Category Archives: Observer

Silicon Valley discovers politics

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This morning’s Observer column:

For many years, Silicon Valley companies didn’t even bother to have lobbyists in Washington. As late as 2015, Eric Schmidt, then the executive chairman of Google, was predicting that authoritarian governments would wither away in a comprehensively networked world, which made some of us wonder what exactly Dr Schmidt was smoking.

During that period, governments generally played along with this myth of their irrelevance. Presidents and prime ministers queued up for invitations to the campuses of the Silicon Valley giants. And insofar as the tech moguls paid any attention to presidential politics, it was to support the Democrats. Schmidt, for example, played a big role in Hillary Clinton’s campaign for the presidency.

Unsurprisingly, the valley was thunderstruck by the election of Donald Trump…

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Who elected tech CEOs?

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This morning’s Observer column:

Sites that host extremist content are themselves vulnerable to distributed denial of service (DDoS) attacks. Anyone can go to the murkier regions of the internet and rent a botnet that will then overwhelm the target site with millions of pings. Easy as pie. And DDoS can be turned on and off like a tap. So if you run a controversial site you need protection against that kind of thing.

For 8chan, that protection was provided by Cloudflare, a service with the resources to ensure that sites can remain online no matter how severe a DDoS attack is. But on Monday, Matthew Prince, Cloudflare’s CEO, pulled the plug. He announced that the company was terminating 8chan as a customer.

“The rationale is simple,” he wrote on the company’s blog. “They have proven themselves to be lawless and that lawlessness has caused multiple tragic deaths. Even if 8chan may not have violated the letter of the law, in refusing to moderate their hate-filled community, they have created an environment that revels in violating its spirit.”

Prince clearly agonised over the decision, not because he was sympathetic to 8chan, but because he found himself wielding a kind of power that corporate executives are not prepared for…

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Booming tech and rising inequality: correlation or causation?

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This morning’s Observer column:

Here is one of the great paradoxes of our time. The world is dominated by a few corporations that are among the most profitable companies in the history of capitalism. In the US (the home of these giants) and in the UK (an enthusiastic vassal state), parts of the economy are booming and employment is at record levels. And yet, in the middle of this astonishing prosperity, inequality is at levels not seen since the period before the first world war. In the US, the share of total income going to the top 1% of the population is now back to the level it was in the 1920s. And in the UK, more than 4 million people are trapped in deep poverty.

Since this catastrophic rise in inequality seems to be correlated with the rise of the tech industry, it’s tempting to see a causal link between the two. Tempting, but too simplistic. For while digital technology has been a central factor in what’s happened, it’s only a part of the story. More often, it’s been an enabler of other forces rather than a prime mover.

The biggest force reshaping our world has been globalisation…

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Facial recognition technology — to ban or regulate it are the only options

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This morning’s Observer column:

On 18 July, the House of Commons select committee on science and technology published an assessment of the work of the biometrics commissioner and the forensic science regulator. My guess is that most citizens have never heard of these two public servants, which is a pity because what they do is important for the maintenance of justice and the protection of liberty and human rights.

The current biometrics commissioner is Prof Paul Wiles. His role is to keep under review the retention and use by the police of biometric material. This used to be just about DNA samples and custody images, but digital technology promises to increase his workload significantly. “It is now seven years,” observes the Commons committee, “since the 2012 high court ruled that the indefinite retention of innocent people’s custody images was unlawful and yet the practice is continuing. A system was meant to have been put in place where any custody images were kept for six years and then reviewed. Custody images of unconvicted individuals at that point should be weeded and deleted.”

But they haven’t: photographs of innocent people remain on the police national database…

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Facebook thinks it’s a state. US Congress disagrees

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This morning’s Observer column:

Now that Wimbledon is over, if you’re looking for something interesting to watch, can I suggest heading over to the video of last week’s interrogation by the US Senate committee on banking, housing and urban affairs of Facebook’s David Marcus? Given the astonishing incompetence of the Senate’s inquisition of Marcus’s boss, Mark Zuckerberg, some time ago, my hopes for last week’s hearing were not high. How wrong can you be?

But first a bit of background might be helpful. Facebook, currently the tech world’s most toxic company, has decided to get into the currency business. It proposes to launch a new global cryptocurrency called Libra and add more people through referrals. Marcus is the guy leading this project. He formerly worked at PayPal and then moved to Facebook, where he ran the company’s Messenger service.

At first sight, Marcus appears to be a Smooth Man from central casting. At second sight, he evokes the “uncanny valley”, defined by Wikipedia as “a hypothesised relationship between the degree of an object’s resemblance to a human being and the emotional response to such an object”. In that respect, he is not unlike his boss…

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Fines don’t work. To control tech companies we have to hit them where it really hurts

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Today’s Observer comment piece

If you want a measure of the problem society will have in controlling the tech giants, then ponder this: as it has become clear that the US Federal Trade Commission is about to impose a fine of $5bn (£4bn) on Facebook for violating a decree governing privacy breaches, the company’s share price went up!

This is a landmark moment. It’s the biggest ever fine imposed by the FTC, the body set up to police American capitalism. And $5bn is a lot of money in anybody’s language. Anybody’s but Facebook’s. It represents just a month of revenues and the stock market knew it. Facebook’s capitalisation went up $6bn with the news. This was a fine that actually increased Mark Zuckerberg’s personal wealth…

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Data can be as toxic as fossil fuel reserves

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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

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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

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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

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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.