For Millions of Immigrants, a Common Language: WhatsApp

With the ability to communicate securely and free, the messaging app has become a mainstay for those who have left their homes for the unknown.
The New York Times
By FARHAD MANJOO from NYT Technology http://nyti.ms/2h0Wimk

Whatsapp Introduce An Intresting Feature.

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Facebook Closes $19 Billion WhatsApp Deal

Facebook says it has wrapped up its landmark $19 billion acquisition of WhatsApp, a deal that was hashed out in Mark Zuckerberg’s house over the course of a few days in February and sealed over a bottle of Jonnie Walker scotch.

WhatsApp has continued to run its operation completely independently since then, but the closing of the deal marks the start of a gradual integration as Facebook gives the world’s biggest mobile messaging service legal and administrative support and — eventually, we can presume — finds new ways to monetize the company it spent more than Iceland’s GDP on.

WhatsApp founders Jan Koum and Brian Acton became billionaires last February when Facebook announced it was buying the company they had started five years ago for a jaw-dropping $19 billion. Having mostly shunned venture capital investments till then the founders had kept large stakes. Koum still had around 45% at the time of the deal, leaving the Ukrainian-born immigrant to pocket $6.8 billion and former Yahoo YHOO +2.27% engineer Acton with $3.5 billion after taxes. WhatsApp founder Jan Koum now gets a seat on the Facebook board and will match Zuckerberg’s $1 salary.

Facebook will now award 177.8 million shares of its Class A common stock and $4.59 billion in cash to WhatsApp’s shareholders, it said in an SEC filing over the weekend, plus 45.9 million shares (restricted stock units) to WhatsApp’s employees to complete the deal.

Fortunately for those parties, the value of Facebook’s shares are now higher than they were when the deal was announced in February, notes Re/code’s Peter Kafka, making the deal worth around $21.8 billion.

The acquisition has gone through a few regulatory hoops, but it passed the final one last Friday when the European Union gave it the green light.

WhatsApp makes money by charging a $1 a year subscription in a handful of countries that have clear carrier billing systems and where credit card penetration is high, bringing in about $20 million in annual revenue, according to Forbes’ estimates. That’s not enough to justify a $19 billion price tag, so Facebook is almost certainly looking at other ways the messaging service could make money.

WhatsApp is the most globally diverse messaging service, with more than 600 million monthly active users from Europe to South America to Asia, so some kind of money transfer service for the world’s increasingly globalized workforce might be one way.

Facebook’s interest in the field of money transfer is well known. In April we reported that Facebook had been working since late 2013 on a European-wide money-transfer and storage service. Two months later it hired PayPal CEO David Marcus as head of the company’s “Messaging Products.” Then last week screenshots tweeted by a Stanford computer science student showed Facebook had already put elements of a payments infrastructure into place in Messenger for iOS, which had yet to be activated.

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WhatsApp Encryption Said to Stymie Wiretap Order

While the Justice Department wages a public fight with Apple over access to a locked iPhone, government officials are privately debating how to resolve a prolonged standoff with another technology company, WhatsApp, over access to its popular instant messaging application, officials and others involved in the case said.

No decision has been made, but a court fight with WhatsApp, the world’s largest mobile messaging service, would open a new front in the Obama administration’s dispute with Silicon Valley over encryption, security and privacy.

WhatsApp, which is owned by Facebook, allows customers to send messages and make phone calls over the Internet. In the last year, the company has been adding encryption to those conversations, making it impossible for the Justice Department to read or eavesdrop, even with a judge’s wiretap order.

As recently as this past week, officials said, the Justice Department was discussing how to proceed in a continuing criminal investigation in which a federal judge had approved a wiretap, but investigators were stymied by WhatsApp’s encryption.

The Justice Department and WhatsApp declined to comment. The government officials and others who discussed the dispute did so on condition of anonymity because the wiretap order and all the information associated with it were under seal. The nature of the case was not clear, except that officials said it was not a terrorism investigation. The location of the investigation was also unclear.

To understand the battle lines, consider this imperfect analogy from the predigital world: If the Apple dispute is akin to whether the F.B.I. can unlock your front door and search your house, the issue with WhatsApp is whether it can listen to your phone calls. In the era of encryption, neither question has a clear answer.

Some investigators view the WhatsApp issue as even more significant than the one over locked phones because it goes to the heart of the future of wiretapping. They say the Justice Department should ask a judge to force WhatsApp to help the government get information that has been encrypted. Others are reluctant to escalate the dispute, particularly with senators saying they will soon introduce legislation to help the government get data in a format it can read.

Whether the WhatsApp dispute ends in a court fight that sets precedents, many law enforcement officials and security experts say that such a case may be inevitable because the nation’s wiretapping laws were last updated a generation ago, when people communicated by landline telephones that were easy to tap.

“The F.B.I. and the Justice Department are just choosing the exact circumstance to pick the fight that looks the best for them,” said Peter Eckersley, the chief computer scientist at the Electronic Frontier Foundation, a nonprofit group that focuses on digital rights. “They’re waiting for the case that makes the demand look reasonable.”

A senior law enforcement official disputed the notion that the government was angling for the perfect case, and said that litigation was not inevitable.

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This is not the first time that the government’s wiretaps have been thwarted by encryption. And WhatsApp is not the only company to clash with the government over the issue. But with a billion users and a particularly strong international customer base, it is by far the largest.

Last year, a dispute with Apple over encrypted iMessages in an investigation of guns and drugs, for instance, nearly led to a court showdown in Maryland. In that case, as in others, the company helped the government where it was able to, and the Justice Department backed down.

Jan Koum, WhatsApp’s founder, who was born in Ukraine, has talked about his family members' fears that the government was eavesdropping on their phone calls. In the company’s early years, WhatsApp had the ability to read messages as they passed through its servers. That meant it could comply with government wiretap orders.

But in late 2014, the company said that it would begin adding sophisticated encoding, known as end-to-end encryption, to its systems. Only the intended recipients would be able to read the messages.

“WhatsApp cannot provide information we do not have,” the company said this month when Brazilian police arrested a Facebook executive after the company failed to turn over information about a customer who was the subject of a drug trafficking investigation.

The iPhone case, which revolves around whether Apple can be forced to help the F.B.I. unlock a phone used by one of the killers in last year’s San Bernardino, Calif., massacre, has received worldwide attention for the precedent it might set. But to many in law enforcement, disputes like the one with WhatsApp are of far greater concern.

For more than a half-century, the Justice Department has relied on wiretaps as a fundamental crime-fighting tool. To some in law enforcement, if companies like WhatsApp, Signal and Telegram can design unbreakable encryption, then the future of wiretapping is in doubt.

“You’re getting useless data,” said Joseph DeMarco, a former federal prosecutor who now represents law enforcement agencies that filed briefs supporting the Justice Department in its fight with Apple. “The only way to make this not gibberish is if the company helps.”

“As we know from intercepted prisoner wiretaps,” he added, “criminals think that advanced encryption is great.”

Businesses, customers and the United States government also rely on strong encryption to help protect information from hackers, identity thieves and foreign cyberattacks. That is why, in 2013, a White House report said the government should “not in any way subvert, undermine, weaken, or make vulnerable generally available commercial encryption.”

In a twist, the government helped develop the technology behind WhatsApp’s encryption. To promote civil rights in countries with repressive governments, the Open Technology Fund. which promotes open societies by supporting technology that allows people to communicate without the fear of surveillance, provided $2.2 million to help develop Open Whisper Systems, the encryption backbone behind WhatsApp.

Because of such support for encryption, Obama administration officials disagree over how far they should push companies to accommodate the requests of law enforcement. Senior leaders at the Justice Department and the F.B.I. have held out hope that Congress will settle the matter by updating the wiretap laws to address new technology. But the White House has declined to push for such legislation. Josh Earnest, the White House spokesman, said on Friday that he was skeptical “of Congress’s ability to handle such a complicated policy area.”

James B. Comey, the F.B.I. director, told Congress this month that strong encryption was “vital” and acknowledged that “there are undoubtedly international implications” for the United States to try to break encryption, especially for wiretaps, as in the WhatsApp case. But he has called for technology companies and the government to find a middle ground that allows for strong encryption but accommodates law enforcement efforts. President Obama echoed those remarks on Friday, saying technology executives who were “absolutist” on the issue were wrong.

Those who support digital privacy fear that if the Justice Department succeeds in forcing Apple to help break into the iPhone in the San Bernardino case, the government’s next move will be to force companies like WhatsApp to rewrite their software to remove encryption from the accounts of certain customers. “That would be like going to nuclear war with Silicon Valley,” said Chris Soghoian, a technology analyst with the American Civil Liberties Union.

That view is one reason government officials have been hesitant to rush to court in the WhatsApp case and others like it. The legal and policy implications are great. While no immediate resolution is in sight, more and more companies offer encryption. And technology analysts say that WhatsApp’s yearlong effort to add encryption to all one billion of its customer accounts is nearly complete.

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Facebook and WhatsApp might be the next Apple in encryption fight

Friction between tech companies and law enforcement over data access and encryption is heating up around the world.

Apple and the FBI are in a widely watched standoff, and a similar situation is unfolding in Brazil with WhatsApp, which is owned by Facebook (FB, Tech247).

At issue: Authorities in Brazil think information transmitted through WhatsApp could help in a criminal investigation into drug trafficking.

In Apple's case, law enforcement wants to get into a suspect's iPhone but can't because it's encrypted. In WhatsApp's case, law enforcement wants to get into messages but can't get past the app's encryption.

But there's a crucial difference: Apple (AAPL, Tech247) admits that it could help the FBI open the door if it built a new version of the iPhone's operating system. WhatsApp says it can't get in at all.

Brazilian law enforcement told CNN that it is looking for WhatsApp to provide suspects' IP addresses, customer information, geo-location data and physical messages.

WhatsApp says it has been cooperating, but is not able to provide "the full extent of the information law enforcement is looking for."

 According to WhatsApp, messages that travel through its servers are jumbled up code -- even the company can't decrypt them.

The latest versions of the service encrypt messages on the sender's device (some older versions of the app did not use encryption). The messages stay encrypted until the recipient's device receives them.

 At that point, WhatsApp deletes the messages from its server. And the server also deletes unreceived messages after 30 days.

WhatsApp says it could theoretically retrieve encrypted messages when they're on its server, but it doesn't have the technical capability to translate them back into plain text.

"We've built encryption so no one -- including WhatsApp -- can decrypt messages," a spokesman told CNNMoney.

According to Ajay Arora, CEO of security company Vera, the only way for WhatsApp to decrypt the messages would be to possess the physical, unlocked phones, which hold the keys to the encrypted messages.

"The encryption key is just randomly generated based on attributes of the device and tied to the device," Arora told CNNMoney. "So to retrieve the encryption key you need to get access to the device."

But if police had a suspect's unlocked phone, they wouldn't need WhatsApp's help to see the messages -- they could just look on the phone. So there's really nothing that WhatsApp can do to help.

"WhatsApp cannot provide information we do not have," a WhatsApp spokesman said in a statement.

 Tensions between law enforcement and tech companies may continue to escalate if more apps like WhatsApp adopt end-to-end encryption. (Signal and Telegram are popular apps that already have similar levels of privacy protections.) That's because of what's happening right now with Apple.

Not only has Apple refused to comply with a court order to break into the iPhone used by one of the San Bernardino shooters, the company also wants to build a phone that even it can't break into.

If that's the case, then governments around the world will have a hard time requesting data they think they might need.

After all, if the phone can't be unlocked, then the data transmitted through the devices can't be unlocked either. 

Technology

Facebook And WhatsApp Back Apple In Fight For Encryption

 

More data, more problems

 

The battle for the right to strong encryption rages on. First we saw Apple have to defend their users’ right to privacy regarding the iPhone involved in the San Bernardino shooting. With one of the shooter’s iPhone 5C units in FBI custody, the government requested that Apple create a tool that weakens iPhone security—to which they said no. Repeatedly. Now the CEO of Facebook-owned app WhatsApp Jan Koum and the social network king himself, Mark Zuckerberg, are backing Apple’s decision.

The purpose of security is to safeguard privacy. Billions of people share their most personal, intimate information using services like ours, and they expect all of us to keep it safe from criminals and other bad guys. Asking a single company to undermine the security of its product for an investigation threatens the security of all of us in the long run.

Today, WhatsApp and other companies are asking a U.S. court to overturn an order that would require Apple to weaken the security of its product. We are proud to stand together to demonstrate how these efforts go beyond what the law allows and how they compromise the values upon which our country is built."

Asking a single company to undermine the security of its product for an investigation threatens the security of all of us in the long run

 

He wasn’t alone. Mark Zuckerberg, head of Facebook and undisputed star of MWC 2016 added his thoughts on the matter as well yesterday, saying "Facebook stands with many technology companies to protect you and your information."

During a hearing earlier this week between Congress and the director of the FBI, may were quick to point out that weakening encryption on our personal devices could hurt us in the long run rather than help us. At the very least, it would weaken protection on the average citizen while those with malicious intent will continue to find ways around the government’s capabilities. While some are worried about creating “evidence-free zones,” others are troubled by weakened security for everyone because of the few looking to harm us. As California’s own state representative Judy Chu mentioned on Tuesday, “Safe manufacturers are not required to keep keys to safes or locks. It's clear technology is outpacing the FBI's capabilities.”

Facebook and WhatsApp support of Apple in their fight for encryption against the FBI adds them to a growing list of technology companies. Google, Amazon, Microsoft and more have come out in support of strong encryption for their users—though skeptics wonder how much of it is true belief and how much is purely PR. At least in the case of Amazon's devices, their dropping of encryption in their latest firmware is definitely not for the PR.

We’ve seen instances where Apple and other companies have complied in handing over cloud data when lawfully requested. But Apple’s stand at least shows that a line must be drawn. This may not be the last time a government agency begs a tech company to lower the bridge over the moat protecting local user data. But at the very least, it begins to set the cultural norm of privacy users can expect in their digital lives.

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