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The Police Can Probably Break Into Your iPhone

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In a new Apple ad, a man on a city bus announces he has just shopped for divorce lawyers. Then a woman recites her credit card number through a megaphone in a park. “Some things shouldn’t be shared,” the ad says, “iPhone helps keep it that way.”

Apple has built complex encryption into iPhones and made the devices’ security central to its marketing pitch.

That, in turn, has angered law enforcement. Officials from the F.B.I. director to rural sheriffs have argued that encrypted phones stifle their work to catch and convict dangerous criminals. They have tried to force Apple and Google to unlock suspects’ phones, but the companies say they can’t. In response, the authorities have put their own marketing spin on the problem. Law enforcement, they say, is “going dark.”

Yet new data reveals a twist to the encryption debate that undercuts both sides: Law enforcement officials across the nation regularly break into encrypted smartphones.

That is because at least 2,000 law enforcement agencies in all 50 states now have tools to get into locked, encrypted phones and extract their data, according to years of public records collected in a report by Upturn, a Washington nonprofit that investigates how the police use technology.

At least 49 of the 50 largest U.S. police departments have the tools, according to the records, as do the police and sheriffs in small towns and counties across the country, including Buckeye, Ariz.; Shaker Heights, Ohio; and Walla Walla, Wash. And local law enforcement agencies that don’t have such tools can often send a locked phone to a state or federal crime lab that does.

With more tools in their arsenal, the authorities have used them in an increasing range of cases, from homicides and rapes to drugs and shoplifting, according to the records, which were reviewed by The New York Times. Upturn researchers said the records suggested that U.S. authorities had searched hundreds of thousands of phones over the past five years.

While the existence of such tools has been known for some time, the records show that the authorities break into phones far more than previously understood — and that smartphones, with their vast troves of personal data, are not as impenetrable as Apple and Google have advertised. While many in law enforcement have argued that smartphones are often a roadblock to investigations, the findings indicate that they are instead one of the most important tools for prosecutions.

“Law enforcement at all levels has access to technology that it can use to unlock phones,” said Jennifer Granick, a cybersecurity lawyer at the American Civil Liberties Union. “That is not what we’ve been told.”

Still, for law enforcement, phone-hacking tools are not a panacea to encryption. The process can be expensive and time consuming, sometimes costing thousands of dollars and requiring weeks or more. And in some cases, the tools don’t work at all.

“We may unlock it in a week, we may not unlock it for two years, or we may never unlock it,” Cyrus R. Vance Jr., the Manhattan district attorney, testified to Congress in December. “Murder, rape, robberies, sexual assault. I do not mean to be dramatic, but there are many, many serious cases where we can’t access the device in the time period where it is most important for us.”

Along with officials at the Justice Department, Mr. Vance has complained for years that smartphone encryption by Apple and Google has hamstrung investigations. His crime lab has spent hundreds of thousands of dollars on phone-hacking tools, he told lawmakers, yet remains locked out of roughly half of the iPhones it has warrants to search, or about 300 to 400 a year.

ImageA demonstration outside an Apple store in New York in 2016 protesting U.S. government efforts to gain access to the iPhone of an attacker in the 2015 shooting in San Bernardino, Calif.
Credit…Bryan Thomas/Getty Images

Law enforcement regularly searches phones with owners’ consent, according to the records. Otherwise, a warrant is required.

An Apple spokesman said in an email that the company was constantly strengthening iPhone security “to help customers defend against criminals, hackers and identity thieves.” But, he added, no device can be truly impenetrable.

Google, which also offers encryption on its Android smartphone software, did not respond to a request for comment.

The companies frequently turn over data to the police that customers store on the companies’ servers. But all iPhones and many newer Android phones now come encrypted — a layer of security that generally requires a customer’s passcode to defeat. Apple and Google have refused to create a way in for law enforcement, arguing that criminals and authoritarian governments would exploit such a “back door.”

The dispute flared up after the mass shootings in San Bernardino, Calif., in 2015 and in Pensacola, Fla., last year. The F.B.I. couldn’t get into the killers’ iPhones, and Apple refused to help. But both spats quickly sputtered after the bureau broke into the phones.

Phone-hacking tools “have served as a kind of a safety valve for the encryption debate,” said Riana Pfefferkorn, a Stanford University researcher who studies encryption policy.

Yet the police have continued to demand an easier way in. “Instead of saying, ‘We are unable to get into devices,’ they now say, ‘We are unable to get into these devices expeditiously,’” Ms. Pfefferkorn said.

Congress is considering legislation that would effectively force Apple and Google to create a back door for law enforcement. The bill, proposed in June by three Republican senators, remains in the Senate Judiciary Committee, but lobbyists on both sides believe another test case could prompt action.

Phone-hacking tools typically exploit security flaws to remove a phone’s limit on passcode attempts and then enter passcodes until the phone unlocks. Because of all the possible combinations, a six-digit iPhone passcode takes on average about 11 hours to guess, while a 10-digit code takes 12.5 years.

The tools mostly come from Grayshift, an Atlanta company co-founded by a former Apple engineer, and Cellebrite, an Israeli unit of Japan’s Sun Corporation. Their flagship tools cost roughly $9,000 to $18,000, plus $3,500 to $15,000 in annual licensing fees, according to invoices obtained by Upturn.

The police can send the trickiest phones to crack, such as the latest iPhones, to Cellebrite, which will unlock them for about $2,000 a device, according to invoices. Law enforcement can also buy a similar premium tool from Cellebrite. The Dallas Police Department spent $150,000 on one, according to the records.

David Miles, Grayshift’s chief executive, said in an email that its products can help the police get into some iPhones in one day and that they have helped law enforcement “solve crimes faster in many areas, including child abuse, narcotics, human trafficking, sexual assault, homicide and terrorism.” He confirmed that Grayshift’s flagship tool costs $18,000 but declined to comment further on prices or customers.

Cellebrite said in a statement that it sold a range of products to law enforcement, and that it now had more than 7,000 customers in 150 countries. “We have experienced double-digit growth for the last few years, and we expect that trend to continue,” the company said. “As long as criminals increasingly turn to technology, there will be a need for law enforcement to stay one step ahead of them.”

Credit…Desiree Rios for The New York Times

Records obtained by Upturn show that law enforcement agencies have spent tens of millions of dollars on such tools in recent years. Andrea Edmiston, director of government affairs at the National Association of Police Organizations, said such prices had created a divide in the justice system, where officers in metro police departments can afford to search phones while rural sheriffs cannot. Money spent on such tools also can take funds away from other needs, she said.

Yet the Upturn data shows that police departments in many smaller communities have invested in phone-hacking tools. For instance, officials in Bend, Ore., population 100,000, have spent more than $62,761 on the technology since 2017. And the police department in Merrill, Wis., population 9,000, with just 10 vehicles and two bicycles, has spent $32,706 on the tools since 2013, though it has divided the cost with two nearby agencies.

With the proliferation of such tools, law enforcement has also sought to search phones for minor crimes. For instance, Upturn obtained warrants that authorized the police to search phones related to a case involving $220 worth of marijuana in Fort Worth as well as an investigation into a fight over $70 at a McDonald’s in Coon Rapids, Minn. At the Baltimore County Police Department and the Colorado State Patrol, a majority of warrants for phone searches that Upturn obtained involved drug investigations.

Logan Koepke, the lead author of the Upturn report, said the findings worried him because they showed that many police departments could gain entry to highly personal and private data, with little oversight or transparency. (Upturn is suing the New York Police Department for its records on phone searches.)

Mr. Koepke’s group asked 110 of the largest law enforcement agencies in the United States for their policies on using such tools and handling the data they extract from smartphones. Only half of those that replied said they had a policy, he said, and of those, just nine policies included substantive restrictions.

“They’re getting a window into your soul; it’s all of your contacts, your text messages, your entire location history, potentially embarrassing pictures, your account credentials,” he said. “We are placing in the hands of law enforcement something that I think is a dangerous expansion of their investigatory power.”

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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