Friday, July 27, 2018

How Silicon Valley Became a Den of Spies - POLITICO Magazine

(This is a super long – but interesting article – I have inserted just the last few paragraphs, but you can read it all.)………..

There’s another big challenge to doing counterintelligence work in the Bay Area, say these officials: getting the cooperation of local private-sector actors, especially in tech. Indeed, said former intelligence officials, not only do many cases of economic espionage not reach the prosecution stage here, they often go unreported entirely.

This has been a longstanding source of friction in the Valley. “The biggest problem we had—really, seriously—with a lot of these companies is that they wouldn’t prosecute,” said Larae Quy, the former Palo Alto-based FBI counterintelligence agent who retired in 2006. “They would have an employee sell technology to, say, the Russians or the Chinese, and rather than let their stockholders or investors know about it, they just let it walk. So, we’ve caught the guy, or we have information and we’d like to take it to the next level, and they don’t want to push it because of the bad press that gets out. It’s the most frustrating thing in the world.”

Silicon Valley firms continue to downplay, or outright conceal, the extent to which the theft of trade secrets and other acts of economic espionage occur, said multiple former officials. “Coming forward and saying you didn’t have controls in place—that totally impacts shareholder or investor value,” noted one former intelligence official. “Especially when you’re dealing with startups or mid-level companies that are looking for funding, that’s a big deal. You’re basically announcing to the world, especially if you’re potentially going forward with a public trial, that you were not able to protect your information.”

The open, start-up culture in the Bay Area has also complicated U.S. counterintelligence efforts, said former officials, because Russian and Chinese operatives have an easier time infiltrating organizations without any security systems or hierarchies in place. These services like penetrating young companies and start-ups, noted one former official, because “it’s always better to get in at ground floor” when seeking to pilfer valuable information or technology.

The exorbitant cost of living in Silicon Valley, however, means that opportunities for tech employees—and potential spies or co-optees—to “get in at the ground floor” are becoming increasingly uncommon. The tech industry, chasing talent and lower overheard, is now spread more widely across the country than ever before. And this diffusion will create new vulnerabilities. Consequently, places like Chapel Hill, North Carolina and Boulder, Colorado—both midsized cities with thriving tech industries—will likely see an uptick in counterintelligence cases. (One former intelligence official noted that the FBI’s office in Austin, Texas, has built up its counterintelligence capacities.)

But spies will never leave Silicon Valley. As the region’s global clout grows, so will its magnet-like attraction for the world’s spooks. As one former U.S. intelligence official put it, spies are pulled toward the Bay Area “like moths to the light.” And the region will help define the struggle for global preeminence—especially between the United States and China—for decades to come.