How China Hacked America’s Phone Network

from The New York Times I'm Sabrina. tavernes and this is the. [Music]. daily an alarming new hack by China has. penetrated the nerve center of the. United States our phone. network today my colleague David Sanger. on what the scope of this new attack. tells us about the growing power of one.

of America's biggest. [Music]. [Applause]. [Music]. adversaries it's Thursday December. [Music]. 12th David Sanger you're back I am I'm. delighted to be here so David you are. here today to talk about a hack and.

close listeners of the show will know. that this is a topic you do sometimes. talk about on The Daily we counted you. have done three shows on hacking in. recent years but this particular hack. this one you're looking into right now. this one is different you say it is. Sabrina it's the big one it's from China. it was run by the Chinese Ministry of. State security and hackers working for. them it's got a strength strange name.

it's called salt typhoon okay but the. key thing to know here is that this is a. hack of America's telecommunication. systems it's a hack of AT&T and Verizon. it's a hack of all of the smaller. communication systems and what's. remarkable about it is that the Chinese. were able by spending millions of. dollars and a lot of time to figure out.

how to get into the core of what binds. the United States together which gives. them access to so much more what's. really striking to me is the degree to. which this has freaked out American. officials the head of the Senate. intelligence committee Senator Mark. Warner who was himself a telecom's. executive in a previous life told me it. is the worst intrusion into the United.

states he has ever seen in his career. wow Jake Sullivan the National Security. adviser organized in The Situation Room. a meeting with the chief executive. officers of each of the major. telecommunications companies they. dragged them to Washington and said we. are going to have to figure out an. emergency way to get the Chinese out of. your systems and to rebuild those. systems so they can't get back in so the. critical question but this hack raises.

is how could it be this late in the. Cyber Wars which have been going on for. two decades that China has managed once. again to pierce America's. defenses okay so this hack really shook. Washington and also it shook a number of. important American companies these. telecoms as you're saying tell me David. what we know about it so the first thing.

we know is that telecom companies were. clueless for a year maybe two years that. the Chinese were in their. system in other words they had their. Radars off in fact for some parts of. their systems they never had Radars on. at all and the second thing is that. Microsoft researchers put the telecom. companies onto this for the first time. the telecoms missed it entirely but. Microsoft noticed that Chinese hacking.

groups that they follow were. targeting these companies AT&T and. Verizon and many others and suddenly. they realized that the Chinese were. inside an American system and they were. the first ones to send up the. alert not only were the Chinese hackers. there they had figured out a way to go. Target some very specific National.

Security officials and politicians. including president-elect Trump and vice. president elect fans H then they. discovered that the Chinese could. actually listen to some conversations. wow were they actually listening to. Trump and Vance's phone calls we don't. know for sure what they listened to or. whether they actually tuned into some of. those. conversations but American investigators. seem to have a pretty high certainty. that they.

did and then we also learned that these. hackers could read open unencrypted. texts that would be for example if you. were sending a text from an iPhone to an. Android so it's not staying within the. Apple network and it's going out as an. SMS message the Chinese could read. those that's amazing I mean that is. really a violation of American Security. it really is and it tells you how.

effective they are and initially the. American investigators thought that the. Chinese were just really focusing on. Washington and Washington players but. the more they dug in the more they. discovered no they were in the entire. system around the country and then it. got worse because it turns out that the. telecom companies Run for the US. government the lawful Taps that are put. on the phones of suspect criminals or.

spies basically the way that the US. government phone taps people that thinks. are spying for other countries that's. right and of course the government can. go get the warrant but the government. doesn't run the phone system so then. they have to take that warrant to AT&T. or Verizon or another company and say we. need to tap this phone. number well the Chinese got in so deeply. that they could figure out which phone. numbers they were listening to and then.

they could figure out wow they're on to. this suspected Chinese spy and they're. on to this one but they don't know about. this third one wow so the Chinese. actually saw with this kind of you know. seeth through glasses they got in this. hack who the US suspected was a Chinese. spy that's right so just think about. this if the Chinese. know which Chinese spies were on to and. which ones we are't it gives them a huge.

Advantage they begin to know if they. need to send more spies in so there's a. huge counterintelligence factor to the. Salt typhoon hack as well interesting. but to what extent does it affect. everyday Americans like should I be. worried about it it's a great question. because the Chinese have shown from this. that they could get into most of these. ordinary phone calls the question is.

would they want to right they seem to be. quite focused on National Security. officials. politicians now I can imagine Sabrina. that for you they may want to go in and. figure out what's going to be on the. daily in uh in a couple of days but in. case they're not interested in that you. know they're probably not going in to. listen to ordinary Americans talk about. how much milk and eggs to go pick up on. the way home from work right but the. fact that they have the cap ability to.

go do this throughout the system is. pretty shocking now there's an exception. to this when you're talking on an. ordinary phone line the phone. conversation is largely. unencrypted but if you're talking over. WhatsApp or signal or even if you are. talking from iPhone to an iPhone or. messaging between iPhones then those are. usually encrypted and the Chinese would. be able to see that there was a. conversation underway but they couldn't.

listen in or look at or read the content. interesting so if I'm doing a WhatsApp. call then that is off limits because. that's encrypted that's right and you. know there are some encrypted. conversations that with a lot of work. you can Pierce but by and large you're a. lot safer on an encrypted line and last. week the US government for the first. time that I can ever recall came out and. told Americans you should use encrypted. apps to commun communicate until we have.

this problem solved huh and that's a big. change because it was only back in the. Obama Administration that the FBI was. complaining about encrypted apps because. they couldn't listen in if there was a. criminal case underway or a kidnapping. exactly it needed access to people's. phones to be able to see what the. conversations had been that's right and. basically they've decided now because of. the severity of this hack to reverse. their advice and tell Americans.

go use encryption so how did China. actually pull it off the best I can. discern from Telecom Executives and. other experts is they took advantage of. the fact that our phone systems are. actually the amalgam of really new Sleek. digital equipment and really old creaky. equipment that's been sitting around for. 40 years okay so how does that make it. vulnerable because these old systems. have been embedded in the Telecom system.

for the longest time from an age that. goes back before hacking and so there's. almost no way to build modern. protections into them because these. systems were built so long ago it was. before anybody had Protections in mind. so let me give you an example yeah. please if you're going to do a banking. transaction over your. phone um you frequently get a code that. comes back from the bank that you have.

to insert first so that they're sure. that they're talking to you on your. phone and you insert it and we've gotten. used to it it drives us crazy but we all. understand why we need to do it okay in. the cyber world that's called multiactor. authentication right so it's something. other than just your password to make. sure that it's really you but inside. these Telecom systems there was no. multifactor authentication so one they. got the master password they were in the.

system they were able to roam freely. across the system without ever being. challenged again for credentials or. identification imagine this imagine that. you showed your ID once at the airport. right but before you got on an. international flight no one asked to see. your passport one more time that's sort. of what happened here so basically these. hackers kind of tried every door found.

one that was open and then was never. challenged once they got inside that. door that's right but they did something. even more strategic they realized that. our systems were old and rickety and. they looked for the seams between that. old equipment and the new equipment. because they knew the older equipment. was going to be their way. inside okay David so you've explained. how this hack was really the biggest. anyone in Washington and you had ever. seen it compromised really vital stuff I.

understand all that but haven't the US. and China been spying on each other for. a long time like is there a reason for. us to think that this is actually worse. than those other times we've been spying. on each other for decades and it's. always been an article of faith that we. can hack into systems better than any. other country can that's always been the. Assumption and it was backed up 10 years. ago when Edward Snowden who you'll.

remember was a contractor for the. National Security Agency revealed a huge. Trove of documents that exposed that the. NSA was getting inside the Chinese. telecommunication systems and. particularly aiming at Huawei the. Chinese telecommunications giant that's. been supported by the government and for. years the US government has been Banning. Huawei equipment from the US. for fear that if Huawei was inside our.

networks they would have an easy way of. diverting phone calls texts all kinds of. computer data back to Beijing so what. did we learn. here we've learned here that even. without Huawei in our system because. most of huawei's equipment has been. banned the Chinese found a way in anyway. and we've learned learned that at this.

point they are essentially as good as. the. NSA no one will say this in public to. you but you get people off the Record. and they say to me David this is the. first time I've come to the conclusion. the Chinese are completely in the major. leagues here and they can do what we can. do. [Music].

we'll be right. back so David how did we get to the. point where China got so good at hacking. well China's invested in it practiced in. it trained people in it and you know. it's like anything else in superpower. competition you know 20 25 years ago the. Chinese were almost nowhere in space. right now they've got space satellites. can grab our space satellites and the.

same is true in cyber it's just another. area where they know they need to be. able to dominate the superpower. competition in. surveillance and the big improvements in. their capability started after Xi. Jinping came to power in 2012 the. current Chinese leader the current. Chinese leader and you know at the time. when G came came in the American.

intelligence reports were this is not a. man who is going to challenge the United. States militarily or for intelligence. purposes he's got to focus on building. up his own economic capabilities well it. turns out all those reports were wrong. and it was another of the mistakes we. made in sort of assessing where the new. cold wars were emerging so he's the one. who decided to make the investments in. space and and he's the one who has.

invested Millions if not billions of. dollars in cyber capabilities so where. was China in terms of its ability in. surveillance when he came in they were. pretty clunky they put most of their. cyber capability into the hands of the. people's Liberation Army it's China's. main military operation you know 10. years ago I was writing about uh. people's Liberation Army unit unit.

1398 that was based out of a big white. office tower near the Shanghai airport. and they had officers who would go break. into American companies and try to steal. their secrets and their designs and. bring them back to Chinese state-owned. or other companies and were they. successful at doing that partly they. stole the design for the F35 the us. stealth fighter and then produced one.

that looks very much like it but they. make it a lot more cheaply than we do. but along the way Sabrina they got. caught pretty easily a company called. mandiant found them breaking into US. companies and were able to identify the. specific hackers who later got indicted. by the United States they were wanted. posters with these hackers pictures on. them and even though they were pla. officers so like Keystone Cops kind of.

thing better than Keystone Cops but not. the best cat burglars you ever met so. they started working hard on being. stealthy on hiding their tracks they. began to study how the American systems. work in great detail and then they did. something even smarter they moved a lot. of this hacking out of the hands of the. army and handed it to the ministry of.

State security and what does it mean. that it goes from the Army to the. ministry of State security why is that. important it means that they're going to. a group that has more money to invest on. intelligence. assets that are trained at a higher. level that have the ability because. they're working in secret to go out and. hire and train much more effective. hackers who would not be caught as.

easily and they learned many more. innovative ways to get into American. European African Latin American. systems they began to sell. telecommunications equipment as we were. discussing earlier that would enable. them to own the infrastructure and. therefore get in and they learned how to. be much more effective at stealing. master password words so that they.

didn't have to actually write code and. malware but instead could pretend like. they were legitimate operators inside a. system David what's an example of the. Chinese getting better if you think back. to the turning points in surveillance in. China what's an. example we are starting to get some. context as to how big a massive data. breach has been against the US. government previously we knew think. Sabrina the first time that we realized.

how good they were it appears that. hackers based in China have broken into. US Government computer networks gaining. access to information of federal workers. was when they got into the office of. personnel management at the end of the. Obama Administration this would likely. be the largest theft of US Government. data in the history of the United States. so here's what we know the off now this. is seemingly the most boring bureaucracy. in Washington right they are basically.

the government's HR manager okay and. they keep the security clearance files. for 22 million Americans who have secret. top secret compartmentalized clearances. and so forth and the Americans who get. clearances have to fill out these. enormously detailed forms that describe. their financial condition their medical. histories every relationship they've.

been in every Foreigner they've ever met. and had you know long interactions with. so this is not just your name and your. Social Security number this is the. details of your life and obviously for. Chinese intelligence officials if they. could get that kind of understanding of. the American Elite who are working on. every classified project it's enormously. beneficial official and much as in this.

most recent hack they were inside the. office of personnel management for a. year before anyone even knew that they. were stealing the files encrypting them. and broadcasting them back to. Beijing okay so China is getting much. better at all of this that extra funding. and people and focus is really starting. to pay off but big picture here David. what is China trying to do with all of.

this like what's it really up to here. well this is the great mystery that the. cia's new or relatively new China. operation is constantly trying to figure. out that the NSA is trying to figure out. so there are couple of theories the. first theory is they just want a. complete map of everybody in the US who. works in the National Security sphere. and access to what they do so it's first. of all for great intelligence gathering.

the second thing they're beginning to do. though is learn how to plant their. malware into critical infrastructure in. the United States that may enable them. to turn off water pipelines or electric. grids if we they got into a direct. conflict with the us and we really saw. this last year 2023. with the Chinese hacking group named.

Vault typhoon it's a different group. than the group that was just caught. inside the Telecom system but their. purpose was to be able to get into the. utilities that feed American bases in. Guam in Hawaii on the west coast so that. if there was ever a incident over Taiwan. say say a Chinese Invasion or just a.

slow choking off of Taiwan that the. Chinese could use the code they put in. these systems to turn off the power or. turn off the water and slow an American. response an ability to get troops to. Taiwan and that's critically important. it's also got a psychological element. which is if there was a crisis in Taiwan. and suddenly you were living in San. Franc Isco and there was no water coming.

out of the tap you're not thinking about. Taiwan right you're thinking about how. you get water coming out of your tap for. your family so that's a huge step up. right it's not just surveillance in this. case it's actually disrupting critical. processes that are required for defense. that's absolutely right and the US. discovered this Midway through the Biden. Administration and through 2023 there. were all these kinds of emergency. meetings in the situation room and they.

brought in the heads of the utilities. and they're trying to go clean out the. Chinese malware but the fact of the. matter is Sabrina you just don't know. what you don't know and the Chinese are. excellent at creating an access into a. system testing out whether it could work. and then pulling all the code out so. that when somebody came looking for it. they may not find anything other than a. little bit of evidence that Chinese.

hackers had been there okay so that. brings us to today and to this salt. typhoon hack which you say is still a. problem because it's still lurking in. our phone systems that's right and so I. I think to understand what has everybody. so worried right now you have to sort of. back up enough to look at these two. different kind of operations so salt. typhoon the one that we've been. discussing in the Telecom system gives. the Chinese an enormous surveillance.

capability and a chance to monitor. National Security operations and whether. or not we're on to Chinese spies and all. that and the earlier system they. discovered the one that got into the. electric grid and the Water Systems. gives an ability to actually disrupt. when you add these together you get a. current surveillance capability. and a.

perspective disruption capability right. that what the Chinese can do now is. listen in on president-elect Trump and. National Security officials if they're. on that open Line what they could do in. the future is shut down systems okay so. that's clearly a very serious problem. what's the government doing about this. well they have begun to talk a little. more publicly about these kinds of hacks. and particularly about salt typhoon.

that's what led to that warning last. week that people should begin using. encrypted apps but that's a Band-Aid. it's not a solution right if you are. really going to fix our Telecom system. you would either have to go shut it down. and rebuild it with something more. modern well no one's going to do that we. need it every day or you're going to. begin to make incremental fixes and then. build a parallel system to it that you. can begin to shift over to you are going.

to have to go set real standards for. cyber security companies can't live in a. world anymore in which it's sort of up. to them how much they invest in these. because what we've discovered about the. Telecom system is on the one hand it's a. commercial system it's owned by. companies not the government but on the. other hand it's critical to our national. security right so we're trying to. balance a lot of different compli ated. values here one of them is keep the.

Chinese out of our system for which. you'd want to design something entirely. new but the other is keep the US economy. going and keep people communicating. which means you're kind of stuck with. the system that's been pasted together. over the years yeah it's not an easy. engineering problem so David just. stepping back here for a second and. thinking about this big. picture this all all comes at quite a.

moment of potential change we're just. weeks away from president-elect Trump's. inauguration with all of the potential. kind of change and Chaos he might bring. with him on China on a lot of these. issues and I'm wondering how you see it. right now what all of this means so. first of all the world has changed a lot. since Donald Trump left office on. January 20th. 2021 obviously there had been hacking. and issues like this during his time but.

the level of the Chinese. sophistication and the sophistication of. others Russia Iran North Korea has gone. up considerably and we don't know how. the president's planning to go handle. this in fact whenever he's asked a. question about China his answer usually. has to do with tariffs as if that's. going to solve our competition with the. only competitor who can take us on. militarily economically technologically.

even. culturally the second big change that. was going on the biggest change since. president Trump left office is that. Russia and China two giant cyber Powers. have come together in a partnership that. is basically opposing the United States. around the world right you've seen it of. course first in Ukraine but we're. beginning to see it in the cyber world.

as well because they want to operate by. a set of rules that they Define and we. want to operate by a set of global rules. that we. Define and the third big change that's. underway here of course is artificial. intelligence because that affects. everything in the hacking world you can. build much better defenses to hacking. using AI tools you can also find. vulnerability in Old systems like the.

Telecom system we've been discussing. here using those tools so we have a new. arms race underway that's Aid driven to. go find or defeat this kind of code in. our systems and those big three things. Trump the new cold Wars the arrival of. artificial intelligence is leading to an. entirely New Era and and some real. Brewing.

[Music]. problems well David it sounds like we're. going to have you on for more episodes. about hacking in the future well this is. probably more the beginning of a. conversation on The Daily rather than. the end of. one David we look forward to it thanks. Sabrina great to be with you. [Music].

we'll be right. back here's what else you should know. today on Wednesday FBI director. Christopher Ray said he'll step down. from his role in the New Year this is. not easy for. me I love this place I love our mission.

and I love our. people but my focus is and always has. been on us and on doing what's right for. the FBI his decision comes after. president-elect Donald Trump announced. his intention to replace Ry with. longtime loyalist cash Patel this is the. best way to avoid dragging the bureau. deeper into the fry while reinforcing. the values and principles that that are. so important in how we do our work under.

Ray the FBI repeatedly investigated. Trump including by searching his. maralago estate for classified. documents and more details have emerged. about Luigi menion the man charged with. killing the CEO of United Healthcare. Brian Thompson in a series of social. media posts menion described health. problems saying back pain that had once. been a minor issue got worse before. having surgery last year Manion stopped.

communicating with friends and family. about 6 months ago his mother filed a. missing person report last month Mion. who was arrested on Monday in. Pennsylvania now faces a murder charge. and has been denied bail he's fighting. extradition to New. York today's episode was produced by. Stella tan and Mary Wilson it was edited. by Maria burn and Paige cowt contains.

original music by Dan Powell and was. engineered by Chris Wood our theme music. is by Jim brunberg and Ben Lanser of. [Music]. [Music]. wonderly that's it for the daily I'm. Sabrina Tavern see you tomorrow. [Music].