By Steve Holland and Matt Spetalnick WASHINGTON (Reuters) - President Barack Obama vowed on Friday to respond to a devastating cyber attack on Sony Pictures that he blamed on North Korea, and scolded the Hollywood studio for caving in to what he described as a foreign dictator imposing censorship in America. Obama said the cyber attack caused a lot of damage to Sony but that the company should not have let itself be intimidated into halting the public release of "The Interview," a lampoon portraying the assassination of North Korean leader Kim Jong Un. "We will respond," Obama told an end-of-year news conference. "We'll respond proportionally, and we'll respond in a place and time and manner that we choose." Earlier, the Federal Bureau of Investigation announced it had determined that North Korea was behind the hacking of Sony, saying Pyongyang's actions fell "outside the bounds of acceptable state behavior." Obama said North Korea appeared to have acted alone. Washington began consultations with Japan, China, South Korea and Russia seeking their assistance in reining in North Korea. It was the first time the United States had directly accused another country of a cyber attack of such magnitude on American soil and set up a possible new confrontation between longtime foes Washington and Pyongyang. The destructive nature of the attack, and threats from the hackers that led the Hollywood studio to pull the movie, set it apart from previous cyber intrusions, the FBI said. A North Korean diplomat at the United Nations in New York said Pyongyang had nothing to do with the cyber attack. "DPRK (North Korea) is not part of this," the diplomat told Reuters. Obama said he wished that Sony had spoken to him first before yanking the movie, suggesting it could set a bad precedent. "I think they made a mistake," he said. "We cannot have a society in which some dictator someplace can start imposing censorship here in the United States," he said. "Because if somebody is able to intimidate folks out of releasing a satirical movie, imagine what they start doing when they see a documentary that they don't like, or news reports that they don't like." Sony Pictures Entertainment Chief Executive Michael Lynton insisted the company did not capitulate to hackers and said it is still looking for alternative platforms to release "The Interview." Earlier this week, a spokeswoman for Sony had said the company did not have further release plans for the $44 million film starring Seth Rogen and James Franco. "We have not caved, we have not given in, we have persevered and we have not backed down," Lynton told CNN. "We have always had every desire to have the American public see this movie." OBAMA'S OPTIONS Despite Obama's stern warning to North Korea, his options for responding to the computer attack by the impoverished state appeared limited. The president declined to be specific about any actions under consideration. North Korea has been subject to U.S. sanctions for more than 50 years, but they have had little effect on its human rights policies or its development of nuclear weapons. It has become expert in hiding its often criminal money-raising activities, largely avoiding traditional banks. The FBI said technical analysis of malicious software used in the Sony attack found links to malware that "North Korean actors" had developed and found a "significant overlap" with "other malicious cyber activity" previously tied to Pyongyang. But it otherwise gave scant details on how it concluded that North Korea was behind the attack. U.S. experts say Obama's options could include cyber retaliation, financial sanctions, criminal indictments against individuals implicated in the attack or even a boost in U.S. military support to South Korea. It could also take the largely symbolic step of restoring North Korea to its list of countries designated as sponsors of terrorism, which carries automatic restrictions. But the effect of any response would be limited given North Korea's isolation and the fact that it is already heavily sanctioned for its disputed nuclear program. There is also the risk that an overly harsh U.S. response could provoke Pyongyang to escalate into cyber warfare. "GUARDIANS OF PEACE" The attack on Sony, more than three weeks ago, was conducted by hackers calling themselves "Guardians of Peace." The FBI said the hack rendered thousands of Sony's computers inoperable, forced the company to take its entire computer network offline, stole proprietary information and confidential communications. U.S. movie theater chains had said they would not show the film after hackers made threats against cinemas and audiences. Many in Hollywood and Washington criticized Sony's cancellation as capitulating to the hackers. Security experts said Sony's decision to shelve the film could mean that more businesses will be targeted for cyber extortion. "I fully expect to see more actions like this against film studios or other soft targets," said Jeffrey Carr, chief executive officer of Taia Global, a cyber security company. Obama called on the new Congress to work with his administration on new cyber security legislation. Non-conventional capabilities such as cyber warfare and nuclear technology are the weapons of choice for the impoverished North, defectors said in Seoul. They said the Sony attack may have been a practice run for North Korea's "cyber army" as part of its long-term goal of being able to cripple its rivals' telecommunications and energy grids. (Additional reporting by Roberta Rampton, Susan Heavey, David Chance, Arshad Mohammed and David Brunnstrom in Washington and Ju-min Park and Jack Kim in Seoul, Editing by David Storey, Bernard Orr)
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