The Courts

Supreme Court Sides With Internet Provider In Copyright Fight Over Pirated Music 63

Longtime Slashdot reader JackSpratts writes: The Supreme Court unanimously said on Wednesday that a major internet provider could not be held liable for the piracy of thousands of songs online in a closely watched copyright clash. Music labels and publishers sued Cox Communications in 2018, saying the company had failed to cut off the internet connections of subscribers who had been repeatedly flagged for illegally downloading and distributing copyrighted music. At issue for the justices was whether providers like Cox could be held legally responsible and required to pay steep damages -- a billion dollars or more in Cox's case -- if they knew that customers were pirating music but did not take sufficient steps to terminate their internet access.

In its opinion released (PDF) on Wednesday, the court said a company was not liable for "merely providing a service to the general public with knowledge that it will be used by some to infringe copyrights." Writing for the court, Justice Clarence Thomas said a provider like Cox was liable "only if it intended that the provided service be used for infringement" and if it, for instance, "actively encourages infringement." Justice Sonia Sotomayor, joined by Justice Ketanji Brown Jackson, wrote separately to say that she agreed with the outcome but for different reasons. [...]
Cox called the court's unanimous decision a "decisive victory" for the industry and for Americans who "depend on reliable internet service."

"This opinion affirms that internet service providers are not copyright police and should not be held liable for the actions of their customers," the company said.
Social Networks

Meta and YouTube Found Negligent in Landmark Social Media Addiction Case 60

A jury found Meta and YouTube negligent in a landmark social media addiction case, ruling that addictive design features such as infinite scroll and algorithmic recommendations harmed a young user and contributed to her mental health distress. The verdict awards $3 million in compensatory damages so far and could pave the way for more lawsuits seeking financial penalties and product changes across the social media industry. "Meta is responsible for 70 percent of that cost and YouTube for the remainder," notes The New York Times. "TikTok and Snap both settled with the plaintiff for undisclosed terms before the trial started." From the report: The bellwether case, which was brought by a now 20-year-old woman identified as K.G.M., had accused social media companies of creating products as addictive as cigarettes or digital casinos. K.G.M. sued Meta, which owns Instagram and Facebook, and Google's YouTube over features like infinite scroll and algorithmic recommendations that she claimed led to anxiety and depression.

The jury of seven women and five men will deliberate further to decide what further punitive damages the companies should pay for malice or fraud. The verdict in K.G.M.'s case -- one of thousands of lawsuits filed by teenagers, school districts and state attorneys general against Meta, YouTube, TikTok and Snap, which owns Snapchat -- was a major win for the plaintiffs. The finding validates a novel legal theory that social media sites or apps can cause personal injury. It is likely to factor into similar cases expected to go to trial this year, which could expose the internet giants to further financial damages and force changes to their products.
The verdict also comes on the heels of a New Mexico jury ruling that found Meta liable for violating state law by failing to protect users of its apps from child predators.
Facebook

Meta Loses Trial After Arguing Child Exploitation Was 'Inevitable' (arstechnica.com) 41

Meta lost a child safety trial in New Mexico after a court found that its platforms failed to adequately protect children from exploitation and misled parents about app safety. According to Ars Technica, the jury on Tuesday "deliberated for only one day before agreeing that Meta should pay $375 million in civil damages..." While the jury declined to impose the maximum penalty New Mexico sought, which could have cost the company $2.2 billion, Meta may still face additional financial penalties and could be forced to make changes to its apps. From the report: The trial followed a 2023 lawsuit filed by New Mexico Attorney General Raul Torrez after The Guardian published a two-year investigation exposing child sex trafficking markets on Facebook and Instagram. Torrez's office then conducted an undercover investigation codenamed "Operation MetaPhile," in which officers posed as children on Facebook, Instagram, and WhatsApp. The jury heard that these fake profiles were "simply inundated with images and targeted solicitations" from child abusers, Torrez told CNBC in 2024. Ultimately, three men were arrested amid the sting for attempting to use Meta's social networks to prey on children. At trial, Mark Zuckerberg and Instagram chief Adam Mosseri testified that "harms to children, such as sexual exploitation and detriments to mental health, were inevitable on the company's platforms due to their vast user bases," The Guardian reported. Internal messages and documents, as well as testimony from child safety experts within and outside the company, showed that Meta repeatedly ignored warnings and failed to fix platforms to protect kids, New Mexico's AG successfully argued.

Perhaps most troubling to the jury, law enforcement and the National Center for Missing and Exploited Children also testified that Meta's reporting of crimes to children on its apps -- including child sexual abuse materials (CSAM) -- was "deficient," The Guardian reported. Rather than make it easy to trace harms on its platforms, the jury learned from frustrated cops that Meta "generated high volumes of 'junk' reports by overly relying on AI to moderate its platforms." This made its reporting "useless" and "meant crimes could not be investigated," The Guardian reported.

Celebrating the win as a "historic victory," Torrez told CNBC that families had previously paid the price for "Meta's choice to put profits over kids' safety." "Meta executives knew their products harmed children, disregarded warnings from their own employees, and lied to the public about what they knew," Torrez said. "Today the jury joined families, educators, and child safety experts in saying enough is enough."
Meta said the company plans to appeal the verdict. "We respectfully disagree with the verdict and will appeal," Meta's spokesperson said. "We work hard to keep people safe on our platforms and are clear about the challenges of identifying and removing bad actors or harmful content. We will continue to defend ourselves vigorously, and we remain confident in our record of protecting teens online."
Privacy

Hong Kong Police Can Demand Passwords Under New National Security Rules (bbc.com) 69

An anonymous reader quotes a report from the BBC: Hong Kong police can now demand phone or computer passwords from those who are suspected of breaching the wide-ranging National Security Law (NSL). Those who refuse could face up to a year in jail and a fine of up to $12,700, and individuals who provide "false or misleading information" could face up to three years in jail. It comes as part of new amendments to a bylaw under the NSL that the government gazetted on Monday.

The NSL was introduced in Hong Kong in 2020, in wake of massive pro-democracy protests the year before. Authorities say the laws, which target acts like terrorism and secession, are necessary for stability -- but critics say they are tools to quash dissent. The new amendments also give customs officials the power to seize items that they deem to "have seditious intention."

Monday's amendments ensure that "activities endangering national security can be effectively prevented, suppressed and punished, and at the same time the lawful rights and interests of individuals and organizations are adequately protected," Hong Kong authorities said on Monday. Changes to the bylaw was announced by the city's leader, John Lee, bypassing the city's legislative council. The NSL also allows for some trials to be heard behind closed doors.

The Courts

Intuit Beats FTC In Court, Ending Restrictions On 'Free' TurboTax Ads (arstechnica.com) 59

An anonymous reader quotes a report from Ars Technica: An appeals court invalidated the Biden-era Federal Trade Commission's attempt to punish Intuit for allegedly deceptive ads that pitched TurboTax as free. Under then-Chair Lina Khan, the FTC determined in 2024 that the TurboTax maker violated US law with deceptive advertising and ordered it to stop telling consumers, without more obvious disclaimers, that TurboTax or other products are free. The FTC's chief administrative law judge had previously found that Intuit's ads violated prohibitions on deceptive advertising because the firm "advertised to consumers that they could file their taxes online for free using TurboTax, when in truth, for approximately two-thirds of taxpayers, the advertised claim was false."

Intuit appealed in the conservative-leaning US Court of Appeals for the 5th Circuit and got a resounding victory on Friday in a 3-0 ruling issued (PDF) by a panel of judges. "Following the Supreme Court's decision in SEC v. Jarkesy, we hold that adjudication of a deceptive advertising claim before an administrative law judge violated the constitutional separation of powers," the 5th Circuit panel said. The Supreme Court's June 2024 ruling (PDF) in Securities and Exchange Commission v. Jarkesy held that the SEC system for issuing fines violated the right to a jury trial. The 5th Circuit panel said the Jarkesy decision confirms that the FTC must pursue deceptive advertising claims in courts rather than its own administrative process. [...]

The 5th Circuit ruling acknowledged that most people can't use TurboTax for free. "TurboTax 'Free Edition' has been part of the TurboTax range for more than a decade, available to taxpayers for what Intuit refers to as 'simple tax returns,'" the ruling said. "Most American taxpayers do not have 'simple tax returns.' The TurboTax website is designed so that any individual taxpayer can begin preparing a tax return in TurboTax Free Edition, but those who enter disqualifying information are prompted before filing to upgrade to a paid product." Although the court noted that Intuit stopped the specific ads challenged by the FTC, the ruling said the cease-and-desist order issued by the agency could have far-reaching effects on Intuit marketing. "The cease-and-desist order is remarkably broad: it prohibits Intuit for the next twenty years from advertising 'any goods or services' as free unless specific, extensive, and arguably unworkable requirements are satisfied. The order is not confined to tax-preparation solutions and extends to all products sold by Intuit," the ruling said.

The 5th Circuit said the FTC's deceptive advertising claims are "traditional actions at law and equity and thus involve private rights that demand adjudication in an Article III court." The court rejected the FTC's argument that the claims involve public rights that may be adjudicated by administrative agencies. "In sum, there is overwhelming evidence that Section 5 of the FTC Act did not create a new duty for merchants to refrain from deceptive advertising," the 5th Circuit said. "That duty long predated the FTC Act and could be enforced by private parties in actions at common law or equity for fraud, deceit, or unfair competition."

United States

Trump Administration To Pay French Company $1 Billion To Stop Offshore Wind Farms (npr.org) 312

An anonymous reader quotes a report from NPR: The Trump administration will pay $1 billion to a French company to walk away from two U.S. offshore wind leases as the administration ramps up its campaign against offshore wind and other renewable energy. TotalEnergies has agreed to what's essentially a refund of its leases for projects off the coasts of North Carolina and New York, and will invest the money in fossil fuel projects instead, the Department of Interior announced Monday.

The Trump administration has tried to halt offshore wind construction, but federal judges overturned those orders. Environmental groups denounced the TotalEnergies deal as an alternate way to block wind projects. President Donald Trump has gone all in on fossil fuels, which he says is the way to lower costs for families, increase reliability and help the U.S. maintain global leadership in artificial intelligence.

TotalEnergies pledged to not develop any new offshore wind projects in the United States. TotalEnergies CEO Patrick Pouyanne said in a statement that the company renounced offshore wind development in the United States in exchange for the reimbursement of the lease fees, "considering that the development of offshore wind projects is not in the country's interest." Pouyanne said the refunded lease fees will finance the construction of a liquefied natural gas plant in Texas and the development of its oil and gas activities, calling it a "more efficient use of capital" in the U.S. After it makes those investments, TotalEnergies will be reimbursed, up to the amount paid in lease purchases for offshore wind, according to the DOI.

Government

Bipartisan Bill Seeks To Ban Sports Betting On Prediction Market Platforms 57

An anonymous reader quotes a report from TechCrunch: Senators Adam Schiff (D-CA) and John Curtis (R-UT) introduced (PDF) a bill on Monday that could prevent prediction market platforms Kalshi and Polymarket from allowing users to wager money on sports events or play casino-style games. This bipartisan bill would not apply to FanDuel and DraftKings, which are subject to state-by-state gambling laws, rather than federal ones. "Sports prediction contracts are sports bets -- just with a different name. And yet, these contracts are currently offered in all fifty states in clear violation of state and federal law," Schiff said in a statement.

Prediction markets like Kalshi and Polymarket are regulated under the Commodity Futures Trading Commission (CFTC), which is why Schiff and Curtis are able to address them under federal jurisdiction, rather than leaving them to state-regulated sportsbooks. But these senators argue that there isn't much of a difference in practice between betting on sports via federally or state-regulated apps. Kalshi's Super Bowl trading volume, for instance, reached over $1 billion this year -- a 2700% increase year-over-year. "Too many young people in Utah are getting exposed to addictive sports betting and casino-style gaming contracts that belong under state control, not under federal regulators," Curtis said in a statement.
The report notes that Kalshi is temporarily banned in Nevada and is facing criminal charges in Arizona. "Kalshi may brand itself as a 'prediction market,' but what it's actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law," Arizona Attorney General Kris Mayes said in a statement last week.
Government

Tech Leaders Support California Bill to Stop 'Dominant Platforms' From Blocking Competition (ca.gov) 47

A new bill proposed in California "goes after big tech companies" writes Semafor. Supported by Y Combinator, Cory Doctorow , and the nonprofit advocacy group Fight for the Future, it's called the "BASED" act — an acronym which stands for "Blocking Anticompetitive Self-preferencing by Entrenched Dominant platforms."

As announced by San Francisco state representative Scott Wiener, the bill "will restore competition to the digital marketplace by prohibiting any digital platform with a market capitalization greater than $1 trillion and serving 100 million or more monthly users in the U.S., from favoring their own products and services on the platforms they operate."

More from Scott Wiener;s announcement: For years, giant digital platforms like Apple, Amazon, Google, and Meta have used their immense power to promote their own products and services while stifling competitors — a practice also known as self-preferencing. The result has been higher prices, diminished service, and fewer options for consumers, and less innovation across the technology ecosystem.

Self-preferencing also locks startups and mid-sized companies out of the online marketplace unless they play by rules set by their competitors. As a new generation of AI-powered startups seeks to enter the marketplace, their success — and public access to the innovations they produce — depends on their ability to compete on an even playing field.

"Anticompetitive behavior is everywhere on the internet," said Senator Wiener, "from rigged search results, to manipulative nudges boosting the 'house' product, to anti-discount policies that raise prices, to the dreaded green bubble that 'breaks' the group chat. When the world's largest digital platforms rig the game to favor their own products and services, we all lose. By prohibiting these anticompetitive practices, the BASED Act will protect competition online, empower consumers and startups, and promote innovations to improve all our lives."

The announcement includes a quote from Teri Olle, VP of the nonprofit Economic Security California Action, saying the act would "safeguard merit-based market competition. This legislation stands for a simple principle: owning the stadium doesn't mean that you get to rig the game." Some conduct prohibited by the proposed bill includes
  • Manipulating the order of search results to favor a provider's products or services, irrespective of a merit-based process,
  • Using non-public data generated by third-party sellers — including sales volumes, pricing, and customer behavior — to develop competing products that are subsequently boosted above the third-party sellers' product...

And the announcement also notes that "under the terms of the bill, providers could not prevent consumers from obtaining a portable copy of their own data or restrict voluntary data sharing (by consumers) with third parties."

Read on for reactions from DuckDuckGo, Proton, Yelp, Y Combinator, and Cory Doctorow.


Electronic Frontier Foundation

EFF Tells Publishers: Blocking the Internet Archive Won't Stop AI, But It Will Erase The Historical Record (eff.org) 26

"Imagine a newspaper publisher announcing it will no longer allow libraries to keep copies of its paper," writes EFF senior policy analyst Joe Mullin.

"That's effectively what's begun happening online in the last few months." The Internet Archive — the world's largest digital library — has preserved newspapers since it went online in the mid-1990s... But in recent months The New York Times began blocking the Archive from crawling its website, using technical measures that go beyond the web's traditional robots.txt rules. That risks cutting off a record that historians and journalists have relied on for decades. Other newspapers, including The Guardian, seem to be following suit...

The Times says the move is driven by concerns about AI companies scraping news content. Publishers seek control over how their work is used, and several — including the Times — are now suing AI companies over whether training models on copyrighted material violates the law. There's a strong case that such training is fair use. Whatever the outcome of those lawsuits, blocking nonprofit archivists is the wrong response.

Organizations like the Internet Archive are not building commercial AI systems. They are preserving a record of our history. Turning off that preservation in an effort to control AI access could essentially torch decades of historical documentation over a fight that libraries like the Archive didn't start, and didn't ask for. If publishers shut the Archive out, they aren't just limiting bots. They're erasing the historical record...

Even if courts place limits on AI training, the law protecting search and web archiving is already well established... There are real disputes over AI training that must be resolved in courts. But sacrificing the public record to fight those battles would be a profound, and possibly irreversible, mistake.

Censorship

Millions Face Mobile Internet Outages in Moscow. 'Digital Crackdown' Feared (cnn.com) 54

13 million people live in Moscow, reports CNN.

But since early March the city "has experienced internet and mobile service outages on a level previously unseen." (Though Wi-Fi access to the internet is still available...) Russian social media "is flooded with jokes and memes about sending letters by carrier pigeons or using smartphones as ping-pong paddles..." [Moscow residents] complain they cannot navigate around the center or use their favorite mobile apps. The interruptions appear to have had a knock-on effect of making it more difficult to make voice calls or send an SMS. Some are panic-buying walkie-talkies, paper maps, and even pagers.

The latest shutdown builds on similar efforts around the country. For months, mobile internet service interruptions have hit Russia's regions, particularly in provinces bordering Ukraine, which has staged incursions and launched strikes inside Russian territory to counter Russia's full-scale invasion. Some regions have reported not having any mobile internet since summer. But the most recent outages have hit the country's main centers of wealth and power: Moscow and Russia's second city, St. Petersburg.

Public officials claim the blackout of mobile internet service in the capital and other regions is part of a security effort to counter "increasingly sophisticated methods" of Ukrainian attack... Speculation centers on whether the authorities are testing their ability to clamp down on public protest in the case there's an effort to reintroduce unpopular mobilization measures to find fresh manpower for the war in Ukraine; whether mobile internet outages may precede a more sweeping digital blackout; or if the new restrictions reflect an atmosphere of heightened fear and paranoia inside the Kremlin as it watches US-led regime- change efforts unfold against Russian allies such as Venezuela and Iran... On Wednesday, Russian mobile providers sent notifications that there would be "temporary restrictions" on mobile internet in parts of Moscow for security reasons, Russian state news agency RIA-Novosti reported. The measures will last "for as long as additional measures are needed to ensure the safety of our citizens," Kremlin spokesman Dmitry Peskov said on March 11...

As well as banning many social media platforms, Russia blocks calling features on messenger apps such as WhatsApp and Telegram. Roskomnadzor, the country's communications regulator, has introduced a "white list" of approved apps... Russia has also tested what it calls the "sovereign internet," a network that is effectively firewalled from the rest of the world. The disruptions are fueling broader concerns about tightening state control. In parallel with the internet shutdown, the Kremlin has also been pushing to impose a state-controlled messaging app called Max as the country's main portal for state services, payments and everyday communication. There has been speculation the Kremlin may be planning to ban Telegram, Russia's most widely used messaging app, entirely. Roskomnadzor said that it was restricting Telegram for allegedly failing to comply with Russian laws.

"Russia has opened a criminal case against me for 'aiding terrorism,'" Telegram's Russian-born founder Pavel Durov said on X last month. "Each day, the authorities fabricate new pretexts to restrict Russians' access to Telegram as they seek to suppress the right to privacy and free speech...."

The article includes this quote from Mikhail Klimarev, head of the Internet Protection Society and an expert on Russian internet freedom. "In any situation when they (the authorities) perceive some kind of danger for themselves and accept the belief that the internet is dangerous for them, even if it may not be true, they will shut it down," he said. "Just like in Iran."
Firefox

Firefox Announces Built-In VPN and Other New Features - and Introduces Its New Mascot (mozilla.org) 41

A free built-in VPN is coming to Firefox on Tuesday, Mozilla announced this week: Free VPNs can sometimes mean sketchy arrangements that end up compromising your privacy, but ours is built from our data principles and commitment to be the world's most trusted browser. It routes your browser traffic through a proxy to hide your IP address and location while you browse, giving you stronger privacy and protection online with no extra downloads. Users will have 50 gigabytes of data monthly in the U.S., France, Germany and U.K. to start. Available in Firefox 149 starting March 24.

We also recently shared that Firefox is the first browser to ship Sanitizer API, a new web security standard that blocks attacks before they reach you [for untrusted HTML XSS vulnerabilities].

"The roadmap for Firefox this year is the most exciting one we've developed in quite a while," says Firefox head Ajit Varma. "We're improving the fundamentals like speed and performance. We're also launching innovative new open standards in Gecko to ensure the future of the web is open, diverse, and not controlled by a single engine.

"At the same time we're prioritizing features that give users real power, choice and strong privacy protections, built in a way that only Firefox can. And as always, we'll keep listening, inviting users to help shape what comes next and giving them more reasons to love Firefox."

Two new features coming next week:
  • Split View puts two webpages side by side in one window, making it easy to compare, copy and multitask without bouncing between tabs. Rolling out in Firefox 149 on March 24.
  • Tab Notes let you add notes to any tab, another tool to help with multitasking and picking up where you left off. Available in Firefox Labs 149 starting March 24.

And Firefox also released a video this week introducing their new mascot Kit.


The Military

Officer Leaks Location of French Aircraft Carrier With Strava Run (bbc.com) 86

schwit1 shares a report from the BBC: A French officer has reportedly revealed the location of an aircraft carrier deployed towards the Middle East after publicly registering a run on sports app Strava. French news outlet Le Monde first reported the officer, referred to as Arthur, logged a 35-minute run on the app while exercising on the deck of aircraft carrier Charles de Gaulle on 13 March. He used a smartwatch to record his run and upload the activity to the app, the paper said, creating a map that showed his location. [...] The location of the vessel was said by Le Monde to have been northwest of Cyprus, around 100km (62 miles) from the Turkish coast, with satellite images capturing the carrier and its escort. A representative from the French Armed Forces said the officer's behavior "does not comply with current guidelines," which "sailors are regularly made aware of."
Government

White House Unveils National AI Policy Framework To Limit State Power 75

An anonymous reader quotes a report from CNBC: The Trump administration on Friday issued (PDF) a legislative framework for a single national policy on artificial intelligence, aiming to create uniform safety and security guardrails around the nascent technology while preempting states from enacting their own AI rules. The six-pronged outline broadly proposes a slew of regulations on AI products and infrastructure, ranging from implementing new child-safety rules to standardizing the permitting and energy use of AI data centers. It also calls on Congress to address thorny issues surrounding intellectual-property rights and craft rules "preventing AI systems from being used to silence or censor lawful political expression or dissent."

The administration said in an official release that it wants to work with Congress "in the coming months" to convert its framework into a bill that President Donald Trump can sign. The White House wants to codify the framework into law "this year" and believes it can generate bipartisan support, Michael Kratsios, director of the White House Office of Science and Technology Policy, said in an interview with Fox News on Thursday evening. That won't be easy in a deeply divided Congress where Republicans hold thin and often fractious majorities, and where Trump has already urged GOP lawmakers to prioritize his controversial voter-ID bill above all else ahead of the November midterms.
BCLP has an interactive map that tracks the proposed, failed and enacted AI regulatory bills from each state.
Power

Work From Home and Drive More Slowly To Save Energy, IEA Says (bbc.com) 152

As energy prices soar from the Iran conflict, the International Energy Agency is urging governments to cut energy use by taking up measures like remote work and reduced speed limits. The group warns the energy security crisis could persist for months, even if supply routes stabilize. "I believe the world has not yet well understood the depth of the energy security challenge we are facing," said IEA's executive director, Fatih Birol. "It is much bigger than what we had in the 1970s... It is also bigger than the natural gas price shock we experienced after the Russia's invasion of Ukraine." The BBC reports: Thirty-two countries are members of the IEA, including the US, the UK, Australia, Canada, Japan and 24 other European nations. Its role is to act as a global watchdog, providing analysis and recommendations on global energy problems, such as energy security and the transition to clean energy. The IEA's other suggestions for governments, businesses and individuals include:

- Promoting use of public transport
- Giving private cars access to city centres on alternate days
- Encouraging car sharing and efficient driving habits
- Avoiding air travel where possible, especially business flights
- Switching to electric cooking

It also said there should be a focused effort to preserve liquid petroleum gas for cooking and other essential uses, by switching bio-fuel converted vehicles onto gas and introducing other measures to reduce its use. Birol said these proposals were in addition to action taken by IEA member countries earlier this month, when they agreed to release 400 million barrels of oil, 20% of its emergency reserves.
Several countries in Asia have implemented emergency four-day workweeks and work-from-home mandates as they have been hit particularly hard from the conflict. Fortune notes: "Asia is particularly dependent on oil exports from the Middle East; Japan and South Korea respectively source 90% and 70% of their oil from the region."
Crime

DOJ Charges Super Micro Co-Founder For Smuggling $2.5 Billion In Nvidia GPUs To China 33

Longtime Slashdot reader AmiMoJo shares a report from CNN: The co-founder of Super Micro Computer and two others were charged with diverting $2.5 billion worth of servers with Nvidia's artificial intelligence chips to China, in violation of U.S. laws barring exports to that country without a license. Yih-Shyan Liaw, known as Wally; Ruei-Tsang Chang, known as Steven; and Ting-Wei Sun, known as Willy, were charged with conspiring to violate export control laws, smuggling goods from the U.S. and conspiring to defraud the U.S.

Liaw, who co-founded Super Micro Computer and served on its board of directors, was arrested Thursday in California and released on bail. Sun, a contractor, is held awaiting a detention hearing. Chang, who worked in the Taiwan office of Super Micro, remains at large. [...] According to the indictment, the men used a pass-through company based in Southeast Asia to place orders to obscure that the servers would end up in China. The men worked with executives at the pass-through company to provide false documents to the server manufacturer to further the deception, the indictment said. They used a shipping and logistic company to repackage the servers into unmarked boxes to conceal their contents before they were shipped to China.

To deceive the manufacturer's auditors, who checked the pass-through company for compliance with export laws, the men allegedly used "dummy" nonworking copies of the servers when the actual servers were on their way to China. Two of the defendants allegedly worked to stage the dummy servers at a warehouse rented by the pass-through company, according to the indictment. Sun took photos and videos of the staged servers to one of the compliance auditors who instead of conducting the audit was "off-site enjoying entertainment paid for" by the pass-through company, according to the indictment. In another instance, prosecutors said surveillance cameras documented individuals using hair dryers to remove labels and add labels and serial number stickers to the boxes and dummy servers.
Super Micro said it's fully cooperating with the investigation, but that hasn't prevented its stock from plunging. It's down nearly 30% following the news.

The company issued the following statement: "The conduct by these individuals alleged in the indictment is a contravention of the Company's policies and compliance controls, including efforts to circumvent applicable export control laws and regulations. Supermicro maintains a robust compliance program and is committed to full adherence to all applicable U.S. export and re-export control laws and regulations."

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