North Korean Game Hackers Help That Country Earn Hard Currency

The Chosun Ilbo reports that, according to a police investigation,elite North Korean hackers created and distributed programs that stole millions of U.S. dollars from popular South Korean on-line gaming sites, such as Lineage and Dungeon Fighter.
The hackers, who are believed to have graduated from the North's prestigious Kim Il-sung University and Kim Chaek University of Technology, stole gaming items such as weapons, armor and other objects that players collect and store in their on-line games and trade for cash. The Seoul Metropolitan Police Agency said on Thursday it had arrested five South Koreans, including a 43-year-old identified only by his surname Chung. They were apprehended for creating programs, with the aid of hackers that use personal information stolen from servers for on-line games, and distributing them to buyers. Nine others were also arrested for aiding Chung in distributing the software.
"It appears that North Korea has gone beyond the traditional methods of earning foreign currency, such as drug manufacturing and producing counterfeit bills, to creating Internet hacking programs," a police official said.
Chung, who runs an Internet chat room in Daejeon in southwestern Korea, traveled to China's Heilongjiang Province in northern China in early 2009 and was introduced to around 30 North Korean hackers through a broker.

Time to Revamp Korea's National ID System?

I recommend another very interesting article generated by the cyber-attack and leakage of personal information from Nate and Cyworld accounts.  This one, accompanied by a nice graphic (click to see a larger version) was published in The Korea Times.
The article notes that the compromised information included names, passwords, phone numbers, e-mail addresses, and most alarmingly, resident registration numbers, the country’s equivalent to social security numbers.
Government officials insist that the country’s computer security defense is still salvageable as they scramble to apply the patchwork. But critics, unconvinced, claim it’s officially time to blow up the national ID system and start over.
``The resident registration number of virtually every Korean is out there ― the information is so easily available that police announced a while ago that hackers are barely getting 1 won for each code. And we have heard rumors that criminals are passing these numbers around in (Microsoft) Excel files,’’ said Jang Yeo-gyeong, a computer security expert at activist group Jinbo Net.
From a security standpoint, resident registration numbers are flawed from the start. The 13-digit code reveals the birth date, sex and registration site of a person, unlike comparable systems in the United States and Japan based on random numbering.
People here submit their national ID numbers to Korean Web sites due to local laws requiring them to make verifiable real-name registrations for virtually every type of Internet activity, not only for encrypted communications like e-commerce, online banking and e-government services but also casual tasks like e-mail and blogging.

Apple, Google in Violation of Korean Law

As reported in the Joongang Daily, South Korea’s telecommunications regulator announced yesterday that Apple and Google’s location tracking capabilities violate Korean laws, fining Apple Korea and ordering that both companies rectify the issues.The Korea Communications Commission (KCC) has been investigating since April, after two computer engineers argued that the latest version of Apple’s mobile operating system, iOS 4.0, keeps track of users’ locations as far back as June 2010, which was when the operating system was launched. That caused controversy worldwide.
While the Korean government was hardly alone in launching an investigation into location tracking issues, it is the first in the world to actually declare that Apple and Google violated laws and order punitive measures.
According to Location Information Law Article 15, when businesses seek to collect, utilize and offer people’s location data, they should get their consent. Furthermore, Location Information Law Article 16 dictates that businesses take protective technological measures to prevent the data from being exposed, falsified or damaged.
“We haven’t been tracking anyone,” Apple CEO Steve Jobs said earlier this year. “The files they found on these phones were basically files we have built through anonymous, crowd-sourced information that we collect from the tens of millions of iPhones out there.”
Google also explained that “all location sharing on Android is an opt-in by the user.” When a user activates an Android phone, a screen appears saying Google will collect anonymous location data.

More on Cyber Leaks and Cyber Warfare in Korea

Press coverage of the recent cyber attacks on Nate and Cyworld and the resulting leakage of personal information is just beginning. Readers who found my previous post interesting may wish to read today's article in the Joongang Daily. It notes that controversy is heating up over Korean Web portal operators’ collection and storage of private data after the country’s worst cyber hacking case put over two-thirds of its population at risk of identity theft.
It also put a question mark on the effectiveness of the country’s controversial Internet regulations, such as the real-name verification law, which critics argue provide incentives for online companies to hoard personal information.

“While they didn’t have the ability to protect private data, they have been excessively collecting it,” said Lim Jong-in, dean of the Graduate School of Information Security at Korea University, referring to the country’s major Web portals.

Korean Internet users rely heavily on do-it-all, one-stop Web portals. They visit industry leader Naver at least three times for every four Internet uses, according to market research firm Metrix Corp., and the three most-visited Web portals account for more than 90 percent of the country’s Web search traffic.
These Web portals ask for names, resident registration numbers, birth dates, addresses and phone numbers to join their services, which are accumulated, some of them encrypted, in their servers for at least five years and become attractive “booty” for hackers.
“Instead of mere lists of online accounts, [hackers] could steal the full package of real world identities,” said Nakho Kim, a media researcher at the University of Wisconsin-Madison. “Due to government policies and industry laziness, many Korean online services tend to collect a lot of personal identity information.”
Readers following the broader global context of the recent cyber attacks on Nate and Cyworld will want to read The New York Times article entitled "Security Firm Sees Global Cyberspying."

Hackers Compromise Personal Data from Nate and Cyworld Accounts

On July 29 it was reported by the Joongang Daily that hackers had stolen personal data from as many as 35 million Korean netizens with Nate and Cyworld accounts.
According to SK Communications, which runs both Nate and Cyworld, hackers had access to the IDs, names, cellphone numbers, e-mail addresses, encrypted social security numbers and encrypted passwords of an estimated 35 million users.
Cyworld currently has 33 million users and Nate 25 million users, the company said.
SK Communications suspects the hacking was done through malicious code, and the IP address used for the attack was from China.
The company reported the attack to the Korea Communications Commission and asked police yesterday for help investigating.
The Cyber Terrorism Response Center under the National Police Agency said its team will visit SK Communications’ database center in Seongsu-dong, eastern Seoul, to determine the exact details of the attack.
Police believe Tuesday’s hacking attack was Korea’s biggest ever.
On August 3 The Washington Post published an interesting report on widespread cyber-spying. According to the report, a leading computer security firm has used logs produced by a single server to trace the hacking of more than 70 corporations and government organizations over many months, and experts familiar with the analysis say the snooping probably originated in China.Google’s disclosure early last year that hackers in China had broken into its networks and stolen valuable source code was a watershed moment: A major U.S. company volunteered that it had been hacked. Google also said that more than 20 other large companies were similarly targeted.

Traffic Spike Crashes LG U+ Phone Data Network

The data network of LG U+, Korea's smallest mobile network, was out of service yesterday, causing inconvenience to startled subscribers.   As reported in the Joongang Daily, data traffic spiked to about five times the normal traffic, starting around 8:00 A.M.
With the popularity of data-gobbling smartphones and tablet PCs, compounded by mobile carriers spoiling customers with unlimited data usage plans, the nation’s data networks are already handling more data than they should, observers say.
And while the surge in data traffic has caused dropped calls and slow connections, it has never caused a network to blackout for hours.

A Nostalgic Note on the Decline of PC Rooms

The Joongang Daily has an interesting article, including the accompanying graphic (click to see a full size version), on the declining number of PC bangs (PC Rooms or internet cafes) in South Korea.  As noted in the article,PC bangs enjoyed their heyday in the late 1990s and early 2000s. After the Asian financial crisis of 1997 and 1998, many people who lost their jobs opened PC bangs to survive.
Government regulations are thought to be partly behind the decline of PC Bangs.

One new restriction to take effect by the year’s end is the Cinderella law pushed jointly by the culture and family ministries. Under the law, PC bangs cannot offer online games to anyone younger than 16 from midnight to 6 a.m., in the hopes of curbing game addiction among Korean minors.

There is also a regulatory question over whether PC Bangs are allowed to sell cup ramen or green tea to their customers. Jo, a 37-year-old owner of a PC bang in Imun-dong, central Seoul, was recently hit with a fine. He was guilty of pouring boiling water into a customer’s cup ramen, and someone caught him with a camera and filed a report.

“I was told that if customers pour the water themselves, it’s OK. But if I pour the water, I’m guilty,” Jo said. “There are many cases in which owners served green tea, and ended up paying a 500,000 won fine.”
In addition to the regulatory issues raised in the Joongang Daily article, I would simply note the reality of the mobile broadband revolution, ignited in Korea with the arrival of Apple's iPhone in late 2009.  The fact that people can easily use their Android devices, iPhones or tablet computers in coffee shops and public wi-fi hotspots all over the country, has undoubtedly lessened their interest in PC Bangs.

CNN Executive on Mobile News and The Need for Original Content

As noted in a Joongang Daily article today, Tony Maddox, 50, executive vice president and managing director of CNN International, based at CNN’s headquarters in Atlanta, believes that not many people sit in front of the television to watch scheduled news and that is why CNN doesn’t feel threatened by the introduction of social media but “embraces them.”   As readers of this blog may know, I've been interested in television news for a long time.  It was the topic of my doctoral dissertation at Stanford, which later was expanded into my first book, Television's Window on the World, which is still available via many bookstores and can be downloaded free of charge from Google Books.  The book examines ten years of U.S. network television coverage of international affairs back in the pre-CNN, pre-internet era.  My interest in television news continued over the years, and I wrote two Headline Series monographs for the Foreign Policy Association, the latest of which was The Internet and Foreign Policy.
Now, back to the Joongang Daily article based on an interview with CNN's Tony Maddox. Today's consumers, he said, are not going to tie themselves to scheduled TV news. "They want TV news when they want it, on the go."

Maddox explained that as a result of the expanding platform of the Internet and mobile and iPad applications, to meet soaring demand, “more people access CNN content and read, listen and watch stories today than at any point in history.”
Under Maddox’s direction, CNN has been spending “enormous sums of money” since 2007 to add more correspondents to cover the world, which he said was in contrast to other media companies that have been reducing the number of foreign correspondents to cut back on expenses.

This is a move, Maddox said, that CNN has taken to “distinguish itself in the marketplace” in such an era in which everyone can say they are a reporter by having a mobile phone in hand.

The basic points made by Maddox apply not only to news, but to other forms of information as well. Despite the flood of information unleashed by the internet and the rapid spread of mobile devices, people everywhere long for high quality, accurate, trustworthy and credible information.

A Push for Browser Dirversity in Korea: Cracks in the Microsoft Monoculture?

An excellent article in The Wall Street Journal today by Evan Ramstad.  Entitled appropriately "At Last:  A Push for Browser Diversity in Korea," it reports on the somewhat amazing effort by the Korean government to wean people off their heavy dependence upon Microsoft's IE6 browser and to encourage use of Firefox, Chrome and other browsers.
As the article notes,South Korea’s major Internet portals and government regulators are trying to pull the country’s Internet users into the 21st century. How? With a campaign to wean South Koreans off a decade-old Microsoft Corp. browser and some related security technology that is way out of date.
The campaign seeks to fix the essential contradiction in South Korea’s technology environment — the government in the late 1990s built amazing broadband infrastructure all over the country, but in 1999 imposed rules that locked users to Microsoft’s Internet Explorer and an encryption method that made them vulnerable to hacking and software viruses.
I highly recommend that you read the entire article by Ramstad.

More on the Opening of Korea's Smart Phone Game Market

As noted in an earlier post, the Korean government has decided to open up the market for mobile games, by eliminating required government ratings.  Bloomberg's Business Week has an interesting follow-up article on this development. It included the following description of a game developed in Korea that was not available to iPhone users in Korea until now.
Air Penguin, a game in which players guide an animated penguin across an icy landscape, jumped to near the top of the iPhone gaming charts last spring. Yet until now the game hasn’t been available to iPhone owners in the home country of its creator, Seoul-based Gamevil. That’s because South Korea has long required game makers to submit their products to the government for review of their suitability for various age groups based on factors such as violence and sexual content.
I particularly liked the illustration that accompanied the Business Week article (click to see a full size version).

Mobile Internet as the "First Screen" in the Asia Pacific Region

As reported by eMarketer, Asia Pacific consumers view mobile as their first screen. Asia-Pacific is economically diverse, but universally high mobile usage unites the region. Mobile users in Asia-Pacific are increasingly looking at their phones as a first screen, whether to download media, access the internet or communicate with peers—and marketers.
eMarketer estimates over 2.1 billion people in Asia-Pacific will use a mobile phone at least monthly this year, representing over half the population of the region. By the end of 2011, Asia-Pacific will account for 56% of all mobile users in the world. Growth will be steady, with penetration reaching 72.6% by 2015 for a mobile population of nearly 2.9 billion.
eMarketer estimates just under 30% of Asia-Pacific mobile users, or 623.3 million, will log on to the web via mobile at least monthly in 2011. As shown in the accompanying illustration (click to see full size version) mobile internet penetration is expected to rise to 42.1% of mobile users in the region by 2015. And for many of these users, mobile is the first screen for internet access.

Korean IT Firms and the War over Patents

In recent years, Korean firms have registered a large number of patents in the United States. As noted by the Chosun Ilbo  IBM registered the most patents in the U.S. last year with 5,896, and Samsung Electronics rose to No. 2 with 4,551 and LG Electronics ranked ninth with 1,490 patents. Judging by the number of registered patents, Korea is a major force, but the atmosphere is quite different on the frontlines, where Apple, Microsoft, Philips and other global IT companies have launched a patent war against their Korean rivals. They have started using patent and copyright law to protect their smartphone and LED technologies and to pressure Korean IT firms. The main battleground in the patent wars is the smartphone market.
As the Chosun Ilbo points out, U.S. companies virtually control the global market for operating systems, which determine the success or failure of a smartphone. Korean companies have plenty of patents for manufacturing technology, but very few for software.

Nexon Positioned for Success in Global Market

For some time, analysts of South Korea's dynamic ICT sector have noted that its success was largely based on the manufacture and export of hardware, prominently including semiconductors, screens, television sets, and mobile handsets.  Korea has been viewed as relatively weak in the production and export of software, content and services.   That situation may be changing, and one reason is the potential of Korea's online games in the global market.
A recent article in TechCrunch uses the Korean company Nexon as an example of Asian innovation in the world of free-to-play games and virtual goods.  The article is well worth reading.  I would only add, as noted in earlier posts, that the world of online games has business implications and future applications that extend far beyond the game industry itself.  These include education and the process of admission to colleges and universities, both areas of interest to our new Asia Center to Advance Educational Exchange (ACAEE).