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CYBER WARS
Israeli hacking school trains cyber warriors
by Staff Writers
Hadera, Israel (AFP) Dec 02, 2013


Israeli hi-tech surfing wave of buyer interest
Jerusalem (AFP) Dec 02, 2013 - Israeli hi-tech has become the target of a buying frenzy, with startups sparking investment bids and a flurry of mergers and acquisitions unseen since the dotcom bubble burst in 2000.

New ventures raised $660 million (486 million euros) in the third quarter of 2013, up from $488 million over the same period a year earlier, according to IVC Research Centre, the main Israeli database on the subject.

And interest in small, innovative Israeli companies shown by US hi-tech heavyweights and other international players appears to be growing.

While nine Israeli startups were snapped up for more than $400 million between 2003 and 2011, six businesses were sold for well over that amount this year alone.

The latest acquisition was that of PrimeSense, a 3D motion-sensing firm which was purchased by Nasdaq-heavyweight Apple for an undisclosed amount estimated at around $360 million (265 million euros).

Six weeks beforehand, Facebook paid an estimated $150 million (110 million euros) for another Israeli startup called Onavo.

And in September, IBM completed the acquisition of security software provider Trusteer for a billion dollars, on the heels of Google's purchase crowd-sourced map app Waze for a reported $1.3 billion.

A growing number of hi-tech companies of Israeli origin are being listed on foreign equity markets, including the London Stock Exchange and Nasdaq in New York.

"The sector as a whole is growing briskly, particularly in the United States where the Nasdaq is well up, and significant funds are invested in hi-tech," said Yossi Vardi, a prominent Israeli hi-tech entrepreneur.

"The big players in the market are in fierce competition with one another," he added.

"They are looking for innovative new companies and come to Israel to find and buy them."

The majority of buyers are from across the Atlantic, IVC director Koby Simana said.

"Most of the funds invested today in Israeli hi-tech companies come from foreign investors, mostly US venture capital funds," he said.

The close cooperation between Israeli hi-tech companies and universities such as the Technion technological institute in Haifa account for a large number of success stories.

Israel's Silicon Valley

The area around the northern port city has become known as a second Silicon Valley due to its concentration of start-ups, R&D centres and young graduates, Simana says.

Companies such as Intel, IBM, Microsoft and Yahoo have set up offices around the Technion and recruit students directly out of school or even as they pursue their studies.

"These young people are ambitious, they are not afraid to take risks, they want to constantly innovate," said Vardi, a member of the Technion board.

Some analysts believe that massive acquisitions of Israeli startups by large foreign corporations stifle the spread of the hi-tech sector's energy to the broader Israeli economy, but Simana sees the downside as limited.

"It is true that there have been some spectacular exits but in most cases entrepeneurs who managed to get a startup on its feet (and sell it) have then restarted the cycle, creating positive fallout for the Israeli economy," he said.

"I do not know of any other economic sectors in Israel that attract investors from the American, European and Asian markets," he added.

Three hooded hackers hunch over their computer screens in the control room at Israel's new state-of-the-art "Cyber Gym", where IT and infrastructure company employees train to defend against cyber attacks.

The facility, a series of small buildings in the shadow of the looming Orot Rabin power station on Israel's northern coastline, was inaugurated this month by the Israel Electric Corp (IEC), which has experienced its fair share of cyber attacks.

"Israel, we believe, is the most-attacked country," Cyber Gym director Ofir Hason told AFP.

"And as the most-attacked civilian company in Israel, this gives us the unique capabilities to train other companies around the world" to defend against system hacking.

IEC itself is subjected to some 10,000 attacks per hour, CEO Eli Glickman said, and the Cyber Gym's instructors are well-versed in the art of cyber warfare.

"We're a group of professionals from the army, security services and (straight) from university," said an instructor who called himself "Mister" and refused to show his face on camera.

Mister launches simulated attacks against the computer systems of the trainees, who sit in an adjacent building.

"It's a playground to simulate real cyber attacks," he said while seated in the "attack room" -- a computer nerd's paradise, decorated with Star Wars and Pac-Man murals and lines of code running off wall-mounted screens that show the hacking taking place live.

But the work is serious -- Cyber Gym's launch was attended by members of Israel's intelligence community -- and is designed to put trainees under as much pressure as possible.

Trainees -- mostly IT and systems workers from energy and infrastructure companies -- sit in the "defence room" experiencing the hacks in real time, and their progress is scrutinised by another instructor, who refers to himself only as "A".

"Each attack is different, so there's no way for the defence teams to cheat. There's no set scenario or scripted attack; they're performed in a different way, live, by the hackers next door," he said.

"If the hackers succeed, the lights go off and the system shuts down," he says, in what is a simulation of just one potential result of a successful attack.

Plunging the room into darkness is one of a number of ways the centre shows the practical outcome of a cyber attack, which can often be forgotten when the fight is conducted in the ether.

"An attack could end with damage to equipment, or a blackout around Israel," Hason said.

"In the cyber arena, when you fail to protect your system, the influence could be physical damage to your system."

'Future battle will be in cyber space'

Israel's politicians and generals often warn of the dangers of hacking.

Last month, the armed forces chief of staff painted a grim picture of a future war in which the Jewish state comes under simultaneous attack both on the ground and in cyber space.

"It is possible that there will be a cyber attack on a site supplying the daily needs of Israeli citizens; that traffic lights would stop working or the banks would be paralysed," Lieutenant General Benny Gantz told a security conference in October.

Around the same time, the Israeli security services reportedly thwarted a cyber attack and an attempt at industrial espionage that originated in China.

And in June, Prime Minister Benjamin Netanyahu accused arch-enemy Iran of stepping up cyber attacks against Israel, including through its Lebanese ally Hezbollah.

But Cyber Gym and IEC executives were tight-lipped about where most of the attacks against their systems come from.

From "all over the world", said Glickman, declining to give specifics.

Energy Minister Silvan Shalom, who attended Cyber Gym's inauguration, was equally enigmatic.

"We can't give you any specific details," he said.

For now, Cyber Gym is primarily reaching out to Israeli companies, but it is hoping to branch out further.

"There's a possibility it will be opened up to American companies, western Europe, eastern Europe and Asia," IEC vice president Yaakov Haim told AFP.

In the meantime, the trainees are working hard amid a tranquil setting of green lawns and fruit trees laden with unpicked oranges, on the front lines of a new battlefield.

Asked whether Israel was more concerned about a physical or a virtual attack, Shalom said: "I think the future battle will be in cyber space."

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