Bits Blog: Study May Offer Insight Into Coca-Cola Breach

Spend enough time with cybersecurity experts and chances are you will hear some variation of this line: There are two types of companies in the United States, those that have been hacked and those that don’t yet know they’ve been hacked.

Government intelligence officials and cybersecurity specialists say hackers — predominantly from China — are siphoning gigabytes, if not terabytes, of data from companies in the United States every day. We count on much of this information to deliver the innovative products and services that will lead to new jobs and economic growth. The security software company McAfee estimates that in 2008 alone, companies around the world lost more than $1 trillion because of this sort of intellectual property theft.

“I’ve seen behind the curtain,” Shawn Henry, the Federal Bureau of Investigation.’s former top cyber agent, who recently joined the cybersecurity start-up CrowdStrike, told me in an interview in April. “I can’t go into the particulars because it’s classified, but the vast majority of companies have been breached.”

The problem is that such breaches rarely make headlines because companies fear what disclosure will mean for their stock price. Google was the first to try to change that mentality when, in 2010, it disclosed that it and 34 other companies, many based in Silicon Valley, had been attacked by Chinese hackers. Of those 34, only Intel and Adobe Systems came forward, and they provided few details.

Still, news of some breaches leak out. That was the case, most recently, with Coca-Cola. This month, Bloomberg News reported that Coca-Cola was breached by Chinese hackers in 2009 during a failed $2.4 billion takeover attempt of the China Huiyuan Juice Group. That attempted deal would have been the largest foreign acquisition of a Chinese company.

Now, a 2010 case study published by the Mandiant Corporation, a cybersecurity firm, may offer further details. The study, which does not mention Coca-Cola specifically, details a 2009 breach of a “Fortune 500 Manufacturer” that aligns almost perfectly with Bloomberg’s account of Coca-Cola’s breach.

According to the study:

In 2009, a U.S. based Fortune 500 manufacturing company initiated discussions to acquire a Chinese corporation. During the negotiations, APT [advanced persistent threat] attackers compromised computers belonging to the executives of the U.S.-based company, most likely in an effort to learn more details of the negotiations. Sensitive data left the company on a weekly basis during negotiations, potentially providing the Chinese company with visibility to pricing and negotiation strategies.

As Bloomberg reported, Mandiant’s study said the company gained knowledge of the breach only when law enforcement officials notified it of the intrusion. The study also details how hackers penetrated the company via a so-called spearphishing attack, in which the attackers sent e-mails to certain executives from a fake account ostensibly belonging to the chief executive.

According to Bloomberg, an e-mail containing the subject line: “Save power is save money! (from CEO)” was sent to the e-mail account of Bernhard Goepelt, Coca-Cola’s current general counsel. The e-mail contained a malicious link that, once clicked, downloaded malware that gave the attackers full access to Coca-Cola’s network.

Mandiant’s 2010 report said the e-mail “was crafted to look like it originated from a fellow employee and discussed a message from the CEO on conserving resources.”

Tal Be’ery, a senior Web researcher at Imperva, a data security firm, compared details of the Coca-Cola breach with Mandiant’s study and said the two accounts clearly referred to the same company. Executives at Mandiant and media officers at Coca-Cola did not return requests for comment.

If Mandiant’s study is, in fact, based on Coca-Cola, then it offers new insights into the breach. According to the study, once in, hackers used password-stealing software to gain access to other systems on the company’s network. They also used the compromised executive’s account to launch what is known as an SQL server attack, in which hackers exploit a software vulnerability and enter commands that cause databases to produce their contents.

But one of the most interesting aspects of the breach, according to Mandiant, was how well the attackers had concealed their tracks. According to Mandiant, hackers used so-called stub malware. This is an agile agent whose code can be tweaked by hackers to use it for various functions while leaving a small forensic footprint.

The one discrepancy between the Bloomberg and Mandiant accounts was why, ultimately, the company’s acquisition fell apart. According to Bloomberg, Coca-Cola’s takeover attempt of China Huiyuan Juice Group was thwarted because China’s Ministry of Commerce rejected it for antitrust reasons. Mandiant’s report offered a different take:

The intrusion had a significant impact on the victim organization. As a result of the compromise, the U.S. company terminated their acquisition plans. While it was not possible to determine all the data that had been lost, the victim company was not able to compete the acquisition and accomplish their business objectives.

Updated: In an e-mail, Kent J. Landers, a spokesman for Coca-Cola, said that the company does not comment on security matters, but said Coca-Cola did not complete its acquisition of China Huiyuan Juice Group ”as a result of the China Ministry of Commerce declining approval for the proposed transaction.”

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Media Decoder Blog: Robert Thomson to Be Chief of News Corporation's New Publishing Company

2:53 p.m. | Updated

Robert Thomson, the top editor at The Wall Street Journal and Dow Jones and a confidante of News Corporation’s chairman and chief executive, Rupert Murdoch, is expected to be named chief executive of the media conglomerate’s newly spun-off publishing company.

Mr. Thomson will run the separate, publicly traded company, which will include The Journal, The New York Post, HarperCollins and a suite of lucrative television assets in Australia. The announcement is expected as early as Monday, according to a person briefed on the company’s decision-making.

Mr. Thomson took over at The Journal in 2008, soon after News Corporation completed its $5.6 billion acquisition of Dow Jones. He serves as managing editor of The Journal and editor in chief of Dow Jones, which also publishes Barron’s and the Dow Jones Newswires.

Gerard Baker, a deputy managing editor at the Journal, will take over for Mr. Thomson at The Journal, said the person briefed on the decisions, who could not discuss private conversations publicly.

At The Journal, Mr. Baker has overseen Washington and political coverage, among other topics. He previously wrote a neoconservative column for The Times of London, also owned by News Corporation, and served as Washington bureau chief at The Financial Times, where Mr. Thomson was the top editor of the United States edition.

Mr. Thomson began his career at News Corporation in 1979 as a reporter at The Herald in Melbourne, Australia. He and Mr. Murdoch are both Australian, and have taken family vacations together. Mr. Murdoch is often seen in Mr. Thomson’s office in the Journal newsroom.

In his tenure at The Journal, Mr. Thomson increased circulation by broadening the newspaper’s focus beyond business to include more general-interest and lifestyle news. He oversaw an expansion of the newsroom budget, added photographs to go along with the paper’s signature dot drawings and introduced a local New York section.

Mr. Murdoch will serve as chairman of the publishing company and remain chief executive of the entertainment company, which will include News Corporation’s movie studio, Fox Broadcasting and cable channels like FX and Fox News.

News Corporation plans to complete its split, which was announced in June, in mid-2013. Additional announcements about the publishing company’s board and cash structure are expected before the end of the year.

A News Corporation spokeswoman declined to comment on the expected appointments. Reuters was the first to report on the expected appointments.

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Official Syrian Web Sites Hosted in U.S.

Even as Syrians lost access to the Internet on Thursday, people outside the country could still browse the Syrian government’s many Web sites for much of the day because they are hosted in foreign countries, including the United States.

By nightfall, after being contacted by The New York Times, several host companies said they were taking down those sites. They and similar companies had been identified in reports published by Citizen Lab, a research laboratory that monitors North American Web service providers that host Syrian Web sites.

For example, the Web site of SANA, the Syrian state news agency, is hosted by a Dallas company, SoftLayer Technologies. It is one of a handful of Internet providers based in the United States that sell their services, often unknowingly, to Web sites operated by the government of President Bashar al-Assad.

HostDime.com in Orlando, Fla., hosts the Web site of Syria’s Ministry of Religious Affairs. Jumpline.com hosts the site of the country’s General Authority for Development. The government of Hama, a city that has seen heavy clashes between rebels and government troops, operated its Web site through WeHostWebSites.com in Denver.

An executive order by President Obama prohibits American companies from providing Web hosting and other services to Syria without obtaining a license from the Treasury Department.

On Thursday, State Department officials confirmed that providing the services was a violation of the United States sanctions. “Our policies are designed to assist ordinary citizens who are exercising their fundamental freedoms of expression, assembly and association,” a spokesman, Mark C. Toner, said.

A SoftLayer spokesman, Andre Fuochi, would not comment about the SANA Web site, but in a statement he said the company “rigorously” enforces “prevailing laws and regulations and acts swiftly and vigorously if we find our users to be in violation.”

Dennis Henry, the vice president of operations at HostDime.com, said he had been unaware of the Syrian government Web site, but that it was hosted by a customer’s server housed in HostDime.com’s data center.

“We have contacted our direct client whose server is housing the Web site to express our concerns,” Mr. Henry said. On Friday, Mr. Henry said the company had removed the Web site.

Mike Griffin, an owner of Handy Networks, a wholesale Web service and the owner of WeHostWebSites.com, said he too had been unaware of the Syrian government Web site but had asked that it be removed.

“We comply with all U.S. sanctions, including those prohibiting the exportation of Web hosting services to Syria,” he said.

Upon being told of the Syrian Web site, Jumpline’s chief operating officer, Andy Mentges, said in an e-mail that it would be “shut down within the hour.”

The Internet shutdown across Syria on Thursday underscored how the 20-month conflict, which has left more than 40,000 people dead, has increasingly moved to the Web. Both sides use cyberattacks to advance their causes.

The hosting of government Web sites overseas represents a growing technological sophistication by the Assad government. “Look what they did with chemical weapons. They can do the same with communications,” said Robert B. Baer, a former C.I.A. operative based in the Middle East. “When the Syrians want to do something, they can do it.”

It is also likely that Syrian rebel and jihadi groups host Web sites inside the United States. The Syrian government appears to be aware that its Web sites are safer and easier to control when operated on servers inside the country.

In July, the Assad government ordered that all official Web sites be hosted inside Syria. But in case of an emergency or an Internet shutdown like the one on Thursday, the government also maintains Web sites based in the United States, Canada and Britain, said Helmi Noman, a senior researcher at Citizen Lab.

“This most recent Internet disruption in Syria highlights the issue of Web hosting and how the regime is able to make use of servers outside Syria to promote its message while locally hosted sites are down,” Mr. Noman said.

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Hacking Report Criticizes Murdoch Newspaper and British Press Standards

LONDON — The leader of a major inquiry into the standards of British newspapers triggered by the phone hacking scandal offered an excoriating critique of the press as a whole on Thursday, saying it displayed “significant and reckless disregard for accuracy,” and urged the press to form an independent regulator to be underpinned by law.

Dan Kitwood/Getty Images

Lord Justice Sir Brian Leveson on Thursday with his inquiry on press standards.

The report singled out Rupert Murdoch’s defunct tabloid The News of the World for sharp criticism.

“Too many stories in too many newspapers were the subject of complaints from too many people with too little in the way of titles taking responsibility, or considering the consequences for the individuals involved,” the head of the inquiry, Lord Justice Sir Brian Leveson, said in a 46-page summary of the findings in his long-awaited, 1,987-page report published in four volumes.

“The ball moves back into the politicians’ court,” Sir Brian said, referring to what form new and tighter regulations should take. “They must now decide who guards the guardians.”

The report was published after some 337 witnesses testified in person in 9 months of hearings that sought to unravel the close ties between politicians, the press and the police, reaching into what were depicted as an opaque web of links and cross-links within the British elite as well as a catalog of murky and sometimes unlawful practices within the newspaper industry.

“This inquiry has been the most concentrated look at the press this country has ever seen,” Sir Brian said after the report was made public.

But in a first reaction, Prime Minister David Cameron resisted the report’s recommendation that a new form of press regulation should be underpinned by laws, telling lawmakers that they “should be wary” of “crossing the Rubicon” by enacting legislation with the potential to limit free speech and free expression.

Mr. Cameron’s remarks drew immediate criticism from the leader of the Labour opposition, Ed Miliband, who said Sir Brian’s proposals should be accepted in their entirety.

Mr. Cameron ordered the Leveson Inquiry in July, 2011, as the phone hacking scandal at The News of the World blossomed into broad public revulsion with reports that the newspaper had ordered the interception of voice mail messages left on the cellphone of Milly Dowler, a British teenager who was abducted in 2002 and later found murdered. Sir Brian said there had been a “failure of management and compliance” at the 168-year-old News of the World, which Mr. Murdoch closed in July, 2011, accusing it of a “general lack of respect for individual privacy and dignity.”

“It was said that The News of the World had lost its way in relation to phone hacking,” the summary said. “Its casual attitude to privacy and the lip service it paid to consent demonstrated a far more general loss of direction.”

Speaking after the report was published, Sir Brian said that while the British press held a “privileged and powerful place in our society,” its “responsibilities have simply been ignored.”

“A free press in a democracy holds power to account. But, with a few honorable exceptions, the U.K. press has not performed that vital role in the case of its own power.”

“The press needs to establish a new regulatory body which is truly independent of industry leaders and of government and politicians,” he said. “Guaranteed independence, long-term stability and genuine benefits for the industry cannot be realized without legislation,” he said, adding: “This is not and cannot reasonably or fairly be characterized as statutory regulation of the press.”

In the body of the exhaustive report, reprising at length the testimony of many of the witnesses who spoke at the hearings, the document discusses press culture and ethics; explores the press’s attitude toward the subjects of its stories; and discusses the cozy relationship between the press and the police, and the press and politicians.

John F. Burns, Sandy Lark Turner and Sandy Macaskill contributed reporting.

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Peter Swire Named Mediator in Internet ‘Do Not Track’ Effort

Over the last few months, an international effort to give consumers more control over the collection of their online data has devolved into acrimonious discussions, name-calling and witch hunts.

Andrew Spear for The New York Times

Peter Swire, a law professor at Ohio State, was named as a mediator by the World Wide Web Consortium. The international group is trying to come up with standards that would allow Internet users to keep their online activities private from advertisers.

The idea was to work out a global standard for “Do Not Track,” a computer browser setting that would allow Internet users to signal Web sites, advertising networks and data brokers that they did not want their browsing activities tracked for marketing purposes.

But some industry executives involved in the negotiations have questioned the agenda of privacy advocates, saying their efforts threaten to undermine an advertising ecosystem that fuels free online products and services. At the same time, some technology experts and privacy advocates have accused industry executives of stalling and acting in bad faith.

Into this rancorous battle steps a new mediator, Peter Swire, a professor of law at Ohio State University and a former White House privacy official during the Clinton administration. On Wednesday, the World Wide Web Consortium, or W3C, the international consortium that has been trying to develop technical Do Not Track standards, said that Mr. Swire would take over as co-chairman of its Tracking Protection Working Group.

While parties on both sides welcomed the move, many said they were doubtful that Mr. Swire could bring opponents to agreement, especially at a time when some industry groups are questioning whether the W3C is an appropriate forum.

On one hand, industry executives have an interest in protecting “behavioral” ads, marketing pitches that use data about an individual’s online activities to tailor ads to that person. On the other hand, consumer advocates argue that Internet users should be able to limit that kind of online surveillance.

Mr. Swire, a former chief counselor for privacy at the Office of Management and Budget, said he hoped to strike a balance that was palatable to both sides. He said he viewed a Do Not Track system as a kind of digital equivalent to the Do Not Call list, a national registry in the United States through which consumers may opt out of phone solicitations.

“People can choose not to have telemarketers call them during dinner. The simple idea is that users should have a choice over how their Internet browsing works as well,” Mr. Swire said in a phone interview. But he added: “The overarching theme is how to give users choice about their Internet experience while also funding a useful Internet.”

Still, Mr. Swire may not be able to overcome the bitterness that remains among the negotiating parties after months of public accusations, personal attacks and recriminations.

Earlier this year at an event at the White House, industry representatives publicly committed to incorporating and honoring a browser-based Do Not Track system under certain conditions. The conditions included a requirement that individual users would actively choose to turn on a don’t-track-me setting. Industry groups also said any system should still permit companies to collect information about users’ browsing activities for market research and product development purposes.

But after months of wrangling with consumer advocates, industry representatives now say the W3C is not an appropriate forum for them to work out policy details, arguing that the group’s expertise is more technical than practical.

In an online discussion forum for the working group, for example, senior industry executives have suggested that respected technology experts are out of touch with commercial reality.

“The advocacy side of the group tends to lean toward absolutist terms and solutions,” Shane Wiley, the vice president for privacy and data governance at Yahoo, wrote in a message in September to Ed Felten, a professor of computer science and public affairs at Princeton University. “The real world isn’t that easy even if it feels that way in a classroom or a small lab.”

Then there are the technologists who say industry executives are playing down the privacy risks of online data-mining.

“For want of a better metaphor: you are the climate change skeptic of computer privacy,” Jonathan Mayer, a graduate student in computer science and law at Stanford University, wrote last month to Yahoo’s Mr. Wiley. “Unlike some of the more patient members of the group, I long ago ceased pretending you’re negotiating in good faith.”

Now the industry has begun an effort to distance itself from the W3C process and promote its own self-regulatory program that allows consumers to decline targeted advertising by installing opt-out buttons from dozens of member companies.

“We’ve seen the W3C falter,” said Mike Zaneis, the general counsel for the Interactive Advertising Bureau, an industry trade group. “So industry is redoubling its efforts to come up with a meaningful standard for browser controls.”

As the debate rages on, newer iterations of popular browsers like Microsoft’s Internet Explorer and Google’s Chrome have already installed Do Not Track settings for their users. But in the absence of accepted global standards for these systems, ad networks and data brokers are not yet honoring the don’t-track-me browser flags. Even Microsoft’s and Google’s own ad services don’t respond to such signals coming from their own browsers.

Although Mr. Swire said he hoped to spur progress, for the moment Do Not Track browser settings have no more significance than emoticons.

“Do Not Track is a work in progress,” Mr. Swire said. “So is the Internet.”

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Hypothermia and Carbon Monoxide Poisoning Cases Soar in New York After Hurricane Sandy

The number of cold-exposure cases in New York City tripled in the weeks after Hurricane Sandy struck compared with the same period in previous years, the health department reported in an alert to thousands of doctors and other health care providers on Wednesday.

And even though power and heat have been restored to most of the city, there are still thousands of people living in the cold, the department said.

The department warned health care providers that residents living in unheated homes faced “a significant risk of serious illness and death from multiple causes.”

The number of cases of carbon monoxide exposure, which can be fatal, was more than 10 times as high as expected the week of the storm and 6 times as high the next week, reflected in greater numbers of emergency department visits. Calls to the city’s poison center also increased, health officials said.

And as temperatures dip, health officials said the cold could lead to other health problems, including a worsening of heart and lung diseases and an increase in anxiety and depression.

“My bigger concern is what happens in the future as we get closer to winter in the next four weeks,” Dr. Thomas A. Farley, the city’s health commissioner, said in an interview. “There are probably about 12,000 people living in unheated apartments right now.”

Between Nov. 3 and 21, more than three times as many people visited emergency rooms for cold exposure as appeared during the same time periods from 2008 to 2011, the health department said. The storm hit on Oct. 29.

It took days before many elderly and disabled residents, trapped in cold, dark apartments without working elevators or phones, were visited by emergency responders and health workers. Some went to emergency rooms.

Dr. Farley said prolonged exposure to cold even slightly below room temperature could be deadly, and he urged residents of unheated apartments to consider relocating. He said they could find help by calling 311.

The alert said residents in cold apartments should wear layers of dry, loosefitting clothing. They should not use ovens or portable gas heaters because of the risks of fire and carbon monoxide.

The statistics were collected through a system that gathers major complaints daily from most of the city’s hospital emergency departments. The number of hypothermia cases reported to the system since the storm is 65, but that is considered an undercount.

Health department officials said the figure also did not reflect the much larger number of people whose underlying heart and lung problems had worsened in cold environments. An increase in asthma attacks, heart attacks and stroke would be more difficult to detect immediately. Officials said both the very young and older people, as well as people with chronic diseases, mental illness and substance use, were most at risk.

Dr. Farley said the increase in hypothermia cases was greatest immediately after the hurricane and during the cold period around the northeaster on Nov. 7.

Some people exposed to cold were treated at Staten Island University Hospital. “Our initial cases were people immersed in water, most in the process of being rescued,” said Dr. Brahim Ardolic, chairman of the hospital’s department of emergency medicine.

Makeshift efforts to keep warm also caused health problems. Many city residents without heat used stoves and, in some cases, generators indoors or in garages, leading to exposure to carbon monoxide, a colorless, odorless gas.

“It’s a really scary exposure because you usually don’t realize what happened,” Dr. Ardolic said. “It can be insidious enough that you can go to sleep and wake up, if you’re lucky, with a severe headache. If you’re unlucky, you just won’t wake up.”

One post-storm patient was Hazel Mintz, 90, who lives on the 12th floor of an apartment building in Far Rockaway, Queens, that lost heat. She was taken to the emergency room after the storm because of chest pain. Days later, after neighbors heard a carbon monoxide alarm and smelled something burning in Ms. Mintz’s empty apartment, a caregiver opened the door to find a blackened kettle atop a burner with a gas flame. “I put on the gas to warm up,” Ms. Mintz, who has recovered, said.

At St. John’s Episcopal Hospital in Far Rockaway, one of the areas hardest hit by the storm, 13 people have been treated for carbon monoxide exposure since the storm, including a family of three burning charcoal indoors to keep warm, said Dr. Rajiv Prasad, the emergency department director.

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Hypothermia and Carbon Monoxide Poisoning Cases Soar in New York After Hurricane Sandy

The number of cold-exposure cases in New York City tripled in the weeks after Hurricane Sandy struck compared with the same period in previous years, the health department reported in an alert to thousands of doctors and other health care providers on Wednesday.

And even though power and heat have been restored to most of the city, there are still thousands of people living in the cold, the department said.

The department warned health care providers that residents living in unheated homes faced “a significant risk of serious illness and death from multiple causes.”

The number of cases of carbon monoxide exposure, which can be fatal, was more than 10 times as high as expected the week of the storm and 6 times as high the next week, reflected in greater numbers of emergency department visits. Calls to the city’s poison center also increased, health officials said.

And as temperatures dip, health officials said the cold could lead to other health problems, including a worsening of heart and lung diseases and an increase in anxiety and depression.

“My bigger concern is what happens in the future as we get closer to winter in the next four weeks,” Dr. Thomas A. Farley, the city’s health commissioner, said in an interview. “There are probably about 12,000 people living in unheated apartments right now.”

Between Nov. 3 and 21, more than three times as many people visited emergency rooms for cold exposure as appeared during the same time periods from 2008 to 2011, the health department said. The storm hit on Oct. 29.

It took days before many elderly and disabled residents, trapped in cold, dark apartments without working elevators or phones, were visited by emergency responders and health workers. Some went to emergency rooms.

Dr. Farley said prolonged exposure to cold even slightly below room temperature could be deadly, and he urged residents of unheated apartments to consider relocating. He said they could find help by calling 311.

The alert said residents in cold apartments should wear layers of dry, loosefitting clothing. They should not use ovens or portable gas heaters because of the risks of fire and carbon monoxide.

The statistics were collected through a system that gathers major complaints daily from most of the city’s hospital emergency departments. The number of hypothermia cases reported to the system since the storm is 65, but that is considered an undercount.

Health department officials said the figure also did not reflect the much larger number of people whose underlying heart and lung problems had worsened in cold environments. An increase in asthma attacks, heart attacks and stroke would be more difficult to detect immediately. Officials said both the very young and older people, as well as people with chronic diseases, mental illness and substance use, were most at risk.

Dr. Farley said the increase in hypothermia cases was greatest immediately after the hurricane and during the cold period around the northeaster on Nov. 7.

Some people exposed to cold were treated at Staten Island University Hospital. “Our initial cases were people immersed in water, most in the process of being rescued,” said Dr. Brahim Ardolic, chairman of the hospital’s department of emergency medicine.

Makeshift efforts to keep warm also caused health problems. Many city residents without heat used stoves and, in some cases, generators indoors or in garages, leading to exposure to carbon monoxide, a colorless, odorless gas.

“It’s a really scary exposure because you usually don’t realize what happened,” Dr. Ardolic said. “It can be insidious enough that you can go to sleep and wake up, if you’re lucky, with a severe headache. If you’re unlucky, you just won’t wake up.”

One post-storm patient was Hazel Mintz, 90, who lives on the 12th floor of an apartment building in Far Rockaway, Queens, that lost heat. She was taken to the emergency room after the storm because of chest pain. Days later, after neighbors heard a carbon monoxide alarm and smelled something burning in Ms. Mintz’s empty apartment, a caregiver opened the door to find a blackened kettle atop a burner with a gas flame. “I put on the gas to warm up,” Ms. Mintz, who has recovered, said.

At St. John’s Episcopal Hospital in Far Rockaway, one of the areas hardest hit by the storm, 13 people have been treated for carbon monoxide exposure since the storm, including a family of three burning charcoal indoors to keep warm, said Dr. Rajiv Prasad, the emergency department director.

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U.S. Growth Revised Up, but Year-End Slowdown Is Feared

Even as the government said that the United States economy grew faster than first estimated in the third quarter, economists warned that the rate of expansion could slow sharply before the end of the year as worries mount about the fiscal impasse in Washington.

Nam Y. Huh/Associated Press

An employee on the assembly line this month at Generac Power Systems in Whitewater, Wis., a maker of residential generators.

The Commerce Department said Thursday that gross domestic product expanded at an annual rate of 2.7 percent in the three months ended Sept. 30, well above the 2 percent estimate it initially made in late October. But the revision was driven by increased inventory accumulation and a jump in federal spending — factors unlikely to be repeated in the current fourth quarter, economists said.

What’s more, the revised figures show spending by businesses on equipment and software declined by 2.7 percent in the third quarter, the first decrease since the end of the recession in mid-2009 and a sign of just how cautious many companies have become amid the uncertainty in Washington and slowing growth in Asia and Europe.

“It’s a nice headline number,” said Nigel Gault, chief U.S. economist at IHS Global Insight, of the 2.7 percent rate, “but it exaggerates the underlying momentum in the economy. Sustainable improvements in growth are not driven by inventories.”

The two biggest growth areas in the third quarter — inventory growth and federal spending — “are likely to be minuses in the fourth quarter,” he said. Mr. Gault expects the annual rate to sink to 1 percent this quarter, hurt by a fiscal stalemate in Washington as well as the aftereffects of Hurricane Sandy.

To be sure, there were signs of optimism in Thursday’s data. Residential fixed investment rose 14.2 percent, a sign that the housing recovery is gaining steam. Indeed, a separate report Thursday from the National Association of Realtors showed pending home sales rose to a two-and-a-half-year high.

And not all economists took a pessimistic view. “The economy certainly hasn’t taken off, but it’s nowhere close to a stall,” said David Kelly, chief global strategist for JPMorgan Funds. “The economy is still underperforming its full potential, but once we get past the ‘fiscal cliff’ uncertainty, we could see stronger growth next year.”

The new estimate of growth represents a substantial increase in the level of the second quarter, when the economy grew at a rate of just 1.3 percent. It also marks the fastest rate of expansion since the fourth quarter of 2011, when the economy grew at a 4.1 percent annual pace.

This was the second of the government’s three estimates of quarterly growth. The final figure is scheduled for Dec. 20.

“Over all, it was a disappointing report,” said Michelle Meyer, senior United States economist with Bank of America Merrill Lynch.  The accumulation of inventories went from subtracting 0.1 percentage points from the initial estimate to adding 0.8 percentage points, she said.

    “A lot of that inventory build was unintentional, which suggests a downside risk for the fourth quarter,” she said.  “Businesses had expected stronger sales and consumer spending and were caught off guard."

    Ms. Meyer said she expected the economy to grow by 1 percent in the fourth quarter and 1 percent in the first quarter of 2013, well below the level needed to bring down the unemployment rate, which stood at 7.9 percent in October.

    On Thursday, the government also reported that first-time unemployment claims dropped by 23,000 to 393,000 last week. But Ms. Meyer cautioned that these figures were much more volatile than usual because of the Thanksgiving holiday as well as Hurricane Sandy.

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As Opposition Meets in Cairo, More Violence Mars Syria

The Syrian opposition pushed ahead on military and political fronts on Wednesday, as rebels shot down a government warplane in the north of Syria and a newly formed coalition started talks in Cairo on how to pick a transitional government to replace that of President Bashar al-Assad.

The coalition, whose official name is the National Coalition of Syrian Revolutionary and Opposition Forces, was formed at a meeting in Qatar earlier this month, and has already been anointed with official recognition from Britain, France, Turkey and the members of the Gulf Cooperation Council. But in order to encourage further recognition internationally, it must tackle the broader problem of uniting multiple groups in exile and rebels on the ground in Syria.

That challenge was apparent on the first day of what are expected to be two days of talks in Egypt. Disagreements emerged over the composition of the coalition when the Syrian National Council, one of its members, tried to increase the number of its representatives.

“Nothing will proceed until we work this out,” said one council member at the talks, who spoke to Reuters on condition of anonymity.

The talks took place against the backdrop of a 20-month civil war in which about 40,000 people have been killed so far in clashes between armed rebels and jihadist forces on one side and Mr. Assad’s military on the other. The conflict has flared at various times along Syria’s borders with Lebanon, Israel, Turkey and Jordan and in most of the country’s cities, including deadly car bombings on Wednesday near Damascus, the capital.

In Turkey, once an ally of the Assad government, a team of NATO inspectors visited sites on Wednesday where the alliance might install batteries of Patriot antiaircraft missiles that Turkey, a member, has requested to prevent any incursions by the Syrian air force, which has become the Assad government’s main weapon against the rebels. Patriot missiles have also been discussed as a way of enforcing a no-fly zone over rebel-held areas of Syria near the Turkish border if one is imposed.

Meanwhile, opposition politicians gathered in a Cairo hotel to shape an alternative government. Ahmad Ramadan, a member of the national council, said in an interview with Radio Sawa, an Arabic-language broadcaster sponsored by the United States government, that the talks were more likely to decide on the selection process than to choose actual candidates.

Khaled Khoja, a coalition member attending the talks, said: “I don’t think we’ll be discussing the election of a transitional government during the meeting today. We’re still discussing whether to have a government or to have committees instead.”

State media said on Wednesday that at least 34 people, and possibly many more, died in the two car bombings in Jaramana, a suburb of Damascus that is populated by minorities.

The official SANA news agency said the explosions struck at about 7 a.m. and were the work of “terrorists,” the word used by the authorities to denote rebel forces seeking the overthrow of President Assad.

The agency said the bombings were in the main square of Jaramana, which news reports said is largely populated by members of the Christian and Druse minorities. Residents said the neighborhood was home to many families who have fled other parts of Syria because of the conflict and to some Palestinian families. The blasts caused “huge material damage to the residential buildings and shops,” SANA said.

The death toll was not immediately confirmed. An activist group, the British-based Syrian Observatory for Human Rights, initially said that 29 people had died but revised the figure later to 47, of whom 38 had been identified. Of the 120 injured, the rebel group said, 23 people were in serious condition, meaning that the tally could climb higher.

There were also reports from witnesses in Turkey and antigovernment activists in Syria that for the second successive day insurgents had shot down a government aircraft in the north of the country, offering further evidence that the rebels are seeking a major shift by challenging the government’s dominance of the skies. It was not immediately clear how the aircraft, apparently a plane, had been brought down.

Video posted on the Internet by rebels showed wreckage with fires still burning around it. The aircraft appeared to show a tail assembly clearly visible jutting out of the debris. Such videos are difficult to verify, particularly in light of the restrictions facing reporters in Syria. However, the episode on Wednesday seemed to be confirmed by other witnesses.

“We watched a Syrian plane being shot down as it was flying low to drop bombs,” said Ugur Cuneydioglu, who said he observed the incident from a Turkish border village in southern Hatay Province. “It slowly went down in flames before it hit the ground. It was quite a scene,” Mr. Cuneydioglu said.

Video posted by insurgents on the Internet showed a man in aviator coveralls being carried away. It was not clear if the man was alive but the video said he had been treated in a makeshift hospital. A voice off-camera says, “This is the pilot who was shelling residents’ houses.”

The aircraft was said to have been brought down while it was attacking the town of Daret Azzeh, 20 miles west of Aleppo and close to the Turkish border. The town was the scene of a mass killing last June, when the government and the rebels blamed each other for the deaths and mutilation of 25 people. The video posted online said the plane had been brought down by “the free men of Daret Azzeh soldiers of God brigade.”

On Tuesday, Syrian rebels said they shot down a military helicopter with a surface-to-air missile outside Aleppo and they uploaded video that appeared to confirm that rebels have put their growing stock of heat-seeking missiles to effective use.

In recent months, rebels have used mainly machine guns to shoot down several Syrian Air Force helicopters and fixed-wing attack jets. In Tuesday’s case, the thick smoke trailing the projectile, combined with the elevation of the aircraft, strongly suggested that the helicopter was hit by a missile.

Rebels hailed the event as the culmination of their long pursuit of effective antiaircraft weapons, though it was not clear if the downing on Tuesday was an isolated tactical success or heralded a new phase in the war that would present a meaningful challenge to the Syrian government’s air supremacy.

Hala Droubi reported from Dubai, United Arab Emirates. Alan Cowell contributed reporting from Paris; Sebnem Arsu contributed reporting from Istanbul, and Hania Mourtada from Beirut, Lebanon.

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Dark Warnings About Future of Internet Access

PARIS — A commercial and ideological clash is set for next week, when representatives of more than 190 governments, along with telecommunications companies and Internet groups, gather in Dubai for a once-in-a-generation meeting.

The subject: Control of the Internet, politically and commercially.

The stated purpose of the World Conference on International Telecommunications is to update a global treaty on technical standards needed to, say, connect a telephone call from Tokyo to Timbuktu. The previous conference took place in 1988, when the Internet was in its infancy and telecommunications remained a highly regulated, mostly analog-technology business.

Now the Internet is the backbone for worldwide communications and commerce. Critics of the International Telecommunication Union, the agency of the United Nations that is organizing the meeting, see a dark agenda in the meeting. The blogosphere has been raging over supposed plans led by Russia to snatch control of the Internet and hand it to the U.N. agency.

That seems unlikely. Any such move would require an international consensus, and opposition is widespread.

Terry D. Kramer, the former Vodafone executive who is the United States ambassador to the conference, has vowed to veto any change in how the Internet is overseen.

Analysts say the real business of the conference is business. “The far bigger issue — largely obscured by this discussion — are proposals that are more likely to succeed that envision changing the way we pay for Internet services,” Michael Geist, an Internet law professor at the University of Ottawa, said by e-mail.

Hamadoun Touré, secretary general of the I.T.U., has repeatedly said that the U.N. group has no desire to take over the Internet or to stifle its growth. On the contrary, he says, one of the main objectives of the conference is to spread Internet access to more of the four and a half billion people around the world who still do not use it.

And yet, groups as diverse as Google, the Internet Society, the International Trade Union Confederation and Greenpeace warn that the discussions could set a bad precedent, encouraging governments to step up censorship or take other actions that would threaten the integrity of the Internet.

“This is a very important moment in the history of the Internet, because this conference may introduce practices that are inimical to its continued growth and openness,” Vinton G. Cerf, vice president and chief Internet evangelist at Google, said in a conference call.

Google set up a Web site last week, “Take Action,” encouraging visitors to sign a petition for a “free and open Internet.” The campaign is modeled on the successful drive last winter to defeat legislative proposals to crack down on Internet piracy in the United States.

More energy is expected to be spent on how companies make money off the Internet. In one submission to the conference, the European Telecommunications Network Operators’ Association, a lobbying group based in Brussels that represents companies like France Télécom, Deutsche Telekom and Telecom Italia, proposed that network operators be permitted to assess charges for content providers like Internet video companies that use a lot of bandwidth.

Analysts say the proposal is an acknowledgment by European telecommunications companies that they cannot hope to provide digital content. “The telecoms realize that they have lost the battle,” said Paul Budde, an independent telecommunications analyst in Australia. “They are saying, ‘We can’t beat the Googles and the Facebooks, so let’s try to charge them.’ ”

The European lobbying group says that without the new fees, there will be no money to invest in network upgrades needed to deal with a surge in traffic. Regulators have required European telecommunications operators to open their networks to rivals, and the market for broadband is fiercely competitive, with rock-bottom prices.

In the United States, by contrast, most telecommunications companies have been permitted to maintain local monopolies — or duopolies, with cable companies — in broadband, keeping prices higher. And American regulators have ordered broadband providers to give equal priority to all Internet traffic. Such “network neutrality” is incompatible with charging content providers for moving their bits of data.

Analysts say this may explain why American telecommunications companies have not joined the European call for a new business model. “Models that try to force payment terms between nations and telecom operators run a huge risk of cutting off traffic,” Mr. Kramer said in an interview. “Liberalized markets are the only way to expand the success of the Internet.”

People who have been briefed on the conference submissions say that not a single European government delegation has endorsed the telecommunications operators’ proposal, and the European Parliament has passed a resolution denouncing it. Only governments, not private groups or companies, can put items on the meeting agenda.

While many documents prepared for the conference remain secret, several people who have seen submissions say there is broad support for Internet connection fees in French-speaking Africa and among Arab nations — countries in which many telecommunications companies are still owned or heavily regulated by governments.

Much of the attention before the 12-day conference has focused on a proposal from Russia that would effectively remove control of the Internet’s infrastructure from a collection of decentralized and apolitical organizations, mostly based in the United States. “Member states,” Russia proposed, “shall have equal rights to manage the Internet, including in regard to the allotment, assignment and reclamation of Internet numbering, naming, addressing and identification resources.”

Those functions are performed by the Internet Corporation for Assigned Names and Numbers, a private organization with an international board that operates under contract with the United States government.

The Russian proposal was widely interpreted as a call to legitimize domestic censorship of the Internet. Yet analysts note that governments inclined to filter the Web, like China and Iran, have not waited for consensus in an international meeting to do so.

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