The 5 biggest tech stories of 2014

The battle over net neutrality

A long-simmering dispute over the rules that govern the internet heated up this year, setting the stage for a possible political showdown in 2015. In January, a federal appeals court overturned Federal Communications Commission rules on net neutrality, the principle that broadband companies should treat all internet traffic equally. The court ruled that the FCC couldn't prohibit companies like Comcast or Verizon from creating fast lanes on their networks and charging companies for access, unless the FCC reclassifies broadband providers — a move that the regulator has resisted. In response, the FCC proposed watered-down rules that would permit broadband providers to prioritize some web content over others, if it was "commercially reasonable," and opened the proposal to public comment. The response was overwhelmingly negative, and in November, President Obama came out strongly in favor of full net neutrality, urging the FCC to classify broadband as a public utility and impose tougher restrictions. Broadband companies, which have the backing of many congressional Republicans, say stricter regulations would hobble innovation and their ability to expand high-speed networks. FCC Chairman Tom Wheeler, who reportedly favors a less-regulated approach, is expected to unveil his agency's revised rules early next year.

A cyberbug wake-up call

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Cybersecurity experts uncovered a string of serious vulnerabilities in common software and hardware this year that have long put computer systems, passwords, and sensitive personal information at risk. The first piece of bad news came in the spring, with the discovery of a bug called Heartbleed, which affected widely used encryption software called OpenSSL that sites like Twitter, Yahoo, Tumblr, and Dropbox use to send and receive sensitive data like log-ins, passwords, and credit card information. Though it was "easily the worst vulnerability since mass adoption of the internet," according to Matthew Prince, CEO of cybersecurity firm CloudFlare Inc., Heartbleed was patched relatively quickly. But the fact that it went undiscovered for at least two years heightened fears that hackers had already rummaged through corporate sites for sensitive user data. A few months later, researchers discovered the Bash bug — a security flaw found in Mac and Linux operating systems that could give hackers the ability to control computers remotely. USB devices also came under suspicion, after security experts uncovered a bug called BadUSB that allows hackers to hide and spread malignant code in the popular devices' firmware.

Apple reinvents the wallet

Apple made its first foray into wearable tech this year, adding the much-anticipated Apple Watch to its device offerings, the first expansion of its product lineup since it unveiled the iPad in 2010. The iPhone also got a face-lift, with the introduction of the new iPhone 6 and a jumbo-size iPhone 6 Plus, designed to compete with Samsung's popular "phablet" smartphones. But Apple's biggest unveiling this year was what came inside the devices: a mobile payments system dubbed Apple Pay. The system allows users to store debit and credit card information on smartphones and use the phone's near field communication chip to make contactless payments at thousands of retailers. While Apple hopes its new mobile payments system — which launched with several partner merchants, including McDonald's, Macy's, and Whole Foods — will change how Americans shop, it has encountered some resistance from retailers like Walmart, RiteAid, CVS, Best Buy, and Target, which are backing a rival, QR-code-based mobile payments system called CurrentC.

Corporate systems breached

2014 might be remembered as the year of the corporate data breach. Week after week, Americans were greeted with grim headlines about yet another cyberattack compromising millions of consumers' private data at companies like Target, Home Depot, JPMorgan Chase, and eBay. The attack on Target is believed to have affected more than 110 million customers, while JPMorgan said its breach might have put at risk personal data belonging to 76 million households and 7 million small businesses. The staggering size of the breaches renewed calls for better data security practices at companies that handle customers' sensitive information and propelled U.S. merchants and payment processors to start exploring more-secure transaction technologies. At year's end, Sony Pictures suffered one of the most devastating corporate cyberattacks of all time. A group of hackers linked to North Korea stole more than 100 terabytes of confidential information, publicly released damaging corporate secrets, and destroyed internal Sony data systems. The attack could ultimately cost the studio as much as $300 million.

Uber's bumpy ride

Silicon Valley startups that owe their success to the rise of the "sharing" economy faced a number of hurdles this year, as regulators increasingly objected to the companies' rule-breaking business models and consumers began to question the value of disruptive technologies. The on-demand car service Uber found itself mired in a number of controversies, including allegations that it tried to sabotage rival Lyft, tracked the ride histories of users without their permission, and considered secretly digging up dirt on its media critics. Several states in India banned the service after a driver allegedly raped a passenger in Delhi, and France announced plans to block Uber next year for failing to adequately insure drivers. Apartment-rental site Airbnb came under similar scrutiny for violating local hotel laws and tax requirements. Critics have accused the site of giving short shrift to renters' safety and of contributing to the rise in illegal hotels. Despite the scandals, investors continue to bet on the companies' lofty potential: Airbnb and Uber are valued at $13 billion and $40 billion, respectively.