Also on Portfolio

Gawker Media Rumor Control

A Feisty Ad Server Catches Google's Eye

Lawyers: Can't Anybody Speak English?

Even as it agreed in January to plunk down $1.23 billion to buy a promising but problematic search company in Norway, Microsoft knew that the company had some accounting matters to address.

Now, it appears, the acquired company, Fast Search & Transfer, may have some criminal matters to work out: Suspicions about the Norwegian search-engine company's revenue reporting are now in the hands of the Oslo police.

Norway's financial supervisory authority, Kredittilsynet, said its review of Fast Search's previously disclosed accounting problems not only appeared to have violated accounting standards, they may have broken the law too.

The development is bad news for Microsoft, which snapped up Fast Search as a potential Google-buster. Fast Search, which for a while was also known as the Google of Norway, had search-engine technology that industry experts said was better than Google's and could handle truly massive corporate projects.

Goldman Sachs estimated last year that the company would grow its revenue 27 percent in 2007. Over the years, Fast Search appeared to benefit from big contracts with customers such as AT&T, Comcast, and the Walt Disney Co.

At one point, Intel was interested in buying the Norwegian rising star, but Microsoft grabbed the prize. At the time, Microsoft was still digesting it $6 billion acquisition of the digital-advertising company aQuantive—a deal that came just one month after Google said it would pay $3.1 billion for DoubleClick.

In its haste to grab Fast Search, however, Microsoft looked past the company's problems: They include, but aren't limited to, accounting irregularities that began to appear as Microsoft began to look over its books.

In the second quarter of 2007, Fast Search reported an operating loss of $38 million on revenue of only $35 million—a full $20 million below forecasts. The loss widened in the following quarter, leading the Norwegian stock exchange to delist Fast Search on December 12.

That same day, Fast Search said it would review its accounting for all of 2006 and 2007. The latest unaudited results show revenue growth of 7 percent for last year, which is far below Goldman's forecast.

Still, Microsoft pursued the acquisition, completing the deal on April 28.

Kredittilsynet, the supervisory agency, was equally determined. It referred Fast Search to investigators at Økokrim, the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime.

Økokrim last week concurred that the nature of the irregularities and the amount by which Fast Search apparently inflated its accounts were serious matters warranting prosecution. But the agency said it was too busy to open a criminal investigation.

Rather than let the matter rest, the market supervisor turned it over to the Oslo police for investigation. Aftenposten, a Norwegian newspaper, characterized Kredittilsynet's decision to involve the police as an unprecedented step in that country.

As of now, it's unclear what the Oslo police have in store for Fast Search—or for former company C.E.O. John Markus Lervik, who is now the vice president for enterprise search at Microsoft.

Methane reserves deep in the ocean and in arctic permafrost might trigger runaway global warming. But they've also got the potential to provide huge amounts of power, a possibility that is attracting the interest of energy companies.

Methane hydrate, a strange form of natural gas, has recently become a fascination for energy-hungry nations from the United States to Japan and India. Hydrate is found in oceans across the world, where the gas is trapped in icy structures below the seabed, and also lies beneath the Arctic's permafrost.

A paper published this week in Nature suggests that the release of methane hydrates, also known as clathrates, may have triggered a very rapid period of global warming 635 million years ago -- and may do so again. But those same hydrates are also a tempting target for energy production.

"What we've been asked to do is to make this a viable option for the policy makers in the future, and to figure out what's available to us," says Ray Boswell, a researcher with the U.S. Department of Energy's methane hydrates R&D program. "You don't want to find out that you need it, and then find out that you're 30 years down the science and technology curve."

The Gulf of Mexico is estimated to hold more than 6,500 trillion cubic feet of hydrate in sandstone reservoirs, currently the best candidates for commercial exploitation, according to the U.S. Minerals Management Service. If only 5 percent of that hydrate could be tapped, it would yield more than 300 trillion cubic feet of gas. By comparison, the United States' reserve of conventional natural gas is currently estimated at 211 trillion cubic feet.

Researchers romantically call methane hydrates "the fire in the ice," since the frosty chunks burn if you set a match to them. But it's not just romance that's drawing energy companies to the frozen fuel. While methane hydrates have previously been too expensive to extract on a commercial scale, the increasing price of oil -- now more than $130 per barrel -- means the hydrates might soon become a profitable energy source. Chevron has been involved in the gulf research, and BP is exploring for hydrates in Alaska. Japanese engineers reportedly pumped hydrates from a test well in Canada's Northwest Territories this last winter.

"Everybody knows there's a lot of it," Boswell says. "Now, our goal is to understand the ramifications: Does it have potential as an energy resource, and if so, how would you go about getting it? And how does it fit into climate issues?"

It's that last question that opens up the can of worms. Even as some researchers wonder whether methane hydrate could play an important role in powering the 21st century, others ask whether it has played a critical part in catastrophic climate shifts in the past -- and if it could do so again.

The troubling questions arise from prehistoric climate blips that researchers are still struggling to understand.

The most recent abrupt climate change occurred 55 million years ago during the Eocene greenhouse event, when ice disappeared from the poles and trees grew in Antarctica. From analyzing the fossil record, researchers determined that there were very high levels of methane in the atmosphere at that time.

Some paleoclimate researchers hypothesize that a gradually warming climate brought oceans to a temperature tipping point around 55 million years ago, which caused icy methane hydrate structures to melt and let the gas bubble up to the ocean's surface in a long, enormous burp. Since methane is a more powerful greenhouse gas than carbon dioxide, if it were released into the atmosphere in a huge gush, it may have caused temperatures to spike dramatically.

This theoretical precedent has led to speculation in popular science books that our current bout of man-made global warming could cause another catastrophic methane release. But the dominant scientific paradigm is that methane is more likely to be an issue over the long term.

David Archer is an ocean chemist at the University of Chicago who called methane the "crouching tiger of the carbon cycle" on a respected climate blog.

"It's predicted that with a doubled [carbon dioxide] concentration, the deep ocean could eventually change its temperature by about three degrees," Archer told Wired.com. "Three degrees would eventually get rid of all the methane in the ocean. But at what rate -- that's the question."

After conducting his most recent modeling experiments, Archer says that methane released from the ocean could accelerate global warming over a time frame of thousands of years. But we don't have a serious cause for alarm within our lifetime, he says. Smaller releases of methane hydrate are likely as the Arctic permafrost thaws during this century, "but those are equivalent to a volcano eruption," Archer says. "It's not a doomsday thing."

But the lead author of the new Nature paper, Martin Kennedy of the University of California at Riverside, explicitly called a release of methane hydrate "a doomsday scenario for the climate," and called for far more research into methane's role in the world's climate.

While U.S. scientists are proceeding fairly slowly, investigating both the risks and benefits of methane hydrates, other countries are on a faster track.

Japan, South Korea, China and India are all determined to make methane hydrates a viable energy source. India spent $35 million on a 2006 expedition to explore deposits along its coasts, while South Korea, which currently relies on imported natural gas to fuel most of its power plants, has pledged to start commercial production by 2015.

The world may have found a successor to the gold rush and the oil boom: the methane bubble.

1935: The last concrete is poured at the Hoover Dam site, four months before President Franklin Roosevelt dedicates one of the largest hydroelectric projects in U.S. history.

Hoover Dam was conceived in the early 1920s as a way of reclaiming California's flood-prone Imperial Valley, improving water supply to the seven Colorado River-basin states, and generating electric power for Southern California, which was already growing rapidly.

Because the site chosen -- on the Colorado River about 30 miles southeast of Las Vegas -- was adjacent to Boulder Canyon, the undertaking was christened the Boulder Canyon Dam Project.

It was a formidable project. At the time of its completion, Hoover Dam was the world's largest concrete structure, a distinction it held until 1942 when the Grand Coulee Dam opened. It was also, at the time, the largest public-works program in U.S. history.

Construction began in 1932 with the diversion of the Colorado River around the site and the building of two cofferdams to protect against flooding. The surrounding canyon walls were cleared of loose rock and reinforced, and the first concrete was poured in June 1933.

Owing to the problems of uneven cooling and contraction -- which could cause the dam face to crack under stress -- concrete was poured in five-foot increments rather than continuously, to assure structural integrity. A special system of cold-water pipes sped the cooling of the concrete.

The dam stands 725 feet high, now ranking it second behind California's Oroville Dam. Its 17 turbines generate up to 2,074 megawatts of hydroelectric power. (Capacity was increased incrementally until 1961.) The damming of the Colorado River also created Lake Mead, named for the dam's project manager, Elwood Mead.

The dam was built at considerable human cost: 112 workers died from various causes, including accidents, heat stroke and heart failure. A brief workers' strike in 1931 failed, although working conditions improved in its wake. The Six Companies, which ran the project, began providing water on a regular basis: probably a good idea, because temperatures at the work site routinely reached 120 degrees.

The real controversy came later. Although originally referred to as the Boulder Canyon Dam Project, it became known as Hoover Dam after President Hoover's interior secretary, Ray Wilbur, so named it during a speech at the site. Given Hoover's unpopularity at the time -- his policies were widely blamed for helping start the Great Depression -- it was not a popular choice.

Nevertheless, the name stuck, even appearing on official documents, until Hoover was swept out of the White House by FDR in 1932. Roosevelt's interior secretary, Harold Ickes, no fan of Hoover's, officially changed the name to Boulder Dam. It remained that way until President Truman, under pressure from Congress, restored Hoover's name in 1947.

(Source: PBS)

A new book by photographer Richard Ross, Architecture of Authority, examines the way institutional buildings exert power over people. Ross managed to gain impressive access to all kinds of secretive or high-security buildings, from Abu Ghraib prison in Iraq, to the supermax high-security Pelican Bay prison in California. Ross credits his unprecedented access to a combination of persistence and sincere curiosity. "Many of these people want to show you these places once they know that you're interested in their world," he says.

To question the pervasiveness of intimidating, "disgusting" architecture, the images in Ross' book are both striking and inviting. Ross intentionally makes the photos of oppressive structures look seductive. "You can convince people a lot easier by whispering in their ear rather than hitting them over the head," says Ross.

Following is a selection from the book along with Ross's commentary. Ross has an exhibition at the Aperture Gallery in New York which is now open to the public.

Left: Pictured is the prison's lethal injection chamber. "Ninety percent of inmates who enter Angola [Louisiana State Penitentiary], never leave," Ross says. Inmates work on the prison farm and are not allowed to eat the cows they raise because the quality of the meat is too high. Meals at Angola can cost as little as 17 cents per person since so much of the food is grown on site. Twice a year, inmates enjoy a rodeo on the prison grounds with barbecues and bull riding.

Pelican Bay prison holds some of the most dangerous inmates in California. Inmates are often accompanied by four guards during transport within the facility. The light coming through the ceiling in this photo is likely the only sunlight that inmates see during their sentence. In spite of the immense security, Ross says, prisoners are still able to get messages to the outside world to carry out deals and assassinations.

Opened in 1829, the Eastern State Penitentiary is one of the oldest prisons in the United States. When it was built, the word 'penitentiary' signified that prisoners were to be penitent in the eyes of God. Even the design of the walls was meant to resemble those of a church.

"In the Eastern State Penitentiary they had skylights and natural light come in because they equated the idea of light and God as one," Ross says. He draws visual parallels in his book between prisons, churches and law enforcement institutions as places where people are intended to seek some form of redemption.

Nothing is private in this isolation room, a fact conveyed by the prominent camera in the corner. Ross says the use of rooms like these is at the extreme of an authority continuum that begins in preschool (also featured in his book):

"Situations evolve without anybody noticing," Ross says. "Civil liberties are taken away piecemeal but they're rarely given back. So it starts with kids giving up some of their independence to sit on the circle at Montessori school, and that's socialization, or learning to live within a group, but at some point it gets a lot rougher than that."

There is often a third party present in interrogations, Ross says, who sits behind the interrogator. This adds an ominous element of uncertainty. The prisoner is left to wonder whether this person has the ability to intervene, and if so, whether it would be on his behalf or not:

"It's almost as if they act like an omnipotent presence. The silent voice. It's almost Buddhist. They don't say anything. The person being interrogated could look over at that person and wonder if this person is going to tip the scales. Are they going to intercede at any point? At what point do they intercede? At what point do they stop being a neutral, silent observer? Their role is always confused there. The uncertainty assists in the interrogation process."

In photographing military and law enforcement buildings, Ross never directly requests to photograph the most sensitive areas.

"When I go to a Secret Service interview room, I would never say to them, 'Could I see your interrogation room?' They would bristle and I wouldn't get in," he explains.

In the case of Abu Ghraib prison, the notorious scene of torture and abuse of prisoners, this was particularly important:

"If you look at a continuum of a conversation, an interview, interrogation and torture, where's that line?" Ross asks. "By the time prisoners are in Abu Ghraib, that's an interrogation room. They're not fucking around and they're not standing on ceremony."

Ross' father was a New York City police officer at this precinct. "I grew up there," Ross says. Though he died 20 years ago, Ross says his father would be amused that he is able to make a living by photographing these institutions.

Though the cells in this prison have been removed, it is a classic example of a panopticon, where prisoners are controlled by the actual or perceived gaze of guards at a central position. One of the most efficient architectures of authority, the simple design allows many people to be controlled by very few.

For Ross, this is the signature photo of the project. Shot in August 2005 in almost 120-degree heat, within a window of five minutes, the photo was almost prohibited by the officers on-site.

The curtain in this photo segregates the women from the men in a small corner of the mosque. Ross says he wanted to give an idea of the way women are weighted or valued in these buildings.

"These mosques are the architecture of our world. They're really gorgeous," Ross says. "In any of the mosques there's never any image of anything figurative. There's no idol worshipping in a mosque."

"I was in there photographing that room. It was empty and then a kid, probably in his early twenties who is Arabic, Iraqi, comes in and says, 'Are you a photographer?' We need someone to help us document the birth of the Iraqi constitution," Ross says.

"I ended up going with them for several days photographing sheiks, the president, Muqtada al-Sadr, al-Maliki, with real flexibility of going from one side of the yellow tape to the other," Ross says.

"They were really cool about that. They were great people. I would be having lunch with the oil minister and he would be saying things like 'Thank you for liberating our people,' and I said, 'Don't thank me, I had nothing to do with it, and I would've voted against it.'"

Aren't fax signatures the weirdest thing? It's trivial to cut and paste -- with real scissors and glue -- anyone's signature onto a document so that it'll look real when faxed. There is so little security in fax signatures that it's mind-boggling that anyone accepts them.

Yet people do, all the time. I've signed book contracts, credit card authorizations, nondisclosure agreements and all sorts of financial documents -- all by fax. I even have a scanned file of my signature on my computer, so I can virtually cut and paste it into documents and fax them directly from my computer without ever having to print them out. What in the world is going on here?

And, more importantly, why are fax signatures still being used after years of experience? Why aren't there many stories of signatures forged through the use of fax machines?

The answer comes from looking at fax signatures not as an isolated security measure, but in the context of the larger system. Fax signatures work because signed faxes exist within a broader communications context.

In a 2003 paper, Economics, Psychology, and Sociology of Security, professor Andrew Odlyzko looks at fax signatures and concludes:

He's right. Thinking back, there really aren't ways in which a criminal could use a forged document sent by fax to defraud me. I suppose an unscrupulous consulting client could forge my signature on an non-disclosure agreement and then sue me, but that hardly seems worth the effort. And if my broker received a fax document from me authorizing a money transfer to a Nigerian bank account, he would certainly call me before completing it.

Credit card signatures aren't verified in person, either -- and I can already buy things over the phone with a credit card -- so there are no new risks there, and Visa knows how to monitor transactions for fraud. Lots of companies accept purchase orders via fax, even for large amounts of stuff, but there's a physical audit trail, and the goods are shipped to a physical address -- probably one the seller has shipped to before. Signatures are kind of a business lubricant: mostly, they help move things along smoothly.

Except when they don't.

On October 30, 2004, Tristian Wilson was released from a Memphis jail on the authority of a forged fax message. It wasn't even a particularly good forgery. It wasn't on the standard letterhead of the West Memphis Police Department. The name of the policeman who signed the fax was misspelled. And the time stamp on the top of the fax clearly showed that it was sent from a local McDonald's.

The success of this hack has nothing to do with the fact that it was sent over by fax. It worked because the jail had lousy verification procedures. They didn't notice any discrepancies in the fax. They didn't notice the phone number from which the fax was sent. They didn't call and verify that it was official. The jail was accustomed to getting release orders via fax, and just acted on this one without thinking. Would it have been any different had the forged release form been sent by mail or courier?

Yes, fax signatures always exist in context, but sometimes they are the linchpin within that context. If you can mimic enough of the context, or if those on the receiving end become complacent, you can get away with mischief.

Arguably, this is part of the security process. Signatures themselves are poorly defined. Sometimes a document is valid even if not signed: A person with both hands in a cast can still buy a house. Sometimes a document is invalid even if signed: The signer might be drunk, or have a gun pointed at his head. Or he might be a minor. Sometimes a valid signature isn't enough; in the United States there is an entire infrastructure of "notary publics" who officially witness signed documents. When I started filing my tax returns electronically, I had to sign a document stating that I wouldn't be signing my income tax documents. And banks don't even bother verifying signatures on checks less than $30,000; it's cheaper to deal with fraud after the fact than prevent it.

Over the course of centuries, business and legal systems have slowly sorted out what types of additional controls are required around signatures, and in which circumstances.

Those same systems will be able to sort out fax signatures, too, but it'll be slow. And that's where there will be potential problems. Already fax is a declining technology. In a few years it'll be largely obsolete, replaced by PDFs sent over e-mail and other forms of electronic documentation. In the past, we've had time to figure out how to deal with new technologies. Now, by the time we institutionalize these measures, the technologies are likely to be obsolete.

What that means is people are likely to treat fax signatures -- or whatever replaces them -- exactly the same way as paper signatures. And sometimes that assumption will get them into trouble.

But it won't cause social havoc. Wilson's story is remarkable mostly because it's so exceptional. And even he was rearrested at his home less than a week later. Fax signatures may be new, but fake signatures have always been a possibility. Our legal and business systems need to deal with the underlying problem -- false authentication -- rather than focus on the technology of the moment. Systems need to defend themselves against the possibility of fake signatures, regardless of how they arrive.

---

Bruce Schneier is Chief Security Technology Officer of BT, and author of Beyond Fear: Thinking Sensibly About Security in an Uncertain World.