Security Market Segment LS
Tuesday, 09 October 2018 07:33

Bloomberg reporters stand to earn bonuses if chip story holds up Featured

Bloomberg reporters stand to earn bonuses if chip story holds up Pixabay

The Bloomberg story, claiming chips are being implanted by a Chinese contractor on server motherboards sold by US firm Supermicro Computer and being used to spy on some companies, will benefit reporters Jordan Robertson and Michael Riley — who wrote it — if it holds up under scrutiny.

The company has a practice of paying those higher annual bonuses to those who write stories that move markets, according to a report from Business Insider dating back to 2013.

iTWire contacted Bloomberg for comment about this practice on Monday. The news agency has not yet responded.

The BI report quoted a Bloomberg spokesman as saying: "It isn’t news unless it's true. At Bloomberg News, the most important news is actionable.

"That means we strive to be first to report surprises in markets that change behaviour and we put a premium on reporting that reveals the biggest changes in relative value across all assets.”

The story about chip implants resulted in Lenovo shares falling by as much as 23% across Asia on Friday.

The stocks of ZTE Corporation, China's biggest telecommunications equipment maker, fell by about 14% in Hong Kong trading.

Both Apple and Amazon lost a little less than 2% of their value following the report.

The BI report quoted an ex-Bloomberg employee as saying: “Anyone who moves the markets gets a bonus. Your team gets awards. If you don’t move the market [it’s] like there’s something wrong with you. You don’t get a full bonus.”

But whether the story, which was published last week, will hold up is another matter altogether. There have been detailed denials from Apple, Amazon and Supermicro. A former Apple general counsel said the FBI had told him it had no idea what the Bloomberg reporters were on about.

Additionally, Apple chief security officer George Stathakopoulos has written  directly to the US Congress, saying that the company had been unable to find any evidence to back the Bloomberg claims.

In its story, Bloomberg claimed security testing by Amazon in 2015 had revealed the existence of tiny chips that were not part of an original mainboard design and that this led to an extensive investigation by US Government agencies which found servers built using these boards in data centres belonging to the Department of Defence, on warships, and for processing data being handled by CIA drones.

The agency said that major banks were also using servers made by Supermicro and that the government investigation led to several companies getting rid of the Supermicro equipment.

A few years ago, Robertson and Riley put out a story, claiming that the US Government had prior knowledge of the Heartbleed bug, a serious vulnerability in OpenSSL, before it was announced. Bloomberg did not issue a follow-up after the story was denied.


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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.



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