Executives are out of touch with the human effects of digital darwinism

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Digital Darwinism: the evolution of technology and its impact on markets and society. I’m sure you’ve heard it before:  Happy employees mean happy customers. But what happens when customers and employees evolve to a point where executives lose sight of who they are, what they value and what they want? That’s exactly what’s happening in this era of digital Darwinism. Technology and society are evolving. Customer and employee behaviors, norms and values too are evolving. What’s not advancing in parallel are organizational investments, whether they be in operational, product and service innovation to get in front of, or keep up…

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Microsoft Will Pay Out $26 Million in Settlement Over Hungarian Bribery Scheme

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Microsoft will pay out $26 million in a settlement to resolve charges that its staff bribed government officials in Hungary, the Washington Post reported on Monday, with President and Chief Legal Officer Brad Smith telling staff in an email the matter “involved employee misconduct that was completely unacceptable.”

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Facebook App to Keep Kids From Talking to Strangers Online Fails Its One Job

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To absolutely nobody’s surprise, it turns out that letting the company with tons of privacy scandals run a messaging service for children might have been a bad idea. Now there are multiple reports that a pitfall in the design of Facebook’s Messenger Kids app lets children talk to unauthorized users in group chat—aka…

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Colorado state auditors investigating whistle-blower claims about fraud in Judicial Department

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Colorado auditors since late May have been investigating allegations of spending abuse and fraud in the state’s Judicial Department following an anonymous whistle-blower letter that laid out those claims, The Denver Post has learned.

Two high-ranking Judicial Department officials have already resigned amid a Denver Post inquiry into a $2.5 million leadership training contract awarded to the department’s former chief of staff, Mindy Masias. Masias received the contract even though she had been disciplined over concerns about allegedly altered receipts. Those concerns were serious enough that she was barred from future expense reimbursements, from approving any expenditures for anyone in the department, and from signing any department documents.

The $2.5 million contract and the Masias’ resignation agreement, which included converting months of medical leave to paid administrative leave, were not part of the whistle-blower’s letter.

A copy of the 23-line undated letter was addressed to the governor’s office and the chief justice of the Colorado Supreme Court. In it, the tipster refers to problems at the Judicial Department including wasteful spending (such as a team-building rowing class in Virginia that cost thousands of dollars), employees on unexplained paid leave for months at a time, allegations of fraud and subsequent cover-up, and employees getting paid to speak at conferences without taking time off.

“There is so much more to write and so many more details, but everyone is terrified and sick of the corruption and coverups,” the letter says.

State Auditor Dianne Ray in May sent a letter to Chief Justice Nathan Coats asking whether her office should investigate the claims raised in the letter or whether judicial wanted to handle it itself.

In his reply, Coats told Ray that her office should handle the investigation independently, confirming he had received a copy of the letter.

“I have therefore already had a chance to look into these allegations myself and have been in consultation with the Attorney General about them,” Coats wrote to Ray on May 29. “After further consultation with my own and the Attorney General’s staff about your letter, there is consensus … that it makes the most sense for the (auditor) to simply conduct the investigation, with which we will of course fully cooperate.”

Chief Court Administrator Christopher Ryan, who award Masias the $2.5 million contract, and Chief Administrative Officer Eric Brown, who recommended she get the contract, resigned last week. Prior to leaving, Ryan canceled the contract.

The whistleblower claims Ryan, Masias and Brown “are part of a cover-up of (Family Medical Leave Act) fraud.”

The Post learned that Masias took medical leave in November 2018 and department payroll records show she used hundreds of hours of paid time off until March 2019, when she resigned. Then, as part of her resignation agreement, the vacation and sick time she had used were restored and paid to her. It amounted to more than $35,000.

The letter says two other employees — building manager Jane Hood and Chief Financial Officer David Kribs — were also paid for not working.

Multiple sources, who spoke anonymously for fear of losing their jobs, have told The Post Hood has not worked since April 2018. The Post received documents in an open records request that show she signed a resignation agreement in September. The agreement put her on paid administrative leave receiving her normal $122,000 salary from April 2018 through June 2019.

Hood was responsible for all aspects of the new Ralph L. Carr Colorado Judicial Center in downtown Denver, including security surveillance and janitorial services. No details for her separation are spelled out in the document and Hood, when reached by The Post, refused to discuss it because of the confidentiality requirements it contains.

Kribs salary has been paid since he left in May and will continue through September. His separation is classified as a layoff and is part of the department’s “voluntary separation incentive program.” Kribs cited the same confidentiality agreement when reached by The Post.

The letter also says  Brown “doesn’t use a state computer so there is no way to see how much consulting work he does during the day.” After resigning last week, Brown was ordered to transfer any state-owned information from his personal computing devices to state-owned ones and under the supervision of a judicial department computer technician.

Letter from chief justice

Letter from state auditor

Editorial: The Colorado Judicial Department scandal looks bad and we deserve to know what happened

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The public needs questions answered about the scandal rocking Colorado’s Judicial Department.

Two top officials have resigned in response to an investigation launched by Denver Post reporter David Migoya, but those resignations leave more questions than answers. The public deserves to know why a $2.5 million contract and a sweetheart severance deal were offered to former chief of staff Mindy Masias after she was disciplined for discrepancies with her expense receipts.

Migoya uncovered through an open records request the severance agreement, which included wiping clean any record of Masias’ discipline and paying her for sick leave and vacation time that she had already used during a long-term medical leave. And then, a day after she resigned, she was awarded a $2.5 million contract to provide leadership training to the department. It’s a deal and a contract we’d be surprised to see awarded to any employee, especially one who had recently been in trouble.

After Migoya started asking questions, the Judicial Department canceled the $2.5 million contract. Then state court administrator Christopher Ryan and Chief Administrative Officer Eric Brown resigned.

The public needs to know why Ryan and Brown would go to such lengths for Masias —  paying her for leave she had already used, and then essentially hiring her back into the Judicial Department. The mind reels at the possibilities.

We learned Monday that the Office of the State Auditor is in the middle of an investigation that was started in May after an anonymous report to the fraud hotline. That investigation, according to documents sent to The Denver Post by the Justice Department, will look into whether Masias, Ryan, Brown and other top officials were “part of a cover up of FMLA fraud.” The federal Family and Medical Leave Act allows for individuals to take up to 12 weeks of leave without the threat of losing their job for a serious medical illness or to care for a sick or dying family member. At the Judicial Department, employees can use their sick and vacation time so that the leave is “paid.”

Additionally, the investigation will look into whether Masias and Brown earned consulting and speaking fees while on state time.

We are unsure if this investigation will answer our questions. It certainly sounds related but we know that audits can be limited in scope and we hope it’s not too late for State Auditor Dianne E. Ray to make sure she looks into Masias’ contract and severance agreement as other potential misdeeds.

But there is another compelling part of the investigation that needs to occur: what did Chief Justice Nathan Coats know when? The correspondence with Ray indicates Coats received a tip about the matter in May and shortly after asked for the auditor to “conduct the investigation, with which we will of course fully cooperate.” Masias resigned March 19 and Brown made the recommendation March 20 that she receive the contract.

It’s entirely possible that Coats wasn’t involved or that Ryan and Brown hid things from him. If so, we need to know. The chief justice needs to clear his name of this scandal and the only way we see that as possible is with an independent investigation that isn’t limited in scope and is quickly made public.

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UK to toughen telecoms security controls to shrink 5G risks

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Amid ongoing concerns about security risks posed by the involvement of Chinese tech giant Huawei in 5G supply, the UK government has published a review of the telecoms supply chain which concludes that policy and regulation in enforcing network security needs to be significantly strengthened to address concerns.

However it continues to hold off on setting an official position on whether to allow or ban Huawei from supplying the country’s next-gen networks — as the US has been pressurizing its allies to do.

Giving a statement in parliament this afternoon, the UK’s digital minister, Jeremy Wright, said the government is releasing the conclusions of the report ahead of a decision on Huawei so that domestic carriers can prepare for the tougher standards it plans to bring in to apply to all their vendors.

“The Review has concluded that the current level of protections put in place by industry are unlikely to be adequate to address the identified security risks and deliver the desired security outcomes,” he said. “So, to improve cyber security risk management, policy and enforcement, the Review recommends the establishment of a new security framework for the UK telecoms sector. This will be a much stronger, security based regime than at present.

“The foundation for the framework will be a new set of Telecoms Security Requirements for telecoms operators, overseen by Ofcom and government. These new requirements will be underpinned by a robust legislative framework.”

Wright said the government plans to legislate “at the earliest opportunity” — to provide the regulator with stronger powers to to enforcement the incoming Telecoms Security Requirements, and to establish “stronger national security backstop powers for government”.

The review suggests the government is considering introducing GDPR-level penalties for carriers that fail to meet the strict security standards it will also be bringing in.

“Until the new legislation is put in place, government and Ofcom will work with all telecoms operators to secure adherence to the new requirements on a voluntary basis,” Wright told parliament today. “Operators will be required to subject vendors to rigorous oversight through procurement and contract management. This will involve operators requiring all their vendors to adhere to the new Telecoms Security Requirements.

“They will also be required to work closely with vendors, supported by government, to ensure effective assurance testing for equipment, systems and software, and to support ongoing verification arrangements.”

The review also calls for competition and diversity within the supply chain — which Wright said will be needed “if we are to drive innovation and reduce the risk of dependency on individual suppliers”.

The government will therefore pursue “a targeted diversification strategy, supporting the growth of new players in the parts of the network that pose security and resilience risks”, he added.

“We will promote policies that support new entrants and the growth of smaller firms,” he also said, sounding a call for security startups to turn their attention to 5G.

Government would “seek to attract trusted and established firms to the UK market”, he added — dubbing a “vibrant and diverse telecoms market” as both good for consumers and for national security.

“The Review I commissioned was not designed to deal only with one specific company and its conclusions have much wider application. And the need for them is urgent. The first 5G consumer services are launching this year,” he said. “The equally vital diversification of the supply chain will take time. We should get on with it.”

Last week two UK parliamentary committees espoused a view that there’s no technical reason to ban Huawei from all 5G supply — while recognizing there may be other considerations, such as geopolitics and human rights, which impact the decision.

The Intelligence and Security committee also warned that what it dubbed the “unnecessarily protracted” delay in the government taking a decision about 5G suppliers is damaging UK relations abroad.

Despite being urged to get a move on on the specific issue of Huawei, it’s notable that the government continues to hold off. Albeit, a new prime minister will be appointed later this week, after votes of Conservative Party members are counted — which may be contributing to ongoing delay.

“Since the US government’s announcement [on May 16, adding Huawei and 68 affiliates to its Entity List on national security grounds] we have sought clarity on the extent and implications but the position is not yet entirely clear. Until it is, we have concluded it would be wrong to make specific decisions in relation to Huawei,” Wright said, adding: “We will do so as soon as possible.”

In a press release accompanying the telecoms supply chain review the government said decisions would be taken about high risk vendors “in due course”.

Earlier this year a leak from a meeting of the UK’s National Security Council suggested the government was preparing to give an amber light to Huawei to continue supplying 5G — though limiting its participation to non-core portions of networks.

The Science & Technology committee also recommended the government mandate the exclusion of Huawei from the core of 5G networks.

Wright’s statement appears to hint that that position remains the preferred one — baring a radical change of policy under a new PM — with, in addition to talk of encouraging diversity in the supply chain, the minister also flagging the review’s conclusion that there should be “additional controls on the presence in the supply chain of certain types of vendor which pose significantly greater security and resilience risks to UK telecoms”.

Additional controls doesn’t sound like a euphemism for an out-and-out ban.

In a statement responding to the review, Huawei expressed confidence that it’s days of supplying UK 5G are not drawing to a close — writing:

The UK Government’s Supply Chain Review gives us confidence that we can continue to work with network operators to rollout 5G across the UK. The findings are an important step forward for 5G and full fibre broadband networks in the UK and we welcome the Government’s commitment to “a diverse telecoms supply chain” and “new legislation to enforce stronger security requirements in the telecoms sector”. After 18 years of operating in the UK, we remain committed to supporting BT, EE, Vodafone and other partners build secure, reliable networks.”

The evidence shows excluding Huawei would cost the UK economy £7 billion and result in more expensive 5G networks, raising prices for anyone with a mobile device. On Friday, Parliament’s Intelligence & Security Committee said limiting the market to just two telecoms suppliers would reduce competition, resulting in less resilience and lower security standards. They also confirmed that Huawei’s inclusion in British networks would not affect the channels used for intelligence sharing.

A spokesman for the company told us it already supplies non-core elements of UK carriers’ EE and Vodafone’s network, adding that it’s viewing Wright’s statement as an endorsement of that status quo.

While the official position remains to be confirmed all the signals suggest the UK’s 5G security strategy will be tied to tightened regulation and oversight, rather than follow a US path of seeking to shut Chinese tech giants out.

Commenting on the government’s telecoms supply chain review in a statement, Ciaran Martin, CEO of the UK’s National Cyber Security Centre, said: “As the UK’s lead technical authority, we have worked closely with DCMS [the Department for Digital, Culture, Media and Sport] on this review, providing comprehensive analysis and cyber security advice. These new measures represent a tougher security regime for our telecoms infrastructure, and will lead to higher standards, much greater resilience and incentives for the sector to take cyber security seriously.

“This is a significant overhaul of how we do telecoms security, helping to keep the UK the safest place to live and work online by ensuring that cyber security is embedded into future networks from inception.”

Although tougher security standards for telecoms combined with updated regulations that bake in major fines for failure suggest Huawei will have its work cut out not to be excluded by the market, as carriers will be careful about vendors as they work to shrink their risk.

Earlier this year a report by an oversight body that evaluates its approach to security was withering — finding “serious and systematic defects” in its software engineering and cyber security competence.

This site turns your selfies into Renaissance portraits

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First came Instagram filters. Then came the Snapchat masks. Now AI renders are the latest way of using technology to change the way we look. Sure, FaceApp has been making the rounds for its dramatic aging filters (and questionable data practices), but for something more dignified, why not render your face like a Renaissance portrait instead? AIportraits.com does just that. Created by a team of researches at the MIT IBM Watson AI Lab, the site uses an AI model trained on 45,000 portraits from styles ranging from the Early Renaissance to the Contemporary period. The results are surprisingly authentic. The…

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Daily Crunch: Microsoft invests $1B in OpenAI

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The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. Microsoft invests $1 billion in OpenAI in new multiyear partnership

OpenAI was founded three years ago by Elon Musk, Sam Altman and others with the aim of performing research and development that steers artificial intelligence in a “friendlier” direction.

Its deal with Microsoft is an “exclusive computing partnership,” with new AI technologies built for Microsoft’s Azure platform and existing OpenAI services ported over.

2. UVeye snaps up $31M for its hyper-detailed, AI-based drive-thru vehicle-scanning platform

UVeye’s technology can be used to assess the state of rental and used cars, help with insurance adjustments, inspect vehicles to diagnose mechanical or other problems and as part of wider security efforts.

3. Amazon is opening a pair of new robotic fulfillment centers in Ohio

The two warehouses will be located in the north of the state, in Akron and Rossford, respectively. They’ll function much like Amazon’s other shipping centers, providing a collaborative workspace between human employees and the company’s growing army of shipping robots.

logo for Slack is displayed on the a monitor at the New York Stock Exchange

NEW YORK, NY – JUNE 20: The logo for Slack is displayed on the a monitor at the New York Stock Exchange (NYSE), June 20, 2019 in New York City. (Photo by Drew Angerer/Getty Images)

4. Slack speeds up its web and desktop client

Slack’s latest update doesn’t introduce any new features or a new user interface. Instead, it’s almost a complete rebuild of the underlying technology that makes its web and desktop experiences work.

5. Cyber threats from the US and Russia are now focusing on civilian infrastructure

Although both sides have been targeting each other’s infrastructure since at least 2012, according to The New York Times, the aggression and scope of these operations now seems unprecedented.

6. How to go to market in middle America

There comes a time for many startup companies where they either realize they need to do a nationwide rollout, or they need to actively target buyers in the middle of the country. (Extra Crunch membership required.)

7. This week’s TechCrunch podcasts

The latest episode of Equity looks at whether it’s possible to predict the next generation of unicorns, while Original Content reviews the brilliantly titled Netflix special “Frankenstein’s Monster’s Monster, Frankenstein.”

Here’s Why The Witcher Auditioned 207 Other Guys for Geralt When Henry Cavill Was Right There

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When Netflix revealed it was making a television adaptation of The Witcher, Henry Cavill immediately wanted in. However, producers still auditioned over 200 actors for Geralt before choosing him for the job. Why did it take four months and hundreds of actors before going with the leading man who wanted to be there in…

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