miércoles, 28 de febrero de 2018

The battle for the ad (blocking) market

Some weeks ago, a wave of surprise shook many people when they read that Google was on the brink to distribute an adblocker integrated with its browser. Was Google going to start blocking its main source of revenues? Was the inventor and king of online ads as the source for financing digital services going to kill the market it created? But things are more complex.

According with the data published by PageFair, in 2016 11% of the Internet population are currently using an ad blocker, with a yearly growth of 30%. So the menace was already there when Google decided that the best strategy was to join (apparently) with the enemy. Furthermore, ad blocking was such a growing sector that different kind of business models were beginning to arise. Because you should notice that the majority of adblockers are not non-profit companies. Adblocker Plus, the leader of the ad blocking market,  is itself a two-sided platform that provides free services to users thanks to the revenues it obtains from not blocking some kind of ads.

So once more and as usual, it is good to take a look from a different angle. The reality is that Google (and Facebook) are not fighting the online ad business but protecting its (big) share in it. The ad blockers market battle that have already started is in fact an ad market battle. On one side,  Adblocker Plus and the so-called Acceptable Ads Comitte have defined an Acceptable Ads Definition. On the other side,  the Coalition for Better Ads (CBA), which include Google and Facebook, has defined the initial better ads standard. On the gap between both standards for a consumer-friendly ad lays the online advertisement market of the future (and its stream of revenues)

So things are not as some people has described. Google is not entering in the ad blocking market but continue its battle for the absolute dominance the ad market.

miércoles, 21 de febrero de 2018

Again platform regulation, now as online intermediary services

Some weeks ago, I wrote about the complexity of laying down rules on fake news, but the sudden EU regulatory frenzy about platforms doesn't stop on this issue. The digital giants are also on the focus of Brussels for other reasons, one of them their role on the economy, particularly as intermediaries on the value chain for the distribution of good and services. In the midterm review of the Digital Single Market Strategy, the European Commission committed to present concrete actions on unfair contracts and trading practices in platform-to-business relations before the end of 2017. Although the deadline has passed without any initiative be presented, it looks that it would be done in the following months.

The objective of the forthcoming European Commission proposals are what they called online intermediation services, which take part in the relationship between companies and consumers through some kind of contract. The main kind of platforms that could be included on this group are e-commerce market places (e.g. eBay, Amazon, ...), appstores (e.g. Applestore or Google market) and  online advertising platforms (e.g. Google and Facebook). However, it is difficult to establish a limit of which are the markets and categories of online platforms that could be regulated as intermediaries. Perhaps, a wiser approach to this regulation is laying down the topics that should be monitorized on intermediation services and an open procedure to define which are the categories by the regulator. 

So, let´s focus on what should be regulated on this unequal relationship between the digital giants and national companies. Perhaps, the better studies on the issue was published by the European Comission, one of them last summer and a second one on December. Based on survey on SMEs and complaint cases, the documents identify five issues to be regulated with different termonology:
  • Terms and conditions of the contract, particularly its clarity and changes during the relationship
  • Search and ranking tools on the platform, with a special focus of algorithm transparency and the listing mechanisms
  • Platform operation as another service provider on equal conditions as the other companies
  • Conditions for the usage of data generated within the platform, both by the platform and the service providers
  • Dispute resolution mechanisms for redressing of unfair treatment
Regarding which platforms should be regulated, there is a consensus on the classification detailed above, However, as I stated before, a fix classification would be always short sighted. A lesson we have learned on the years we have already lived on the digital age is the unexpected dynamics of the markets and the unending creativity of innovators. In the same manner that it is done in the telecom market, it would be wiser to lay down the rules for the definition of markets to be regulated and which kind of remedies could be introduced on the above mentioned five issues on the cases that are needed.

miércoles, 14 de febrero de 2018

The sleepwalkers

The Sleepwalkers: How Europe Went to War in 1914The Sleepwalkers: How Europe Went to War in 1914 by Christopher Clark
My rating: 4 of 5 stars

Since I was a child, I have been puzzled about how the First World War started. When you study the Second World War, you have a feeling of the inevitability of the conflict: A megalomaniac fool invading one country after another until the other big powers get fed up and declared the war. On the contrary, in the first reading the chronicles of the begining of the Great War you see the killing of the heir of a decaying empire at the hands of a nacionalist terrorist group as the flame that ignited the clash. Everytime I have spoken with a friend about the comparison of the outbreak of the starting of the two major disputes of the human beings history, I have met with a reflexion of my own perplexity.

With the rationale above, it is easy to understand why the first time I read of the existence of "The sleepwalkers" I knew that I would read that book. The essay looked as the key to the explanation I was looking for since my childhood, the link bewtween the killing in Sarajevo and the explosion of a war that ending with the dead of 30 million of people. Once I have finished it, I am not disappointed in ny manner. At last, I have worked out the debt of knowledge on the matter with myself.

The pages of "The sleepwalker" disentangle the genesis of the war. On one hand, there was a growing rivalry for the dominance of the Balkans between a rising country and a decaying one, respectively, Serbia and Austria-Hungary. On the other hand, both of these countries was the vortex of a complex alliance scheme. The inevitable conflict between Serbia and Austria drawn the rest of the European continent to war. The killing in Sarajevo was an excuse, but it could be another one.

However, it was not so simple as it was described above. Reading the pages of "The Sleepwalkers" you have the feeling that the war could have been avoided. The unthinkable of the war was it the end the reason for its declaration. Every power acted as if the other side was going to act in a wiser manner and would take the cautious decision on spite of its provocation. It was this way of thinking the final rationale for the conflict.

But the book is more than an excellent history book. "The sleepwalkers" it is also a background for thinking in our current crisis in many areas, both in the international and national arena. The pages of the book give us many reasons for demanding a more concious behaviour of our leaders, asking them for being something more than sleepwalkers dragged by the events.

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miércoles, 7 de febrero de 2018

The case for digital skills

According with the Treaties, the European Union has not any real competence on Education. However, the European Commission has made the promotion of digital skills one of the central policies, first, in the Digital Agenda and, afterwards, in the Digital Single Market Strategy. The spreading of digital technologies is leading to the need for every citizen to have at least basic digital skills in order to live, work, learn and participate in the modern society. 

The urgency for promoting the acquisition of digital skills by citizens is usually justified by figures and statistics. For instance, one piece of data that is putting forward frequently are the results of the last DESI publication, which is showing that around 45% of the European population lacks of  basic digital skills. However, few times we think on the real stories that are behind that numbers.

Let´s start our review of the consequences of the lack of digital skills on real life with a hot story: fake news. Since the last USA presidential elections, it looks that there is a real worry among policies makers about the quick spreading of fake news through the Internet. The last evidence of this worry of the elites are the proposals for regulations coming from President Macron and the European Commission. However, the focus of these proposals is regulating plaforms and less on explaining the population, for instance, how algorithmic selection of news works. And we should remember that 54% of the population has a preference for the algorithmic selection of news, which is the real problem when a high percentage of people still believes in conspiracies in Europe.

The lack of digital skills is beginning to have impact on the opportunities to access to public services.  On a time where some people are still suffering the impact of the economic crisis, the dramatic consequences of the digital divide on an ordinary guy who is not able to fulfill an online form to demand welfare services is the starting point of "I, Daniel Blake", the last Ken Loach´s film. Perhaps, it s an extreme case, but without any doubt, it is already easiest to obtain public grants and benefits using the Internet than going to a physical point of service.

It is also worrisome how receiving any kind of information through an app or website gives this information an extra verity value. An evidence of this fact have happened in Sweden recently, where 37 unwanted pregnancies occurred among users of an app which was sold as an "algorithmic contraceptive method". The app was the digitalisation the traditional rhythm method, a contraceptive method known as insecure due to its typical failure rate of 24%, which so long ago was declining on usage in western societies. It is not difficult to imagine among the 37 unexpected mothers a significative percentage of women who looks her smartphone as an unerring device for giving advice on any kind of issue who would have never used in a conscious manner the rhythm method.

Another field where the lack of digital skills may have devastating consequences for people are the usage of fintech services. Particularly dangerous to people finances could be entering in the cryptocurrencies market. Different scams model are emerging, including fake ICOs or exchange scams. In 2017, Japan police detected 33  cryptocurrency scam cases in the first seven months. We can expect a rise of these figures in the current year.

Any kind of relationship where a citizen is involved is based on digital means, the increasing adoption of technology is an evidence of this fact. Therefore, the lack of digital skills have a daily impact on people beyond their professional career. Using a car without any driving knowledge usually ends with an accident, difficult to expect a positive outcome of using computers or smartphones lacking digital skills.
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