|Bid||1,884.62 x 1200|
|Ask||1,885.38 x 1400|
|Day's range||1,873.00 - 1,887.39|
|52-week range||1,566.76 - 2,035.80|
|Beta (5Y monthly)||1.51|
|PE ratio (TTM)||83.56|
|Earnings date||29 Jan 2020|
|Forward dividend & yield||N/A (N/A)|
|1y target est||2,181.63|
Amazon Future Engineer Donates $1 million to Washington STEM and $1 million to Pacific Science Center, two respected Washington State nonprofits.
The top stories here are Apple's ITP vulnerability, Amazon's motion to stop work under the JEDI contract, Amazon's soaring music subs and the UK digital tax.
Quarterly earnings results from Comcast, Southwest, American Airlines, and more. And a look at why Pure Storage, Inc. (PSTG) is a Zacks Rank 1 (Strong Buy) stock right now, as it trades under $20 a share...
(Bloomberg) -- Legendary investor Bill Miller’s hedge fund jumped 120% last year -- and he says it’s because he didn’t stray from his top names.“In the fourth quarter, we did our favorite thing to do in markets: nothing,” Miller wrote in an investor letter dated Jan. 15. “No new names and no elimination of holdings from the portfolio. This doesn’t happen as often as it probably should.”The performance stands in contrast to the industry. Hedge funds on average rose 9.2% last year, according to Bloomberg Hedge Fund Indices, while the S&P Index 500 jumped 29% in that period. Miller’s gain marks a turnaround for 2018 when the fund slid about 34% as markets plunged.The veteran stock-picker’s Miller Value Partners 1 surged 60% in the fourth quarter alone, according to the letter seen by Bloomberg. The fund, which has about $220 million in assets, uses one-to-three times leverage on its investments.Among the fund’s top contributors to the gains were security system company ADT Inc., Flexion Therapeutics Inc. and Teva Pharmaceutical Industries Ltd. Other holdings included furniture retailer RH and Amazon.com Inc.Miller, who focuses on beaten-down securities that trade at a large discount to their intrinsic value, predicts the bull market will continue, though “stocks will not move in a straight line higher.” He declined to comment beyond the letter.Miller gained fame beating the S&P 500 for 15 straight years when he ran the Legg Mason Value Trust. He stumbled during the financial crisis, losing 55% in 2008 and triggering redemptions.His Miller Opportunity Trust, a mutual fund with $1.7 billion in assets, was up about 34% last year and rose about 19% in the fourth quarter.(Updates with Miller declining to comment in sixth paragraph)To contact the reporter on this story: Melissa Karsh in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Sam Mamudi at email@example.com, Alan MirabellaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Amazon (AMZN) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
(Bloomberg Opinion) -- Have we finally reached the point where we automatically assume that every new retail disaster has been caused by a private equity firm? Yes, I believe we have. When the New York Post published a report on Tuesday contending that New York’s Fairway Market grocery chain was going to liquidate — a claim denied by the company, which subsequently filed for Chapter 11 bankruptcy protection on Thursday — I began exploring whether private equity was indeed responsible for its problems.It was.The year was 2007. Fairway, a treasured New York institution that was founded in 1933, had grown from one store on Manhattan’s Upper West Side to four stores, three in New York City and one on Long Island. The stores were supermarket size, but they didn’t much resemble a Safeway or a Kroger. They were eclectic, with 50 brands of olive oil, dozens of varieties of olives, cheese, smoked salmon, imported beer and who knows what else. It was quintessential New York. On a per-square-foot basis, the four Fairways were among the highest grossing grocery stores in the country.Howie Glickberg, the grandson of the founder, was one of three partners who owned Fairway Market. The other two were ready to cash out, and others in management who held small equity stakes were looking for a payday. Glickberg needed to find a source of liquidity. Unfortunately for him, he found Sterling Investment Partners, a private equity firm based in Westport, Connecticut, that focuses on mid-market companies.“I was looking to expand the business,” Glickberg told me when I caught up with him on Wednesday afternoon. In the ensuing buyout, Sterling put $150 million into the company in return for an 80% ownership stake. The majority of that was debt. Needless to say, the debt landed on Fairway’s books, not Sterling’s. Three Sterling partners, including co-founder Charles Santoro, joined the board. None of them had any grocery experience.Sterling had enormous ambitions for the company. Glickberg had envisioned expanding slowly, a store at a time. Santoro talked about turning Fairway into a national chain with hundreds of stores that would compete with Whole Foods and Trader Joe’s. Santoro did not respond to an email request for an interview.By 2012, Fairway was up to 12 stores, including some in suburban New Jersey, where the company’s urban cachet didn’t necessarily translate. Most of this expansion was fueled by yet more debt. Not surprisingly, the expansion eviscerated the company’s profits while adding millions more in debt to its balance sheet. By 2012, its debt burden had grown to more than $200 million, and it was losing more than $10 million a year.Badly in need of cash, Sterling turned to the public markets. In April 2013, Fairway Group Holdings Corp., as the company was now called, went public at $13 a share, raising $177 million. Its prospectus said that the money would go toward “new store growth and other general corporate purposes.” But that wasn’t quite accurate; the prospectus showed that more than $80 million went to pay “dividends” to preferred shareholders — i.e. Sterling Investment Partners. An additional $7.3 million went to management.Around the same time as the IPO, Glickberg was pushed aside and a new chief executive officer was brought in, an accountant who had been an executive at Grand Union, a grocery chain that failed in 2013. Glickberg did stay on the board, however, where he was the only person with either grocery or retail experience.By 2014, Fairway was up to 15 stores. Its directors — a number of them Sterling executives — were paying themselves absurd amounts of money: $12.1 million in 2013, according to the company’s 2014 proxy. Santoro alone took down $5.4 million that year — at a company with a market cap below $170 million.And that wasn’t the only problem with how Fairway was being run. Hannah Howard, Fairway’s former director of communications, would later describe what it looked like from the inside:[T]he place was kind of a mess: It took months to get paid, with leadership claiming paychecks had been lost on the truck to Red Hook. As expansion scaled, finding talented, knowledgeable staff became more difficult, so quality at new locations began to suffer. It became increasingly apparent that Fairway’s corporate leaders were good at running two or three stores, but they didn’t make the right preparations to run a dozen. “There were not processes or systems in place that were scalable,” says one erstwhile executive. “The leadership was completely incompetent.”Meanwhile, Whole Foods and Trader Joe’s were expanding methodically. When Amazon Inc. bought Whole Foods, it meant that Fairway had a competitor with limitless cash. Fairway’s vaunted revenue-per-square-foot numbers dropped by a third. Cash flow was consistently negative. The stores looking increasingly shabby because the company couldn’t afford to keep them up. By 2016, saddled with $267 million in debt, Fairway filed for Chapter 11 bankruptcy protection. It hadn’t turned a quarterly profit the entire time it was a public company.Here perhaps is the strangest part of the story: Although Fairway managed to reduce its debt by $140 million through the bankruptcy process, it didn’t use bankruptcy to close stores or break any of its expensive leases ($6 million alone for the flagship store on the Upper West Side). It didn’t try to go back to what it was, a small chain of groceries that were part of New York’s central nervous system. Meanwhile, Sterling Investment Partners, having milked Fairway for nine years, walked away. Another private equity firm, the Blackstone Group Inc., took over. Glickberg retired.By August 2018, Blackstone had exited and the company had been bought by two other private equity firms: Brigade Capital Management LP and Goldman Sachs Group Inc. In November, they hired a new CEO, a turnaround specialist named Abel Porter, who actually did have grocery experience. He was the company’s fourth CEO in six years.“We’re not burning cash, we’re accumulating cash,” Porter told Bloomberg News at the time. He added that there was “no risk of running out of capital” despite a debt level that exceeded $300 million. In that same article, however, a credit analyst for Moody’s Investment Service, Mickey Chadha, predicted that Fairway would need to be restructured again within 18 months. More money was going out the door than was coming in.Chadha’s prediction was off, but not by much. It’s been 14 months since that article ran, and Fairway is once again in deep trouble. When I asked him how he saw it coming, he laughed. “That’s my job,” he said. “You could see it when you looked at their liquidity. They just weren’t generating enough cash. No free cash flow, and lots of debt. It was highly predictable.”A few months ago, Chadha updated his analysis of Fairway’s bonds. He said that, as of June, the company’s remaining cash was down to $10 million and he predicted that it would continue to dwindle through 2020. “The company,” he concluded, “has limited alternative sources of liquidity as virtually all tangible and intangible assets are pledged to the credit facilities.”As part of its bankruptcy plan, Fairway agreed to sell five stores and a distribution facility to Village Supermarket Inc. for $70 million. Village Supermarket is another grocery chain owned by a family, the Sumas family of New Jersey. It seems to have done what Sterling Investment Partners could not: expand sensibly. The company now has 30 stores. If a handful of Fairway stores end up being run by the Sumas family, it will have saved an institution that private equity nearly destroyed.“I’m upset about what happened,” Glickberg told me. “They made a lot of bad decisions. They brought in people who knew nothing about the business and nothing about New York. My grandfather started the company, so it was more than a business to me.”I guess one moral of this story is that if you run a family company, don’t sell it to a private equity firm unless you don’t care what happens afterward. But mainly, it reaffirms what we are all coming to realize: private equity firms like Sterling Investment Partners aren’t on the side of the companies they buy. Not really. They’re out for themselves.To contact the author of this story: Joe Nocera at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Citrix Systems' (CTXS) fourth-quarter results benefit from solid adoption of unified workspace solutions amid decline in Professional Services revenues. However, shift toward subscription model weighs on margins.
Apple's (AAPL) first-quarter fiscal 2020 earnings are expected to have benefited from strength in Services. iPhone sales are likely to have declined due to stiff competition in China.
(Bloomberg) -- Incumbent New York City Democrats face an unprecedented number of challengers in this year’s primary election, reflecting the party’s ideological divisions and the impact of Alexandria Ocasio-Cortez’s 2018 upset election to Congress.The outcome of about a dozen races in the June 23 primary will test the power of the party’s county organizations as young and immigrant voters increase their clout.One of the establishment’s chief rivals, the Democratic Socialists of America, has a stake in some contests after helping Ocasio-Cortez beat former U.S. Representative and Queens Democratic Chairman Joseph Crowley. The DSA has backed six insurgents, and other progressive groups want to build on past success that has ousted conservative Democrats.“Ocasio-Cortez showed you can mount an insurgent campaign and win even if you don’t come from wealthy donors with the backing of the Democratic establishment,” said Monica Klein, a spokeswoman for the Working Families Party, which helped seven successful state senate challengers in 2018. “Those victories and people’s feelings about Donald Trump’s presidency have energized young and working-class voters and people of color to get involved.”City BattlesThe primary for state and local candidates is separate from New York’s presidential primary on April 28. In a city where Democrats vastly outnumber Republicans, winning the primary virtually assures victory in November’s general election.Ocasio-Cortez’s campaign didn’t respond to requests for comment. Matthew Thomas, a spokesman for the DSA, said the lawmaker has not endorsed any of the candidates.In the 38th Assembly District in southeast Queens, Jenifer Rajkumar, 37, a non-socialist Stanford-educated lawyer and immigrant-rights advocate, has taken on Michael Miller, 58, a Democrat also backed by the Conservative Party. His 10-year record includes opposition to same-sex marriage and a vote against equal pay for women that was included in a package that guaranteed access to reproductive health care and abortion.“It shows he doesn’t represent the values of our district’s voters or today’s Democratic Party,” Rajkumar said. “It shows he represents yesterday and not today.”Miller, who said his votes reflect his constituents’ beliefs, is taking Rajkumar’s challenge seriously. He has paid $34,000 to Meridian Strategies, a Brooklyn consulting firm created by two college students, for an “Incumbent Protection Program” that includes house-to-house canvassing and voter-opinion surveys. Miller has $37,000 on hand, mostly from lobbyists, unions and Democratic organizations.Rajkumar has outraised him so far, reporting $230,000 this month from about 200 donors, including $50,000 of her own money. She has $223,000 on hand.In an interview, Miller said his 40 years living in the district should count for something. After office hours, his calls bounce to his mobile phone so that constituents can stay in touch, he said. He disagreed with Rajkumar’s approach in appealing to the district’s different ethnic groups. “We’re all people, Queens is a melting pot,” he said. “Latinos, Asians, Irish, Italians, all should be treated the same.”Miller took credit for helping save Neir’s Tavern, reputed to be New York’s oldest bar, attending a Queens Chamber of Commerce meeting that produced a last-minute city grant to keep the bar open. But he skipped that night’s celebration while Rajkumar joined scores of politicians and customers at the bar. She said if she represented the district, she would have come to the bar’s rescue before it faced imminent eviction.Rajkumar began her campaign in Queens after serving as Governor Andrew Cuomo’s statewide immigration director. She organized and ran a $31 million project to ensure legal representation for non-citizen New Yorkers. The district she wants to represent is near the neighborhood in which her parents settled upon arriving from India about 45 years ago. It’s not just the district’s Latino and south Asian majority who need a champion, she said.“This area has been hidden away, undercounted by the census and overlooked by the state, and everyone in it would benefit from getting state funds and resources and the attention we deserve,” she said. “I see this race as very winnable. The demographics are in my favor. The party machine can’t stop us.”Party SupportU.S. Representative Gregory Meeks, the Queens Democratic chairman, said he would back Miller even though his voting record doesn’t always match the party’s mainstream. “He was duly elected and he’s earned our support,” Meeks said. The party organization backs Ocasio-Cortez as an incumbent, he added, and if Rajkumar wins the primary she’ll get party support, too.Not all the insurgents competing in the primary are progressives. State Senator Michael Gianaris, who fought Amazon.com Inc.’s proposed move to Long Island City last year, faces long-shot opposition from two sparsely funded candidates who are more conservative. And self-described Marxist state Senator Julia Salazar, who beat longtime incumbent Martin Dilan two years ago, is opposed by a former aide to Vito Lopez, a now-dead Brooklyn assemblyman censured and ousted from office in a sex harassment scandal.Dilan’s 45-year-old son, Erik, who has held a central Brooklyn assembly seat since 2016, has competition from Salazar’s former chief of staff, Boris Santos, 29. Santos, backed by the Democratic Socialists, says Dilan has taken too much money from the real-estate industry.Housing issues are also driving the campaign on Ocasio-Cortez’s Astoria, Queens, home turf. Zohran Mamdani, 28, an Indian-Ugandan New Yorker with experience as a housing counselor and Democratic Socialist organizer, is challenging five-term Assemblywoman Aravella Simotas, 41, arguing she’s not aggressive enough in fighting gentrification. But Simotas has her own progressive credentials: She opposed the Amazon deal and sponsored a law protecting tenants that passed last year.Such challenges have unnerved party veterans and excited a new generation, said Democratic political consultant George Arzt.“Many incumbents are scared of new, young voters and immigrants who are registering in big numbers and voting in droves,” Arzt said. “They believe the country is going in the wrong direction and they can do something about it.”To contact the reporter on this story: Henry Goldman in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Flynn McRoberts at email@example.com, Stacie ShermanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.The hack of Amazon.com Inc. billionaire Jeff Bezos’s phone, allegedly via a WhatsApp message, brings to light potential security weaknesses in smartphone operating systems, Facebook Inc. vice president Nicola Mendelsohn said.“One of the things that it highlights is actually some of the potential underlying vulnerabilities that exist on the actual operating systems on phones,” Mendelsohn said in a Bloomberg Television interview with Francine Lacqua at the World Economic Forum in Davos, Switzerland on Thursday.Bezos’s iPhone may have been hacked after he received a message via Facebook’s WhatsApp messaging platform, from Saudi Arabia’s Crown Prince Mohammed Bin Salman, according to a November 2019 report by FTI Consulting Inc., a business advisory firm, which was published by Vice.The message included a 4.22 MB video. Within hours of receiving it, “a massive and unauthorized exfiltration of data from Bezos’s phone began,” according to the report. The Saudi Embassy has denied involvement in the hack, calling the allegations “absurd.”Apple Inc. did not immediately respond to a request for comment.Read more about the Bezos hack here.Mendelsohn, who helps run Facebook’s Europe, Middle East and Africa business, said that the company would take any allegations that its service was used in a hack very seriously and would look into it, but said the company couldn’t “comment on any individual story.”It’s not the first time WhatsApp’s been drawn into a hacking controversy. WhatsApp in November sued Israeli spyware maker NSO Group, accusing it of infecting phones of some users through the messaging app. The lawsuit said that NSO Group used a vulnerability in WhatsApp, since patched, to secretly deliver its surveillance software to users. NSO denied the claims in the lawsuit and said it would “vigorously fight them.”To contact the reporter on this story: Amy Thomson in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Giles Turner at email@example.com, Nate LanxonFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Want to receive this post in your inbox every day? Sign up for the Balance of Power newsletter, and follow Bloomberg Politics on Twitter and Facebook for more.Italy’s rickety government faces the prospect of collapse yet again, with right-wing opposition politician Matteo Salvini ready to pounce.Prime Minister Giuseppe Conte canceled his trip to the World Economic Forum in Davos today, with any hope of projecting a business-as-usual image in tatters.The main party in his ruling alliance — the anti-establishment Five Star Movement — was rocked by Luigi Di Maio’s resignation as its leader, while Salvini’s League is poised to score big gains in a key regional election on Sunday.As John Follain reports, Conte is holding urgent meetings in Rome before a cabinet gathering this evening, while Five Star girds itself for a bruising succession fight that could further destabilize the government.Yet Conte has an ace up his sleeve: the government’s very fragility. Its key members know that if they fail to hold the administration together, there will be snap elections they would surely lose.Opinion polls say Salvini’s League would win a national vote, signaling a sharp turn to the right that much of Europe, already dealing with the U.K.’s Brexit and trade tensions with the U.S., would rather not contemplate now.Salvini is not assured of winning power — yet. He overreached in the summer when he broke up the last government only to be left out of the current one. And however much support his party enjoys, one politician is more popular than him: Giuseppe Conte.Global HeadlinesTrying times | House impeachment managers set out their case for removing President Donald Trump from office in the Senate trial by depicting him as vindictive, untruthful, unbound by the law and willing to abuse his power at the expense of U.S. national security. They will resume arguments today, seeking to persuade moderate Republicans that they should subpoena witnesses such as former National Security Adviser John Bolton.Senators acting as jurors can drink either milk or water while in the chamber during the trial — and nothing else.Global flashpoint | The eastern Mediterranean is a strategic but fraught region at the confluence of Europe, the Middle East and Africa. The delicate balance of power is being upset by President Recep Tayyip Erdogan’s claims on rights over lucrative hydrocarbons following a contentious maritime deal struck with Libya. The jostling is evidence of a vacuum opening up as a result of U.S. disengagement, with Turkey and Russia attempting to take its place.Moving on | Prime Minister Boris Johnson’s Brexit deal cleared its final hurdles in parliament for the U.K. to leave the European Union on Jan. 31, ending a crisis that paralyzed politics for several years. Britain remains bound by EU law in 2020 while it negotiates a new trade deal with Europe. That’s the “first priority,” Chancellor of the Exchequer Sajid Javid told U.S. Treasury Secretary Steven Mnuchin yesterday. “I thought we’d go first,” said a “disappointed” Mnuchin.Damage done | The claim that Saudi Crown Prince Mohammed bin Salman was involved in hacking Amazon boss Jeff Bezos’s phone refocuses attention on the young leader as he seeks a more positive global spotlight. Sylvia Westall and Donna Abu-Nasr report on potential damage to Saudi Arabia’s image as it prepares to host dozens of events showcasing the prince’s efforts to transform the kingdom’s economy and lure billions in foreign investment.China and Greta | China is conducting a “war against pollution,” with some positive results. But unlike the rest of the world, where activism as exemplified by Greta Thunberg is a key driver of the environmental agenda, China frowns upon actions not involving the state. The result is a paradox: President Xi Jinping champions the anti-pollution cause, but restrictions on civil society leave little room for open criticism of government policy.What to WatchTrump will become the first sitting U.S. president tomorrow to address the anti-abortion March for Life in person as he courts conservative voters before the November elections. While Angela Merkel has little time to reset Germany’s economy before her term ends, she appears more focused on challenges on Europe’s doorstep such as Libya and Iran, subjects she’ll probably emphasize when she speaks in Davos today. Chinese officials moved to halt travel from Wuhan, essentially locking down a city of 11 million people, as they try to stop the spread of a new SARS-like virus that’s already killed 17 and infected hundreds. The International Court of Justice ordered Myanmar to take emergency measures to prevent genocide against its minority Muslim Rohingya population.Tell us how we’re doing or what we’re missing at firstname.lastname@example.org. And sign up for Bloomberg Green, our new daily digest of climate news and insights on the latest in science, environmental impacts, zero-emission tech and green finance.And finally … Thailand’s ubiquitous street food vendors are wondering how they will cope with a new law that bans single-use plastic bags. While customers love buying cheap snacks and hot soup, Thailand generates more than 5,000 metric tons of plastic trash each day and some ends up spoiling its beautiful beaches. Authorities are clamping down on bags first, plastic straws by 2022 and aim to recycle all remaining plastic packaging by 2027. \--With assistance from Kathleen Hunter.To contact the author of this story: Karl Maier in Rome at email@example.comTo contact the editor responsible for this story: Anthony Halpin at firstname.lastname@example.org, Michael WinfreyRosalind MathiesonFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- It’s hard to underestimate just how much damage Crown Prince Mohammed bin Salman of Saudi Arabia has done to his country in the last 15 months. Yet it’s also difficult to see how the U.S. can defend its interests in the region without his cooperation.The damage became visible on Oct. 2, 2018, when a Saudi hit team lured Washington Post columnist Jamal Khashoggi to the Saudi consulate in Istanbul to murder him. The latest revelation is a hacking campaign against Jeff Bezos, the founder and CEO of Amazon.com Inc., who also owns the Washington Post. As a UN report released Wednesday notes: “The information we have received suggests the possible involvement of the Crown Prince in surveillance of Mr. Bezos, in an effort to influence, if not silence, The Washington Post’s reporting on Saudi Arabia.”A security consultant for Bezos made a version of this claim last year. The UN report fills in more details. It says that Bezos and the crown prince, known as MBS, attended a dinner on April 4, 2018, where the two men exchanged their WhatsApp contact information. On May 1, a video was sent to Bezos from MBS’s account that included malware that allowed the Saudis to keep tabs on his phone. More than six months later, on Nov. 8, MBS trolled Bezos, sending him a photo of a woman that resembled his paramour. This was months before the National Enquirer published a story about Bezos and his extramarital affair.UN reports are not always reliable, of course. The Wall Street Journal reported last March that the Enquirer got its scoop about the Bezos affair from his lover’s brother, to whom it paid $200,000. That said, the specifics of the report support what’s widely known about the Saudis’ extensive cyberespionage operation. In November, for example, the Justice Department charged two former employees of Twitter and a Saudi national with spying for Saudi Arabia. In October, Facebook sued an Israeli company, alleging it had compromised the accounts of 1,400 users of WhatsApp, which Facebook owns. That company has also sold its products to Saudi Arabia.The company, the NSO Group, issued a statement Wednesday saying its technology “cannot be used on U.S. phone numbers” and “was not used in this instance.” And the UN report, it should be noted, does not explicitly say that it was, noting that the hack “likely was undertaken” by the use of spyware “such as the NSO Group’s Pegasus-3 malware.”It’s worth paying attention, however, to something else in the NSO Group’s statement. These kinds of hacks “put a strain on the ability to use legitimate tools to fight serious crime and terror.”This is an understatement. Saudi Arabia has already shown that it cannot be trusted with powerful cybertools such as those developed by the NSO Group. Technology that is vital to combating jihadist groups should never be used to target dissidents — or the owners of U.S. newspapers, for that matter.A straightforward response to the latest episode of this Saudi scandal would be to ban any exports of advanced cyberweapons to the regime. And it’s a tempting proposition.Before Western governments take that step, they might recall that it took years after the Sept. 11 attacks to get Saudi Arabia to fully commit to fighting the jihadist groups its religious leaders had inspired and some of its wealthiest citizens had financed. MBS represents a departure from this double game. His reforms infuriate not just the liberal activists he jails and disappears, but the reactionaries who prospered under the previous system.If it were just another dictatorship, it would be easy enough to quarantine Saudi Arabia until it reforms. Unfortunately, Saudi Arabia remains a vital partner against Iran and the jihadists in the Middle East. Its enemies are also the West’s enemies. For now, as my Bloomberg Opinion colleague Bobby Ghosh notes, the challenge is to press MBS to stop acting like the thugs he’s fighting.To contact the author of this story: Eli Lake at email@example.comTo contact the editor responsible for this story: Michael Newman at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Eli Lake is a Bloomberg Opinion columnist covering national security and foreign policy. He was the senior national security correspondent for the Daily Beast and covered national security and intelligence for the Washington Times, the New York Sun and UPI.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Researchers still aren’t sure exactly what infected the billionaire’s handheld. Tasked with diagnosing a suspected cyberattack on an iPhone owned by Amazon.com Chief Executive Officer Jeff Bezos, forensics experts detected a massive spike in data being siphoned from the device hours after he received a WhatsApp message from a Saudi royal. Yet the malware behind the hack remains a mystery.What’s clear, though, is that Bezos was hit by a potent combination: advanced code, capable of grabbing gobs of information quickly, along with an encrypted delivery system that helped it evade detection. Over the last decade, spyware has gained wider acceptance, become more lucrative and, when transmitted via encryption, increasingly effective. It has evolved from a surveillance tool available for download on the dark web, often by consumers seeking to pry into a partner’s private life, into a pricey product passed off as a way for law enforcement to root out illegal behavior. The market for mobile surveillance technology is valued at about $12 billion and remains less than 10% penetrated, according to Moody’s.The alleged attack on Bezos would be one of the most high-profile examples of spyware being used by government officials against an individual, and it has elicited calls for greater regulation of the industry. The two United Nations experts -- Agnes Callamard, UN special rapporteur on summary executions and extrajudicial killings, and David Kaye, UN special rapporteur on freedom of expression -- said they want a moratorium on the sale and transfer of surveillance technology from private companies. They also called the allegations involving Bezos’s phone “a concrete example of the harms that result from the unconstrained marketing, sale and use of spyware.”“Surveillance through digital means must be subjected to the most rigorous control, including by judicial authorities and national and international export control regimes, to protect against the ease of its abuse,” they wrote in a report released Wednesday.The UN experts and the forensic analysis of Bezos’s mobile phone, which was published by Vice, identified two electronic surveillance companies that could have developed the technology used to execute the hack. Israel’s NSO Group and Italy’s Hacking Team both sold products to Saudi officials before the 2018 attack, according to FTI Consulting Inc., which did the analysis. Saudi Arabia spent $55 million in 2017 for NSO’s Pegasus software, the Israeli newspaper Haaretz reported in November.Hacking Team didn’t respond to requests for comment, and NSO denied involvement in the attack.“Our technology was not used in this instance; we know this because of how our software works and our technology cannot be used on U.S. phone numbers,” the company said in a statement, while declining to say whether it has done business with Saudi Arabia. “Our products are only used to investigate terror and serious crime.”As the industry has grown in profitability, so has its reputation as a clean and credible business, said Jack Cable, an independent security researcher and a student at Stanford University. Even so, software makers can’t guarantee that their products won’t be used for ill intent, he said.“We need look no further than the advertising of companies like NSO Group to see that they sell themselves as protecting human rights for their exploit services,” Cable said. At the same time their products have been employed by authoritarian governments accused of human rights abuses.Spyware is essentially a type of malware that is unwittingly loaded on the device and then takes over.Once it’s installed, spyware like NSO’s Pegasus can begin sending back the phone user’s private data, including passwords, contact lists, calendar events, text messages and live voice calls from mobile messaging apps, according to the Pegasus manual. In some cases, the operator of the spyware can use the phone’s camera or microphone to take photographs or record audio without the target’s knowledge.On its website, NSO Group notes that terrorists, drug traffickers, pedophiles and other criminals have access to advanced technology that makes them harder to monitor and track. “NSO Group develops best-in-class technology to help government agencies detect and prevent a wide-range of local and global threats.”Milan-based Hacking Team, founded in 2003, has sold surveillance technology to law enforcement and intelligence agencies in dozens of countries, according to company documents. Hacking Team promotional materials describe how the company’s technology -- its flagship system is called “Galileo” -- was designed to gain access to people’s Skype calls, social media messages, mobile phone locations, text messages and other data. The company said in a video posted online that the technology could be “deployed all over your country” and could hack devices belonging to “hundreds of thousands of targets.”There is a constant cat-and-mouse game played between spyware developers and the companies responsible for mobile operating systems and applications. When a new spyware tool is discovered, developers from companies like Apple Inc. and Facebook Inc. work to release a software patch that blocks the tool from working. Then the surveillance manufacturers will work to upgrade their tools to bypass the latest security updates.In recent years, however, there have been a number of cases in which spyware has been used to hack the phones or computers of journalists, activists, politicians and ordinary civilians.Activists and researchers say they have identified over 100 cases where NSO Group’s technology has been abused to target dissidents, lawyers and enemies of oppressive regimes. WhatsApp and its parent company, Facebook, sued NSO Group in October alleging that the Israeli company used malware to hack into the mobile phones of 1,400 people and conduct surveillance. NSO group disputed the allegations and vowed to fight them vigorously.Amnesty International is supporting a lawsuit in Tel Aviv court against the Israeli Ministry of Defense seeking revocation of NSO’s export license. The lawsuit was filed in May 2019 by a group of non-profit groups claiming NSO’s technology prioritizes profit over human rights.From 2017 to 2019, NSO Group’s technology was linked to hacks on a British lawyer, a Canada-based Saudi dissident, and multiple U.S. citizens.In 2012, Ahmed Mansoor, a prominent human rights advocate in the United Arab Emirates was targeted with spyware produced by Italy’s Hacking Team. Since then, similar cases have been reported in countries including Morocco, Egypt and Bahrain.Meanwhile, in Italy, prosecutors are currently probing a company named eSurv, whose employees developed spyware for law enforcement agencies, but then allegedly used the technology to hack the phones of hundreds of innocent Italians.And the work on Bezos’s phone aimed at getting to the bottom of the hack, FTI says, is still under way.To contact the reporters on this story: William Turton in New York at email@example.com;Ryan Gallagher in Edinburgh at firstname.lastname@example.org;Kartikay Mehrotra in San Francisco at email@example.comTo contact the editors responsible for this story: Andrew Martin at firstname.lastname@example.org, Tom GilesFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(Bloomberg) -- In the spring of 2018, Saudi Arabia’s crown prince, Mohammed Bin Salman, arrived in the U.S. for a three-week cross-country tour to pitch a progressive vision for his kingdom, including an economic plan less reliant on oil, and to charm America’s elite.He visited MIT and Harvard, talked space travel with Richard Branson and hobnobbed with celebrities, including Oprah Winfrey, according to media reports. The crown prince also met with business executives, including Amazon.com Inc. Chief Executive Officer Jeff Bezos.It was an encounter likely weighted with tension. Both Amazon’s e-commerce site as well as its most profitable business, Amazon Web Services, had been pushing to expand in the Middle East, including in Saudi Arabia. At the same time, Jamal Khashoggi, a columnist at the Bezos-owned Washington Post, had written columns sharply critical of the crown prince including one, while Bin Salman was visiting the U.S., saying that “replacing old tactics of intolerance with new ways of repression is not the answer.” They met at a small dinner in Los Angeles on April 4. It’s not clear what the two men talked about, but it apparently went well enough that they exchanged phone numbers.Nearly four weeks later, on May 1, Bezos received a WhatsApp message from the crown prince’s account, which arrived “unexpectedly and without explanation, meaning it was not discussed by the parties in advance of being sent,” according to a November 2019 report by FTI Consulting Inc., a business advisory firm, which was published by Vice.The message included a 4.22 MB video. Within hours of receiving it, “a massive and unauthorized exfiltration of data from Bezos’s phone began,” according to the report.News of the alleged hack was reported by The Guardian on Tuesday and confirmed Wednesday by two United Nations experts, who said in a statement, “The information we have received suggests the possible involvement of the crown prince in surveillance of Mr. Bezos, in an effort to influence, if not silence, The Washington Post’s reporting on Saudi Arabia.”The Saudi Embassy has denied involvement in the hack, calling the allegations “absurd.”The details from the U.N. statement add a remarkable twist to last year’s already remarkable accusation by Bezos that the National Enquirer tried to blackmail him by threatening to publish embarrassing personal photos and texts from him a month after it published an article saying he was having an extramarital affair.Bezos’s security team launched an investigation into how the texts leaked, led by security consultant Gavin de Becker. It didn’t take long for De Becker to home in on Saudi Arabia. De Becker said the Saudi government was targeting Bezos as the owner of the Washington Post.A few months earlier, in October 2018, Khashoggi was murdered by agents of the Saudi government and the Washington Post published “ever-expanding revelations” about the role of the Saudi government and of the crown prince personally, according to the U.N. experts. That was soon followed by an online campaign against Bezos: In November 2018, the top-trending hashtag on Saudi Twitter was “Boycott Amazon.”On Nov. 8, 2018, Bezos received another message from the crown prince’s WhatsApp account, when Bezos and his wife were exploring a divorce and before his marital problems became public, according to the FTI Consulting report. It showed a picture of a woman who resembled Lauren Sanchez, with whom Bezos was having a then-secret relationship, and read: “Arguing with a woman is like reading the Software License Agreement. In the end you have to ignore everything and click I agree,” according to the report.De Becker’s inquiry included interviews with current and former executives at the National Enquirer’s parent company, American Media Inc., discussions with Middle East experts and cybersecurity officials who have tracked Saudi spyware. He concluded, in a March 30, 2019 column in the Daily Beast “with high confidence that the Saudis had access to Bezos’ phone and gained private information.”But the investigation wasn’t over. De Becker hired FTI Consulting on Feb. 24, 2019 to do an analysis of Bezos’ iPhone X, according to the company’s report. The analysis was conducted in a “well-equipped and secure lab environment, including forensic imaging of Bezos’ phone and analysis of phone behavior in a sandboxed network,” the report says.What the FTI investigators found was that the amount of data being transmitted out of Bezos’s phone changed dramatically after receiving the video file from the crown prince’s account. His phone averaged about 430 KB of egress per day in the six months prior to receiving the WhatsApp video. Hours later, the egress jumped to 126 MB, according to the report.The FTI Consulting report was completed in November, and was passed along to experts at the U.N. who were already looking into the Khashoggi murder. One of those experts, David Kaye, the U.N. special rapporteur on the promotion and protection of the right to freedom of opinion and expression, said evidence shared with his team was reviewed by four independent experts, who asked some questions of the authors, leaving the U.N. team ultimately satisfied with the results.Kaye said they sent a letter to the Saudi government warning that their statement was coming.“The allegations here are very grave, they’re about a foreign government compromising the communications account of a phone of an American citizen,” Kaye said in an interview. “There’s clearly enough for federal authorities to examine this.”The crown prince hasn’t yet addressed the allegations. But on Feb. 16, 2019, two days after Bezos had received a briefing on the Saudi online campaign against him, his WhatsApp account sent another message to Bezos telling him to be skeptical of what he was hearing.“Jeff all what you hear or told to it’s not true and it’s matter of time tell you know the truth,” the message says, according to the FTI Consulting report. “There is nothing against you or Amazon from me or Saudi Arabia.”\--With assistance from Matt Day.To contact the reporters on this story: David Wainer in New York at email@example.com;Alyza Sebenius in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: Andrew Martin at email@example.com, Molly SchuetzFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- In most places, government ministers would be happy to hear that someone intends to invest a billion dollars in their country. Not in today’s India. Late last week, Amazon.com Inc.’s Jeff Bezos announced that he would be pumping another billion into the online retailer’s India arm; in response, India’s commerce minister, Piyush Goyal, said that “it is not as if they are doing a favor to India when they invest a billion dollars.”On one trivial level, Goyal is right. Any business only invests to do itself favors, or it isn’t a business at all but a charity. If Amazon is betting on India, it presumably hopes to eventually make money here. But Goyal didn’t stop there. He pointed out that Amazon was making a loss in India, and added that “it certainly raises questions, where the loss comes from,” and asked if Amazon was indulging in “predatory pricing or some unfair trade practices.” Given that India’s Competition Commission has just announced an inquiry into both Amazon and Walmart-owned Flipkart Online Services Pvt., the minister’s statements suggest the government has already made up its mind that Amazon’s investments in India are dangerous and distortionary.This conclusion is somewhat odd, given that the billion dollars Bezos promised were to help smaller retailers get online — something very relevant to its business model in India, where the government prevents it from operating as a retailer and forces it to remain merely a “marketplace” for other sellers. It is even odder, given that e-retail in India is only 1.6% of the total retail market, way below the 15% in comparable markets like China. You can worry about “predatory” pricing if the company in question is dominant; that is hardly the case here. If anything, getting more of India’s smaller retailers online would help them to deal with the after-effects of India’s botched transition to a new indirect tax regime. The new goods and services tax has hit unmodernized small-sellers particularly hard.The fact is that India’s government has not just made life unnecessarily difficult for foreign-owned e-commerce players, but it also changed the rules of the game after Amazon, among others, had made big investments in India. It wouldn’t have been surprising if Bezos had cut and run instead of putting in another billion. And that would have been a tragedy: India’s having so much trouble creating jobs for its hundreds of millions of young people that it shouldn’t be looking to throw out a company explicitly promising to create another million jobs by 2025, in addition to the 700,000 it already claims to have created.So why is the government so determined to make life uncomfortable for foreign investors? In this particular case, one reason might be the nearness of crucial elections in India’s capital city of Delhi — where Goyal’s Bharatiya Janata Party wants to unseat a local challenger. Delhi’s electorate includes a large number of the sort of small retailers that the BJP imagines resent and fear online retail.But a deeper reason is that India has turned inward. Twenty-five years of openness and trade raised hundreds of millions out of poverty and kept growth high; but that era seems to have ended. India now faces a prolonged slowdown, increasing food prices, and a job shortage. In earlier times, reformers within the government might have seized the opportunity to make the case for competitiveness-enhancing reform and more private investment. But today, in government, there are no reformers.The Indian political and bureaucratic elite was never really sold on markets in the first place; but reform-minded prime ministers prevented them from indulging their worst statist instincts. Many hoped that Narendra Modi, India’s current prime minister, would be another in this line of reform-friendly leaders. The Indian government continues to say it intends to open more sectors to foreign investment, and to raise the share of FDI in the economy. But in practice Modi seems either unwilling or unable to stop his government from alienating investors, raising tariffs, and generally returning India to the autarkic 1970’s.All the hallmarks of that dark period are visible today: not just open suspicion of “predatory” foreign investors, but paranoia about imports and public policy that replaces efficiency with tokenism. Last week, for example, Indians were startled when news broke that Goyal was planning to reduce the amount of alcohol and cigarettes that international travelers may bring into the country free of duty. The amount of additional tax this will net is likely to be so small, and the cost to airport franchisees so disproportionately high, that it makes little sense — but, when a government is seized by the protectionist urge, good sense is rarely on display. Bezos may have invested too much in India already to give up just because the government has turned hostile. Yet others who might have followed him will now probably wonder whether the slog to gain a foothold in the Indian market is worth it.To contact the author of this story: Mihir Sharma at firstname.lastname@example.orgTo contact the editor responsible for this story: James Gibney at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Mihir Sharma is a Bloomberg Opinion columnist. He was a columnist for the Indian Express and the Business Standard, and he is the author of “Restart: The Last Chance for the Indian Economy.”For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(Bloomberg) -- United Nations experts accused the Saudi Crown Prince Mohammed bin Salman of possible involvement in hacking Jeff Bezos’s phone in an effort to “influence, if not silence” reporting on Saudi Arabia by the Bezos-owned Washington Post.Bezos’s iPhone was infiltrated via an MP4 video file sent from the WhatsApp account used by the prince in 2018, according to a statement Wednesday by U.N. independent experts appointed by the Human Rights Council.“The alleged hacking of Mr. Bezos’s phone, and those of others, demands immediate investigation by U.S. and other relevant authorities, including investigation of the continuous,multi-year, direct and personal involvement of the crown prince in efforts to target perceived opponents,” Agnes Callamard, U.N. Special Rapporteur on summary executions and extrajudicial killings, and David Kaye, U.N. Special Rapporteur on freedom of expression, wrote in the statement.Bezos, who is also the chief executive officer of Amazon.com Inc., had exchanged phone and WhatsApp numbers with the crown prince at a dinner in April 2018, a month before the alleged hack, according to the U.N. statement. On May 1, a message from the crown prince’s account was sent to Bezos through WhatsApp containing an encrypted video file. A forensic analysis found that within hours of clicking on the video file, “massive and (for Bezos’ phone) unprecedented exfiltration of data from the phone began.”Around that time, Jamal Khashoggi, a Saudi dissident who was living in self-imposed exile in the U.S. and working as a columnist for the Washington Post, was writing pieces critical of the Saudi government. Khashoggi was murdered at the Saudi consulate in Istanbul in October 2018 by agents of the Saudi government. The U.S. Central Intelligence Agency has said it’s certain that the crown prince directed the killing and dismemberment of the Saudi insider-turned-critic.As the Post began to report on the murder and role of the Saudi government and crown prince, a massive online campaign was being waged against Bezos, according to the U.N. report, identifying him principally as the owner of the Washington Post and prompting Twitter hashtags of “Boycott Amazon.”On. Nov. 8, 2018 a single photograph was texted to Bezos from the crown prince’s WhatsApp account, along with a sardonic caption, according to the U.N. statement. It was an image of a woman resembling Lauren Sanchez, whom Bezos was dating, and sent months before the affair became public.“At a time when Saudi Arabia was supposedly investigating the killing of Mr. Khashoggi, and prosecuting those it deemed responsible, it was clandestinely waging a massive online campaign against Mr. Bezos and Amazon targeting him principally as the owner of The Washington Post,” Callamard and Kaye wrote.The Saudi Embassy, in a Twitter post, denied involvement in the hack. “Recent media reports that suggest the Kingdom is behind a hacking of Mr. Jeff Bezos’ phone are absurd,” according to the tweet. “We call for an investigation on these claims so that we can have all the facts out.”The U.N. statement said the intrusion “likely was undertaken through the use of a prominent spyware product identified in other Saudi surveillance cases, such as the NSO Group’s Pegasus-3 malware, through the use of Israeli spyware.” The report notes that the product is widely reported to have been purchased and deployed by Saudi officials.A representative for the NSO Group denied any connection to the Bezos hack, describing such a suggestion as “defamatory. Our technology was not used in this instance.” The representative said “our technology cannot be used on U.S. phone numbers, our products are only used to investigate terror and serious crime.”The U.N. said the circumstances and timing of the Bezos hack “strengthen support for further investigation by U.S. and other relevant authorities of the allegations that the Crown Prince ordered, incited, or, at a minimum, was aware of planning for but failed to stop the mission that fatally targeted Mr. Khashoggi in Istanbul.”The twisting tale began in early 2019 with the surprise announcement that Bezos and his wife MacKenzie would divorce after 25 years of marriage. Shortly thereafter, the National Enquirer disclosed the extramarital affair between Bezos and Sanchez, a former television anchor, in a series of reports that relied, in part, on intimate text messages sent by the Amazon CEO.Bezos later wrote an extraordinary blog post accusing the tabloid of threatening to publish more embarrassing text messages and photos unless he publicly affirmed that there was no political motivation or outside force behind the tabloid’s coverage.Gavin de Becker, a security consultant for Bezos, said at the time that he believed the Saudi government had accessed Bezos’s phone before the Enquirer exposed the affair. He didn’t provide any direct evidence to back up his claims, which he said came from “our investigators and several experts.” De Becker said the Washington Post’s coverage of the Khashoggi murder probably explained why bin Salman sought to harm the Amazon founder.Senator Ron Wyden, a Democrat from Oregon, has written to Bezos seeking more information about the hack and concerns of Saudi involvement.“Unfortunately, the breach of your device appears to be part of a growing trend,” Wyden wrote. “To help Congress better understand what happened -- and to help protect Americans against similar attacks -- I encourage you to provide my office with information regarding your case.”Bezos has refrained from directly commenting on the crown prince’s alleged involvement in the hack, but on Wednesday tweeted a photograph from a memorial service honoring Khashoggi with the simple hashtag Jamal.(Updates with Bezos tweet in last paragraph. A previous version of the story corrected the spelling of Human Rights Council in second paragraph.)\--With assistance from David Wainer, William Turton, Ryan Gallagher, Matt Day and Gwen Ackerman.To contact the reporters on this story: Molly Schuetz in New York at firstname.lastname@example.org;Giles Turner in London at email@example.comTo contact the editors responsible for this story: Molly Schuetz at firstname.lastname@example.org, Robin Ajello, Andy MartinFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Jeff Bezos remembered slain Saudi journalist Jamal Khashoggi with a simple tweet, hours after a United Nations panel accused the Saudi crown prince of possible involvement in hacking Bezos’s phone.Bezos on Wednesday tweeted the hashtag Jamal, along with a photo of himself at a memorial service for Khashoggi held in Istanbul in October.Khashoggi, a Saudi dissident who was living in self-imposed exile in the U.S., was murdered in Istanbul in October 2018 by agents of the Saudi government. He had written pieces critical of the Saudi government for The Washington Post, which Bezos owns.Earlier on Wednesday, a UN panel accused Saudi Crown Prince Mohammed bin Salman of possible involvement in the hacking of Bezos’s phone to “influence, if not silence” the newspaper’s reporting on the kingdom.UN Panel Links Saudi Prince to Bezos Hack, Effort to Muzzle PostThe National Enquirer last year disclosed an extramarital affair between Bezos and a former television anchor in a series of reports that relied in part on intimate text messages sent by Bezos, the CEO of Amazon.com Inc.(Updates with additional background.)To contact the reporter on this story: Erin McClam in New York at email@example.comTo contact the editors responsible for this story: Sebastian Tong at firstname.lastname@example.org, Jim SilverFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.