Data can be as toxic as fossil fuel reserves

This morning’s Observer column:

”Data is the new oil” is a tired metaphor designed to capture the fact that, just as the old economy ran on oil, so the new digital economy runs on data. Just as plentiful reserves of underground oil were good for oil companies, so the possession of masses of data would likewise be a great asset for tech companies lucky enough to have it. And whether or not they count it explicitly as an asset on their balance sheets, in practice it gives them a powerful bulwark against competitors and startups. It’s no longer enough for a couple of grad students to come up with a better search algorithm than Google’s, for example; they would also have to build a global network of massive server farms – and have acquired exabytes of data. So possession of large quantities of data greatly heightens the barrier to entry for competitors and thereby strengthens incumbents. The more data you have, the better.

The ICO’s recent fines, however, cast a shadow on this cosy scene. Possessing oodles of data is only an unalloyed good if you can protect it from thieves, hackers and other criminals. If you can’t, then that precious asset can suddenly turn toxic – just like fossil fuel reserves….

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Sheep, goats and hotel WiFi

This morning’s Observer column:

You’ve just arrived at the hotel after a delayed flight and a half-hour wrangle with the car-hire firm. And then you remember that you’ve forgotten to pay last month’s credit card bill, and there’ll be an interest charge if you wait until you’re back at base. But – hey! – you can do it online and help is at hand. The receptionist is welcoming and helpful. They have wifi and it’s free. Relieved, you ask for the password. “Oh, you don’t need one,” he replies. “Just type in your room number and click the box.”

Phew! Problem solved. Er, not necessarily. At this point the human race divides into two groups. Call them sheep and goats. Sheep are sweet, trusting folks who like to think well of their fellow humans. Surely that helpful receptionist would not knowingly offer a dangerous service. Also, they find digital technology baffling and intimidating. And they cannot imagine why anything they do online might be of interest to anyone.
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Goats, on the other hand, have nasty, suspicious minds…

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Guess who benefits from Automation 2.0

This morning’s Observer column:

We have now lived through what one might call Automation 1.0. The paradigmatic example is car manufacturing. Henry Ford’s production line metamorphosed into Toyota’s “lean machine” and thence to the point where few humans, if any, are visible on an assembly line. Once upon a time, the car industry employed hundreds of thousands of people. We called them blue-collar workers. Now it employs far fewer. The robots did indeed take their jobs. In some cases, those made redundant found other employment, but many didn’t. And sometimes their communities were devastated as a result. But GDP went up, nevertheless, so economists were happy.

Now we’re embarking on Automation 2.0…

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Facebook moves into global banking

This morning’s Observer column:

We’ve known for ages that somewhere in the bowels of Facebook people were beavering away designing a cryptocurrency. Various names were bandied about, including GlobalCoin and Facebook Coin. The latter led some people to conclude that it must be a joke. I mean to say, who would trust Facebook, of Cambridge Analytica fame, with their money?

Now it turns out that the rumours were true. Last week, Facebook unveiled its crypto plans in a white paper. It’s called Libra and it is a cryptocurrency, that is to say, “a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units and verify the transfer of assets”.

Like bitcoin, then? Er, not exactly…

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LATER Merryn Somerset Webb of the Financial Times had a really good column ($) about the Facebook venture. Among the points she raises are:

  • Real cryptocurrencies are about privacy and freedom. They are decentralised and permissionless — no one runs them, no one can be prevented from using them and the system never needs reference to a central authority. (This last assertion is dubious — see Vili Lehdonvirta’s Turing Institute talk — but we will leave that pass for now.) Libra is to be none of these wonderful things. It is to be run by a single organisation based in Switzerland. It is centralised and permissioned — and its value will not depend on anything intrinsic to it but to a basket of fiat currencies.

  • The interest from the deposits and government bonds that back Libra will not go to the people holding the currency. It will be used to pay for the system’s operating costs and, once those are covered, to the founding members as dividends.

  • There are real privacy concerns raised by Libra, especially in relation to Facebook’s role in it in relation to the metadata that Libra will throw up. “If you are worried about the way financial apps might use data on your spending patterns, you should be really worried about how a vast social network morphing into a financial network might use it. Anyone with your social media data can guess what you might buy. Anyone with your financial data knows already.”

  • If Libra really is based on a basket of fiat currenties and is stable as a result, it might not take long for us to refer to the value of things in Libras. A Libra could just be a Libra. That, says Webb, “is a sovereignty game-changer”.

  • If Libra succeeds, it won’t because it’s a real cryptocurrency. It’ll be because it isn’t.

How Silicon Valley lost its shine

This morning’s Observer column:

Remember the time when tech companies were cool? So do I. Once upon a time, Silicon Valley was the jewel in the American crown, a magnet for high IQ – and predominately male – talent from all over the world. Palo Alto was the centre of what its more delusional inhabitants regarded as the Florence of Renaissance 2.0. Parents swelled with pride when their offspring landed a job with the Googles, Facebooks and Apples of that world, where they stood a sporting chance of becoming as rich as they might have done if they had joined Goldman Sachs or Lehman Brothers, but without the moral odium attendant on investment backing. I mean to say, where else could you be employed by a company to which every president, prime minister and aspirant politician craved an invitation? Where else could you be part of inventing the future?

But that was then and this is now…

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Farewell iTunes, hello Music

This morning’s Observer column:

Last Monday, at Apple’s Worldwide Developers Conference, the company’s head of software engineering, Craig Federighi, announced that it was terminating iTunes. In one way, the only surprising thing was that Apple had taken so long to reach that decision. It’s been obvious for years that iTunes had become baroquely bloated, a striking anomaly for a company that prides itself on elegant and functional design. So the decision to split the software into three functional units – dealing with music, podcasts and TV apps – seemed both logical and long overdue. But for internet users d’un certain âge (including this columnist) the announcement triggered reflections on personal and tech history.

There’s been music on the internet for a long time. The advent of the compact disc in the early 1980s meant that recorded music went from being analogue to digital. But CD music files were vast – a single CD came in at about 700MB – and for most people, the network was slow. So transferring music from one location to another was not a practical proposition. But then, in 1993, researchers at the Fraunhofer Institute in Germany came up with a way of shrinking audio files by a factor of 10 or more, so that a three-minute music track could be reduced to 3MB without much perceptible loss in quality…

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Anyone who thinks that Huawei can be crushed without retribution is deluded

This morning’s Observer column:

Until recently, the only thing the average citizen could have told you about Huawei, the Chinese tech giant, was that s/he hadn’t the faintest idea of how to pronounce it (it’s “hwa-wei” btw, according to Wikipedia). And then, suddenly, this unpronounceable company seemed to be all over the news. Now it’s at the centre of a burgeoning geopolitical row. How did that happen?

I blame the Australians, who have a government only marginally less dysfunctional than our own…

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Elon Musk may be a pain. But he’s not nuts

This morning’s Observer column:

You don’t have to be a psychiatrist to wonder if Elon Musk, the founder of Tesla, is off his rocker. I mean to say, how many leaders of US public companies get into trouble with the US Securities and Exchange Commission for falsely claiming that they have secured funding to take their company private at $420 a share – and then get sued and fined $40m? Or can you imagine another CEO who deals with Wall Street analysts by swatting away questions about his company’s capital requirements as if they were flies. “Excuse me. Next. Next,” he replied to one guy who was pressing him on the subject. “Boring, bonehead questions are not cool. Next?”

The view from Wall Street is that Musk is too volatile to be in charge of a big and potentially important public company. The charitable view is less judgemental: it is that, while he may have a short fuse, he’s also a gifted, visionary disrupter. But even those who take this tolerant view were taken aback when he declared at a recent public event that he could see “one million robo-taxis on the roads by 2020”…

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The significance of the WhatsApp hack

This morning’s Observer column:

When Edward Snowden broke cover in the summer of 2013 and a team of Guardian journalists met up with him in his Hong Kong hotel, he insisted not only that they switch off their mobile phones but also that they put the devices into a fridge. This precaution suggested that Snowden had some special insight into the hacking powers of the NSA, specifically that the agency had developed techniques for covertly taking over a mobile phone and using it as a tracking and recording device. To anyone familiar with the capabilities of agencies such as the NSA or GCHQ, this seemed plausible. And in fact, some years later, such capabilities were explicitly deemed necessary and permissible (as “equipment interference”) in the Investigatory Powers Act 2016.

When Snowden was talking to the reporters in Hong Kong, WhatsApp was a four-year-old startup with an honest business model (people paid for the app), about 200m active users and a valuation of $1.5bn. In February 2014, Facebook bought the company for $19bn and everything changed. WhatsApp grew exponentially to its present ubiquity: it has more than 1.5 billion users and has spread like a rash over the entire planet.

Among its attractions is that it offers users effortless end-to-end encryption for their communications, thereby enhancing their privacy…

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How Microsoft reinvented itself

This morning’s Observer column:

It may have escaped your attention, but Microsoft recently became the third company in history to reach a valuation of one trillion dollars. To which the standard reaction, I have discovered, is: “Eh? Microsoft!!!” Wasn’t that the boring old monolith fixated on desktop products and operating systems that missed out on the smartphone revolution? The company that Bill Gates used to run before he decided to devote himself full-time to giving his money away? The company whose Exchange Server is the bane of every office-worker’s daily grind? The ruthless monopolist who missed the world wide web and then set out to exterminate the one company – Netscape – that hadn’t?

Yes, that Microsoft. Given the company’s history, this is surely the greatest comeback since Lazarus. But with one difference: where Lazarus’s resurrection was (according to the New Testament) instantaneous, Microsoft’s took longer. How this happened is a story that will keep MBA students occupied for decades, but with the benefit of hindsight, we can now see that it has three main strands…

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