The 10 Top News Stories Of 2019 (So Far)

Cloud outages, the JEDI cloud contract controversy, blockbuster vendor and channel acquisitions, the rise of Everything-as-a-Service and a wave of attacks against MSPs are among the top news stories so far in 2019.

2019 So Far

With digital transformation driving businesses of all sizes and shapes to leverage IT to disrupt competitors, these are good days for the IT industry and for the channel.

And yet there is turbulence. IT vendors are finding themselves caught in the tariff war between the U.S. and China. Industry giants like Facebook and Google are coming under increased scrutiny from lawmakers. Some cloud companies continue to experience disruptive service outages. And MSPs have become the latest attack vector in the never-ending barrage of cyberattacks.

Here's our lineup for the 10 top news stories of 2019 (so far). Take a look and see if you agree with our choices.

To see how many of these stories made the year-end list, click here.

10. Regulatory Scrutiny Of Internet Giants On The Rise

In July Facebook agreed to pay a $5 billion penalty to settle Federal Trade Commission allegations that the social media giant mishandled user privacy practices and lost control over huge amounts of user data.

The record fine paid by Facebook is the most visible example of a growing wave of scrutiny and anticipated investigations of tech giants Facebook, Google, Amazon and Apple in such areas as data privacy and antitrust actions.

In July the U.S. Justice Department said it is scrutinizing "leading online platforms" to determine whether they are abusing their dominant positions in the market—potentially taking aim at the four big companies. Earlier reports have said that the Justice Department is specifically looking at Apple and Google while the FTC is undertaking investigations of Facebook and Amazon.

All this comes on top of ongoing antitrust actions brought by the European Commission, the governing body of the European Union. In March the EC hit Google with a $1.69 billion fine for allegedly stifling competition in online advertising. And the EC just opened an investigation of Amazon for possible anti-competitive behavior relating to alleged use of data from independent retailers that use the Amazon marketplace.

9. Service Outages Hit Salesforce, Google Cloud, Slack

Cloud computing and the internet have become integral to how people work today. So much so that service interruptions with cloud services are no longer just disruptive, they can bring business to a complete halt.

And there have been a number of such incidents in 2019 so far. Salesforce grappled with the worst service disruption in its history for several days in late May, leaving sales agents and marketers around the world unable to access customer information.

Cloudflare, which provides content delivery network services for millions of websites, experienced a massive outage June 24 that brought much of the internet to its knees.

Several core Microsoft cloud services, including compute, storage, application development, Active Directory and SQL database services, were hit by a nearly three-hour DNS outage May 2 that also impacted the vendor's Microsoft 365 and Dynamics 365 cloud applications.

Google Cloud services, including G Suite and YouTube, failed for about four hours June 2 when cascading errors created a network congestion problem.

And on June 28 Slack, the widely popular collaboration platform used by millions of office and remote workers, suffered disruptions across its services, forcing workers to find alternative ways to communicate and, in some cases, actually talk to each other.

8. Huawei At The Center Of U.S.-China Trade Dispute

The U.S.-China trade skirmish is one of the biggest economic news stories of 2019. While many IT companies have been caught up in the tariff tiff—President Donald Trump recently tweeted that he would not grant Apple a tariff waiver for MacPro parts manufactured in China, for example—Chinese tech giant Huawei was often in the middle of the deteriorating U.S.-China trade relationship.

Early in the year the U.S. Department of Commerce blacklisted Huawei from buying components and software from U.S. tech companies like Qualcomm and Microsoft. The Chinese manufacturer of networking equipment and mobile devices said that could cost the company as much as $30 billion in lost revenue over the next two years. The company is also the subject of proposed legislation in the U.S. House of Representatives and U.S. Senate that would prevent U.S. companies from selling technology to Huawei.

Last year Trump signed into law Section 889 of the National Defense Authorization Act, which blocks federal agencies and their contractors from procuring Huawei's telecommunications equipment and services. This year the Trump administration has taken that a step further by trying to convince allied countries to do the same. In March Huawei sued the U.S. government over the ban, calling it "unlawful."

In January the U.S. Department of Justice filed formal criminal charges against Hauwei including theft of trade secrets conspiracy and obstruction of justice. A separate 13-count indictment against Huawei and Chief Financial Officer Meng Wanzhou—daughter of Huawei founder Ren Zhenfei—including charges of bank fraud, wire fraud, conspiracy to commit money laundering and violation of the International Emergency Economic Powers Act.

In addition to all this, in December CFO Meng was detained in Vancouver, Canada, on U.S. charges for allegedly defrauding multiple financial institutions in breach of U.S.-imposed sanctions on doing business with Iran. Meng remains in Canada with extradition hearings scheduled for 2020.

7. Intel-AMD Battle Heats Up

On Aug. 7 AMD unveiled the latest generation of its EPYC processors, new 7-nanometer products with 64 cores that the company boasted provide higher performance and lower cost of ownership in the data center compared with Xeon chips from rival Intel.

It was the latest shot in what's become a heated battle between Intel, the longtime market leader in the microprocessor market, and AMD, which has been pushing the envelope of microprocessor technology.

Forrest Norrod, executive vice president and general manager of AMD's Data Center and Embedded Solutions Business Group, told attendees at the AMD EPYC Rome launch that the new processor “kicks a**.”

There's a class of customers for whom I think they're going to really be surprised to see how much this thing kicks a** in Java,” said Norrod in an interview with CRN.

The same week AMD debuted its new EPYC chips for the all-important server market, Intel debuted a lineup of next-generation Xeon Scalable processors, code named Cooper Lake, with 56 cores for high-performance computing and artificial intelligence workloads.

In the face of the increased competition, Intel has been highlighting its recent customer and ecosystem wins and touting the advantages of the company's data-centric platform strategy with its expanding portfolio of CPUs, memory, accelerators and software. In a CRN interview in July Intel U.S. Channel Chief Jason Kimrey told CRN that channel partners should look past point technologies or benchmarks and bet on Intel's comprehensive platform story.

6. Pentagon’s Massive JEDI Cloud Contract Is Caught In AWS Versus Oracle Political Crossfire

The Department of Defense had expected to award its JEDI (Joint Enterprise Defense Initiative) contract to either Amazon Web Services or Microsoft in August. But it’s become increasingly apparent that will not be the case.

JEDI, the Pentagon's massive cloud transformation initiative with a potential value of $10 billion, has been a long-running saga with court challenges, investigations and—the latest—hints from President Donald Trump that he might get involved.

Much of the JEDI news this year involved Oracle's ongoing opposition to the Pentagon's plan to award the entire contract to a single vendor. Oracle also alleged that AWS recruited DoD officials to influence the award process and so should be declared ineligible, prompting investigations by the Pentagon and— reportedly— the Federal Bureau of Investigation, leading to more delays in the contracts award.

A federal judge rejected Oracle's legal challenges in July, seemingly clearing the way for a final award decision. But a new challenge arose in May when the U.S. House of Representatives subcommittee responsible for advancing military spending bills indicated that it might block JEDI funding unless the Pentagon CIO explains how the single-vendor contract will avoid vendor lock-in.

In July Trump waded into the JEDI controversy when he said he had heard the complaints from Oracle and other companies opposed to the plan to award the entire cloud contract to a single vendor and that he would look closely at the plan. In August newly confirmed Defense Secretary Mark Esper was reported to be taking a hard look at the contract, possibly setting the stage for yet more delays.

Finally, on Aug. 13, a multidisciplinary team at the Inspector General’s office will dig further into allegations of conflicts of interest, putting an indefinite pause on what was to be this month's delivery of the potentially massive contract to modernize military computing infrastructure to either Amazon Web Services or Microsoft.

"Our review is ongoing and our team is making substantial progress," said the Defense Department’s IG spokesperson, Dwrena Allen, in a statement. "We recognize the importance and time-sensitive nature of the issues, and we intend to complete our review as expeditiously as possible."

5. Microsoft Rescinds Decision To End Internal Use Rights

Just one week before its Inspire 2019 partner conference, Microsoft surprised its huge channel community when it disclosed that it would no longer offer free product licenses for internal business use by partners. The company cited the shift to cloud-based products as one reason for eliminating the internal use rights (IUR) program, although the high costs of delivering and support the software was also cited as a major factor in the decision.

The news created an uproar among channel partners, who said IUR provided valuable opportunities to gain hands-on experience with Microsoft software and deploying and testing applications in production environments. Some partners said they would abandon their Microsoft Action Pack subscriptions because of the elimination of the IUR, and an online petition protesting the move quickly gained hundreds of partner signatures.

The blowback increased throughout the week. Microsoft Channel Chief Gavriella Schuster (pictured) acknowledged that the feedback on the IUR elimination had "not been good." Five days after the original announcement, Microsoft reversed course and rescinded its decision on ending the longtime channel benefit.

In a blog post, Schuster said the decision was made after hearing feedback from partners in recent days. "We listened to you, and we have acted," she said.

"Your partnership and trust matters to us. Given your feedback, we have made the decision to roll back all planned changes related to internal use rights and competency timelines that were announced earlier this month," Schuster said. "This means you will experience no material changes this coming fiscal year, and you will not be subject to reduced IUR licenses or increased costs related to those licenses next July as previously announced."

4. Salesforce $15.7B Deal For Tableau Leads A Number Of Blockbuster Acquisitions

Cloud application behemoth Salesforce rocked the industry when in June it struck a deal to acquire Tableau Software for a whopping $15.7 billion. The companies said the combination of Salesforce's CRM applications and Tableau's business analytics and data visualization software would make Salesforce a digital transformation powerhouse. (The deal was completed Aug. 1.)

Major acquisitions frequently make the headlines in the IT industry and so far 2019 has certainly had its share with the Salesforce-Tableau deal just one of a number of major acquisition deals to be unveiled or completed so far in 2019.

In July IBM wrapped up its $34 billion acquisition of open-source software developer Red Hat, a deal that was unveiled in October, after clearing all necessary regulatory hurdles. Also in July, wireless carriers T-Mobile and Sprint won government approval for their long-gestating $26.5 billion merger. And in February AT&T won its long legal battle with the Justice Department over its 2018 purchase of Time Warner, making that $85.4 billion acquisition a done deal.

In early August semiconductor manufacturer Broadcom, which stunned everyone in 2018 with its $18.9 billion acquisition of software giant CA Technologies, struck again with a deal to buy Symantec's enterprise business for $10.7 billion, a move that will break up the world's largest pure-play cybersecurity vendor.

Google has been in shopping mode this year to boost its Google Cloud business, striking deals to buy Looker Data Sciences for $2.6 billion and cloud file storage company Elastifile for an undisclosed sum. In May Hewlett Packard Enterprise agreed to acquire supercomputer maker Cray for $1.3 billion and in August bought the business assets of Hadoop platform developer MapR Technologies for an undisclosed price tag. Apple made a big move to control its own destiny with communications chips with an agreement to buy a majority of Intel's smartphone modem business for $1 billion. And Salesforce, not stopping with the Tableau buy, agreed to buy Israeli service management application developer ClickSoftware for $1.35 billion.

3. Channel Consolidation

Merger and acquisition activity has been equally brisk in the channel this year as systems integrators, strategic service providers and solution providers have gone shopping for channel companies to expand their product and service offerings, extend their expertise and enlarge their customer base.

IT services giant Capgemini, for example struck a deal in June to acquire engineering and R&D services provider Altran for $4.1 billion. That acquisition, expected to be completed by the end of the year, will bring more operations technology expertise to Capgemini and build up its service offerings in engineering and R&D.

DXC Technology began 2019 with an agreement to acquire Luxoft, a Switzerland-based digital consulting firm, for $2 billion and closed the acquisition in June. Channel leaders Insight Enterprises and PCM—No. 14 and No. 30, respectively, on the CRN Solution Provider 500—struck a blockbuster deal in June for Insight to buy PCM for $581 million.

Corsica Technologies made a bid to become a leading next-generation IT services provider with a deal in April to buy EDTS and EDTS Cyber, a top MSP and MSSP. In July Houston-based solution provider Computex Technology Solutions agreed to be acquired by Pensare Acquisition for $65 million in cash, stock and assumed debt. And in August DXC spinoff Perspecta completed its first acquisition, buying solution provider Knight Point Systems for $250 million.

2. The Everything-As-A-Service Channel Revolution

The channel has been moving steadily away from reselling IT products to providing strategic services such as systems design and implementation, business process consulting and digital transformation. But in 2019 the move to Everything as a Service, providing IT on a pay-as-you-go basis, accelerated as major IT vendors launched and expanded their Everything-as-a-Service programs, offering channel partners new ways to sell and deliver IT.

Hewlett Packard Enterprise, arguably the pace-setter with its GreenLake pay-per-use model, doubled down on the program this year with its pledge to transform its entire portfolio to as a service by 2022. The sales offensive, including a version of GreenLake for the midmarket and a Network-as-a-Service version of GreenLake from Aruba, is aimed at taking the GreenLake model from hundreds of partners to thousands.

Dell Technologies made a big leap into the Everything-as-a-Service realm in April with the debut of the Dell Technologies Cloud Platform, a hybrid cloud system built on the company's VXRail hyper-converged infrastructure. Customers can buy the cloud system components on an as-a-service basis or through the Flex on Demand pay-per-use program. Dell also unveiled Cloud Data Center as a Service, a new on-premise, consumption-based offering.

Lenovo, meanwhile, launched its TruScale Infrastructure Services, a consumption-based, Infrastructure-as-a-Service offering aimed at driving channel sales and competing with HPE GreenLake and other pay-per-use sales models. TruScale, launched in April, allows customers to use and pay for on-premises data center hardware and services without having to purchase equipment or take capital ownership of the hardware.

HP Inc. has been on board the as-a-service train with its Device-as-a-Service offerings and managed print services. HP CEO Dion Weisler told CRN about the move to the as-a-service model: "There is really no alternative."

1. MSPs At Risk

MSPs have completely reshaped the channel, providing mission-critical outsourced services to help customers reduce costs and increase sales. But in 2019 a series of security breach incidents put the spotlight on a potential downside to the rise of MSPs: Cybercriminals are targeting MSPs and using the tools they use to manage customer IT systems as vehicles to attack their customers.

A wakeup call came in April when Wipro, the giant India-based solution provider, acknowledged that employee accounts had been hacked in a phishing campaign. Wipro's systems were then used to launch attacks against at least a dozen of the company's IT outsourcing customers.

Wipro had fallen prey to a multimonth intrusion from an "assumed state-sponsored attacker," according to KrebsOnSecurity. Wipro said it was able to detect and respond to the threat and limit the damage, but the incident highlighted the potential danger.

CRN shined the spotlight on the risks facing MSPs with a detailed look at the Wipro incident and the warning from the National Counterintelligence and Security Center aimed at educating businesses on the on the scope and scale of the risk.

The remote monitoring and management (RMM) tools used by MSPs are often the attack vector used by hackers. In February cybercriminals exploited ConnectWise partners who had not patched an integration tool with a rival MSP platform, using it to install ransomware on end users' machines. Then, in the Wipro incident, the attackers were believed to have used ConnectWise Control on the hacked systems to connect to Wipro client systems, which were then used to obtain deeper access into Wipro customer networks.

ConnectWise CEO Jason Magee defended the company’s security stance in the wake of the Wipro breach. “ConnectWise takes cybersecurity seriously and we realize that rumored and confirmed security incidents create stress and concern for our partners,” said Magee. “Once we become aware of an issue, we are proactive in taking steps to resolve and/or make our partners aware of the risk.”

The incidents have continued through the year. In June IT By Design, a master MSP that provides network and security operating center services to more than 250 MSPs, was hit by a ransomware attack that spread to eight customers. In July NinjaRMM said its RMM tool was used to spread ransomware, accessing a customer's NinjaRMM account and using the software to distribute ransomware across multiple endpoints.

Earlier this month Continuum said one of its MSP partners was hit by hackers, likely though a phishing campaign, who managed to steal credentials that were then used to disable antivirus tools and run scripts to deploy ransomware to several customers.

“This scares me to death,” said a top MSP executive speaking to CRN about the wave of attacks. “The immaturity level in the MSP marketplace on security right now is mind-boggling. If a hacker infiltrates your tool sets, all those tools you have installed on all your client’s networks are vulnerable. No one is immune to this. It could happen to anyone at any time. This is bad, really bad. And this is the tip of the iceberg. Imagine how much data exfiltration is happening right now.”