IBM sued for cooperating with NSA for spy program

IBM sued for cooperating with NSA for spy program

Summary: IBM is being sued for not disclosing the risks to its business when cooperating with the NSA for the agency's spy program.

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TOPICS: IBM, Privacy, Security
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IBM is being sued by one of its shareholders over its alleged failure to disclose its involvement in the US National Security Agency's (NSA) spy program and subsequent loss of business.

According to Reuters, the Louisiana Sheriffs' Pension and Relief Fund is suing the technology giant's CEO Virginia Rometty and CFO Mark Loughridge for failing to reveal the risk of tying the company to the NSA.

In November, the Center for Strategic Studies in Washington noted that IBM, along with Cisco and Microsoft, appeared to be stonewalled by China in response to media reports that US companies were aiding the NSA.

IBM reported a 22 percent revenue loss from China in October, and a 4 percent drop in its Q3 profits. In September, Microsoft also noted that China is its weakest market.

In May this year, at the AusCERT conference and prior to the first reports of the NSA's spy program, retired US Marine Corps Lieutenant Colonel Bill Hagestad made the remark that if the tensions between China and the US escalated, it would have profound consequences for a company like Cisco.

"I predict that within five years, there's a little company in San Francisco Bay that will cease to exist because China, the biggest customer of Cisco, is going to pull it all out," he said at the time.

The NSA has been under fire for a number of controversial actions it has taken in the interests of collecting intelligence. These have included spying on the Mexican and German presidents, installing surveillance equipment at foreign embassies, creating malware that infected over 50,000 computers, breaking into Microsoft and Google's networks, and even infiltrating online multiplayer games.

Its operations have not been especially clean, either. Although it attempts to minimise spying on US persons, these rules are often ignored, or left to a foreign nation to check. Additionally, it has been found to be promising its allies that it won't spy on them, then behind closed doors, doing it anyway.

Topics: IBM, Privacy, Security

Michael Lee

About Michael Lee

A Sydney, Australia-based journalist, Michael Lee covers a gamut of news in the technology space including information security, state Government initiatives, and local startups.

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19 comments
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  • The NSA is destroying America

    The NSA will cause standards-of-living to go down.

    The United States could have had a very lucrative income by handling the world's cloud date. This has now been ruined by the NSA.

    Companies and individuals will no longer trust their data on US servers, because IBM, Cisco and Microsoft thought it would be a good idea to aid the NSA, and allow the NSA to spy on everyone's private data.

    The only response that companies can make is to stop using the services of those companies listed above that aid the NSA. Bye Bye Cisco. Bye Bye IBM. Bye Bye Microsoft.
    Vbitrate
    • Cisco, maybe but....

      Microsoft and IBM, I wouldn't hold my breath. They are to big to fall just cause they lose some business due to this. They are big enough to ride this out.
      LoopDoGG79
      • Time will tell

        IBM is not as big as it used to be; hence the name Big Blue. Little by little IBM has been selling divisions to Asian companies. IMB is not in the PC business any more as they sold it to Lenovo. Imagine all of Asia not buying IBM computers at all because of mistrust. No company can take that and the same goes for Cisco. Microsoft will be loosing market as well to Linux in Europe mainly and of course Asia and some Latin-American countries. Munich kissed Microsoft good bye and is using Linux. It will be interesting to see those companies 10 years from now.
        Cicuta2011
        • ERRRRM

          MICROSOFT IS STILL BIG AND NOT LOSING, JUST BECAUSE SOME NAZI FACCIST KISSED WINDOWS GOODBYE DOES NOT MEAN ITS GONE. 10 YEARS FROM NOW, I BET PEOPLE WILL STILL BE USING LINUX, LINUX IS NEVER GOING TO BE BIG OR BIGGER, THEY HAVE BEEN DREAMING SINCE 2004
          THEBIGBEN2012
    • Correct, the estimage loss is in trillions of dollars for the next decade

      Who will trust put his data in USA soil??? Just look at the price for "clouding" in usa and compare to the price in CZ, PL, RU... it is much cheaper in USA, I tried to allocate a server in east europe, and guess what??? no available!!! Here in Brazil, the quest for privacy now it is important, as I am asked to make applications, and servers in UNIX, Linux... Thanks to Snowden and windows 8, I am doing well!!!
      Extremelydangerous
  • what makes me laugh

    about this NSA thing, is that for years the USA has been complaining about Chinese hackers. It now looks like they were just doing a bit of self defence. lol, roflmao
    bd1235
    • I laugh also

      Since 1952; so, now the US government cannot complain at all...
      Cicuta2011
  • I Can See Suits by Many Other Groups

    Lawyers, Accountants, Doctors, Finance and banking, individuals who transmitted any sensitive information such as credit card, tax planning, financial account info, etc. There is legal confidentiality and expectation of privacy. Two different concepts and these companies purposely put legal confidentiality at risk. Companies had an obligation to notify users that such privacy is not available because of government wholesale sweeps and not relying on buried disclaimer that appears to reference due process as understood by the citizenry.
    BrianLevyEsq
  • Good news!

    Perhaps if enough stock holders sue companies for turning data over to the government, those companies will have their puppets in Congress eliminate laws like the Patriot Act and others, thereby restoring our Constitutionally-guaranteed freedom from unjustified search and seizure.

    Of course, repealing those laws alone won't stop the illegal practices of our government. What we need is more accountability to the people. We need those in government who are violating the Constitution to be thrown in prison one by one until they all stop doing it. We need to start prosecuting the employees of the government and their superiors for treason when they violate the Constitution, even under orders from superiors. There should also be protection for employees who blow the whistle on illegal activities by our government.

    Maybe everyone needs to re-watch Orwell's film, "1984." Most Americans are literally living that story today. They're struggling, oppressed, and frightened of a government which sees their every move. We are already victims of the "thought police." People are imprisoned without a trial for having beliefs that go against the hidden agenda of the government. The top 1% are the only people who enjoy true freedom. They see everyone else as puppets to be tightly controlled and harnessed as a resource to increase their own wealth and power. They wage nearly continuous wars in order to generate more income. They profit from supplying all participants on both sides of every war. They profit from the continuous destruction and rebuilding cycle of war. They use wars to rally their oppressed citizens toward increasing production efforts. They manipulate all information available to the public so that it hides oppression behind the banner of increasing public safety. People are brainwashed into believing that eliminating all of their rights is being done in their best interest by an altruistic government who want to protect them. It just boggles my mind that people are completely taken in by these manipulations.

    To paraphrase Ben Franklin, those who are willing to give up freedom for safety deserve neither.
    BillDem
    • Ben Franklin's Statement on Freedom and Safety

      I have thought much about that statement attributed to Ben Franklin and I have come to the opinion that it is one of those generalized statements that, although catchy, needs some limitations to make it truly valid. As it is, it is one of the folksy ideas that cannot hold up to scrutiny in many situations and left alone it is rather inane.
      floydr1938
    • SECRET

      It is the government that decides what is SECRET in the interests of National Security. Also it is the Government who decides that it is a criminal offence to disclose that it is a SECRET, including disclosing any wrong doing by the Government. Are you starting to see the paradox yet? What we are doing is unconstitutional, but it is a SECRET in the interests of National Security, and it is a criminal offence to disclose that what we are doing is unconstitutional.

      But we don't that, it is only the Chinese and the Russians that do that, and maybe Hitler.
      bigpicture
      • it's all about integrity

        Who here thinks most of our policy isn't dictated by special interests and big money. If you feel the people in NSA positions aren't influenced to do wrong by "donations" then we are all fine and have nothing to worry about.
        copracr
  • Snowden is a hero -

    - and should be pardoned.

    He did the American People a service in revealing what the NSA is up to.
    Jo Keely
    • Trust neither...

      The NSA is spying on Americans, and that's unconstitutional.

      Snowden might be a "hero" to some, but what he did is also illegal.

      Two wrong, and neither one is something that people should applaud.

      Snowden, no matter what the current negative feeling towards the NSA, committed a felony, and he cannot be allowed to go unpunished. If he is allowed to get away with it, it might encourage others to perform similar acts, under the misguided belief that they're performing an act for the "general good", while it could backfire and endanger the country, or at least some or many people.
      adornoe
      • punishment

        If the US goes unpunished for letting down the public and disregarding the constitution by spying on its citizens so should Snowden. Fair is fair.
        Some Internet Dude
        • That's now how it works, and it wouldn't be possibe to begin with...

          The U.S. can prosecute Snowden, and it would be legal to go after him. The NSA needs to be reigned in, and stopped from spying on Americans.

          Two wrongs need two corrections. Neither one is without blame, and neither one should go unpunished. Snowden committed a criminal act, even if what he did is now seen as "heroic". It's only seen as heroic now because, we don't know yet what kind of damage he did to America and even the world. Having said that, I'm still glad that we are now aware of how intrusive our own government is into our lives. But that doesn't negate the fact that Snowden committed a felony.
          adornoe
  • Another Hero!

    The Louisiana Sheriffs' Pension and Relief Fund is another modern hero fighting for our Constitution. Great work guys, you're setting a great example.
    akaltman@...
  • ms Government vs The People ... of the world.

    This is pure speculation on my part, but food for thought.
    In my mind, there can only be one reason that microsoft continues to stay in business by trying to force it's choices on the consumer despite so many obvious blunders and setbacks.
    The failure and crash of a flagship product, i.e. vista, metro8. much less two of them, would be enough to send most businesses into a fatal downward spiral. What saves ms, ios, and ibm? Permanent, guaranteed, contractual sales specifying 'Special Security Intent' bias built in. In other words, The Ultimate Golden Parachute.
    Not news to anyone, unless they live in another universe. You probably can think of a few of them right now. Maybe read one of their articles lately?
    How many still remember, or were even aware, that metro 8.1 got caught with specific back doors built into it's os 'For The Government' before it was even released? It's pretty quiet on that issue now, isn't it? What with every TV show and movie showing you a metro 8.1 screen at every opportunity.
    The nsa, irs, and oh yea, Benghazi, all have serious downplaying issues in the media.
    The reality is this... The gov. and it's partners, have billions of dollars and jobs tied up and in bed, with one another. They will "never" admit to, or give up, those options without being forced to.
    Our best option, is for the private sector, and other governments, like Brazil's example, to provide counter security and offer other internet choices to protect and secure our lives and well being. After all, we get our security from the same type of people that write theirs.
    ARGUS733@...
  • Well, IBM sold computers to the Nazis so...

    The NSA (aka USSA Stasi) is just another brick in the wall. High stepping to down the road to American Fascism. The US is collapsing under the weight ($$$ cost) of the Military and Spy complexes. It won't be long now. Aided and abetted by Dems and Repubs alike.
    Telexer