miércoles, 17 de julio de 2019

The many fears around Libra

Libra is not only one of the twelve horoscope´s signs  anymore. Since Facebook´s announcement of its participation in a cryptocurrency called by that name, the predominance meaning of the word Libra has changed for many people. Only that fact give us an idea of the social network power and help us to grasp why regulators and politicians from both sides of Atlantic have got so nervous about the new cryptocurrency.

But what is Libra? Is it such different from other cryptocurrencies as to fear it? The answer is yes, it is extremely different to other popular digital coins. It is backed by a bunch of big companies (Facebook, Lyft, Uber, Vodafone, Visa), its potential user base is nearly a quarter of the population (Facebook´s users), it will be backed by physical world currencies and it will have identificable governance institutions. These among other features makes Libra the potential killer application for blockchain and predicts a rapid adoption of it.

The concerns about the new coin starts with the new source of data that Facebook would have at its disposal. Having access to the data related with the money a user has and how he spends it, in combination with the data it already has from each user, would  mean having a complete picture of a quarter of the human population. Taking into consideration the record of abuse of the personal data of the company, it is not a tranquilazing scenario. 

The stability and security infrastructure which would provide support to Libra its a second point for concern. The criticallity of Facebook´s infrastructure would increase  substantially and there are serious doubts that the company is prepare for it. The recent failure of Facebook´s services and the frecquent vulnerabilities that drive to personal data breaches are examples of pieces of news we would not like to see associate with the infrastructure where our money is deposited.

And of course, there are concerns of the consequences of such a powerful cryptocurrency for the stability of the financial system. Two of the many of these consequences has been widely commented. On one hand, some economist are warning about the impact that the frictionless currency market enable by Libra would have on weak currencies and the stability for the economies of countries that issue them. On the other hand, it may implies a complete dissapearance of the current intermediaries  of the retailing financial services.

Although Facebook has had up today show its capacity on the digital world and its ability to jump over the governments concerns, perhaps this time the mountain is so high even for Mark Zuckerberg.

miércoles, 10 de julio de 2019

"The Age of Surveillance Capitalism" - Shoshana Zuboff

The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of PowerThe Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power by Shoshana Zuboff
My rating: 4 of 5 stars

"The age of surveillance capitalism" is one of the books of the season among those interesting on the process of the digital transformation of the society and economy. Furthermore, I´m pretty sure it will transcend this season and becomes one of those few books that will inform digital policy-making for a long time. However, it´s not perfect as a book, in order to illustrate her theories, the author provides an excessive number of examples with more details that are needed.

I was fortunate to attend a key note given by Shoshana Zuboff three years ago, when I supposed she was writing this book. She was extremely passionate describing the concept of surveillance capitalism int the same terms as she described in the book. In the same manner as she does in the book, she started describing its origins in the day when a then small company called Google discovered that the data collected providing services could be used not only for improving services, but also to extract (without asking for permission) a behavioral surplus that allows to predict the future behavior of users, that could be the base for building up services for third parties.

But the exploitation of an innovative business (and surveillance capitalism deserves this qualification) needs for its consolidation a strategy. The author also shows how the mix of aggressive lobbying, revolving doors and penetration into the academy have provided Google (and others after) a competitive advantage based on its image of innovative and benefical-for-all company. This competitive advantage has been the base for an incremental development of a set of products beyond its origin as a search page, all them base on a production cycle of incursion (providing a product that aims to obtain some personal information of the users by surprise), habituation (making the service a need for users), adaptation (introducing minor changes to answer the critics on violating privacy) and redirection (looking for new manners to extract more personal information). The author rightly compares this dispossession cycle of personal information with the conquer strategies of colonial powers, that claimed more and more territories for their Empires without nay other base than brute force.

As you read the book, you will go deeper in Alice's rabbit hole. The bigger issue with surveillance capitalism companies is not the massive accumulation of data that serves for creating new services for third party which are basically the selling of privacy spheres of people (e.g. the Cambridge Analytics case). The most worrisome consequence its the capacity that these companies acquire to automate the behaviour of people in what the author called "instrumentarianism.", which we sometimes wrongly confuse with totalitarianism. That instrumentarianism. is a new political model basically on the hands of private companies more powerful than governments, only makes things worst.

As I have started, this is a must read book. Perhaps its teorethical part woulld have been explained in less pages, but perhaps that would have mean making the book less asequible to people which are not familiar with digital services. The only possible comparison with other book that I can establish is with Piketty's "Capital in the 21st century", and it will be equally influential for some years.


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domingo, 30 de junio de 2019

Adding confusion to Huawei´s affair

After the meeting between Xi Ping and Trump there's a feeling of relief in the tech sector. The general conclusion after the press conference given by the US President is that the tech war against Huawei has finished. I really don´t know if there are reasons to be so optimistic. My impression is that everybody was so eager of listening good news that they think they have listened good news without further analysis. Perhaps it would be good to analyse what we know so far of the supposed end of the Huawei affair.

To begin with, Trump´s declarations are contradictory up to some point. On one hand, he announced that "we´re allowing them (American companies) to sell (to Huawei)", but he refused to confirm that the Chinese tech company would be dropped from the entity list. Therefore, the meaning of this "allowance to sell" is not clear. It may mean a new postponment of the effective entrance of Huawei in the entity list beyond the already given extension of 90 days or it may means that the bunch of tech companies that have been lobbying against the ban are going to receive a partial license for selling chips to Huawei. The answer will be published (or not) by the US Commerce Department in the following days.

It's also interesting to appreciate that no mention has been made by Trump to the Executive Order on the tech supply chain published at the same time that Huawei was introduced in the entity list. It is relevant to highlight that there are signs that the order implementation has its own problems (e,g, The initial assessment of threats of the US Director of National Intelligence was not published this week as was foreseen in the order), but Trump has not give any sign that the implementation of the order was going to be stopped or paralized. This absence may mean that the crusade against the deployment of telco networks based on Huawei equipment on US soil will continue. And therefore, the pressure on US allies to ban Huawei equipment may not be relaxed.

The answer to the above doubts and many others will be given in the following days (or not), but there´s a serious chance that we may have attended only to the first scene of a new episode of confusion of the Huawei´s affair instead to its final act.





miércoles, 26 de junio de 2019

Finishing the building of the European Data Space

Data is recognized as a critical resource for the development and grow of the economy in the forthcoming years. On one hand, there will be an infinite number of data sources, which grow is driving by the dissemination of the IoT. According to IDC, 41.6 billion IoT devices will generate 79.4 zettabytes of data in 2025. On the other hand, there will be a growing demand for data from AI applications across all the economic sectors. Only the market of AI in IoT Devices will reach $9.5B in North America by 2024 with 28.% CAGR. Therefore, we are getting closer to a perfect storm with a perfect match between supply and demand.

Europe has been building a shared data space for years based on legal certainty. Firstly, with the personal data and privacy framework which is now in its second generation with the GDPR.  Now, the free flow of non personal data regulation establishes a new legal innovation without possible comparison in other geographical areas. These two elements set up the the base for trust that allows to say that the free movement of data may be called already the fifth freedom of the European Union and underpins Europe position as worthy partner in the digital economy.

However, an unlimited space for the free movement of data has no sense without unleashing the sharing of data among private and public actors.  Regarding the public sector,  with the continuous exploration of new frontiers for the re-use of public sector data that has achieved a new milestone with the third version of the PSI Directive, it may be said that there is an unrestricted access to public data. By the contrary, B2B or B2G sharing of data its yet in its infancy. 

Regarding B2G sharing of data, there's a strong case for forcing the access from governments to certain data. Data held by companies can be very relevant to guide policy decisions or improve public services. The more the data the better the planning of public services based on evidence. Starting with the data generated by utility companies and ending with data from online platforms for mobility or housing services, the definition of an harmonized European legal framework for B2G sharing of data will unleash without doubt a new wave of sustainable growth in Europe and helps to achieve the SDGs.

More complex in the issue of B2B data sharing. On one hand, any hard or soft regulation measure should be based on voluntary schemes and linked with the different business model for sharing (such as monetisation/selling data, marketplaces/exchanging data, industrial platforms/joint ventures or opendata). On the other hand, as part of this data may be personal data any sharing of it should be based on consent from the sources. The respect for business models and the user privacy rights should be also combine with awareness-raising campaigns among companies on the benefIts of sharing data.

No Single Market would be possible without a Digital dimension and non Digital Single Market would be possible without a European Data Space. Therefore, the survival of Europe as a commercial power depends of deepening and strenghtening the efforts on data regulations beyond ensuring the flow of data  it´s needed promote flooding the channels of exchange with the data itself



miércoles, 19 de junio de 2019

Collateral damage of trade wars

There's a certain probability that in five years the inclusion of Huawei in the US Commerce Department entity list will be study as the black swan event for the OS market for smart devices. Until May 16th 2019, Android was the dominant player in the OS market for Smart Phones and other consumer devices (such as TVs). The maket share of Android on smartphone OS was more than 80% and there was not pesrspective of a viable alternative to it. This position was achieved not without a fierce battle, because we should remember than less than 10 years ago Android was a minor player in the same market.

But then, the unexpected happened. The second player in the smartphone market, Huawei, was banned to use Android and forced to look for an alternative. Based on its immense R&D force (the Chinese company spends more than 15 $ billion per year), Huawei announce that it would began to distribute its own OS less than month after, just in time to avoid (or at least, to make difficult) a massive abandonement of the Huawei Smartphone by users.

There are some people who predicts a Huawei´s failure in this challenge. The main error is the comparison with the fruitless trials of Amazon or Microsoft to compete with Google in the Smartphone OS market. On both cases, the companies made the same errors. They tried to build up at the same time a market share on devices and a market share on OS. Huawei already has a market share on devices. Furthermore, while Amazon/Microsoft were not playing for surviving, Huawei has not alternative but to battle until the end. In this circumstances, even the obstacle of not having Gmail, maps and other Google apps in Huawei´s smartphone will not be a a definite hurdle, because the alternative in not having anything at all.

The first hint that Google is worried about the unexpected competitor in the OS market is already on the table. The Google lobbyist machine are beginning to fight the ban with all its forces. Even the first sign of impact of these efforts has appeared with the doubts about Huawei´s blacklisting in some high US official.

Interesting months ahead in the Smartphone OS market for once in many years. The Google dominance of this sector maybe the collateral damage of the trade wars.

miércoles, 5 de junio de 2019

Disrupting supply chains

On May 16th, US Government introduced Huawei in the Entity List, a black list of companies that no American companies could supply specific items under EAR (Export Administration Regulation). This means, basically, the ban to supply the Chinese company any software or hardware product developed in the USA. However, this ban is not only for US-Persons but also for non US-persons. In the case of foreing products that contains US-products, the supply to Huawei is also forbidden in case they contain more than a de minimis amount of controlled US content are subject to the EAR (25% of the value). The best explanation I have found of these restrictions is in this post.

Look around yourself and pick up any device that gives you access to digital services. Or think about any of the applications that you use on a daily base. Few of these products have been developed completely in just one country, usually all of them are made of different hardware or software components, each of them build up in geographical areas on different sides of the international borders.  So now imagine how difficult is to be safe  of not being breaking the restrictions if you are supplying a technological product. You would have to begin to made complex calculations in case you are using any US component. Therefore, the safe route is cutting relationships with Huawei if possible.

And this is what is happening. Important companies around the world are stopping to supply products to company for the fear of breaking the rule. Software and hardware products that are needed for Huawei products should be substituted by others. A complete redesigne and rebuild of the company flagship products will be needed. The lesson from this affair is how easy is to disrupt the supply chains even of the most powerful companies.



miércoles, 29 de mayo de 2019

The needed temporary status of self-regulation

Although we seen Internet as a massive service as quite recent and young, the truth is that its story goes back nearly thirty years old. The network and its services have evolved so quickly that even for those who lived the first years is difficult some times to appreciate how things have changed. Only for that reason is good to read books such as "The Age of Surveillance Capitalism", the one I´m currently reading. In particular, such a reading is good to discover the reasons why things have gone wrong in some aspects of how Internet is nowadays.

Without any doubt, the most hated feature of internet services is the eager for capturing our personal data. Certainly, the EU regulation such as RGPD has curtailed this trend, but things would be better for our privacy if the US would have a similar regulation. We see the later as an almost impossible event and some blame the different regulatory tradition of privacy of the situation. Nevertheless, the reason is completely different. As the author of the book mentioned above remember us, privacy was on the way of being strongly regulated before 9/11 happened, but the hangover of the worst terrorist attack ever in US soil changed everything. After the attack, the invasion of privacy by digital platforms began to be see as a useful tool for national security and everything on the US institutions rapidly forget the idea of a regulation. Obviously, platforms grasped the opportunity and went further on this area. Obviously, the platforms also quickly forget the self-regulation promises on the matter.

The lesson to be learnt of what happened is never to lose an opportunity to do the right thing on the regulation of digital platforms.

One of the most worrisome issues around digital platforms nowadays is their collaboration on spreading disinformation, particularly through target ads. After the evidence of the usage of this tool in some elections and referendums, the European Commission has tried to curve their use in the elections for the European Parliament. However, instead of passing a regulation the European Commission asked for voluntary measures from the platforms and a periodical review of their effectiveness. And apparently, things have worked.

Probably, now the temptation may be leave things as they are. That would be an error, now it´s the time to develop a regulation based on the lessons learnt instead of trusting that the self-regulations introduced will continue to work in the future. The sad tendency of human beings is to stop a voluntary costly behaviour when no one is looking. Therefore, we can expect that platforms would stop applying the non compulsory rules on place as soon as there´s no one watching thoroughly, and if you need to maintain your vigilance it would be better to do with the back of an actual regulation.

Self-regulation maybe a good temporary solution, but never a perpetual situation. If you have the evidences to regulate better take the opportunity to do it after you have tested the self-regulation measures for a while. Not taking the adecquate measures on the right time is certainly the door to future laments.



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