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Apple and Amazon Deny Chinese ‘spy’ Chips Into Their Network

According to Apple, its digital assistant Siri and social search and analytics company Topsy never shared servers

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Google , US, Alexa, Amazon, Drones, e-commerce
The logo of Amazon, online retailer is seen at the company logistics center in Lauwin-Planque, France. VOA

Apple and Amazon have strongly denied a media report that claimed a massive “supply chain attack” by Chinese spies planted chips in motherboards in data servers bought by these two giants among 30 tech companies.

Bloomberg Businessweek on Thursday reported that malicious chips — as small as a sharpened pencil tip — were planted by a unit of the Chinese People’s Liberation Army to gain access to the supply chain of a firm called Super Micro, known as the “Microsoft of the hardware world”.

According to the report, Apple discovered suspicious chips in its servers in 2015.

The Cupertino-based iPhone maker replied it has never found malicious chips, “hardware manipulations” or vulnerabilities purposely planted in any server.

“The October 8, 2018 issue of Bloomberg Businessweek incorrectly reports that Apple found “malicious chips” in servers on its network in 2015. As Apple has repeatedly explained to Bloomberg reporters and editors over the past 12 months, there is no truth to these claims,” Apple said in a statement.

Apple
Apple, Amazon deny Chinese ‘spy’ chips into their network. Flickr Commons

“Over the course of the past year, Bloomberg has contacted us multiple times with claims, sometimes vague and sometimes elaborate, of an alleged security incident at Apple.

“Each time, we have conducted rigorous internal investigations based on their inquiries and each time we have found absolutely no evidence to support any of them,” Apple said.

“Apple never had any contact with the Federal Bureau of Investigation (FBI) or any other agency about such an incident. We are not aware of any investigation by the FBI, nor are our contacts in law enforcement,” the tech giant added.

According to Apple, its digital assistant Siri and social search and analytics company Topsy never shared servers.

“Siri has never been deployed on servers sold to us by Super Micro; and Topsy data was limited to approximately 2,000 Super Micro servers, not 7,000. None of those servers have ever been found to hold malicious chips,” said Apple.

Amazon,com. Flickr
Amazon.com, Flickr

According to Apple, its best guess is that “they are confusing their story with a previously-reported 2016 incident in which we discovered an infected driver on a single Super Micro server in one of our labs”.

According to Steve Schmidt, Chief Information Security Officer at Amazon Web Services (AWS) which is Amazon’s Cloud arm, “there are so many inaccuracies in “this article as it relates to Amazon that they are hard to count”.

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“Amazon employs stringent security standards across our supply chain – investigating all hardware and software prior to going into production and performing regular security audits internally and with our supply chain partners,” Schmidt said in a statement.

“We further strengthen our security posture by implementing our own hardware designs for critical components such as processors, servers, storage systems, and networking equipment,” he added. (IANS)

Next Story

Amazon Plans to Deliver Packages to Prime Members in One-Day Around the Globe

The announcement adds pressure to rivals Walmart Inc and others already racing to keep pace with the speed and benefits of Amazon's Prime program

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amazon, one-day delivery
An Amazon Prime Truck is on the Road in Virginia, transporting thousands of items ordered from online giant Amazon. (D Bekheet/VOA)

Amazon.com Inc plans to deliver packages to members of its loyalty club Prime in just one day, instead of two days, part of a spending ramp-up that might curb future profits after a blockbuster first quarter.

Shares rose as much as 2% in after-hours trade on Thursday on the faster shipping announcement for customers around the globe and as Amazon’s first-quarter profit trounced estimates thanks to soaring demand for its cloud and ad services. Amazon will spend $800 million in the second quarter on the goal.

The announcement adds pressure to rivals Walmart Inc and others already racing to keep pace with the speed and benefits of Amazon’s Prime program. Amazon’s first-quarter net income more than doubled to $3.6 billion, while analysts were only expecting $2.4 billion, according to IBES data from Refinitiv.

Second-quarter operating income will be as much as $3.6 billion, but analysts had been expecting $4.2 billion, according to FactSet. Chief Financial Officer Brian Olsavsky said Amazon was still reaping rewards from prior years of hiring and investments in warehouses and other infrastructure.

amazon, one-day delivery
Amazon’s first-quarter net income more than doubled to $3.6 billion, while analysts were only expecting $2.4 billion, according to IBES data from Refinitiv. VOA

“We’re banking the efficiencies of prior investments, continued into Q1,” he said on a call with reporters. “There’ll be times when we have to invest ahead to build out warehouse capacity, but right now we are on a nice path where we are getting the most out of the capacity we have.”

Olsavsky also said earlier that the company would spend more later this year to roll out more benefits to international Prime members.

Investments mean lower profits

The news marks a familiar refrain for the world’s largest online retailer. For years, Amazon has made expensive bets on new technology and programs, like its $13.7 billion purchase of Whole Foods Market in 2017 to become a player in the U.S. grocery business.

Amazon’s investments had long meant lower profit. However, its steady, often successful marches into new industries have been lucrative to shareholders, including its founder Jeff Bezos, who had become the richest man in the world.

The luster of these bets still shined brightly on Thursday. The company’s loyal customer base has drawn merchants to sell and increasingly advertise through its site in exchange for fees, helping Amazon transform from a largely low-margin retail business to a more and more lucrative marketplace.

amazon, one-day delivery
Chief Financial Officer Brian Olsavsky said Amazon was still reaping rewards from prior years of hiring and investments in warehouses and other infrastructure. VOA

Revenue from seller services jumped 20% to $11.1 billion in the first quarter, while ad and other sales surged 34% to $2.7 billion, the company said.

Meanwhile, Amazon’s cloud unit kept growing as more enterprises moved data and computing operations to the technology company’s servers. Sales for Amazon Web Services (AWS) rose 41% to $7.7 billion in the first quarter.

More hiring, spending to come

Some analysts noted that these growth figures, while impressive, were lower than what Amazon had posted in prior quarters.

“Amazon delivered slower growth in all key segments,“ (AWS, advertising and e-commerce) “but margins skyrocketed, seemingly driven by less aggressive investment,” said Atlantic Equities analyst James Cordwell.

Amazon suggested that spending indeed was on the way, and with that smaller growth in profit.

‘Lord of the Rings’ prequel

The company has been building warehouses around the world to ensure its edge in delivering goods to customers the fastest. It is spending more on video, from live sports to a planned prequel series to “The Lord of the Rings,” to draw more people to log on to its website, watch, and while they are there, buy socks. Hiring will pick up from the 12 percent increase Amazon posted in the past 12 months, Olsavsky said.

amazon, one-day delivery
Amazon’s investments had long meant lower profit. However, its steady, often successful marches into new industries have been lucrative to shareholders, including its founder Jeff Bezos, who had become the richest man in the world. VOA

And the company is delving into even less familiar terrain.

It recently announced investments in self-driving and electric car companies, teasing how it thinks these high-tech, capital-intensive businesses could pay dividends potentially in the form of autonomous deliveries in the long run. Amazon has not described in detail its thinking behind the bets.

In China, where the company had long struggled to compete with Alibaba Group Holding Ltd, Amazon said this month it would close warehouses and its domestic marketplace in July. There were silver linings for investors, however. Amazon’s Olsavsky said the company saw no material impact in India from actions the company took to comply with new regulations there affecting foreign investment in the e-commerce sector, something Amazon had voiced concern about in the past.

Prime signups on rise in India

Prime member signups in India, one of Amazon’s most important growth markets, continue to be rising the fastest in the company’s history.

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Bezos, who many regard as a management guru, also settled his closely watched divorce such that he will retain full voting control of his family’s stock, sparing Amazon a boardroom battle. However, his fortune, which has been the largest of any married couple in the world, will be divided.

The company forecast net sales of between $59.5 billion and $63.5 billion for the second quarter, the midpoint of which was below analysts’ average estimate of $62.37 billion, according to IBES data from Refinitiv. (VOA)