Latest cybersecurity reporting from selected sources.

Also: Software Supply Chain Risks, Cato's AI Security BuyIn this week's update, four ISMG editors discussed the Pentagon's review of Microsoft's use of Chinese nationals on U.S. military cloud systems, renewed concerns over software supply chain risks and Cato Networks' first-ever acquisition to boost AI security.

Defense Department Suspends, Reviews Microsoft 'Digital Escorts' ProgramThe Pentagon is reviewing Microsoft's decade-long use of "digital escorts" - U.S.-based staff who review code from Chinese engineers - into military cloud systems, a workaround now deemed a "breach of trust" that may have exposed sensitive but unclassified government data.

A Chinese APT is going where most APTs don't: deep into the cloud, compromising supply chains and deploying uncommon malware.

In May 2025, the U.S. government sanctioned a Chinese national for operating a cloud provider linked to the majority of virtual currency investment scam websites reported to the FBI. But more than a month later, the accused continues to openly operate accounts at a slew of American tech companies, including Facebook, Github, LinkedIn, PayPal and Twitter/X.

CISA Advisory Says Threat Actors Stole App Secrets in Azure-Hosted Backup PlatformA suspected Chinese state hacking group linked to last year’s telecom intrusions breached Commvault’s Microsoft Azure environment, exposing sensitive Microsoft 365 credentials and reigniting fears over U.S. cloud infrastructure vulnerabilities and default security settings.

PLUS: India's new electronics subsidies; Philippines unplugs a mobile carrier; Alibaba Cloud expands Asia In Brief Chinese officials admitted to directing cyberattacks on US infrastructure at a meeting with their American counterparts, according to The Wall Street Journal.…

In an effort to blend in and make their malicious traffic tougher to block, hosting firms catering to cybercriminals in China and Russia increasingly are funneling their operations through major U.S. cloud providers. Research published this week on one such outfit -- a sprawling network tied to Chinese organized crime gangs and aptly named "Funnull" -- highlights a persistent whac-a-mole problem facing cloud services.

The United States Treasury Department said it suffered a "major cybersecurity incident" that allowed suspected Chinese threat actors to remotely access some computers and unclassified documents.  "On December 8, 2024, Treasury was notified by a third-party software service provider, BeyondTrust, that a threat actor had gained access to a key used by the vendor to secure a cloud-based

'It's not our job to find the culprits – That's what we're paying you for' lawmaker scolds Brad Smith Lawmakers on Thursday grilled Microsoft president Brad Smith about the Windows giant's businesses dealing in China — and the super-corp's repeated security failings — at a time when Beijing-backed spies are accused of breaking into Microsoft-hosted email accounts of American government officials.…

Plus: Alleged front sanctioned, UK blames PRC for Electoral Commission theft, and does America need a Cyber Force? The United States on Monday accused seven Chinese men of breaking into computer networks, email accounts, and cloud storage belonging to numerous critical infrastructure organizations, companies, and individuals, including politicians and their political parties.…

Chinese hackers stole tens of thousands of emails from U.S. State Department accounts after breaching Microsoft's cloud-based Exchange email platform in May. [...]

The Biden administration today issued its vision for beefing up the nation's collective cybersecurity posture, including calls for legislation establishing liability for software products and services that are sold with little regard for security. The White House's new national cybersecurity strategy also envisions a more active role by cloud providers and the U.S. military in disrupting cybercriminal infrastructure, and names China as the single biggest cyber threat to U.S. interests.