Tim Cook comes out

Writing in BloombergBusinessweek, Apple CEO Tim Cook has publicly announced that he is gay.

While I have never denied my sexuality, I haven’t publicly acknowledged it either, until now. So let me be clear: I’m proud to be gay, and I consider being gay among the greatest gifts God has given me.

Being gay has given me a deeper understanding of what it means to be in the minority and provided a window into the challenges that people in other minority groups deal with every day. It’s made me more empathetic, which has led to a richer life. It’s been tough and uncomfortable at times, but it has given me the confidence to be myself, to follow my own path, and to rise above adversity and bigotry. It’s also given me the skin of a rhinoceros, which comes in handy when you’re the CEO of Apple.

This is not a big surprise, as many people have assumed that this is the case. Still, the CEO of Apple, the world’s largest company by market value, certainly is likely to become a strong role model for gay people in big business.

Apple Pay competitor CurrentC has been hacked

Talk about excellent PR for Apple Pay, check this out:

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From Apple Insider:

MCX, the company behind CurrentC, sent out the email on Wednesday, revealing that its security systems were breached by unauthorized third parties within the last 36 hours. The company says its investigations suggest that only users’ email addresses were obtained, but not any additional information.

Multiple AppleInsider readers sent a copy of the note that MCX sent to pilot program participants on Wednesday. Currently in trial, CurrentC is expected to launch at some point in 2015.

The system has found itself in the midst of a controversy over both Apple Pay and Google Wallet, as retailers participating in CurrentC are forbidden from offering alternative mobile payment systems. As a result, both Rite Aid and CVS shut down their NFC-based payment systems this past weekend, blocking the recently launched Apple Pay.

By the way, if you want to see a hilarious set of reviews for the CurrentC app (which is required to use the service) click here to go to the app in the iTunes store and click on “ratings and reviews.” Without giving anything away, the average rating is one star.

The UK also operates a surveillance state

The Guardian is reporting that GCHQ, Britain’s equivalent of our NSA, is collecting information on British citizens without a warrant, despite earlier assurances from the GCHQ that it required a warrant to collect information provided by the NSA or other non-Britain spy agencies.

Excerpt:

The government’s submission discloses that the UK can obtain “unselected” – meaning unanalysed, or raw intelligence – information from overseas partners without a warrant if it was “not technically feasible” to obtain the communications under a warrant and if it is “necessary and proportionate” for the intelligence agencies to obtain that information.

The rules essentially permit bulk collection of material, which can include communications of UK citizens, provided the request does not amount to “deliberate circumvention” of the Regulation of Investigatory Powers Act (Ripa), which governs much of the UK’s surveillance activities.

This point – that GCHQ does not regard warrants as necessary in all cases – is explicitly spelled out in the document. “[A] Ripa interception warrant is not as a matter of law required in all cases in which unanalysed intercepted communications might be sought from a foreign government,” it states. The rules also cover communicationsdata sent unsolicited to the UK agencies.

Campaigners say that this contrasts with assurances by parliament’s Intelligence and Security Committee in July last year that a warrant signed by a minister was in place whenever GCHQ obtained intelligence from the US.

So we now know of at least two surveillance state operations that function without normal privacy guarantees: GCHQ and NSA.

Op-Ed: Snyder signing anti-Tesla bill is a head-scratcher

Nancy Kaffer, a Detroit Free Press columnist, questions why exactly Rick Snyder signed the anti-Tesla legislation banning Tesla Motors sales in Michigan.

Excerpt:

It’s a strange look for Michigan’s pro-business, pro-innovation governor: signing legislation to bar direct vehicle sales for Tesla Motors, the electric car company that’s the sexy poster-child for business innovation.

Kinda makes you wonder what’s going on in Lansing — and how much substantial campaign contributions influenced the outcome.

Michigan has franchise laws that protect dealers from direct competition with company stores owned by automakers, but a loophole in Michigan law could have allowed Tesla to open company stores in the state, as it has following a court victory in Massachusetts. The law passed last week closed that loophole.

Whether Tesla should be able to make direct sales — whether any automaker should — is a question that’s yet to be resolved, and probably won’t be dropped just because Snyder and the Michigan Legislature slammed that door closed. (To be clear, it’s not just Republican lawmakers who voted to approve this legislation; it was approved unanimously in the state Senate, and opposed by just three legislators in the House: Democratic Reps. Rose Mary Robinson and minority leader Tim Greimel, and Republican Rep. Tom McMillin.)

But in a contradictory message sent after he signed the law, Snyder encouraged a conversation examining “business and regulatory” practices, an odd attempt to start a conversation that the law he had just signed should have ended.

Second NSA whistleblower is “confirmed”

Michael Isikoff is reporting that Federal agents have identified a suspected “second” whistleblower providing details of the NSA surveillance programs to reporters.

Excerpt:

The FBI has identified an employee of a federal contracting firm suspected of being the so-called “second leaker” who turned over sensitive documents about the U.S. government’s terrorist watch list to a journalist closely associated with ex-NSA contractor Edward Snowden, according to law enforcement and intelligence sources who have been briefed on the case.

The FBI recently executed a search of the suspect’s home, and federal prosecutors in Northern Virginia have opened up a criminal investigation into the matter, the sources said.

But the case has also generated concerns among some within the U.S. intelligence community that top Justice Department officials — stung by criticism that they have been overzealous in pursuing leak cases — may now be more reluctant to bring criminal charges involving unauthorized disclosures to the news media, the sources said. One source, who asked not to be identified because of the sensitivity of the matter, said there was concern “there is no longer an appetite at Justice for these cases.”

I believe that the Justice Department should tread very carefully in dealing with any whistleblowers. And it should be especially careful in challenging reporters covering any additional disclosures in an attempt to reveal to Americans the overall breadth of the surveillance of American citizens. The people have a right to know.

US Postal Service approved 50,000 mail intercepts last year

The Postal Service operates a surveillance program called “mail covers.”  An Inspector General report concludes that the program approved 50,000 requests in 2013, and that oversight in protecting privacy is lax, according to the New York Times:

Law enforcement officials say this deceptively old-fashioned method of collecting data provides a wealth of information about the businesses and associates of their targets, and can lead to bank and property records and even accomplices. (Opening the mail requires a warrant.)

Interviews and court records also show that the surveillance program was used by a county attorney and sheriff to investigate a political opponent in Arizona — the county attorney was later disbarred in part because of the investigation — and to monitor privileged communications between lawyers and their clients, a practice not allowed under postal regulations.

Theodore Simon, president of the National Association of Criminal Defense Lawyers, said he was troubled by the audit and the potential for the Postal Service to snoop uncontrolled into the private lives of Americans.

“It appears that there has been widespread disregard of the few protections that were supposed to be in place,” Mr. Simon said.

And if that is not enough, the Postal Service in fact photographs the outside of every piece of mail sent through their service.

Clearly, the surveillance state continues in its mad rush to “collect it all.”

Apple Pay already shaking up payment industry

Although Apple Pay, Apple’s new secure and simple payment system,  has already shaken up two large merchants, despite the fact that it works only on iPhone 6 and iPhone 6 Plus and has been available only one week.

Both Ride Aid and CVS have blocked the payment system on their terminals, even though Apple Pay was working seamlessly at the two companies.

From the New York Times:

Ashley Flower, a spokeswoman for Rite Aid, said the company “does not currently accept Apple Pay.” She added that Rite Aid was “still in the process of evaluating our mobile payment options.”

Representatives from CVS did not respond to repeated telephone and email requests for comment on Sunday.

Analysts said disabling acceptance of Apple Pay was a way to favor a rival system that is not yet available but is being developed by a consortium of merchants known as Merchant Customer Exchange, or MCX. Rite Aid and CVS are part of that consortium, not part of the group of retailers that had teamed up with Apple on its payment system. Nonetheless, over the week, Apple Pay technology was working in Rite Aid and CVS stores.

“Clearly Rite Aid and CVS are making a business decision over a customer satisfaction decision,” said Patrick Moorhead, president of Moor Insights & Strategy.

Methinks there is fear in the land among those who want to create their own payment systems. The MCX system tracks users purchases across merchants and will be used by merchants to follow consumers by name. By contrast, Apple Pay is totally secure and merchants cannot follow or record specific purchases. Apple Pay essentially works like cash, albeit through a credit card.

Also from the Times:

A great deal is at stake. MCX’s payments system helps merchants keep track of customer shopping habits across the dozens of merchants who plan to accept the payment product. That is a potential treasure trove of data for retailers, who wish to better target consumers with deals and loyalty programs.

This also gives retailers the potential ability to cut credit card companies out of the payments process entirely. MCX’s system, CurrentC, will be linked to a consumer’s debit account, according to the company’s description of the product. By bypassing credit card companies, MCX merchants could potentially save money on the fees they pay per transaction.

The fact of the matter is that Apple Pay is simple for users, secure for banks and merchants, and it will eventually win out. The last thing I would ever do would be to allow a merchant access to one of my debit cards.

Disclosure: I am long AAPL.

When is an endorsement not an endorsement?

An endorsement is not an endorsement when it is made on “the narrowest of margins.”

The Detroit Free Press has endorsed Rick Snyder in the upcoming gubernatorial election. However, the endorsement is hardly ringing in its praise of Snyder:

By a narrow margin, the editorial board endorses Snyder. But a second term must be tempered with empathy and a sense of moderate Michigan values.

The distinction between Michigan gubernatorial candidates Rick Snyder and Mark Schauer is clear.

Snyder, the Republican incumbent, promised a pragmatic approach to the state’s problems and delivered — except when he was caving to radical elements of the GOP-led Legislature or going back on his word about transparency.

Schauer says he’ll shape state government according to the progressive values the Free Press Editorial Board believes are embedded in Michigan’s DNA — expansion of civil rights, protections for workers, environmental stewardship, plus investment in schools, roads and the social safety net.

But only one candidate could bring his agenda into practical, achievable focus. And so by the narrowest of margins, with keen reservations, the Free Press endorses RICK SNYDER for a second, four-year term as Michigan’s governor.

Tesla ban quote of the day

Usually we think of politicians on the left as being the major proponents of protectionist policies. But Snyder is a Republican, as are the governors of almost all the states that have barred Tesla’s entry (Maryland’s Martin O’Malley is the only Democrat in the bunch). In other contexts, Snyder contends that he is against burdensome regulations that thwart competition and hinder growth. What’s different about the auto industry? Well, auto dealerships donate overwhelmingly to Republicans; perhaps these Republican governors are not so much pro-business as they are pro-businesses-that-fund-their-campaigns.

Indeed, prominent Republican politicians have a long history of enshrining protectionist laws that help auto dealers. In 1973, Republican hero Ronald Reagan, then the governor of California, signed a law that barred new-car dealerships from opening within a 10-mile radius of an existing dealership peddling the same kind of car, according to Mother Jones, to reward a businessman who was one of Reagan’s top fundraisers. Decades later George W. Bush, as governor of Texas, signed what was then the nation’s strictest law prohibiting car manufacturers from selling directly to consumers, at a time when the Internet finally made such transactions more feasible. Texas’s law was subsequently copied by other states around the country and used to shut down Ford’s own attempt to sell used cars to consumers through its Web site. Ford fought the law and ultimately lost.

Yes, that’s right: The big auto incumbents have tried to engage in their own direct-to-consumer sales before, even though many are now throwing their weight behind the recent spate of legislation that bars such activity.

– Catherine Rampell, writing in the Washington Post.

Townhall: Anti-Tesla bill bad for Michigan

Townhall.com, a relatively conservative publication, is now dissing Governor Rick Snyder for caving in to the auto dealer lobby.

Excerpt:

The original focus of House Bill 5606 was on determining how franchise-dealership fees are charged. Then, right before the vote, an amendment banning automobile sales directly to consumers was added by State Senator Joe Hune. This backhanded maneuver shielded the amendment from public comment and debate.

Passed unanimously in the State Senate and with only one dissenting vote in the House, the “anti-Tesla bill” is an economic loss for Michigan. The state will miss out on tax revenue from sales of expensive Teslas (which can sell for over $100,000), but the negative consequences extend much further and speak to the widespread problem of special interests controlling politicians.

* * *

Governor Snyder has received more than $175,000 this election cycle from automotive companies. Is it any wonder that General Motors and Ford both said in statements that they “applaud” Governor Snyder’s decision. The Michigan Auto Dealers Association has been a long-time backer of Hune, and his wife is a lobbyist for auto dealers. While Snyder is calling for the legislature to eventually debate the merits of requiring automobile sales through dealers, if the results of the vote on HB 5606 are any indication, the Big Three and Michigan dealers have no reason to worry—they already have the legislature in their pockets.

The influence of these groups extends far beyond Michigan. The National Auto Dealers Association has spent $2 million on federal candidates during the current cycle. General Motors, Ford Motor Company, and Chrysler have spent acombined $34 million on federal lobbying and political contributions in the 2014 election cycle. Alternatively, Tesla has only spent $8,600.

* * *

The dealership model does have some benefits, such as flexible prices based on low financing rates. Dealerships also offer places for customers to service their vehicles. However, if dealerships benefit customers, why is it necessary to ban other manufacturers from using direct sales? If all consumers were truly benefitting, there would be no need to force everyone to shop at dealerships.

Wall Street Journal calls out Rick Snyder

In an op-ed yesterday (pay wall), the Wall Street Journal called out Rick Snyder for “embracing the car dealer cartel.”

Excerpt:

Republican Michigan Governor Rick Snyder ’s re-election race against Democrat Mark Schauer is close, so naturally Mr. Synder is throwing his principles over the side.

How else to explain Governor Snyder’s signing Tuesday of a bill that effectively shuts out Tesla Motors from selling cars directly to consumers in Michigan? Restraint of trade and suppression of competition are now protected by law in Michigan.

* * *

General Motors [in 2009] filed for Chapter 11 bankruptcy. So it is no surprise to see that early Tuesday morning General Motors urged Governor Snyder to sign the auto-dealer protection bill, which he did.

Mr. Snyder and his GOP legislature may think this act of inbred protectionism two weeks before the election will guarantee their re-election. But doing this deal makes it more likely that a second Snyder term will consist of a return to the state’s low-growth status quo. It is the sort of flip-flop that breeds cynicism among Republican conservatives about the political leadership of their own party.

* * *

Direct sale of cars to buyers, whether by Tesla or more established manufacturers, gives consumers more choice and more control over how much they want to pay for a new vehicle. It creates downward pressure on prices, leaving more money in the car-buying public’s pockets. The dealer status quo, protected Tuesday by Governor Snyder and General Motors, does the opposite. It benefits some at the expense of everyone else.

Your NSA: putting the dumb in freedom