Uber CEO says company failed to disclose massive breach in 2016

(Reuters) – Uber Technologies Inc [UBER.UL] failed to disclose a massive breach last year that exposed the data of some 57 million users of the ride-sharing service, the company’s new chief executive officer said on Tuesday.

FILE PHOTO: Uber CEO Travis Kalanick speaks to students during an interaction at the Indian Institute of Technology (IIT) campus in Mumbai, India, January 19, 2016. REUTERS/Danish Siddiqui

Discovery of the company’s handling of the incident led to the departure of two employees who led Uber’s response to the incident, said Dara Khosrowshahi, who was named CEO in August following the departure of founder Travis Kalanick.

Khosrowshahi said he had only recently learned of the matter himself.

The company’s admission that it failed to disclose the breach comes as Uber seeks to recover from a series of crises that culminated in the Kalanick’s ouster in June.

“None of this should have happened, and I will not make excuses for it,” Khosrowshahi said in a blog post.

According to the company’s account, two individuals downloaded data from a web-based server at another company that provided Uber with cloud-computing services.

The data contained names, email addresses and mobile phone numbers of some 57 million Uber users around the world. The hackers also downloaded names and driver’s license numbers of some 600,000 of the company’s U.S. drivers, Khosrowshahi said in a blog post.

Bloomberg News reported that Uber’s chief security officer Joe Sullivan and a deputy had been ousted from the company this week because of their role in the handling of the incident. The company paid hackers $100,000 to delete the stolen data, according to Bloomberg.

FILE PHOTO: The logo of Uber is seen on an iPad, during a news conference to announce Uber resumes ride-hailing service, in Taipei, Taiwan April 13, 2017. REUTERS/Tyrone Siu/File Photo –

Though such payoffs are rarely discussed in public, U.S. Federal Bureau of Investigation officials and private security companies have told Reuters in the past year that an increasing number of companies have made payments to criminal hackers who have turned to extortion.

None have previously come to light that aimed to suppress breaches that would have required public disclosure, such as those involving protected personal information.

The chief executive of Uber Technologies Inc, Dara Khosrowshahi attends a meeting with Brazilian Finance Minister Henrique Meirelles (not pictured) in Brasilia, Brazil October 31, 2017. REUTERS/Adriano Machado

Sullivan did not immediately return messages seeking comment.

Sullivan, formerly the top security official at Facebook Inc (FB.O), is a former federal prosecutor and one of the most admired security executives in Silicon Valley.

Kalanick learned of the breach a month after it took place, in November 2016, as the company was in negotiations with the U.S. Federal Trade Commission over the handling of consumer data, according to Bloomberg.

Uber representatives did not respond when asked to comment on the Bloomberg report.

Khosrowshahi said he had hired Matt Olsen, former general counsel of the U.S. National Security Agency, to help him figure out how to best guide and structure the company’s security teams and processes.

“While I can’t erase the past, I can commit on behalf of every Uber employee that we will learn from our mistakes,” he said. “We are changing the way we do business, putting integrity at the core of every decision we make and working hard to earn the trust of our customers.”

Reporting by Jim Finkle in Toronto; Additional reporting by Joseph Menn in San Francisco; Editing by Tom Brown

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Tencent turns to WeChat, games and deals for global strategy

HONG KONG (Reuters) – China’s biggest social network and gaming firm Tencent Holdings, which last week reported forecast-beating quarterly results, is close to making Malaysia the first foreign country to roll out its WeChat ecosystem, an executive told Reuters.

FILE PHOTO: Tencent’s booth is pictured at the Global Mobile Internet Conference (GMIC) 2017 in Beijing, China April 28, 2017. REUTERS/Jason Lee/File Photo

Tencent has made a “breakthrough” in gaining an e-payment license in Malaysia for local transactions, and plans a launch early next year, senior vice president S.Y. Lau said in an interview.

The move pits Shenzhen-based Tencent, Asia’s most valuable listed company, against rival Alibaba Group as they scramble for new growth opportunities outside China.

“Malaysia is actually quite large in the sense that we have 20 million WeChat users, huge potential, and the market is quite warm towards internet products from China,” Lau said.

Southeast Asia, home to more than 600 million people and some of the world’s fastest-growing economies, has been a key battleground for China’s tech titans fighting for deals. Ethnic Chinese make up more than a fifth of Malaysia’s population.

WeChat Pay and Alibaba’s Alipay, which dominate China’s digital payment market, have sought to expand their global footprint, although that push has so far been limited to payment services for Chinese outbound tourists. They can scan-and-pay for purchases in 34 countries or regions via Alipay and 13 via WeChat Pay, according to the companies.

Alipay’s parent company Ant Financial has joint ventures in seven markets for local digital payments services, which operate independently under the partnerships’ brand names.

Alibaba is looking to build a global payment system, while Tencent is more interested in generating traffic for WeChat – two different strategies, some bankers and investors say.

WeChat has more users, but Alipay’s aggregate transaction volume is higher, according to JP Morgan’s John Hall, though other investors note that WeChat Pay can also process large transactions if it’s used on e-commerce platforms.

GLOBAL EXPANSION

One challenge for Tencent, say analysts, is that its success in China cannot be easily exported to other markets.

Tencent is “not in a hurry” to speed up its overseas expansion or increase the monetization rate of its digital assets, Lau said.

“We walk our own path at our own pace … and, to be honest, there is really quite a lot to do in China,” he said.

WeChat, which has ballooned from a messaging app to an all-in-one platform with 980 million monthly active users, could be the “killer product” to spearhead expansion abroad, Lau said, as its embedded payment function draws more services.

WeChat, with an open platform of mini-programmes, was a key revenue contributor for Tencent in the third quarter. Social and other advertising revenue rose 63 percent, while payment and cloud helped “other business” post a 143 percent jump

FILE PHOTO: The Snapchat messaging application is seen on a phone screen August 3, 2017. REUTERS/Thomas White/File Photo

“Honour of Kings”, Tencent’s top-grossing battle game that led an 84 percent increase in quarterly smartphone gaming revenue, also owes its success to the network help of WeChat, and is expected to find it tougher to crack Western markets, analysts say.

Tencent this month delayed the launch of the game’s U.S. edition, “Arena of Valor”, to next year to “further polish additional gameplay and social features”.

After games and social media, most of Tencent’s other businesses are in digital content, including Spotify equivalent Tencent Music and YouTube equivalent Tencent Video, which also makes its own dramas.

CULTURE CHALLENGE

Lau said the ultimate aim was to export culture from China to the rest of the world, rather than the other way round, which he acknowledged was challenging.

“What we’re aiming to create is ‘super IPs’ (intellectual property) that leverage our different businesses from upstream to downstream,” Lau said, citing Disneyland and the James Bond movies as successful practices in the West.

A big business for Tencent’s recently-listed publishing arm, China Literature, is to sell its popular novels and have them turned into dramas and video games by Tencent’s other business lines.

Tencent this month announced a plan involving 10 billion yuan ($1.51 billion) of investment to boost its creative content ecosystem, though it gave no timeframe for the investment.

Company president Martin Lau – no relation to S.Y. – said on an earnings call last week that Tencent would keep investing in digital content, especially online video, to draw more time from more paying customers.

Overseas acquisitions will remain a key way of enhancing Tencent’s global access and competitiveness, S.Y. Lau said.

Independent technology analyst Richard Windsor said Tencent’s 2016 acquisition of Supercell gave it a strong position in gaming,, while the move to buy a stake in social media firm Snapchat is another piece in the jigsaw.

“It increasingly looks as if Tencent is embarking on a circumnavigation of the digital life pie in order to build an ecosystem to challenge the Google, Apple, Amazon, Facebook dominance of consumer digital services,” he said, noting it’s at a “super early stage” in that process.

Tencent will likely seek more overseas acquisitions, Windsor added, which, beyond being expensive, could challenge Tencent in integrating all its digital assets at home and abroad.

Tencent has struggled to monetize its dominance over the Chinese digital life, he said, adding that’s why he sees more upside in Tencent’s market valuation, and prefers it to Alibaba.

($1 = 6.6267 Chinese yuan renminbi)

Reporting by Sijia Jiang, with additional reporting by Kane Wu; Editing by Ian Geoghegan

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