Who at News America Hacked Floorgraphics? It's Elementary My Dear Watson

At the urging of New Jersey Senator Frank Lautenberg, the Justice Department is reopening its investigation of the hacking of Floorgraphics Inc. (FGI) by its News Corp-owned competitor, News America Marketing Group (NAM).

The investigation is potentially devastating to News Corp because it is their first reported crime in the U.S., and could lead to prosecution of top executives here, as well as stiff penalties against News Corp.

As BNET's Jim Edwards explains, News America set out to destroy Floorgraphics in 1999, according to its lawsuit.

At a meeting in July 1999, News’ Chief Executive Officer told FGI that News was interested in buying FGI, but if FGI refused to sell and chose instead to compete with News for in-store programs other than floor advertising — such as instant coupon machines, shelf ads, take ones or shopping cart placards — News would destroy FGI.

FGI chose to compete — and News America allegedly made good on its promise to kill FGI. The complaint:

“…on at least eleven separate occasions between October 2003 and January 2004, News intentionally, knowingly and without authorization breached FGI’s secure computer system and repeatedly accessed, viewed, took and obtained FGI’s most sensitive and private information concerning its past and upcoming advertising and marketing programs.”

NBC's Michael Isikoff picks up the story:

When the case went to trial, News America’s lawyer, Lee Abrams, did not dispute the hacking allegation. Instead, he told the jurors in his opening statement that “some person” gained entry to the website of Floorgraphics “through a firewall at News America Marketing headquarters,” adding “we don’t know who did the access.”

Actually, they probably do know who "did the access." Read carefully:

While confirming that “someone using a News America Marketing computer address” accessed Floorgraphics’ password protected computers, News America spokeswoman Halpin told NBC that “this site was available to hundreds, if not thousands, of Floorgraphics retailers, representatives of consumer packaged goods companies and Floorgraphics employees. There is considerable employee movement within this industry, and we believe it was someone with an authorized password. News America Marketing condemned this conduct, which is in violation of the standard of our company.”

This denial actually points to the hacker, if you avoid the deliberate red herring.

1. News America admits the hacking was done from behind the firewall at its headquarters.

2. News America inserts a red herring:

"this site was available to hundreds, if not thousands, of Floorgraphics retailers, representatives of consumer packaged goods companies and Floorgraphics employees."

It's no doubt true many of these people had user accounts that let them see their own information. But the hacking went beyond one client's data and allowed access to all FGI clients' data. The only logins that would provide FGI-wide access would belong to select FGI employees.

3. News America draws the same conclusion:

"we believe it was someone with an authorized password."

Aha! So was it an inside job? Not quite.

"There is considerable employee movement within this industry"

Get it? It was an FGI employee who physically took his or her "authorized password" to News America's headquarters and hacked FGI's computer from there.

This FGI employee might have still remained on FGI's payroll at the time of the hacking, or may have left FGI before or after. (S)he might have gone to work for News America, or taken a different job "within this industry."

If one went directly onto News America's payroll, case closed. In any event, FGI only had 60 employees at the time, and only a few had client-wide access, so it shouldn't be hard to narrow it down to the hacker.

As a tweedy English detective used to say, "It's elementary, my dear Watson."