Microsoft starts ruffling privacy feathers in the US

This weekend will mark the one-year anniversary of Europe’s GDPR and Microsoft has made the bold suggestion of bringing the rules over the pond to the US.

Many US businesses would have been protected from the chaos that was the European Union’s General Data Protection Regulation (GDPR), with the rules only impacting those which operated in Europe. And while there are benefits to privacy and data protection rights for consumers, that will come as little compensation for those who had to protect themselves from the weighty fines attached to non-compliance.

Voicing what could turn out to be a very unpopular opinion, Microsoft has suggested the US should introduce its own version.

“A lot has happened on the global privacy front since GDPR went into force,” said Julie Brill, Deputy General Counsel at Microsoft. “Overall, companies that collect and process personal information for people living in the EU have adapted, putting new systems and processes in place to ensure that individuals understand what data is collected about them and can correct it if it is inaccurate and delete it or move it somewhere else if they choose.

“This has improved how companies handle their customers’ personal data. And it has inspired a global movement that has seen countries around the world adopt new privacy laws that are modelled on GDPR.

“Now it is time for Congress to take inspiration from the rest of the world and enact federal legislation that extends the privacy protections in GDPR to citizens in the United States.”

The rules themselves were first introduced in an attempt to force companies to be more responsible and transparent in how customer data is handled. The update reflected the new sharing economies the world had sleepwalked into; the new status quo had come under criticism and new protections had to be put in place while also offering more control to the consumer of their personal data.

GDPR arrived with little fanfare after many businesses scurried around for the weeks prior despite having almost 18 months’ notice. And while these regulations were designed for the European market, such is the open nature of the internet, the impact was felt worldwide.

While this might sound negative, GDPR has proved to be an inspiration for numerous other countries and regions. Brazil, Japan, South Korea and India were just a few of the nations which saw the benefit of the rules, and now it appears there are calls for the same position to be adopted in the US.

As Brill points out in the blog post stating the Microsoft position, California has already made steps forward to create a more privacy-focused society. The California Consumer Privacy Act (CCPA) will go into effect on January 1 2020. Inspired by GDPR, the new law will provide California residents with the right to know what personal information is being collected on them, know whether it is being sold or monetized, say no to monetization and access all the data.

This is only one example, though there are numerous states around the US, primarily Democrat, which have similar pro-privacy attitudes to California. However, this is a law which stops short of the strictness of GDPR. Companies are not on the stopwatch to notify customers of a breach, as they are under GDPR, while the language around punishment for non-compliance is very vague.

This is perhaps the issue Microsoft will face in attempting to escalate such rules up to federal law; the only attempt which we have seen so far in the US is a diluted version of GDPR. Whereas GDPR is a sharp stick for the regulators to swing, a fine of 3% of annual turnover certainly encourages compliance, the Californian approach is more like a tickling feather; it might irritate a little bit.

At the moment, US privacy laws are nothing more than ripples in the technology pond. If GDPR-style rules were to be introduced in the US, the impact would be significant. GDPR has already shifting the privacy conversation and had notable impacts on the way businesses operate. Google, for example, has introduced an auto-delete function for users while Facebook’s entire business rhetoric has become much more privacy focused. It is having a fundamental impact on the business.

We are not too sure whether Microsoft’s call is going to have any material impact on government thinking right now, but privacy laws in the US (and everywhere for that matter) are going to need to be brought up-to-date. With artificial intelligence, personalisation, big data, facial recognition and predictive analytics technologies all gaining traction, the role of personal data and privacy is going to become much more significant.

Facebook’s privacy conundrum

Facebook CEO Mark Zuckerberg has to do something about his firm’s reputation for data privacy, but it could it require destroying its own core business model.

At the F8 developer conference this week, Zuckerberg has been making claims no-one is surprised to hear. Facebook is all about user privacy, its not about making money anymore, just about offering a service its users care about. The PR machine is shifting through the gears, Facebook has to save its reputation before it’s too late.

This is perhaps the worst kept secret in Silicon Valley; Facebook does not care about data privacy, or at least it hasn’t cared in the past. It cares it was caught flamboyantly prancing around, above and all over the concept, but few will be surprised executives prioritized profits over privacy.

But here is the crossroads the firm faces; be disrupted or destroyed.

This of course sounds very dramatic, and perhaps we are taking poetic licence, but there is at least an element of accuracy to the statement. Zuckerberg needs to fundamentally redefine the business, moving away from the tried and tested business model, before regulators and legislators take Facebook out at the knees.

At the conference, Zuckerberg has been outlining Facebook’s journey forward. Updates will focus on creating a more ‘private’ experience, ushering users towards groups and chat locations which, theoretically, will prevent Facebook from fuelling its data machine. It seems the new business will be focused around two of the companies most popular applications, Messenger and WhatsApp, though this could potentially kill the tried and tested Facebook business model; hyper-targeted advertising.

One example of this is an update which will allow users to invite connections to watch videos in a private message or group. In years gone, this would be sacrilege to Facebook executives. If it is private, how can it be used to tune the advertising machine? Where is the opportunity to make money?

This is the risk Facebook is facing up to; its traditional business model is under threat. Its reputation for handling privacy is in tatters and the world is turning against Facebook. If it continues on the path of collecting and harvesting data in this manner, someone will eventually step in and stop it. Governments and regulators are cracking down on the data sharing economy, and Facebook has been made enemy number one.

But all is not lost. Facebook still has a couple of tricks up its sleeve. Firstly, the core social media platform is salvageable. It might look like a digital Yellow Pages today, but it by-gone years, it was a genuinely engaging platform. Somewhere along the line executives got grabby and started prioritising advertising over engagement, and the platform suffered as a result. If Facebook can rediscover the magic of old, all will be forgiven, such is the short-term memory of many consumers.

This might mean having to sacrifice the hyper-targeted advertising model, but if Zuckerberg’s claims on privacy are to be believed, Facebook might be moving away from it anyway.

Fortunately, with a reinvigorated platform, which people trust and enjoy, Facebook can bolt services on and beside it, as opposed to through it. This is perfectly feasible business model; running the platform as a loss-leader, maintaining a more transparent advertising business and also using the credibility to monetize premium services. And it might be a sensible direction for Facebook to go. It has worked before and will work again.

To make this idea work, Facebook will need a few things. Firstly, the ambition to explore news ideas. Secondly, smart people. And finally, R&D funds. Facebook has all these things in abundance.

Facebook has already shown its ambition with the launch of AR/VR, video platforms, online market places, dating applications and enterprise services (just to name a few). It has and will continue to attract some of the worlds most intelligent engineers and business people. And finally, Facebook has bags of cash.

This of course is taking Zuckerberg at his word. This might be nothing more than a ploy to generate positive PR. The hyper-targeting advertising model might simply be evolving with the help of small print and clever distractions. But, Zuckerberg surely is smarter than this. Another case of misleading the general public would surely be a step too far.

Zuckerberg might be waking up to the fact he cannot hide from this horrid and distasteful reputation he and his firm has developed. Perhaps Facebook has realised it needs to fundamentally change its business model. Maybe Zuckerberg wants to disrupt his own business before governments and regulators try to destroy it.

If 52% don’t understand data-sharing economy, is opt-in redundant?

Nieman Lab has unveiled the results of research suggesting more than half of adults do not realise Google is collecting and storing personal data through usage of its platforms.

The research itself is quite shocking and outlines a serious issue as we stride deeper into the digital economy. If the general population does not understand the basic principles behind the data-sharing economy, how are they possibly going to protect themselves against the nefarious intentions from the darker corners of the virtual world?

You also have to question whether there is any point in the internet players seeking consent if the user does not understand what he/she is signing up for.

According to the research, 52% of the survey respondents do not expect Google to collect data about a person’s activities when using its platforms, such as search engines or YouTube, while 57% do not believe Google is tracking their web activity in order to create more tailored advertisements.

While most working in the TMT industry would assume the business models of the Google and the other internet are common knowledge, the data here suggests otherwise.

66% also do not realise Google will have access to personal data when using non-Google apps, while 64% are unaware third-party information will be used to enhance the accuracy of adverts served on the Google platforms. Surprisingly, only 57% of the survey respondents realise Google will merge the data collected on each of its own platforms to create profiles of users.

Although this survey has been focused on Google, it would be fair to assume the same respondents do not appreciate this is how many newly emerging companies are fuelling their spreadsheets. The data-sharing economy is the very reason many of the services we enjoy today are free, though if users are not aware of how this segment functions, you have to question whether Google and the other internet giants are doing their jobs.

The ideas of opt-in and consent are critically important nowadays. New rules in the European Union, GDPR, set about significant changes to dictate how companies collect, store and use personal information collected by the service providers. These rules were supposed to enforce transparency and encourage the user to be in control of their personal information, though this research does not offer much encouragement.

If the research suggests more than half of adults do not understand how Google collects personal information or uses it to enhance its own advertising capabilities, what is the point of the opt-in process in the first place?

Reports like this suggest the opt-in process is largely meaningless as users do not understand what they are giving the likes of Google permission to do. The blame for this lack of education is split between the internet giants, who have become experts at muddying the waters, and the users themselves.

Those who use the services for free but do not question the continued existence of ‘free’ platforms should forgo the right to be annoyed when scandals emerge. Not taking the time to understand, or at least attempt to, the intricacies of the data-sharing economy is the reason many of these scandals emerge in the first place; users have been blindly handing power to the internet giants.

The internet players need to do more to educate the world on their business models, however the user does have to take some of the responsibility. We’re not suggesting everyone becomes an internet economy expert, but gaining a basic understanding is not incredibly difficult. However, it does seem ignorance is bliss.

Google caves in to employee activism… this time

The Silicon Valley search giant has decided to dissolve its AI ethical council, one week after it was created, in response to opposition from its own employees. But it’s not always so responsive to their concerns.

A week after the Advanced Technology External Advisory Council (ATEAC) was created, Google told  VOX that it has decided to cancel the project. Controversy has been following the project from the start, especially surrounding one council member Google enlisted. This prompted an internal petition that attracted the signatures of more than 2,300 employees and the resignation of one Council member. The sole purpose of ATEAC, with its members unpaid and the body without any decision-making power, seems to generate good PR. In that respect it represents a spectacular own-goal, so Google has bravely run away.

“It’s become clear that in the current environment, ATEAC can’t function as we wanted. So we’re ending the council and going back to the drawing board. We’ll continue to be responsible in our work on the important issues that AI raises, and will find different ways of getting outside opinions on these topics.” Google sent this statement to VOX.

This is not the first time that Google has “listened to employees”. In June 2018, Google famously “ditched contract with the US military” after more than 3,000 employees protested the company’s AI technology being used for military surveillance, the so-called project Maven.

But Google has not always respected its employees’ views. After almost exactly a year after he disclosed that Google was secretly working on a censored version of search engine for China, Ryan Gallagher, the reporter for The Intercept, kept the interested readers updated with the news that Google was closer to readiness with the so-called project Dragonfly. Some senior executives were said to be doing a secret “performance review” of the product, contrary to Google’s normal practice of involving large numbers of employees when assessing upcoming products.

Despite that more than 1,400 employees have condemned project Dragonfly and some have resigned, in addition to Google’s CEO having to testify in front of the Congress, Google looks to be rather determined to push forward with its China re-entry strategy. The Financial Times reported that the search and online advertising giant has recently suspended serving ads on two Chinese websites that evaluate VPNs, which would have helped users inside the Great Firewall to bypass the blocking. A local research firm told the FT that, considering the acrimonious nature of Google’s departure from China nine years ago, the company “may feel compelled to make additional efforts to curry favour and get back in the good graces to get approval to re-enter the market.”

So it is not clear whether it was due to the number of employees protesting against project Dragonfly being smaller or the resignations lower-profile that Google has decided not to back down, or it is simply more convenient to disband a rubber-stamp council or to discontinue a contract with the American military than resisting the temptation of the Chinese market and standing up to the censorial demands of the Chinese authorities.

Microsoft and BMW pair up for IoT Open Manufacturing Platform

Microsoft has partnered up with the BMW Group to launch a new initiative aimed at stimulating growth for IoT in the smart factory segment.

The Open Manufacturing Platform (OMP) will be built on the Microsoft Azure cloud platform, aiming to have four to six partners by the end of the year, to help grow an ecosystem and build future Industry 4.0 solutions. The smart factory segment is promising much with the emergence of 5G, but with every new concept there is scepticism; someone always needs to drag it towards the finish line.

“Microsoft is joining forces with the BMW Group to transform digital production efficiency across the industry,” said Scott Guthrie, EVP of the Microsoft Cloud and AI Group. “Our commitment to building an open community will create new opportunities for collaboration across the entire manufacturing value chain.”

“We have been relying on the cloud since 2016 and are consistently developing new approaches,” said Oliver Zipse, a board member at BMW. “With the Open Manufacturing Platform as the next step, we want to make our solutions available to other companies and jointly leverage potential in order to secure our strong position in the market in the long term.”

BMW is already a significant customer of Microsoft Azure, with over 3,000 machines, robots and autonomous transport systems connected with through the BMW Group IoT platform, which is built on Microsoft Azure cloud.

Openness is one of the key messages here as the pair bemoan data silos and slow productivity created by complex, proprietary systems. The OMP aims to break down these barriers through the creation of an open technology framework and cross-industry community.

For both, the objective of this group is relatively simple. At BMW, the team wants to improve operational efficiencies and reduce costs, partly by taking back control of the supply chain, while Microsoft just wants more people, processes and data on Azure. The more accessible the smart factory is, more companies will become cloud-first, and the more successful the OMP becomes, the more customers Azure gains.

The OMP will provide community members with a reference architecture with open source components based on open industrial standards and an open data model. Through openness, the pair claim data models will be standardised to enable more data analytics and machine learning scenarios and usecases. For Microsoft and the manufacturers, its great news, for the suppliers not so much.

Openness sounds like a great idea, but with any fundamental change comes consequence. There will be numerous companies who benefit considerably from proprietary technologies and processes, especially in traditional industries like manufacturing, though those who resist change will be the losers in the long-run. The world is evolving to a new dynamic, where openness rules the roost, resistance only means future redundancy.

Facebook calls on governments to help control content on the Internet

Facebook founder and CEO Mark Zuckerberg has governments and regulators to play a more active role in developing new rules for the internet.

In an op-ed for the Washington Post, Zuck claimed that the current rules of the internet have served his generation of entrepreneurs well, but “it’s time to update these rules to define clear responsibilities for people, companies and governments going forward.” He argued that companies like Facebook should not make daily judgments on the nature of all the content going through its platform just by themselves. “I believe we need a more active role for governments and regulators,” Zuckerberg said. For what he called the new rules for the internet, Zuckerberg proposed that the parties involved in the governance of the internet should focus on four areas.

“Harmful content” came on top of his list. Zuckerberg conceded that Facebook is having too much power over speech, and believed there is a need for an independent oversight body, dubbed by some media as a “Facebook Supreme Court”, which the company is building up. “First, it will prevent the concentration of too much decision-making within our teams. Second, it will create accountability and oversight. Third, it will provide assurance that these decisions are made in the best interests of our community and not for commercial reasons,” Zuckerberg explained the rationale when the content governance and enforcement plan was published last November.

Zuckerberg also cited the example of the company’s collaboration with the French government to highlight the Facebook’s willingness to work with regulators. Starting from January Facebook has hosted a group of French senior civil servants including those from the telecom regulator l’Arcep (Autorité de régulation des communications électroniques et des Postes) or the Ministry of Justice, whereby they can identify Facebook’s good practice that the delegation can approve. Incidentally, France raised nearly 38,000 requests for Facebook pages to be taken down in 2015, by far the highest number of all countries, according to a stat by Statista from a few years back, cited by the French media outlet Le Journal du Net (JDN) (pictured).

Second on Zuckerberg’s list is “election integrity”. Recognising the significant role Facebook data, and the misuse of it, has played in recent political campaigns, the company is implementing new rules related to political ads, in the run-up to the European Parliamentary election in May. Users are able to search who is behind a certain ad, how much is paid, the number of times the ad has been viewed, as well as the demographics of those that have viewed it. The “Ads Library” will be stored by Facebook for seven years.

However, Zuckerberg also recognised both the difficulty of identifying political ads (“deciding whether an ad is political isn’t always straightforward”), and the inadequacy of the current rules on political campaigns including online political advertising. Therefore, he was calling for both common standards for verifying political actors, and for updates on the laws to keep up with the fast-changing online realities. At about the same time, Facebook published a post to explain how “Why am I seeing this post?” and “Why am I seeing this ad?” work, to further its efforts to be more transparent.

“Privacy” is the next on Zuckerberg’s list. He focused on the topic of privacy in a long post recently, so he did not spell out the measures Facebook is taking. Instead, Zuckerberg was calling on governments and regulators from all countries to develop a common global framework modelled on the GDPR regime in the EU.

Last on the list is “data portability”, i.e. users should be able to seamlessly and securely move their data from one platform to another. This is centred on the Data Transfer Project (DTP) that Facebook is contributing to, together with Google, Microsoft, and Twitter, and is not directly related to governments or regulators. The project aims to build “a common framework with open-source code that can connect any two online service providers”. When the user initiates a data transfer request, DTP will use the “services’ existing APIs and authorization mechanisms to access data. It then uses service specific adapters to transfer that data into a common format, and then back into the new service’s API.”

Zuckerberg has extended plenty of goodwill recently, and there is no reason to question his sincerity. However, in addition to the lack of implementation details in his proposal, his call for actively working with governments and regulators can be a double-edged sword. On one hand, a global oversight body could be able to define a set of common rules that all internet companies can be regulated by and assessed on. On the other hand, how to avoid being dictated by the agenda of individual governments, especially in countries where the demarcation between politicians and professional, supposedly neutral civil servants is less clear, is a hard question to answer. For example, how fundamentally different is Facebook’s collaboration with the French government from Google’s clandestine efforts to satisfy the Chinese government’s censorship requests?

Facebook faces hyper-targeted advertising lawsuit

The US Department of Housing and Urban Development (HUD) has lodged a lawsuit against Facebook, challenging the hyper-targeted big data model which has made OTTs billions over the years.

Quoting the Fair Housing Act, the HUD has claimed Facebook is breaking the law by encouraging, enabling, and causing housing discrimination. The Fair Housing Act prohibits discrimination in housing and housing-related services, including online advertisements. Facebook’s advertising platform is said to discriminate individuals based on race, colour, national origin, religion, sex, disability and familial status, violating the Act.

“Even as we confront new technologies, the fair housing laws enacted over half a century ago remain clear – discrimination in housing-related advertising is against the law,” said General Counsel Paul Compton.

“Just because a process to deliver advertising is opaque and complex doesn’t mean that it’s exempts Facebook and others from our scrutiny and the law of the land. Fashioning appropriate remedies and the rules of the road for today’s technology as it impacts housing are a priority for HUD.”

Complaints were originally raised by the HUD last summer, though the two parties have been in discussions to come to some sort of settlement to avoid legal action. Reading between the lines, talks have broken down or the HUD leadership team wants to give the impression it is taking a more hardened stance against the social media segment.

Although it should come as little surprise Facebook is facing a lawsuit considering the ability for Mark Zuckerberg to stumble from one blunder to the next, this one effectively challenges the foundations of the business model. Hyper-targeted advertising is the core not only of Facebook’s business, but numerous other companies which have emerged as the dawn breaks on the blossoming data-sharing economy.

What is worth noting is this is not the first time Facebook has faced such criticisms. The American Civil Liberties Union (ACLU) has also challenged the social media giant, and earlier this month Facebook stating it was changing the way its advertising platform was set up to prevent abuses with the targeting features.

“One of our top priorities is protecting people from discrimination on Facebook,” said Facebook COO Sheryl Sandberg. “Today, we’re announcing changes in how we manage housing, employment and credit ads on our platform. These changes are the result of historic settlement agreements with leading civil rights organizations and ongoing input from civil rights experts.”

As a result of the clash with the ACLU and other parties, Facebook agreed to remove any gender, age and race-based targeting from housing and employment adverts, creating a one-stop portal instead.

According to the HUD, Facebook allows advertisers to exclude individuals from messaging based on where they live and their societal status. For example, whether someone is a parent or non-American, these categories have been deemed discriminatory. Facebook also allows advertisers to effectively zone off neighbourhoods for campaigns, which is also deemed a violation of the Act. By bringing together data from the digital platform and other insight from non-digital means, HUD is effectively challenging the legitimacy of digital and targeted advertising.

As with other similar cases, the HUD is bringing attention to the light-touch regulatory landscape for the internet economy. While traditional advertising is held accountable by strict rules, the internet operates with relative freedom. This is partly down to the age of mass market media online, it is still comparatively new, and the fact few bureaucrats understand how the data machines work.

What is worth noting is that this is an incredibly narrow focus for the HUD, though should it be successful the same concepts could be applied, and other elements of the Facebook hyper-targeted advertising model could be challenged.

Facebook might be the target here, though many companies will be watching this case with intrigue. Precedent is a powerful tool in the legal and regulatory world, and should the HUD win, the same business model which is being applied elsewhere would be compromised also.

FTC launches investigation for privacy practices in US

The Federal Trade Commission (FTC) has issued orders to seven US broadband providers seeking non-public information to assess privacy practises.

Although this investigation is relatively broad, this might be another attempt from the US Government to get a handle on the privacy practices of the fast-evolving digital economy. Several scandals over the last 18 months have demonstrated current rules are not fit for purpose, containing too many loopholes and inadequately governing an industry which has progressed beyond the reach of bureaucracy.

The FTC has been under pressure in recent months to get a better handle on the data machines which power the digital economy, bringing in billions for the likes of Amazon and Google, but increasingly the telcos. While many fingers have been pointed at the residents of Silicon Valley, the telcos have been making money through the transfer of personal information also.

This investigation is an important step forward in creating a better understanding of the data and sharing economy, a foundation to create resilient and future-proof regulations. Some might suggest this sort of investigation should have happened years ago, but hindsight is always 20/20; who would have predicted the scale of scandals we have witnessed recently.

AT&T, AT&T Mobility, Comcast Cable Communications, Google Fiber, T-Mobile US, Verizon, and Cellco Partnership are the firms which have received the demands.

As part of the investigation, the FTC is requesting:

  • The categories of personal information collected about consumers or their devices
  • Purpose of collecting data for each of the categories
  • Methods of collecting the data
  • Policies for employees to access this data
  • Retention policies
  • What information is transferred to third-parties
  • How the data is the information is aggregated, anonymized or deidentified
  • Disclosures to customers about data collection and transfer to third-parties
  • What choices are offered to the customer
  • How accessible personal data is to the customer

As you can see, this is an incredibly broad and in-depth request, with a lot of the information being non-public. Many of the telcos who have been sent the orders will be uncomfortable releasing this information, though they’ll have no choice.

Although this is a good first step for the FTC, we would hope the investigation is broadened further in the future. More information and insight needs to be collected from the OTTs, the masters of manipulating the data-sharing economy. The telcos are small fish in this expedition, but it is progress.

All eyes from the data-sharing community will be keenly directed towards the FTC over the next couple of months. While this investigation is nothing more than a virtual pebble dropped into the digital pond for the moment, there is the potential for those ripples to grow into waves. This could be the first step towards major regulatory reform, an overdue revolution to gain a better handle on the wild-west internet economy.

Silicon Valley doesn’t know where to look in the 2020 Presidential race

Traditionally Silicon Valley has supported Democrat Presidential candidates but, with the resident internet giants increasingly becoming a political punching bag, this might change very quickly.

More specifically, Silicon Valley tends to lean towards ‘progressive’ Democrats. Many of those who would want to be included in this list have been running events in California recently to woo voters and potential donors alike, but these are candidates which have not been friendly to the internet giants in recent months.

Some of those who would call themselves ‘progressive’ Democrats include California Senator Kamala Harris, Massachusetts Senator Elizabeth Warren and New Jersey Senator Corey Booker, all of which have made moves against the technology giants for varying reasons. Harris and Booker have sponsored or supported bills which would place greater scrutiny on acquisitions, while Warren made the outlandish promise to break-up big tech and reverse certain acquisitions.

While Warren’s promise might end up meaning very little, we suspect there is too much of a focus on popularity instead of practicality, she has been the focal point of some criticism. Texas Representative Beto O’Rourke, another confirmed candidate, poked fun at Warren’s approach instead suggesting the digital economy should be more tightly regulated, avoiding the difficulties of breaking up incredibly complex, private organizations.

The prospect of new regulations is certainly a better option for the internet giants than Warren’s alternative, however O’Rourke is a bit of a difficult horse to back right now. Looking at O’Rourke’s website, it offers little (in fact, zero) insight into potential policies, but if you want to buy a t-shirt this is the place to go.

Of course, regulatory reform is top of the agenda for many of the potential candidates, and the technology industry is a hot topic here as well. Let’s start with the positives.

The majority of the candidates on show were supporters of net neutrality, battling against FCC Chairman Ajit Pai’s mission to undo the protections. Of the potential candidates, Washington Governor Jay Inslee might steal the crown here.

California might have grabbed the headlines for introducing localised net neutrality rules, potentially paving the path for a constitutional crisis, however it was Inslee who was the first to put pen to paper. Washington’s localised net neutrality rules were introduced in March 2018, six months ahead of California.

More positive news focuses on the Lifeline Program, an initiative which helps poorer families access broadband options. This is another area which felt the fury of Pai’s administration, though several of the candidates opposed the cutting of funds. Warren, Vermont Senator Bernie Sanders and New York Senator Kirsten Gillibrand are three candidates which would support the Lifeline Program.

Former Maryland Congressman John Delaney is another who would want to shake the infrastructure game up. Sticking with the rural digital divide, Delaney is proposing the formation of an Infrastructure Bank, with funds of $50 billion, to help close the virtual chasm. This might sound attractive, but Delaney shares the same anti-China rhetoric as President Donald Trump. And that has been working out really well.

Should one of these individuals win the keys to the White House, the FCC could be in-line for yet another shake-up.

Now onto the negative side of regulatory reform. The privacy and data-handling activities of the internet giants have come under a lot of scrutiny and criticism over the last few months. This is unlucky to change, and perhaps will become a lot more aggressive as politicians search for PR points. This is a popularity contest after all.

Almost every candidate is calling for more regulatory reform, pulling down the curtain which hides the data machine fuelling the sharing economy. No-one who is involved in the data sharing economy, internet giants and telcos alike, want too many of these practises exposed as it would lead to public backlash. The industry has allowed the education of the general public to fall too far behind technological developments; any bold revelations will be scary.

Two candidates are setting themselves out from the pack with bold regulatory change, Minnesota Senator Amy Klobuchar and tech entrepreneur Andrew Yang.

Klobuchar’s idea is to introduce a digital dividend on participants of the sharing economy. A levy would be placed on any company which transfers personal data to a third-party, penalising those who monetize data. Those who collect data and use it internally, current or new product development for example, would not be included in the tax.

Yang on the other hand is perhaps proposing the most revolutionary idea; Universal Basic Income (UBI). Effectively, every person over the age of 18 in the US would be entitled to apply to receive $1,000 per month. Yang claims one in three jobs is under risk from automation and AI, therefore the money will help people compensate for this.

The UBI would be funded by consolidating all welfare payments for efficiencies, a new value added tax (VAT), new revenues through increased consumer disposable income and improvements to other areas such as healthcare. However, we suspect this would not cover the outgoings, so it would not be unfair to assume a tax would be placed on those companies benefiting from automation.

Another development mid-way through last year was an attack on the state sales tax regime which the eCommerce giants have enjoyed for so long. These rules would effectively end tax avoidance benefits so many national players have enjoyed by locating head quarters in states like Delaware. Gillibrand, Sanders, Warren and Klobuchar were Senators to voted in favour of the state led digital sales tax.

What is worth noting is policies are still in their early days, and the genuine lobbying from industry will not have started yet. Who knows what the headline policies will be in the run-up to the 2020 Presidential Election, but the Democrats aren’t looking as Silicon Valley friendly as previous years.

Nick Clegg defends Facebook’s business model from EU’s privacy regulation

Facebook’s head of PR reportedly had a series of meetings with EU and UK officials aiming to safeguard the social network’s business model heavily relying on targeted advertising.

Sir Nick Clegg, the former UK Deputy Prime Minister, now Facebook’s VP for Global Affairs and Communications, met three EU commissioners during the World Economic Forum in Davos and shortly after the event in Brussels, according to a report by the Telegraph. These commissioners’ portfolios include Digital Single Market (Andrus Ansip), Justice, Consumers and Gender Equality (Věra Jourová), and Research, Science and Innovation (Carlos Moedas). Clegg’s mission, according to the Telegraph report, was to present Facebook’s case to defend its ads-based business model in the face of new EU legislation related to consumer privacy.

According to a meeting minutes from the Ansip meeting, seen by the Telegraph, “Nick Clegg stated as main Facebook’s concern the fact that the said rules are considered to call into question the Facebook business model, which should not be ‘outlawed’ (e.g. Facebook would like to measure the effectiveness of its ads, which requires data processing). He stated that the General Data Protection Regulation is more flexible (by providing more grounds for processing).”

In response, Ansip defended the proposed ePrivacy Regulation as a complement to GDPR and it is primarily about protecting the confidentiality of consumers’ communications. In addition, the ePrivacy Regulation will be more up to date and will provide more clarity and certainty, compared with the current ePrivacy Directive, which originated in 2002 and last updated in 2009. Member states could interprete and implement the current Directive more restrictively, Ansip warned.

Facebook’s current security setup makes it possible to access users’ communication and able to target them with advertisements based on the communications. Under the proposed Regulation, platforms like Facebook need to get explicit consent from account holders to access the content of their communications, for either advertisement serving, or effectiveness measuring.

There are two issues with Facebook’s case. The first one is, as Ansip put it, companies like Facebook would still be able to monetise data after obtaining the consent of users. They just need to do it in a way more respectful of users’ privacy, which 92% of EU consumers think important, according to the findings of Eurobarometer, a bi-annual EU wide survey.

Another is Facebook’s own strategy announced by Zuckerberg recently. The new plan will make it impossible for Facebook to read users’ private communications with its end-to-end WhatsApp-like encryption. This means, even if consumers are asked and do grant consent, Facebook in the future will not be able to access the content for targeted advertising. Zuckerberg repeatedly talked about trade-offs in his message. This would be one of them.

On the other hand, last November the EU member states’ telecom ministers agreed to delay the vote on ePrivacy Regulations, which means it will be highly unlikely that the bill will be passed and come into effect before the next European Parliament election in May.

The office of Jeremy Wright, the UK’s Secretary of State for Digital, Culture, Media and Sport, did not release much detail related to the meeting with Clegg, other than claiming “We are at a crucial stage in the formulation of our internet safety strategy and as a result we are engaging with many stakeholders to discuss issues pertinent to the policy. This includes discussions with social media companies such as Facebook. It is in these crucial times that ministers, officials and external parties need space in which to develop their thinking and explore different options in a free and frank manner.”

The Telegraph believed Clegg’s objective was to minimise Facebook’s exposure to risks from the impending government proposals that could “place social media firms under a statutory duty of care, which could see them fined or prosecuted” if they fail to protect users, especially children, from online harms.

It is also highly conceivable that the meeting with the UK officials was related to influence post-Brexit regulatory setup in the country, when it will not longer be governed by EU laws. Facebook may want to have its voice heard before the UK starts to make its own privacy and online regulations.