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Sunday, July 23, 2017

Global cyber attack could spur $53 billion in losses: report

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A major, global cyber attack could trigger an average of $53 billion of economic losses, a figure on par with a catastrophic natural disaster such as US superstorm Sandy in 2012, Lloyd’s of London said in a report on Monday.

The report, co-written with risk-modelling firm Cyence, examined potential economic losses from the hypothetical hacking of a cloud service provider and cyber attacks on computer operating systems run by businesses worldwide.

Insurers are struggling to estimate their potential exposure to cyber-related losses amid mounting cyber risks and interest in cyber insurance. A lack of historical data on which insurers can base assumptions is a key challenge. “Because cyber is virtual, it is such a difficult task to understand how it will accumulate in a big event,” Lloyd’s of London chief executive Inga Beale told Reuters.

Economic costs in the hypothetical cloud provider attack dwarf the $8 billion global cost of the WannaCry ransomware attack in May, which spread to more than 100 countries, according to Cyence.

Economic costs typically include business interruptions and computer repairs.

The Lloyd’s report follows a US government warning to industrial firms about a hacking campaign targeting the nuclear and energy sectors.

In June, an attack of a virus dubbed “NotPetya” spread from infections in Ukraine to businesses around the globe. It encrypted data on infected machines, rendering them inoperable and disrupted activity at ports, law firms and factories.

NotPetya caused $850 million in economic costs, Cyence said.

In the hypothetical cloud service attack in the Lloyd’s-Cyence scenario, hackers inserted malicious code into a cloud provider’s software that was designed to trigger system crashes among users a year later. By then, the malware would have spread among the provider’s customers, from financial services companies to hotels, causing all to lose income and incur other expenses.

Average economic losses caused by such a disruption could range from $4.6 billion to $53 billion for large to extreme events. But actual losses could be as high as $121 billion, the report said.

As much as $45 billion of that sum may not be covered by cyber policies due to companies under-insuring, the report said. Average losses for a scenario involving a hacking of operating systems ranged from $9.7 billion to $28.7 billion.

Lloyd’s has a 20-25% share of the $2.5 billion cyber insurance market, Beale said in June.

The birth of the new Nuclear Prohibition Treaty

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The 1968 Nuclear Non-Proliferation Treaty (NPT) is based on three myths: first, that nuclear weapons are an entitlement bestowed upon only a handful of countries that had tested a nuclear weapon before the treaty entered into force in 1970. Second, that the security of most of the world’s nations—indeed world order itself—is based on the possession of or protection by nuclear weapons. Third, that nuclear weapons cannot be banned and nuclear disarmament was only possible as part of a process of “general and complete disarmament”, implying that nuclear weapons might be the last to be disarmed.

These myths have been effectively challenged by the treaty on the prohibition of nuclear weapons or the Nuclear Prohibition Treaty (NPT), as it is being popularly called, which was voted into existence at the UN on 7 July. Of the 125-odd non-nuclear weapon states that participated in the negotiations, 122 voted in favour of the new NPT and only one state, the Netherlands—the sole North Atlantic Treaty Organization (Nato) representative which lives under a nuclear umbrella—voted against. Indeed, had the Netherlands not called for a vote, the treaty would have been approved by consensus. This move was a comic case of Dutch courage—a valiant but vacuous gesture.

The new NPT challenges the old NPT’s myth of entitlement by holding states that after 7 July “owned, possessed or controlled nuclear weapons or other nuclear explosive devices” responsible for “verifying the irreversible elimination of its nuclear-weapon programme” if they become parties to the treaty. In doing so, nuclear weapons have been devalued and are reduced to a liability rather than being treated as an asset.

Similarly, the fact that the majority of the 193 UN members voted for the treaty, including nearly a third of the Group of Twenty, nearly three-fourths of the Non-Aligned, and old NPT members, reflects that most countries do not depend on nuclear weapons for their security. In fact, the entire southern hemisphere is free of nuclear weapons.

Only around 40-odd countries look to nuclear weapons for their security. Even if these countries had been present and had voted against the treaty, it would have passed—though they might have been able to influence the negotiations to their advantage.

Moreover, the new NPT corrects one of the strangest anomalies in international security: acquiescing the possession and use of the deadliest weapons ever invented by mankind. Until this treaty, nuclear weapons (unlike chemical and biological weapons) had never been banned. The new NPT commits state parties not to “develop, test, produce, manufacture, otherwise acquire, possess or stockpile nuclear weapons or other nuclear explosive devices”. Additionally, the treaty also bans the transfer, stationing, installation or deployment of nuclear weapons in other countries as well as the use or threat of use of nuclear weapons.

Finally, while the old NPT is weakest on disarmament and considers it a near impossibility without “general and complete disarmament”, the new NPT is strongest in this aspect. While it makes a passing reference to both the NPT and “general and complete disarmament” in the preamble, it delineates three pathways by which states possessing or being protected by nuclear weapons can disarm and join the treaty in the future.

The first is the “disarm and join” route, where countries first destroy their arsenals, dismantle their nuclear weapon facilities and then join the treaty as non-nuclear weapon states. This is the approach that was adopted in the case of South Africa, which first declared and destroyed its nuclear bombs and facilities and then joined the old NPT.

The second is the “join and disarm” pathway where the country first joins the treaty, declares its nuclear stockpile and enters into an agreement with a “competent international authority” to dismantle its arsenal and related facilities as per the timetable agreed upon. This approach is akin to the one followed by the Chemical Weapons Convention, where countries declared their stockpiles at the time of joining and worked out a plan to dismantle their arsenals in a fixed time frame.

Unlike the first two paths, which are aimed at states that possess nuclear weapons, a third approach is offered to states that have nuclear weapons “in its territory or in any place under its jurisdiction or control that are owned, possessed or controlled by another state”. These states should ensure the prompt removal of these nuclear weapons as part of their agreement to join the treaty and submit a declaration that they have fulfilled their obligations. This approach is designed to accommodate countries such as the Netherlands, Japan, Australia and others that presently live under a nuclear umbrella but might want to leave that protection and join the treaty.

While the new NPT is far from perfect and weak in some aspects, it is likely to enter into force in due course. Although some sceptics have dismissed its implementation as difficult if not impossible, the new NPT can do no worse than the old one.

Irrespective of its future prospects, the passing of the new NPT has already challenged the very basis of nuclear deterrence and the nuclear order based on the old NPT. India and other nuclear weapon states would do well to track its progress—the future of their nuclear arsenals might depend on it.

Credit Card Bills, Insurance Premiums To Get Costlier Under GST

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New Delhi: Credit card providers, banks and insurers have started alerting their customers to pay higher tax post implementation of Goods and Services Tax (GST) from July 1. Customers currently pay 15 per cent service tax for such services. Starting from July 1, 2017 the GST will replace all indirect taxes like service tax and VAT. Financial services and telecom have been put in the 18 per cent GST slab.

SBI Card has sent SMS to its customers alerting about the higher incidence of tax.

“Important: The Government of India proposes to implement the GST which is likely to be effective from July 1, 2017.
Consequently, the existing service tax rate of 15 per cent shall be replaced by a GST rate of 18 per cent,” the SMS sent by SBI Card read.

Banks like Standard Chartered and HDFC are also sending messages related to GST to their customers.

ICICI Prudential Life Insurance, in email messages to its customers, said premium payable on term policy and fund management charges on a Unit Linked Insurance Policy will attract 18 per cent GST post implementation of the new indirect tax regime.

These products currently attract 15 per cent service tax.

GST will be levied at the rate of 2.25 per cent on premium payment for endowment policy. Currently, customers pay 1.88 per cent service tax on endowment policies.

Parliament’s historic Central Hall will host a midnight function on June 30 to launch the nation’s biggest tax reform GST.

President Pranab Mukherjee, who had piloted the first Constitutional Amendment Bill to bring in GST in 2011 when he was finance minister in the previous UPA regime, will share the dais with Prime Minister Narendra Modi on the occasion.

Price Drop Soon For Lenovo, Motorola Handsets Sold Offline

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New Delhi: Tech major Lenovo today said it will slash prices of handsets sold through offline retail channels in the coming days, following the GST implementation.

Motorola handsets sold through brick-and-mortar stores too will see the downward price revision.

“We will cut the prices of handsets sold through retail stores. We are still evaluating the quantum of price cut. This would come into effect soon,” Lenovo MBG India Executive Director Sudhin Mathur told PTI. He added that the revision follows the rollout of GST.
However, prices of the new devices being introduced in the market factor in the impact of the new tax regime, Mathur said.

Players like Apple and Asus have already reduced prices of their smartphones after July 1 when the GST regime came into effect.

Under GST, mobile handsets are being taxed at 12 per cent as compared to an earlier range of 8-18 per cent depending on the states.

The government had also introduced a 10 per cent basic customs duty on mobile phones and certain parts, in a bid to promote domestic manufacturing.

Lenovo (along with Motorola) manufacture their handsets in India through contract manufacturing.

India is one of the fastest growing smartphone markets globally. Players like Samsung, Micromax and Lava have had a significant hold of the market, Chinese players like Lenovo, Vivo and Oppo are aggressively eating into their market share.

The competition among these players is fierce, especially in the affordable (Rs. 12,000 and below) and mid-range (Rs. 12,000-20,000) handsets.

Motorola today also launched the fourth generation of its affordable ‘E’ series. The Moto E4 will be available in two versions — Moto E4 for Rs. 8,999 (offline retail only) and E4 Plus priced at Rs. 9,999 (Flipkart).

“Over 52 million devices were sold in the last 4 quarters in the $100-200 category, making it the largest segment.

Interestingly, online and offline account for similar proportion of this segment,” he said.

Motorola has the ‘E’ series and the recently launched ‘C’ series in the $100-200 price category.

“This segment is witnessing growth, driven by demand from first-time buyers as well as people upgrading from their first smartphones to a better device,” he said.
Mathur added that Lenovo has a market share of around 28 per cent in the said price segment.

The E4 features a 5-inch display, 2GB RAM, 1.3 Ghz quad-core processor, 16GB internal memory (expandable up to 128GB), 8MP rear and 5MP front camera and 2,800 mAh battery.

The E4 Plus has a bigger 5.5-inch display, 3GB RAM, 32 GB internal memory (expandable upto 128GB), 13MP rear and 5MP front camera and 5,000 mAh battery.

Chinese apps, like UC Browser, SHAREit, tap India’s small town demand

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Bengaluru: Chinese utility and content apps such as UC Browser, Xender, SHAREit, Cleanmaster and UC News have become among the most popular apps in India, overtaking many of their Indian and American rivals with ease.

UC Browser, owned by Chinese e-commerce firm Alibaba Group Holding Ltd, is the most popular browser in India. Another Alibaba-owned app, UC News, which aggregates entertainment, cricket and other content, is among the most popular news apps while NewsDog, owned by Hacker Interstellar Inc., is spending heavily to catch up with local rivals such as Dailyhunt, according to data from KalaGato, a research firm.

SHAREit, owned by Lenovo Group Ltd, is the most widely used file-sharing app and smaller rival Xender, too, isn’t far behind, the data shows. Cleanmaster, owned by China’s Cheetah Mobile, is popular with users who constantly run out of storage space on their phones while Meitu Inc.-owned photo-editing app BeautyPlus competes with Facebook Inc.’s Instagram app.

If you’re living in Mumbai, Delhi or Bengaluru, you may not have heard of these Chinese apps but they enjoy massive popularity among Indians in smaller towns and cities. Tailor-made for internet users who have low-cost smartphones, these apps, along with a host of others such as video player MX Player and Bigo Live, offer an insight into how millions of Indians in smaller cities and towns are using the internet. (MXPlayer and Bigo Live, which offers edgy video content uploaded by users, are based out of the US and Singapore, respectively)

“China is five years ahead of India in terms of number of mobile internet users, mobile internet speeds and having a much richer app ecosystem,” said Prayank Swaroop, principal at Accel Partners, a venture capital firm. “So Chinese companies are able to experiment with new app ideas and learn about consumer behaviour faster in their country, and then bring them to India. They’ve seen it before, they build the right product experience and are backed by massive capital so Indian start-ups have to be very innovative to compete against this combination. Building something uniquely Indian is the key.”

The success of these apps is, in turn, attracting other Chinese app makers to India as well as prompting Indian start-ups and investors to seek products for users outside the large cities. Last October, vernacular news content aggregator Dailyhunt (Verse Innovation Pvt. Ltd) raised $25 million in a funding round led by ByteDance, a Beijing-based content service provider. Other Chinese investors as well as venture capital firms are scouting for start-ups offering local language content and video content providers.

“There’s a lot of consumer, and hence investor, interest in video content. It needs to be local and relatable and it won’t necessarily be consumed on YouTube (the video player owned by Google Inc.). That means there’s potentially a lot of space for India-specific content and entertainment apps,” said Karan Mohla, executive director at IDG Ventures India Advisors, a venture capital firm. “Then there’s the community-building aspect. Facebook won’t be used by everyone so there is demand for community and content-sharing platforms made for users in the tier III cities and lower.”

While the Chinese apps referred to above have done well in attracting a large user base, they don’t make money off them in most cases. That’s a problem with the Indian digital business: most of the online advertising spending is still being grabbed by Google, followed by Facebook (a distant second). The likes of Alibaba are investing heavily to accumulate large internet audiences in the hope that they will attract significant ad spending in future. That hope is shared by start-up investors.

“Right now, it’s mostly about getting to a large user base. We believe that if you get to, say, 50 million active monthly users, then there will be attractive monetization opportunities,” said Akshay Bhushan, associate partner at Lightspeed India Partners. “But getting to that scale is a huge challenge. And while there’s a lot of demand for vernacular content, we aren’t seeing many new start-ups that are trying to address this.”

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