The private cloud is the fake cloud

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Danielle Royston, CEO of Optiva argues in favour of the public, as opposed to private cloud for telcos.

Confusion reigns when it comes to cloud and telecoms. CTOs are looking to cloud architectures to increase their processing power, scalability and savings. Yet they are in the dark ages! For starters, there is confusion about private and public clouds and how they differ. Some CTOs think that they can get the same benefits of public cloud with private cloud. Sure, private clouds are ideal if you have money to burn – it is a lot of effort with no rewards.

Often when most telco CTOs refer to the cloud, they mean private cloud deployments, hosting telecom infrastructures on-premises. Most are unaware that private clouds can be complex and costly. When using private cloud, compute and database resources still need to be pre-purchased and provisioned — typically up to 20-30% above peak capacity. Even when the data is virtualized, there is little or no elasticity. Instead, it’s being held in an over-provisioned, private cloud. Basically — a fake cloud.

Moving to the public cloud, on the other hand, can unlock huge cost savings by using external compute resources and it can quickly deliver benefits only possible with a true cloud deployment. With the public cloud, operators can provision for average capacity and scale up or down as needed. That can in turn make a significant difference to the bottom line.

Learning from the enterprise

Many enterprises have deployed Google Cloud, AWS and Azure. For example, Salesforce uses Google Cloud and AWS to host their application services, and Twitter recently moved to AWS. But the telecoms industry hardly hears about the major cloud moves. Why? Most telcos are stuck in the 90s of application management — virtualizing servers, rather than managing IT stacks in the public cloud.

These are some of the key benefits in enterprise that operators can replicate:

  1. Considerable cost savings: When you consider moving an application to the cloud, the business considers the entire stack — from the ground the servers sit on to the people who manage the application. The TCO includes the cost of installation, database licenses, hardware, hardware renewal, power, management time and so on. The public cloud makes all those expenses go away, which is one way it allows CSPs to reduce TCO by up to 80%.
  2. Elasticity: As operators gear up for 5G and the Internet of Things (IoT), processing power and data storage requirements will increase exponentially.  Although no one knows how much is really needed. Getting ready for the peak data demands of these largely unknown variables will be an expensive guess. Leverage the auto-scaling capabilities of public cloud for compute and database resources – that way you will pay only for what you need, when you need it.
  3. Innovation: The reality is that hyperscale web companies out-gun CSPs in terms of R&D and spending on data centers. Google spent more than US$40 billion building data centers to support its public cloud. It spends more than US$3 billion annually on cloud security and announced an additional US$13 billion spend for 2019 alone.

How not to go ‘cloud-native’

The public cloud’s architecture cannot be replicated with an on-premise cloud. Taking existing software architecture and dropping it into Google Cloud or AWS (known as a “lift and shift”) will not deliver the benefits operators hope to gain from the cloud. While “lift and shift” is a quick and dirty way to move to the cloud, it’s not cloud-native, and it’s not the same as an application architected to run “cloud-natively.”

Cloud-native means that an application is built from the ground up to work in the cloud. It is the responsibility of CTOs to dig into vendor terminology that might be misleading, such as “cloud-ready.” Doing so helps to ensure that what you are considering is genuinely fit for the carrier’s purpose and allows the operator to realize the real, full benefits of the public cloud.

If an application claims to be “cloud-ready” or “cloud-native” but requires an old-school Oracle relational database, you’ll have serious problems — and vast license fees too. Instead, a genuine cloud-native database will be faster, more powerful and cost-effective. A good sign that your application is architected and fully suited for the cloud is also when it utilizes containerization, like Kubernetes.

A turning point

It’s surprising that more CTOs have not connected the dots when it comes to the benefits of public cloud. Given the cost pressures facing the industry, the savings alone of moving to the public cloud should be a no brainer. 2019 has been a turning point for telco engagement with the public cloud — one of the biggest technological innovations of the past decade. Don’t take the easy route and go with a fake cloud.

 

Danielle Royston OptivaDanielle Royston is CEO of Optiva Inc. (TSX: OPT) and has close to 20 years of executive experience in the technology industry with an emphasis on turning around enterprise software companies. Before joining Optiva, she served as Portfolio CEO for the ESW Capital family of companies, leading over 15 turnarounds during her tenure. Royston holds a B.S. in computer science from Stanford University.

Rakuten delays network launch to work out the bugs

Japan’s fourth mobile operator has said it will delay its launch, originally set for October 1, in favour of a limited trial for 5,000 users.

The announcement will put a dampener on the spirits of those who are closely watching developments in Japan. With the barriers set so high on entering the mobile connectivity game for new-comers, cash-rich technology companies will be looking for tips and tricks to develop their own game-plans, though this was not supposed to be part of the story.

“In order to ensure the stability and quality of its service for customers and continue to improve the network based on customer feedback and requests, the company will initially open applications to 5,000 subscribers free of charge through the Free Supporter Program,” the firm said in a statement.

The official launch of the service will now be at some point before 31 March 2020, with the Free Support Program set to conclude at that point. Those subscribers who are assisting with the network trial will continue to get free services through to 31 March however.

The trial will focus on Tokyo, Osaka, Nagoya City and Kobe City, with KDDI and Okinawa Cellular to provide roaming services outside of these regions. Those on the trial will receive unlimited calls and data services through the period, in exchange for providing regular feedback to the telco.

The launch of Rakuten has caught the attention of many inside and outside of Japan for several reasons. In the country, consumers have had to deal with three providers to date and the introduction of a fourth player will provide additional competition, as well as a potential disruption to create a new status-quo when it comes to pricing. Just look at the impact Reliance Jio had on India to see the potential a new player can inspire.

Outside of Japan, there will of course be vendors rubbing their hands together in anticipation of a genuine greenfield project, though those who have an interest in muscling in on the connectivity game.

Starting with the vendors, this is a potential gold mine. If Rakuten is going to be competitive, it will have to get its network up-and-running very quickly. Aggressive network deployment and expansion to reduce the reliance on roaming requires some serious investment. The more success Rakuten can generate in the early days, the more quickly it will be able to mobilise investment to fuel further expansion.

And now for the disruptors. There will be several companies which will be keeping an eye on developments here, hoping to understand what works and what doesn’t when deploying a new network.

Dish is one company which falls into this category. Should the T-Mobile US and Sprint merger survive the legal challenges it is facing, Dish will become the fourth MNO in the US through acquiring the Boost prepaid brand from Sprint. It will then have to try and build its own network as quickly as possible.

There are of course other companies who have already declared their interest in the mobile connectivity game, 1&1 Drillisch in Germany for example, however internet companies have also been rumoured to be getting involved.

Amazon is the company which immediately comes to mind, a rumour about Amazon mobile is never too far away, however this is applicable to any internet firm which has a lot of money. Owning and managing a network is one way to make money, another opportunity to collect valuable data on consumers and a chance to own the relationship with the consumer end-to-end.

If Rakuten can prove an internet company can deploy an end-to-end fully virtualized, cloud-native network cost-effectively and in a timely manner, as well as attract the right people to manage the network to meet customer expectations, why wouldn’t others believe they can do the same.

Amazon has buckets of cash, as does Google, Facebook, Alibaba, Baidu or Microsoft. If Rakuten can do it, why couldn’t they? Or how about investment companies and venture capitalists who are always looking for a way to make money?

Azure is on a spending spree

Cloud has led the Microsoft recovery in recent years, and the Azure team is doubling down on that momentum with a third acquisition in as many months.

The financial details of the deal have not been revealed, though Movere will join the Microsoft Azure family, adding migration smarts to an already comprehensive armoury.

“As cloud growth continues to unlock opportunities for our customers, cloud migration is increasingly important for business’s digital strategy,” said Jeremy Winter Partner Director for Microsoft Azure. “Today, I am pleased to announce that Microsoft has acquired Movere, an innovative technology provider in the cloud migration space.”

Founded in 2008 as Unified Logic, the focus of the business was altered in 2014 after the management team experienced difficulties in migrating their business onto the Azure platform. The start-up has been a partner of Microsoft for more than a decade, though in the last five years, it has been more acutely focusing on migration challenges for customers.

For Microsoft, this is just another tool it can talk to potential customers about, adding to two acquisitions over the last couple of weeks.

In July, the Azure team announced the acquisition of BlueTalon, a firm which aims to simplify data privacy and governance across modern data estates. Just after in August, jClarity was added to the mix. jClarity, a leading contributor to the AdoptOpenJDK project, will help teams at Microsoft to leverage advancements in the Java platform.

Alongside Amazon AWS, Microsoft Azure is leading the pack in the cloud world and it does not want to give any opportunity for the ‘also rans’ to close the gap. These acquisitions are simply increasing the breadth, depth and variety of the Azure proposition.

And the importance of the cloud to Microsoft should never be under-estimated.

After joining the Microsoft in 2014, CEO Satya Nadella shifted the focus of the business towards the cloud. Azure was the new poster boy of the firm, which was looking like a shadow of the dominant player which dominated the 90s and 00s.

Since that point, total revenues have grown to $110.36 billion in 2018, from $86.833 billion in 2014. Operating income increased to $35.058 billion in 2018, up from $27.759 billion in 2018. And looking at market capitalisation, Microsoft is now valued at $1.05 trillion, the largest in the technology world.

The cloud is driving Microsoft forward, and it is not afraid to spend some cash to capitalise on the momentum.

Losing face in seconds: the app takes deepfakes to a new depth

Zao, a new mobile app coming out of China, can replace characters in TV or movie clips with the user’s own facial picture within seconds, raising new privacy and fraud concerns.

Developed by Momo, the company behind Tantan, China’s answer to Tinder, Zao went viral shortly after it was made available on the iOS App Store in China, Japan, India, Korea, and a couple of other Asian markets. It allows users to swap a character in a video clip for the user’s own face. The user would choose a character in a clip from the selections, often iconic Hollywood movies or popular TV programs, upload his or her own picture to be used, and let the app do the swapping in the cloud. In about eight seconds the swap is done, and the user can share the altered clip on social media.

While many are enjoying the quirkiness of the app, others have raised concerns. First there is the concern for privacy. Before a user can upload their pictures to have the app do the swapping, they have to log in with their phone number and email address, literally losing face and giving away identification to the app. More worryingly, the app, in its earlier version of terms and conditions would assume the full rights to the altered videos, therefore the rights to the users’ images.

Another concern is fraud. Facial recognition is used extensively in China, in benign and not so benign circumstances alike. In this case, when an altered video with the user’s face in it is shared on social networks, it is out of the user’s control and will be open to abuse by belligerent parties. One of such possible abuses will be payment. Alipay, the online and mobile payment system of Alibaba, has enabled retail check-out with face, that is, the customer only needs to look at the camera when leaving the retailer, and the bill will be placed on the users’ Alipay account. By adding a bit fun into the process, check-out by face not only facilitates retail transactions but also continuously enriches Alibaba’s database. (It would not be a complete surprise if this should be one reason behind the euphoria towards AI voice by Jack Ma, Alibaba’s founder.) The payment platform rushed to reassure its users that the system will not be tricked by the images on Zao, without sharing details on how.

Though Zao is not the first AI-powered deepfake application, it is one of the best worked out, therefore most unsettling ones. In another recent case, involving voice simulation and the controversial scholar Jordan Peterson, an AI-powered voice simulator enabled users to type out sentences up to 280 characters for the tool to read out loud in the distinct, uncannily accurate Jordan Peterson voice. This led Peterson to call for a wide-ranging legislation to protect the “sanctity of your voice, and your image.” He called the stealing of other people’s voice a “genuinely criminal act, regardless (perhaps) of intent.”

One can only imagine the impact of seamless image doctoring coupled with flawless voice simulation on all aspects of life, not the least on the already abated trust in news.

The good news is that the Zao developer is responding to users’ concerns. The app said on its official Weibo account (China’s answer to Twitter) that they understood the concerns about privacy and are thinking about how to fix the issues, but “please give us a little time”. The app’s T&C has been updated following the outcry. Now the app would only use the uploaded data for app improvement purposes. Once the user deletes the video from the app, it will also be deleted in the cloud.

Zao Weibo

Apple given golden opportunity to crack India with relaxed rules

Apple has struggled to gain any sort of traction in the Indian markets to date, but new Government rules could perhaps open the door a crack.

India is a market which represents a significant opportunity for the major players in the digital economy. It has the second-largest population globally and a smartphone penetration rate of roughly 24%, but one of the few markets worldwide where smartphone shipments are increasing quickly. Thanks to certain market disruptions, India is currently under-going its own digital revolution, with the increasingly wealthy middle-class easing into the digital euphoria Western consumers have been accustomed to as the norm.

Year Smartphone penetration1 Average income (US $)2
2018 23.9% 2,020
2017 21.9% 1,830
2016 20.4% 1,690
2015 18.6% 1,600

1Statista 2World Bank Group

The evolution of India and the surge of the digital economy in the country is moving at a dramatic pace. The opportunity for profit is monstrous, but this is a tricky market to crack.

This is the conundrum which Apple is currently facing. It currently has less than 2% of market share across the country (which isn’t increasing), and premium prices are stifling any genuine ambition to increase this.

Indian consumers are gradually spending more on devices, though by the time Apple’s prices would be deemed palatable, other brands might have already developed a strong sense of loyalty; do not underestimate the power of the Android/iOS divide.

Brand Market share
Xiaomi 31%
Samsung 26%
Vivo 6%
Oppo 6%
Realme >1%
Apple >1%

Figures curtesy of Counterpoint Research – Q2 2019 shipments

However, there is a glimmer of hope. The Indian Government has this week announced it will relax rules which dictate how foreign companies can operate in the country. Fortunately for Apple, the easement will allow it to sell directly to customers through its eCommerce channels.

In by-gone years, a foreign company had to source 30% of its production locally to create a retail presence in India. This presence includes online channels. With such reliance on China for the manufacturing elements of the supply chain, Apple has always struggled to meet these requirements. As a result, Apple’s devices have been sold through local partners, who add a premium to an already premium product; it has struggled to gain a foothold in the market.

Another element tied to this is the brand story. The Apple Store is a presence in 25 countries around the world, not only presenting a direct-selling opportunity, but a chance to offer an experience to current and potential customers. This is a fundamental building block in the Apple strategy, which is all about creating a brand and an identity to cultivate customers into the loyal iLifers you see around the world today.

Thanks to new elements being considered by the Indian Government, Apple now meets the requirements and will allegedly begin selling products through its own eCommerce channels in the coming months. These new considerations take into account more iPhones will be manufactured in India, not only for Indian consumers, but for export to Europe as well. This is massive win for Apple.

In short, there are two massive benefits for Apple. Firstly, it can own the purchasing relationship with the customer, dictating the messaging and reducing the price while maintaining profit margins. Secondly, it can begin to create the Apple experience for customers to nurture the sense of loyalty which is so critical to the Apple success over the years.

Apple is an incredibly successful smartphone manufacturer because it creates excellent devices, but the work which has been done to build loyalty with its customer base should never be underestimated.

Think back to the 90s and 00s when you saw Apple adverts on TV. None of these adverts ever really discussed products in the way you would expect but talked about the Apple experience. A huge proportion of advertising today is designed around story-telling and brand experience, but Apple was arguably one of the first to do it and remains one of the best at building this experience.

The result of these campaign was an ‘us’ and ‘them’ mentality which persists today. Whether it pins iOS versus Android, or Mac versus PC, the split is very apparent, and crossover is very rare. Not only does this segmented approach maintain loyalty for the individual products, it presents significant cross-selling opportunities. How many iPhone users have an iWatch, an iPad or a Mac also? We suspect a high percentage.

Shifting people into, and keeping them in, the Apple universe can partly be attributed back to the brand marketing campaigns, the closed ecosystem and ownership of sales channels and brand experience. And now, it presents another massive opportunity moving forward; software and services revenues.

Period Net sales Software and services revenue Percentage of total
Q3 2019 53,809 11,455 21.2
Q2 2019 58,015 11,450 19.7
Q1 2019 84,310 10,875 7.7
Q4 2018 62,900 9,981 15.8
Q3 2018 53,265 10,170 19
Q2 2018 61,137 9,850 16.1
Q1 2018 88,293 9,129 10.3

Figures taken from Apple financial reports – USD ($) in millions

Apple CEO Tim Cook has made a big deal about software and services, and he is very right. It attracts recurring revenues without the R&D and manufacturing price tag. There will of course still be R&D, but smartphones are very expensive products to produce at the level Apple customers demand.

Generating revenues through AppleCare, iTunes, Apple Music, iCloud, Apple Pay, Apple Books, Siri, maps, search or TV subscription services becomes substantially more profitable once people are bought into the ecosystem. And as you can see from the table above, it is becoming an increasingly important facet of the financial spreadsheets.

With many users persisting with the OS they have become accustomed to, if Apple wants to make India a profitable market, it will have to start embedding itself in the minds and lives of Indian consumers today.

The Indian market is one which offers great prospects and profits for those who play their hands wisely. Up to now, Apple would have been written off by many industry commentators, but will changes to the rules, the door is slightly ajar. But that is all it is right now.

Apple will have to convince smartphone users it is a better alternative than the Android ecosystem, while also justifying the premium it traditionally charges for products. This will be a very difficult battle, but Apple is in a better position today than it was yesterday.

US DoJ has found another Chinese target

The US Department of Justice is reportedly on the verge of putting the brakes on a Google and Facebook funded Pacific subsea cable over national security concerns over a Chinese partner.

According to the Wall Street Journal, the distrust between Washington and Beijing is on the verge of spreading to another company with links to the Chinese Government. The cable will be roughly 8,000 miles long, connecting Los Angeles with Hong Kong, with an initial estimated design capacity of 120 Tbps. It has been plugged as the longest and one of the fastest worldwide.

The objective of this subsea cable is to provide more diversity and resiliency across the Pacific. Most cables across the Atlantic land in Japan, though by taking a more direct route, theoretically better performance can be realised.

In itself, this all sounds reasonable, especially if companies like Google and Facebook want to increase their presence in the region, but this isn’t what officials have issue with. It is a Chinese company called Dr Peng Telecommunication and Media Group.

Cable Network

For those who aren’t familiar with Dr Peng, this company is one of the major players in the Chinese connectivity market. In years gone, Dr Peng used to be the market leader in the broadband space, though as the state-owned entities diversified into fixed line, margins and market share was squeezed. Today, Dr Peng, China Mobile, China Unicom and China Telecom control more than 90% of the broadband market.

With the three well-known CSPs putting more pressure on the broadband market, Dr Peng has looked to get out of the segment and diversify into new areas. This includes offering connectivity and customer care services to other telcos, it currently owns 15 data centres across China, and also, investments in subsea cables.

This is where the Department of Justice is finding issue with the trans-Pacific subsea cable. Like Huawei, Dr Peng’s ties to the Chinese Government has been deemed too close. The DoJ is citing national security concerns as the reason to put the brakes on deployment.

The deployment of this cable is currently being undertaken by Pacific Light Data Communication (PLDC), a wholly owned by Dr Peng Holding Hong Kong Limited and China Culture Silicon Valley Limited. PLDC is partnering Google and Facebook for investment in this subsea cable.

Once again, collateral damage to US firms has been ignored in the pursuit of national security. It is also perhaps another indication of the animosity between Washington and Silicon Valley. The occupant of the White House is not exactly on the friendliest of terms with the residents of Mountain View, so it should hardly come as a surprise this was not much of a consideration.

For Google and Facebook, this is unlikely to be welcome news. Offering better connections between the US and South East Asia presents significant opportunities to grow exposure and revenues in some fast-growing markets, such as Philippines, Malaysia or Indonesia. If the US firms do not capitalise, someone else will.

It seems that if this cable is to continue on its path, the parties involved would have to prove there is no way the Chinese Government could monitor, alter or stop internet traffic which would flow through it. Proving this resilience and security is going to be a very difficult task.

Another element to consider is the impact to the on-going conflict between Washington and Beijing. The Chinese Government has taken exception to US aggression against Huawei, and it is unlikely to be thrilled about another Chinese company being scrutinised in such a manner as it prevents it doing business.

For those who might have hoped an end to the trade-war might be in sight, the US Department of Justice might be about to add some more fuel to the flames.

VMWare goes on $4.8bn cloud spending spree

VMWare has doubled down on the cloud, writing two cheques totalling $4.8 billion to acquire security firm Carbon Black and software development firm Pivotal.

Founded in 2007, Carbon Black currently offers cloud security solutions to 5,600 customers and 500 partners globally. The cloud-native security platform leverages big data and behavioural analytics to provide endpoint protection against a growing variety and increasing velocity of cyber threats.

“The security industry is broken and ineffective with too many fragmented solutions and no cohesive platform architecture,” said Pat Gelsinger, CEO of VMWare. “By bringing Carbon Black into the VMware family, we are now taking a huge step forward in security and delivering an enterprise-grade platform to administer and protect workloads, applications and networks.”

“We now have the opportunity to seamlessly integrate Carbon Black’s cloud-native endpoint protection platform into all of VMware’s control points,” said Patrick Morley, CEO of Carbon Black. “This type of bold move is exactly what the IT and security industries have been looking to see for a very long time.”

With Carbon Black’s portfolio added to the fray, VMWare has said it can now create a modern security cloud platform for any application, running on any cloud, on any device. The aim is to add more intelligence to security functions, threat detection, as well as accelerating responses to limit the damage which can be inflicted.

This is the challenge which many enterprise organizations are facing around the world; the volume of threats is increasing, but the complexity is becoming an even greater headache. With security team limited, and due to a skills shortage, it looks likely to stay this way, many organizations are turning to artificial intelligence to shore up defences.

For Carbon Black, this could prove to be a very useful move. Although the footprint of the business is already impressive, leaning on the significant presence of the Dell Technologies family, the parent company of VMWare, could certainly open doors to new customers.

After years of neglect, it seems the security segments of the digital economy might finally get the attention deserved.

Heading over to the Pivotal acquisition, VMWare will have to part with $2.7 billion to bring this firm into the family.

“Kubernetes is emerging as the de facto standard for multi-cloud modern apps,” said Gelsinger. “We are excited to combine Pivotal’s development platform, tools and services with VMware’s infrastructure capabilities to deliver a comprehensive Kubernetes portfolio to build, run and manage modern applications.”

Pivotal will add to the ‘Any Cloud, Any App, Any Device’ strategy being set in place by VMWare. Following the acquisition of Heptio last year, VMWare has become one of the top three contributors to Kubernetes, the open-source container-orchestration system for automating application deployment, scaling, and management. With Pivotal in the stable, another leader in the Kubernetes ecosystem, the momentum will only head one direction.

Europe set to join the facial recognition debate

With more authorities demonstrating they cannot be trusted to act responsibly or transparently, the European Commission is reportedly on the verge of putting the reigns on facial recognition.

According to reports in The Financial Times, the European Commission is considering imposing new rules which would extend consumer rights to include facial recognition technologies. The move is part of a greater upheaval to address the ethical and responsible use of artificial intelligence in today’s digital society.

Across the world, police forces and intelligence agencies are imposing technologies which pose a significant risk of abuse without public consultation or processes to create accountability or justification. There are of course certain nations who do not care about privacy rights of citizens, though when you see the technology being implemented for surveillance purposes in the likes of the US, UK and Sweden, states where such rights are supposedly sacred, the line starts to be blurry.

The reasoning behind the implementation of facial recognition in surveillance networks is irrelevant; without public consultation and transparency, these police forces, agencies, public sector authorities and private companies are completely disregarding the citizens right to privacy.

These citizens might well support such initiatives, electing for greater security or consumer benefits over the right to privacy, but they have the right to be asked.

What is worth noting, is that this technology can be a driver for positive change in the world when implemented and managed correctly. Facial scanners are speeding up the immigration process in airports, while Telia is trialling a payment system using facial recognition in Finland. When deployed with consideration and the right processes, there are many benefits to be realised.

The European Commission has not confirmed or denied the reports to Telecoms.com, though it did reaffirm its on-going position on artificial intelligence during a press conference yesterday.

“In June, the high-level expert group on artificial intelligence, which was appointed by the Commission, presented the first policy recommendations and ethics guidelines on AI,” spokesperson Natasha Bertaud said during the afternoon briefing. “These are currently being tested and going forward the Commission will decide on any future steps in-light of this process which remains on-going.”

The Commission does not comment on leaked documents and memos, though reading between the lines, it is on the agenda. One of the points the 52-person expert group will address over the coming months is building trust in artificial intelligence, while one of the seven principles presented for consultation concerns privacy.

On the privacy side, parties implementing these technologies must ensure data ‘will not be used to unlawfully or unfairly discriminate’, as well as setting systems in place to dictate who can access the data. We suspect that in the rush to trial and deploy technology such as facial recognition, few systems and processes to drive accountability and justification have been put in place.

Although these points do not necessarily cover the right for the citizen to decide, tracking and profiling are areas where the group has recommended the European Commission consider adding more regulation to protect against abuses and irresponsible deployment or management of the technology.

Once again, the grey areas are being exploited.

As there are only so many bodies in the European Commission or working for national regulators, and technology is advancing so quickly, there is often a void in the rules governing the newly emerging segments. Artificial intelligence, surveillance and facial recognition certainly fall into this chasm, creating a digital wild-west landscape where those who do not understand the ‘law of unintended consequence’ play around with new toys.

In the UK, it was unveiled several private property owners and museums were using the technology for surveillance without telling consumers. Even more worryingly, some of this data has been shared with police forces. Information Commissioner Elizabeth Denham has already stated her agency will be looking into the deployments and will attempt to rectify the situation.

Prior to this revelation, a report from the Human Rights, Big Data & Technology Project attacked a trial from the London Metropolitan Police Force, suggesting it could be found to be illegal should it be challenged in court. The South Wales Police Force has also found itself in hot water after it was found its own trials saw only an 8% success rate.

Over in Sweden, the data protection regulator used powers granted by GDPR to fine a school which had been using facial recognition to monitor attendance of pupils. The school claimed they had received consent from the students, but as they are in a dependent position, this was not deemed satisfactory. The school was also found to have substandard processes when handling the data.

Finally, in the US, Facebook is going to find itself in court once again, this time over the implementation of facial recognition software in 2010. A class-action lawsuit has been brought against the social media giant, suggesting the use of the technology was non-compliant under the Illinois Biometric Information Privacy Act.

This is one example where law makers have been very effective in getting ahead of trends. The law in question was enacted in 2008 and demanded companies gain consent before any facial recognition technologies are introduced. This is an Act which should be applauded for its foresight.

The speed in which progress is being made with facial recognition in the surveillance world is incredibly worrying. Private and public parties have an obligation to consider the impact on the human right to privacy, though much distaste has been shown to these principles in recent months. Perhaps it is more ignorance, short-sightedness or a lack of competence, but without rules to govern this segment, the unintended consequences could be compounded years down the line.

Another point worth noting is the gathering momentum to stop the wrongful implementation of facial recognition. Aside from Big Brother Watch raising concerns in the UK, the City of San Francisco is attempting to implement an approval function for police forces, while Google is facing an internal rebellion. Last week, it emerged several hundred employees had signed a petition refusing to work on any projects which would aid the government in tracking citizens through facial recognition surveillance.

Although the European Commission has not confirmed or denied the report, we suspect (or at the very least hope) work is being taken on to address this area. Facial recognition needs rules, or we will find ourselves in a very difficult position, similar to today.

A lack of action surrounding fake news, online bullying, cybersecurity, supply chain diversity and resilience, or the consolidation of power in the hands of a few has created some difficult situations around the world. Now the Commission and national governments are finding it difficult to claw back the progress of technology. This is one area where the European Commission desperately needs to get ahead of the technology industry; the risk and consequence of abuse is far too great.

Telia toys with facial recognition for ice cream payments

In the ever-lasting search for 5G usecases, Telia has teamed-up with Finnish bank OP to trial facial recognition payment solutions.

While facial recognition technologies are taking a bit of a reputational beating at the moment, there are promising usecases in the pipeline. The issue which is not being discussed here, though certainly warrants more attention in the public domain, is the ethical, responsible and transparent application of the technology.

However, this example, authenticating payments, would appear to be a very logical application of the technology.

Firstly, biometrics are becoming increasingly normalised in payments and financial services authentication through fingerprints or vocal recognition, this is just one step further. Secondly, it is theoretically more secure than current identification and authentication techniques. And finally, banks already have trusted relationships with the consumer, and are yet to be caught up with a privacy scandal.

“Facial payment is a good example of a service that benefits from the capacity increase and lower latency of 5G,” said Janne Koistinen, Head of Telia Finland’s 5G programme. “5G will also take the security of mobile connections to the next level, which is interesting for example for payment and other financial services.”

Using the biometric template uploaded through a camera prior to the purchase with the customers bank, a connected device is used by the merchant to authenticate the individual. The customer then authorises the purchase with a simple click once their face has been recognised.

However, 5G would appear to be key here, largely thanks to the advances in lower latency which can be experienced. Slow service could certainly hinder experience and the commercial benefits promised.

“Besides security, a smooth user experience is important for customers,” said Kristian Luoma, Head of OP Lab. “5G makes the service faster and is therefore the perfect partner for Pivo Face Payment. We believe that the trial with Telia opens a new window to the future.”

Although fingerprints and vocal patterns are theoretically unique to each person, there are environmental factors which might hinder authentication. For example, dirt or grease stop the fingerprint reader from worker, or background noise could impact performance for vocal readers.

Facial recognition is also cheaper. Most smartphones or tablets already have a camera, so no specialist equipment needs to be built into the devices. The camera does not need to be high-end, just functional, therefore the expense is mainly on the software side. It is also a lot more accessible, in that everyone has a face and rarely covers it up when in a store.

For the moment, this trial has been limited to an ice-cream van in Vallila, though it is easy to see the wider applications in numerous different settings.

The challenge which such initiatives might face is the increasingly negative perception of facial recognition. This reputation the technology is working up is largely down to the unethical or secretive application in surveillance. This is a much larger topic which needs to be discussed in the public domain, however this initiative does demonstrate the benefits of facial recognition.

FTC Chair kicks off race to tackle big tech before it’s too late

A race seems to be heating up in the US. On one side, government officials are looking to tackle the influence of big tech, and on the other, Silicon Valley is trying to make it as difficult as possible.

Speaking to the Financial Times, Chairman of the FTC Joseph Simons has stated he believes efforts from Facebook CEO Mark Zuckerberg to more intrinsically integrate the different platforms could seriously complicate his own investigation. Back in July, it was unveiled the FTC was conducting a probe to understand whether competition has been negatively impacted by the social media giant.

However, Facebook has gone on the offensive and Simons is clearly not thrilled about it.

“If they’re maintaining separate business structures and infrastructure, it’s much easier to have a divestiture in that circumstance than in where they’re completely enmeshed, and all the eggs are scrambled,” said Simons.

This is the issue which the FTC is facing; Facebook is more closely integrating the separate brands. From a commercial perspective, this will allow the social media giant to cross-pollinate the platforms, potentially increasing revenues and enhancing the data-analytics machine, though it will also make divestments much more difficult to enforce.

Looking across the big names in Silicon Valley, this is a common business practice. The commercial benefits are of course very obvious, but it could be viewed as a defensive strategy in preparation for any snooping from government agencies.

At Google, with the benefit of hindsight, some regulators and politicians might have wanted to have block the acquisitions of Android, YouTube or artificial intelligence firm DeepMind. These acquisitions have led Google to become one of the most influential companies on the planet, though it does appear regulators at the time did not have the vision to understand the long-term impact. Now the services are so deeply embedded and inter-twined it is perhaps unfeasible to consider divestments.

Amazon is another company some of these politicians would love to tackle, but how do you go about breaking-up such a complex business, where the moving parts are becoming increasingly reliant on each-other?

Going back almost two decades, this is not the first-time regulators have attempted to tackle an overly influential player. Thanks to dominance in the PC arena, Microsoft was deemed to be negatively influencing competition when it came to software and applications. Despite Microsoft being forced to settle the case with the Department of Justice in 2001, the concessions stopped far short of a company break-up.

As part of the settlement, Microsoft agreed to make it easier competitors to get their software more closely integrated with the Windows OS, by breaking the company into two separate units, one to produce the operating system, and one to produce other software components. This was a tough pill for Microsoft to swallow, but it was a favourable outcome for the internet giant.

One view on this outcome is that Microsoft managed to structure its business in such a way it became almost impossible to split-up. If the technology giants of today can learn some lessons from Microsoft, they might well be able to circumnavigate any aggression from the US government.

Although the FTC is stealing the headlines here, it is not the only party looking to tackle the influence of Silicon Valley.

The House Judiciary Committee’s subcommittee that deals with antitrust has already summoned Apple, Amazon, Facebook and Google to testify. This investigation is also looking at the potential negative impact these monstrously large companies are having on competition. A couple of weeks later, the Department of Justice also opened its own probe.

Of course, there are also posturing politicians who are aiming to plug for PR points by slamming Silicon Valley. This is a very popular strategy, with the likes of Virginia Senator Mark Warner and Presidential hopeful Elizabeth Warren taking a firm stance. President Trump has rarely been a friend of Silicon Valley either.

Another interest element to consider are the lawyers. Reports have emerged this morning to suggest as many as 20 State Attorney Generals will also be launching their own investigation. The threat of legal action could be very worrying for Silicon Valley, with a number of the lawyers already suggesting they do not like the way the digital economy is evolving, with the concentration of power one of the biggest problems.

The US has generally tolerated monopolies or an unreasonable concentration of power in economic verticals to a point, generally until infrastructure has been sorted, though the pain threshold might be getting to close. This has been seen with a break-up of Standard Oil’s monopoly, as well as splitting the Bell System, a corporation which was a monopoly in some regions for more than a century, into the Baby Bells across North America in the 1980s.

The internet giants will never publicly state they are participating in strategies which in-effect act as a hindrance to government agencies, but it must be a pleasant by-product. First and foremost, the internet giants will want to integrate different products and services for commercial reasons, operational efficiencies or increased revenues for example, however one eye will be cast on these investigations.

It does appear there is an arms race emerging. Government agencies and ambitious politicians are collecting ammunition for an assault on Silicon Valley, and the internet giants are shoring up defences to ensure a continuation of the status quo. This is a battle for power, and its one the US Government could very feasibly lose.