Chairman Mary Schapiro on Friday called the computer glitch that cost brokerage firm Knight Capital Group $440 million “unacceptable.” Schapiro said  the agency is expediting a rule requiring exchange ensure their systems capacity and integrity, the WSJ’s Jenny Strasburg reports. Industry experts are asking how a computer glitch could run up faulty trades uninterrupted for 30 minutes. “Even just a minute or two would have been surprising to me. On these time scales, that is an eternity,” a former trader at a high-speed trading firm tells the New York Times.

Meanwhile, Knight scrambles to stay alive. Knight Capital said investors have agreed to buy $400 million of 2% convertible preferred stock, providing a critical lifeline for the market maker, the WSJ reports. The identity of the investors wasn’t immediately available. Knight said it expects to consummate the transaction later Monday morning.

Knight’s software ills were no excuse. The Journal also says that hours after the software glitch, SEC Chairman Mary Schapiro shot down a request to cancel some of the erratic trades. Schapiro’s willingness to stand firm on a decision that would imperil a large firm was partly a reflection of the changes in place since the 2010 flash crash. Then, the exchanges were allowed to cancel trades, which market participants said was arbitrary and unfair.


Fiscal cliff is already taking a toll. The approaching fiscal cliff is already making businesses cancel new investments and put off new hires. Until recently, it’s mainly been economists and defense contractors who were sounding the alarm, but more diversified companies have begun to hunker down as well, the NYT says. Timothy H. Powers, CEO of electrical products maker Hubbell says the uncertainty has forced the company to cancel millions of dollars’ worth of equipment orders and shelve plans to hire workers for about 100 positions.

Monti warns of euro-zone dissolution. Italian Prime Minister Mario Monti warned of a potential breakup of Europe without more efforts to lower government borrowing costs, Bloomberg reports. In an interview with Germany’s Der Spiegel magazine, Monti said “the tensions that have accompanied the euro zone in the past years are already showing signs of a psychological dissolution of Europe.” While he backed the ECB’s willingness to address “severe malfunctioning” in the government bond market, Monti said the problems ”have to be solved quickly now so that there’s no further uncertainty about the euro zone’s ability to overcome the crisis.”

It’s every bank for itself in Libor probe. Banks are turning against each other as the Libor probe intensifies, DealBook says. “While acknowledging their own wrongdoing, institutions are pointing out actions at other banks that they believe are worse — and in some cases, extend to top executives.” J.P. Morgan and Citigroup are each emphasizing that their CEOs weren’t implicated in the wrongdoing as in the case of Barclays, “and therefore the banks deserve to be treated less severely.”

Silver probe may be dropped. The CFTC appears close to dropping a four-year investigation into the possible manipulation of the silver market because of lack of evidence, the FT reports [registration req’d]. “The conclusion of the investigation will come as a relief to JPMorgan. Although no company or individual was named in the CFTC investigation, the Wall Street bank has suffered a torrent of allegations from silver investors on the blogosphere.”

Tom Loftus contributed to this article.

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