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FBI phone hack is a VC dream come true

3 minute read

People wear protective masks due to the coronavirus disease (COVID-19) outbreak in Pattaya, Thailand March 27, 2020. Picture taken March 27, 2020. REUTERS/Soe Zeya Tun - RC2LTF9SPJIZ

Hong Kong, June 9 (Reuters Breakingviews) - The Federal Bureau of Investigation has been running a startup that would put Silicon Valley to shame. ANOM is a three-year-old joint venture read more with Australia’s Federal Police, 9,000 law-enforcement officers from 17 countries and a drug-trafficking smartphone-developer turned informant.

It tapped into the booming market for secure apps and devices. Just this Monday Apple (AAPL.O)touted its “legacy of privacy leadership” by showcasing new data-protection features.

The FBI’s crooked punters paid $1,700 for an encrypted device boasting a bespoke messaging app and a six-month subscription. It’s the type of hardware-meets-software business model that low-margin handset makers like China’s Xiaomi aspire to .

Word-of-mouth marketing would have kept costs low. ANOM’s active users tripled within months, helped by competitors routinely being shut down.

With tonnes of drugs seized, hundreds of people arrested and a treasure trove of criminal underworld data, the FBI probably hit its returns targets – with some ESG kudos to boot. Only trouble is, it’s a hard model to replicate. (By Robyn Mak)

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