Bankrupting National Security?

Episode 277 of the Cyberlaw Podcast

|The Volokh Conspiracy |

Camille Stewart talks in this episode about a little-known national security risk: China's propensity to acquire US technology through the bankruptcy courts—and the many ways in which the bankruptcy system isn't set up to combat improper tech transfers. Published by the Journal of National Security Law & Policy, Camille's paper is available here. Camille has enjoyed great success in her young career, working with the Transformative Cyber Innovation Lab at the Foundation for Defense of Democracies, as a Cybersecurity Policy Fellow at New America, and as a 2019 Cyber Security Woman of the Year, among other achievements. Plus, of course, the great honor of working for DHS Policy.  We talk at the end of the session about life and advancement as an African American woman in cybersecurity.

In the News Roundup, Maury Shenk tells us that UK courts have so far resisted a sustained media narrative that all facial recognition tech is inherently evil. Americans seem to agree with the UK court, Matthew Heiman notes, since a majority trust law enforcement to use it responsibly. Which is more than you can say for Silicon Valley, which only 36% of Americans trust with the technology.

Mieke Eoyang and I talk about DHS's plan to use fake identities to view publicly available social media postings and the conflict between that plan and social media sites' terms of service. I am unsympathetic, given the need for operational security in conducting such reviews, but we agree that DHS may be biting off more than it can chew, especially in languages other than English. And really, DHS, how clueless do you look when the list of social media you'll be scrutinizing includes sites like the three-years-dead Vine but not TikTok, which Mieke notes ironically, is "what all the kids are using these days."

Maury brings us up to speed on EU plans for the tech sector, which will be familiar to Brits contemplating the EU's plans for them. And speaking of EU hypocrisy and incoherence (we were, weren't we?), Erin Egan of Facebook has written a paper on data portability that deserves more attention, since it shows the impossibility of squaring the EU's snit over Cambridge Analytica with its insistence on the inherently vague principle of "data portability." The paper also calls out our FTC for slamming Facebook over Cambridge Analytica while Commissioner Noah Phillips is warning that restricting data transfers can be an anticompetitive weapon. I promise to invite the commissioner on the podcast again to explore that issue.

Well, that was quick: Fraudsters used AI to mimic a CEO's voice – German accent, "melody," and all – in an unusual cybercrime case. But it won't be unusual long. Anyone can do this now, Maury explains.

In short hits, Mieke and I mock Denmark's appointment of an "ambassador" to Silicon Valley. Way to cut the Valley down to size, Denmark! Maury notes that FinFisher is under investigation for violating EU export control law by selling spyware. Mieke does her best to rebut my suggestion that Silicon Valley's bias is showing in the latest actuarial stat: Turns out that 10% of the accounts that President Trump has retweeted have already been deplatformed. Matthew and I note that China has been caught hacking several Asian telcos to spy on Uighurs. To give the devil his due, though, if the US had 5,000 citizens fighting for ISIS and al-Qaeda, as China claims to have, we'd probably be hacking all the same telcos to keep an eye on them.

State attorneys general will launch sweeping and apparently bipartisan antitrust probes into Facebook and Google this week. Good to see Silicon Valley bringing Rs and Ds together at last; who says its business model is fomenting social division? Finally, Mieke leaves us uneasy about the online security of our pensions, as hackers steal $4.2 million from one fund via compromised email.

Download the 277th Episode (mp3).

Want to hear more from Camille on bankruptcy and national security? She'll be speaking Friday, September 13, at a lunch event hosted by the Foundation for Defense of Democracies. She'll be joined by fellow panelists Giovanna Cinelli, and two other Cyberlaw Podcast alums, Jamil Jaffer and Harvey Rishikof, along with moderator Dr. Samantha Ravich. The event will be livestreamed at www.fdd.org/events. If you would like to learn more about the event, contact Abigail Barnes at FDD. If you are a member of the press, please direct your inquiries to press@fdd.org.

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The views expressed in this podcast are those of the speakers and do not reflect the opinions of the firm.

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  1. One of the weakest areas in Libertarian philosophy and policy deals with the response of Libertarians to other actors who are playing a different strategic game. Most Libertarian analysis deals with single period problems or one-time decisions. Even when game theory is employed, it is not usually – perhaps even ever – in the context of a multi period game where gains and losses can accumulate. A strategically minded opponent planning moves out over a number of periods can gain a permanent advantage over a “single period player” especially if positions or gains can accumulate across periods. This appears to be true in trade analysis (cf: http://www.geraldpech.net/papers/TariffRetaliation.pdf). No surprise then that the Chinese, who are clearly playing a multi period strategic game against us in trade with a much longer horizon, are doing exactly the same thing w.r.t. technology acquisition. We’re playing stupidly.

  2. Bankruptcy Court exists primarily to protect the interests of creditors of bankrupt entities. This suggests that if China shows up willing to pay the most cash to obtain the assets of those bankrupt entities, the bankruptcy court should take that money and distribute it to the creditors. The solution would be easy… if the bankrupt entity has national-security assets, then our government should show up and outbid the Chinese.

    1. It’s as simple as that – if our government were capable of keeping a large emergency cash reserve and deciding to use it without doing paperwork for 6 months first. But yes, a basic libertarian principle is that you don’t complain about unique items being sold in a free market, you put your money together and buy them first.

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