Security Czechs

The Economist: Fighting cyber crime

THE lovely medieval cities of the former Czechoslovakia are an unlikely location for some of the world’s smartest warriors against internet fraud. Yet they are home to three of the biggest purveyors of antivirus software: AVG Technologies in Brno and Avast Software in Prague, both in the Czech Republic; and ESET in Bratislava, in Slovakia. Each company claims to have over 100m users worldwide.

They were all launched shortly before the break-up of Czechoslovakia in 1993, using software developed locally at the tail end of the country’s long communist rule. Its technical colleges produced a large number of computer-savvy people: the Czech Technical University (CTU), in Prague, offered courses in control theory from the early days of computing. But there were few jobs in the country’s small IT industry. To put their skills to use, according to Miroslav Trnka, co-founder of ESET, many underemployed geeks began hunting down viruses almost as a hobby.

After the Velvet Revolution, which freed the country from communism, the hobbyists went commercial. They had some conspicuous advantages. Start-up costs were lower than for rivals in richer countries and, in a country with few natural resources, it was easy to attract talent.

For all that, none of the three companies did especially well, until AVG Technologies, then known as Grisoft, made its basic software freely available (money is made by selling upgrades and premium services to registered users). It then grew rapidly; Avast soon followed suit. In February 15% of AVG Technologies was floated on the New York Stock Exchange, valuing the company at around $860m. Avast took in $100m of venture capital in August 2010 and claims to have over 150m users. ESET, which is still privately owned and does not give away software, has grown more slowly, but says it has over 100m users. All three companies do well in consumer rankings of antivirus software.

Universities in Prague, Brno and Bratislava have continued to encourage research into cyber technology and artificial intelligence. CTU’s information-technology faculty has spawned several commercial spin-offs and is now planning to found a department dedicated to encouraging cybersecurity entrepreneurs. It has invited the founders of AVG, Avast and ESET to join its advisory board.

One of its recent spin-offs is Cognitive Security (CoSe), a firm that monitors internet traffic for anomalies that might signal industrial hacking, euphemistically known as “advanced persistent threats”. It has been backed by venture capitalists as well as a grant from the American army. The company is commercial; but the university retains access to its intellectual property, ensuring that much of its research is published.

With more such spin-offs expected, a handy little industry is emerging. According to COSE’s boss, Martin Rehak, who continues to teach at CTU, the business of cybersecurity somehow speaks to the Czech soul. “We’re not criminals at heart,” he says, “but we can think like them.”

 

Wobbled, not toppled

The Czech government survives amid mounting public disgust

THE squabbling parties of the Czech centre-right prefer to stay in power than face voters’ wrath. That is the upshot of the latest storm in Czech politics, which started with a split in the Public Affairs party (VV, by its Czech initials). Formerly part of the ruling coalition, its internal feuds came to a head after the conviction for bribery of its leading light, Vit Barta. A deputy prime minister, Karolina Peake, left with seven other deputies, amid growing concern about the party’s tactics and behaviour.

The immediate loser in this is the VV, which is now polling below the 5% threshold. Its association with ABL, a private security company founded by Mr Barta, does not help. ABL’s reputed expertise in the waters that flow murkily between officialdom, politics, business and intelligence has given the Czech language a new word: abelizace. Documents published last year by the newspaper Mlada fronta Dnes (and strenuously denied by Mr Barta) suggest that he instructed party members to inflate public contracts and pay kickbacks. Party members also seem to have bugged each others’ phones. The VV’s wobbles in the dying days of the coalition led to an outburst from the prime minister, Petr Necas, who termed it “untrustworthy, irrational and hysterical”.

Ms Peake and the defectors, plus a few others, were set to back the government in a confidence vote this week, giving it a narrow majority and postponing the early election demanded by the opposition Social Democrats, who are riding high in the opinion polls. But the government’s main task will be to restore public confidence before the scheduled election in 2014.

The three-party coalition took office in 2010 amid high hopes. Its large majority meant it would not be held hostage by individual lawmakers and those able to exert pressure on them. And it contained two new parties committed to blitzing sleaze: the VV and the TOP ’09 party.

Two years on, those hopes have shrivelled. The majority has splintered; scandals have spread. Local ODS and Social Democrat chiefs carved up municipal government in Prague for a time, leaving voters incensed. Corruption allegations—real or invented—are readily levelled and rarely investigated properly. They have become the principal political currency, with corrosive effects. Czechs are fed up with the standards of public life and with austerity policies aimed at getting the deficit below 3% of GDP next year. Polls show that 80% of people do not trust the government. A protest in Prague’s Wenceslas Square on April 21st was one of the largest since the 1989 revolution. But in those days the alternative was clearer and a lot more appealing.