The Terrifying Shortage of U.S. Cyberwarriors.

When Kevin Mandia, a retired military cybercrime investigator, decided to expose China as a primary threat to US computer networks, he did not have to consult with US diplomats in Beijing or declassify tactics to safely reveal government secrets.

He compiled a 76-page report based on seven years of work by his company, Mandiant, and produced the most detailed public account yet of how, he says, the Chinese government has been hacking major US companies.

It was not news to his commercial rivals, or the US government, that systematic attacks could be traced to a nondescript office block outside Shanghai that Mandia believes was run by the Chinese army.

What was remarkable was that the extraordinary details – code names of hackers, one's affection for Harry Potter and how they stole sensitive trade secrets and passwords – came from a private security firm without the official backing of the US military or intelligence agencies responsible for protecting America from a cyber-attack.

The report, welcomed by both government and industry, represents a notable alignment of interests in Washington: the Obama administration has pressed for fresh evidence of Chinese hacking that it can leverage in diplomatic talks without revealing secrets about its own hacking investigations, and Mandiant makes headlines with its sensational revelations.It also shows the balance of power in America's cyberwar has shifted to the $30bn-a-year (£19.7bn-a-year) computer security industry.


"We probably kicked the hornet's nest," Mandia, 42, said at the Alexandria, Virginia, headquarters of Mandiant. "[But] tolerance is just dwindling. People are tired of the status quo of being hacked with impunity, where there's no risk or repercussion." China has rejected the allegations.

Mandiant, which took some $100m of business last year, up 60% from the year before, is part of a lucrative and exploding market that goes beyond antivirus software and firewalls. These "digital forensics" outfits can tell a business whether its systems have been breached and, if the company pays extra, who attacked it.

Among Mandiant's staff are retired intelligence and law enforcement agents who specialise in computer forensics and promise their clients confidentiality and control over the investigation.

In turn, they get unfettered access to the crime scene and resources to fix the problem (Mandiant will not say exactly how much it charges, but it is estimated to average about $400 an hour).

The growing reliance on contractors like Mandiant has been compared to the dependence of the military and state department on private contractors, such as the one formerly known as Blackwater, to provide physical security to diplomats and other VIPs during the Iraq war.

Officials inside and outside government believe contractors can often act more quickly than the government and without as much red tape. There are also serious privacy concerns: Most US citizens do not want the government to access their bank accounts, for example, even if China is attacking their bank.

"The government doesn't have the capacity," said Shawn Henry, a former FBI executive assistant director who works for CrowdStrike, a Mandiant competitor. "There are a lot of people working hard. But the structures aren't there."

Michael DuBose, another former senior justice department official who works for a similar firm, Kroll Advisory Solutions, added: "I think there's a recognition that the government can't stand at the entry point of the internet to the US and shield it from all bad things coming in."Since Mandiant released its report this week, government officials and legislators have publicly embraced its findings.

Senator Dianne Feinstein, the Democratic chair of the Senate intelligence committee, hailed Mandiant for exposing the issue of Chinese hacking. She called its report "sobering" and said she hoped it would spur an international agreement to protect companies from cyber-espionage.

Mandiant's report raises questions, too, about the extent to which private companies are in control of defending America's most crucial networks, such as power companies and water treatment plants. Another question is what rules of engagement private companies might rely on. When does a company strike back?

Mandia and his competitors said they are beholden to US and international laws that prohibit the type of intrusive acts they accuse China of committing. Mandia also said his clients are not interested in starting a cyberwar with foreign hackers, in part because they are so vulnerable.

"The only time (retaliatory hacking) would really work is if we got all the bad guys out of our networks in the first place," he said. "Then you can start playing that game." Still, publishing the hacking report was an offensive shot across China's bow.

Mandia launched his company in 2004 after several years in the private sector because, he said, there was no company focused on investigating intrusions. With a master's degree in forensic science from George Washington University, he became Mandiant's sole employee and, two years later, got a cash injection from a friend.

Now, he oversees some 330 employees and the field is growing rapidly. He says he used to see about three major incidents a month when he started his business; now he estimates there are between 30 and 100 incidents a month.

Mandia is hardly alone. A former colleague, Stuart McClure, recently started a company called Cylance. He received $15bn in venture capital funds for his business, which he says is distinctive because of its focus on prevention.

McClure said he sees the future of cyber-defence residing in the private sector, which has deeper pockets and less red tape.

As for any problems they might cause in diplomatic or security circles for the federal government, Mandia and his competitors say that is not a concern, although he has been hiring lawyers to help monitor US policies and regulations. But as a tech expert, he said he has been focused on stopping intrusions. "We're security guys," Mandia said. "We're not diplomats."