German regulator effectively confirms IBM/T-Systems talks

As it does from time-to-time, German regulator Bundeskartellamt has published a list of mergers and acquisitions which is evaluating. IBM and T-Systems are lucky enough to make the list.

Reports of the discussions emerged over the weekend, with IBM rumoured to be considering taking the mainframe service business unit off the hands of the struggling T-Systems. Although the specifics of the deal are not completely clear right now, it would hardly be a surprise to learn T-Systems is attempting to slim the business down.

On the Bundeskartellamt website, there is a page which lists some of the main transactions which the regulator is considering in its role as merger overseer. These are mainly deals which are in the ‘first phase’ and usually passed unless there are any competition concerns. Although the description is not detailed, it lists IBM will be acquiring certain assets from T-Systems.

The news was initially broken by German-language newspaper Handelsblatt, quoting an internal email which suggested 400 employees would be transferred to the IBM business in May. Subsequently IT-Zoom has suggested IBM will be paying €860 million for the business unit.

The origins of such a deal can only lead back to one place; the office of T-Systems CEO Adel Al-Saleh. Al-Saleh was initially brought to the firm, having previously worked at IBM for almost two decades, to trim costs and salvage a business unit which, recently, has been nothing but bad news for parent company Deutsche Telekom. Aside from this saga, job cuts of roughly 10,000 have been announced since Al-Saleh’s appointment.

Confirmed back in June, the 10,000 job cuts were a result of a long-time losing battle to the more agile and innovative players such as AWS and Microsoft. Al-Saleh’s objective was to trim the fat, focusing on the more lucrative contracts, as well as more profitable, emerging segments of the IT and telco world.

While T-Systems and IBM do already have an established relationship, it seems options are running thin to make this business work effectively. With headcount going down from 37,000 to 27,000, its footprint dropping from 100 cities to 10 and this deal working through the cogs as we speak, Deutsche Telekom employees will hope this is the last of the bad news. Whether Al-Saleh feels this is enough restructuring to make the business work remains to be seen.

Heavy Facebook users make bad choices – study

A recent study from Michigan State University suggests Facebook might be having more of an impact on our lives than simply making us less socially capable.

With several departments contributing to the research, the results suggest some slightly worrying trends. As with everything to do with academia and theoretical pursuits, claims have to be taken with a pinch of salt, though it will hardly come as a surprise that our obsession with the virtual world is having a negative effect in our physical one. In this case, the academics suggest our ability to make sensible and logical decisions is being impaired.

Entitled ‘Excessive social media users demonstrate impaired decision making in the Iowa Gambling Task’, the paper measured how reliant on social media users are, then asked the same users to take the ‘Iowa Gambling Task’, which is thought to simulate real-life decision making. The results suggest the more reliant individuals are on social media networks, the higher the likelihood these individuals would make riskier decisions.

71 Facebook users were asked to rank their own social media habits with a measure known as the Bergen Facebook Addiction Scale, before taking the Iowa Gambling Task. The Iowa Gambling Task presents four virtual decks of cards, with the user told each deck holds cards that will either reward or penalize them, with each deck being weighted differently. Two of the decks offer larger rewards, though the losses outweigh the gains, while the other two have smaller rewards and lesser punishments, allowing for a net gain.

Most healthy participants sample cards from each deck, and after about 40 or 50 selections are fairly good at sticking to the good decks, whereas some with various mental conditions to persevere with bad decks, sometimes even with the knowledge they are losing money. The concept of ‘chasing the loss’ seems to be quite apparent here.

In a world where social media networks are potentially creating echo chambers for more extreme opinion, the combination with less considered decision-making leads to a worrying outcome. Perhaps this might be one explanation why some recent decisions in elections and referendums are removed from what would be considered the status quo and would appear to be more ‘confrontational’ than behaviour see during yesteryear.

“We observed that more severe, excessive SNS (social networking sites) use is associated with worse performance in the last 20 trials of the IGT (Iowa Gaming Test),” the paper states.

“Our results have important societal implications. SNS use is ubiquitous and continues to grow, likely resulting in more individuals displaying excessive, problematic SNS use. Meanwhile, companies continue to develop features on SNS platforms to make them even more compelling.”

Those who self-identified as excessive Facebook users performed notably poorer in the tests than those who believed themselves to have a more moderate approach to social media. The behaviour was perhaps most worrying in the final stages of the test, as while the excessive users had the same amount of time to realise which decks were ‘bad’ and which were ‘good’, the riskier choices were still made.

What is worth noting is the limitations of the research. Firstly, the work has been conducted in a controlled, theoretical environment, not the real-world. Secondly, only the impact of Facebook users were measured, not all social media sites. Thirdly, the Iowa Gaming Test is not without its critics. Finally, this test was conducted in a mathematical fashion not clinical, which is an important differentiation to make when claiming conclusions which are linked to psychological behaviour.

That said, the tests should encourage more investigation. Today’s world is being increasingly influenced by the footprint and power of social media, though little work has been done to understand the long-term impacts or even tightly regulate the space. This might be down to the age of this segment, in comparison to traditional industries the internet is still a baby, or due to the fact few outside Silicon Valley understand how Silicon Valley actually works. Whatever the reason, the internet players have been granted a relatively light-touch regulatory landscape.

As the days roll into years, we will discover more of the positive and negative impacts of social media on our lives, though considering the rate of expansion, this education process might be taking too long. Social media sites are rapidly developing in every aspect of our physical and virtual lives, while simultaneously collecting the profits to fuel more aggressive growth in the years to come. The more we find out about platforms like Facebook and the potential impact on our lives, the less we like, though this has done little to slow the gathering momentum behind the segment.

After a year which has seen the rise of extreme political groups utilising the power of social media, Facebook curating the biggest data privacy scandal to date, Google misleading the user over location tracking policies, as well as numerous other nefarious activities, perhaps this paper is further evidence governments need a tighter handle on the internet. Few would complain over greater regulatory scrutiny in this sector, though whether governments have the know-how and resource to actually do it is another matter.

The connected car takes pole position at CES

With the glitz and glamour of Las Vegas, it perhaps shouldn’t come as much of a surprise the connected car is stealing the headlines at the 2019 Consumer Electronics Show (CES).

Starting with Audi, pairing up with Disney the team has unveiled an in-car VR entertainment system which adapts the content to the movements of the car. The game itself is called ‘Marvel’s Avengers: Rocket’s Rescue Run’ and is based on the journey itself. If the car turns right or accelerates the spaceship in the experience does the same.

While Audi is the parent company, the open platform has been brought to the market through subsidy Holoride. Audi will license the technology to the start-up, which will be made available to all carmakers and content developers in the future.

“Creative minds will use our platform to come up with fascinating worlds that turn the journey from A to B into a real adventure,” said Nils Wollny, Head of Digital Business at Audi, and future the CEO of Holoride. “We can only develop this new entertainment segment by adopting a cooperative, open approach for vehicle, device and content producers.”

Moving across to the mapping side of the connected vehicle, Intel’s Mobileye announced a new agreement with UK mapping agency Ordnance Survey. Although this might not be the most exciting aspect of the connected car space, it is perhaps the most crucial; without the relevant location data, the OS is pretty much useless.

While this data will certainly supplement the Intel offering for the connected car space, Mobileye and Ordnance Survey will use the data to create new customized solutions derived from the location intelligence, to help companies realise the riches promised through the city segment.

“One key, and common, learning is that detailed and accurate geospatial data is a must for the success of these projects,” said Neil Ackroyd, Ordnance Survey CEO. “We envisage this new rich data to be key to how vehicles, infrastructure, people and more will communicate in the digital age. Our partnership with Mobileye further enhances our commitment to supporting Britain as a world-leading center for digital and tech excellence.”

For chipmaker Qualcomm there’s been no rest to check out the shows. While Audi, Ducati and Ford have all been using its tech to run various demos across the show, the team has also teamed up with Amazon’s Alexa to demonstrate in-car artificial intelligence.

“The vision behind Qualcomm Technologies’ automotive solutions is to continuously improve and expand the realm of possibilities for in-car experiences while delivering unparalleled safety-conscious solutions,” said Nakul Duggal, SVP of Product Management, Qualcomm.

“Leveraging Amazon’s natural language processing technology, along with services like Amazon Music, Prime Video, Fire TV and Audible, allows us to offer an exclusive, interactive in-car experience for both the drivers and passengers to leverage the latest innovations in a natural, intuitive way.”

The demonstration makes use of Qualcomm’s Smart Audio Platform to include immersive natural language instructions involving in-vehicle navigation, points of interest outside the car and multimedia services which users will use every day at home with Alexa.

“Our vision is for Alexa to be available anywhere customers want to interact with her, whether they’re at home, in the office or on the go,” said Ned Curic, VP of Alexa Auto at Amazon.

This is of course not the only bit of news featuring Amazon this week, as the team announced a partnership with navigation firm Here yesterday. The tie in gives the Here platform a smarter, voice UI and gives Alexa a useful little foray into the connected car segment, an area Google’s virtual assistant has got a little bit of a head-start in.

Finally, AT&T and Toyota Motor North America announced they will enable 4G LTE connectivity for various Toyota and Lexus cars and trucks across the US, starting at the end of the year. As part of the deal, owners of the relevant vehicles will also receive unlimited data plans from AT&T, while the vehicle will also become a wifi hotspot.

“Cars are the ultimate mobile device. Working with Toyota and KDDI we will bring the benefits of connectivity to millions of consumers,” said Chris Penrose, President of IoT Solutions at AT&T.

“This new technology deepens our relationship with Toyota. And we couldn’t be happier to continue working with them. We’re both founding members of the American Center for Mobility testing facility for connected and automated vehicles, where we will help deliver the future of connectivity.”

Huawei launches Kunpeng 920 chip to bag big data and edge computing

Huawei has unveiled a new ARM-based CPU called Kunpeng 920, designed to capitalise on the growing euphoria building around big data, artificial intelligence and edge-computing.

The CPU was independently designed by Huawei based on ARMv8 architecture license, with the team claiming it improves processor performance by optimizing branch prediction algorithms, increasing the number of OP units, and improving the memory subsystem architecture. Another bold claim is the CPU scores over 930 in the SPECint Benchmarks test, 25% higher than the industry benchmark.

“Huawei has continuously innovated in the computing domain in order to create customer value,” said William Xu, Chief Strategy Marketing Officer of Huawei.

“We believe that, with the advent of the intelligent society, the computing market will see continuous growth in the future. Currently, the diversity of applications and data is driving heterogeneous computing requirements. Huawei has long partnered with Intel to make great achievements. Together we have contributed to the development of the ICT industry. Huawei and Intel will continue our long-term strategic partnerships and continue to innovate together.”

The launch itself is firmly focused on the developing intelligence economy. With 5G on the horizon and a host of new connected services promised, the tsunami of data and focus on edge-computing technologies is certain to increase. These are segments which are increasingly featuring on the industry’s radar and Huawei might have stolen a couple of yards on the buzzword chasers ahead of the annual get-together in Barcelona.

“With Kirin 980, Huawei has taken smartphones to a new level of intelligence,” said Xu. “With products and services (e.g. Huawei Cloud) designed based on Ascend 310, Huawei enables inclusive AI for industries. Today, with Kunpeng 920, we are entering an era of diversified computing embodied by multiple cores and heterogeneity. Huawei has invested patiently and intensively in computing innovation to continuously make breakthroughs.”

Another interesting angle to this launch is the slight shuffle further away from the US. With every new product which Huawei launches, more of its own technology will feature. In years gone, should Huawei have wanted to launch any new servers or edge computing products it would have had to look externally for CPUs. Considering Intel and AMD have a strong position in these segments, supply may have come from the US.

For any other company, this would not be a problem. However, considering the escalating trade war between the US and China, and the fact Huawei’s CFO is currently awaiting trial for violating US trade sanctions with Iran, this is a precarious position to be in.

Cast you mind back to April. ZTE had just been caught red-handed violating US trade sanctions with Iran and was subsequently banned from using any US components or IP within its supply chain. Should the courts find Huawei guilty of the same offence, it is perfectly logical to assume it would also face the same punishment.

This is the suspect position Huawei finds itself in and is currently trying to correct. Just before Christmas, Huawei’s Rotating CEO Ken Hu promised it’s supply chain was in a better position than ZTE’s and the firm wouldn’t go down the same route, while in the company’s New Year’s message, Rotating Chairman Guo Ping said the focus of 2019 would be creating a more resilient business. These messages are back up by efforts in the R&D team, such as building an alternative to the Android operating system which would power its smartphones should it be banned from using US products.

Perhaps the Kunpeng 920 could be seen as another sign Huawei is distancing itself from the US, while also capitalising on a growing which is about to blossom.

Privacy International points GDPR finger at Facebook

An investigation from privacy advocacy group Privacy International on the flow of personal information has questioned whether Facebook and its advertisers are violating Europe’s GDPR.

To date there have not been any major challenges using the data privacy regulation. There have of course been numerous violations of user privacy, but as these incidents occurred prior to the implementation of GDPR, the old-version of the rules and punishments were used. This investigation from Privacy International could prove to be a landmark.

The investigation itself questions whether Facebook and the app-developers which use its platform for data collection and user identification is acting responsibly and legally. Using the Facebook Software Development Kit (SDK), data is automatically sent back to the social media giant, irrelevant as to whether consent has been collected, or even if the user has a Facebook book account.

“Facebook routinely tracks users, non-users and logged-out users outside its platform through Facebook Business Tools,” Privacy International states on its website.

“App developers share data with Facebook through the Facebook Software Development Kit (SDK), a set of software development tools that help developers build apps for a specific operating system. Using the free and open source software tool called ‘mitmproxy’, an interactive HTTPS proxy, Privacy International has analysed the data that a number of Android apps transmit to Facebook through the Facebook SDK.”

After testing dozens of different apps, Privacy International claims 61% automatically transfer data to Facebook the moment a user opens the app, while others routinely send Facebook data that is incredibly detailed. Some of these users may be logged out of the platform or might not even have a Facebook account in the first place. Developers tested include travel comparison app Kayak, job search company Indeed and crowd-sourced search service Yelp.

Looking at the Kayak example, not only was information transferred back to Facebook once the app was opened and closed, but also during each stage of the search process. In the example Privacy International gives, the user selected a flight from London Gatwick to Tokyo between December 2 and 5, Narita Airport was then selected, before another search was conducted searching for hotels for two adults in the city. All of this information was sent to Facebook without prompt, despite Kayak claiming, ‘don’t worry, we’ll never share anything without your permission’, when the user signs in.

Alone this information is useful, but not incredibly so. However, when you consider the huge number of apps which will be sending information back to Facebook, an incredibly detailed picture of the user can be built. Using the other apps tested in this investigation, Facebook could also learn or make assumptions about the user’s religion (Muslim Pro), music interests (Shazam), salary and disposable income (Indeed Job Search) and interest in physical activities (MyFitnessPal). All of this information could be used to feed incredibly personalised advertisements to the user.

The big question which remains is whether this could be perceived as a violation of GDPR. Facebook has stated it released an update to the SDK which allowed developers to suspend the automatic data transfers, though this was only for version 4.34 and later. With the Opt-out section (the Google advertising ID) automatically turned off, some might suggest the user is being led as opposed to asked.

Another factor which could work against Facebook is the collection of data on users who do not have Facebook accounts; this is much more suspect. As per GDPR, a company has to have a specific and justified reason to collect personal information. It does appear Facebook is collecting information on users despite having no purpose or valid reason to do so.

With fines for violating GDPR up to 3% of annual turnover, the stakes are very high. This could prove to be one of the first tests of the rules, designed to protect the privacy of the general public, and few will be surprised Facebook is a central character in the story. With the social media giant seemingly antagonising many governments around the world, we suspect there will be a queue forming to have a swing with the sharp GDPR stick.

The biggest stories of 2018 all in one place

2018 has been an incredibly business year for all of us, and it might be easy to forget a couple of the shifts, curves, U-turns and dead-ends.

From crossing the 5G finish line, finger pointing from the intelligence community, the biggest data privacy scandal to date and a former giant finally turning its business around, we’ve summarised some of the biggest stories of 2018.

If you feel we’ve missed anything out, let us know in the comments section below.

Sanction, condemnation and extinction (almost)

ZTE. Three letters which rocked the world. A government-owned Chinese telecommunications vendor which can’t help but antagonise the US government.

It might seem like decades ago now but cast your mind back to April. A single signature from the US Department of Commerce’s Bureau of Industry and Security (BIS) almost sent ZTE, a company of 75,000 employees and revenues of $17 billion, to keep the dodo company.

This might have been another move in the prolonged technology trade war between the US and China, but ZTE was not innocent. The firm was caught red-handed trading with Iran, a country which sits very prominently on the US trade sanction list. Trading with Iran is not necessarily the issue, it’s the incorporation of US components and IP in the goods which were sent to the country. ZTE’s business essentially meant the US was indirectly helping a country which was attempting to punish.

The result was a ban, no US components or IP to feature in any ZTE products. A couple of weeks later manufacturing facilities lay motionless and the company faced the prospect of permanent closure, such was its reliance on the US. With a single move, the US brought one of China’s most prominent businesses to its knees.

Although this episode has been smoothed over, and ZTE is of course back in action, the US demonstrated what its economic dirty bombs were capable of. This was just a single chapter in the wider story; the US/China trade war is in full flow.

Tinker, tailor, Dim-sum, Spy

This conflict has been bubbling away for years, but the last few months is where the argument erupted.

Back in 2012, a report was tabled by Congressman Mike Rogers which initially investigated the threat posed by Chinese technology firms in general, and Huawei specifically. The report did not produce any concrete evidence, though it suggested what many people were thinking; China is a threat to Western governments and its government is using internationally successful companies to extend the eyes of its intelligence community.

This report has been used several times over the last 12 months to justify increasingly aggressive moves against China and its technology vendors. During the same period, President Trump also blocked Broadcom’s attempts to acquire Qualcomm on the grounds of national security, tariffs were imposed, ZTE was banned from using US technologies in its supply chain and Huawei’s CFO was arrested in Canada on the grounds of fraud. With each passing month of 2018, the trade war was being cranked up to a new level.

Part of the strategy now seems to be undermining China’s credibility around the world, promoting a campaign of suggestion. There is yet to be any evidence produced confirming the Chinese espionage accusations but that hasn’t stopped several nations snubbing Chinese vendors. The US was of course the first to block Huawei and ZTE from the 5G bonanza, but Australia and Japan followed. New Zealand seems to be heading the same way, while South Korean telcos decided against including the Chinese vendors on preferred supplier lists.

The bigger picture is the US’ efforts to hold onto its dominance in the technology arena. This has proved to be incredibly fruitful for the US economy, though China is threatening the vice-like grip Silicon Valley has on the world. The US has been trying to convince the world not to use Chinese vendors on the grounds of national security, but don’t be fooled by this rhetoric; this is just one component of a greater battle against China.

Breakaway pack cross the 5G finish line

We made it!

Aside from 5G, we’ve been talking about very little over the last few years. There might have been a few side conversations which dominate the headlines for a couple of weeks, but we’ve never been far away from another 5G ‘breakthrough’ or ‘first’. And the last few weeks of 2018 saw a few of the leading telcos cross the 5G finish line.

Verizon was first with a fixed wireless access proposition, AT&T soon followed in the US with a portable 5G hotspot. Telia has been making some promising moves in both Sweden and Estonia, with limited launches aiming to create innovation and research labs, while San Marino was the first state to have complete coverage, albeit San Marino is a very small nation.

These are of course very minor launches, with geographical coverage incredibly limited, but that should not take the shine off the achievement. This is a moment the telco and technology industry has been building towards for years, and it has now been achieved.

Now we can move onto the why. Everyone knows 5G will be incredibly important for relieving the pressure on the telco pipes and the creation of new services, but no-one knows what these new services will be. We can all make educated guesses, but the innovators and blue-sky thinkers will come up with some new ideas which will revolutionise society and the economy.

Only a few people could have conceived Uber as an idea before the 4G economy was in full flow, and we can’t wait to see what smarter-than-us people come up with once they have the right tools and environment.

Zuckerberg proves he’s not a good friend after all

This is the news story which rocked the world. Data privacy violations, international actors influencing US elections, cover ups, fines, special committees, empty chairs, silly questions, knowledge of wrong-doing and this is only what we know so far… the scandal probably goes deeper.

It all started with the Cambridge Analytica scandal, and a Russian American researcher called Aleksandr Kogan from the University of Cambridge. Kogan created a quiz on the Facebook platform which exposed a loop-hole in the platform’s policies allowing Kogan to scrape data not only from those who took the quiz, but also connections of that user. The result was a database containing information on 87 million people. This data was used by political consulting firm Cambridge Analytica during elections around the world, creating hyper-targeted adverts.

What followed was a circus. Facebook executives were hauled in-front of political special committees to answer questions. As weeks turned into months, more suspect practices emerged as politicians, journalists and busy-bodies probed deeper into the Facebook business model. Memos and internal emails have emerged suggesting executives knew they were potentially acting irresponsibly and unethically, but it didn’t seem to matter.

As it stands, Facebook is looking like a company which violated the trust of the consumer, has a much wider reaching influence than it would like to admit, and this is only the beginning. The only people who genuinely understand the expanding reach of Facebook are those who work for the company, but the curtain is slowly being pulled back on the data machine. And it is scaring people.

Big Blue back in the black

This might not have been a massive story for everyone in the industry, but with the severe fall from grace and rise back into the realms of relevance, we feel IBM deserves a mention.

Those who feature in the older generations will remember the dominance of IBM. It might seem unusual to say nowadays, but Big Blue was as dominant in the 70s as Microsoft was in the 90s and Google is today. This was a company which led the technology revolution and defined innovation. But it was not to be forever.

IBM missed a trick; personal computing. The idea that every home would have a PC was inconceivable to IBM, who had carved its dominant position through enterprise IT, but it made a bad choice. This tidal wave of cash which democratised computing for the masses went elsewhere, and IBM was left with its legacy business unit.

This was not a bad thing for years, as the cash cow continued to grow, but a lack of ambition in seeking new revenues soon took its toll. Eight years ago, IBM posted a decline in quarterly revenues and the trend continued for 23 consecutive periods. During this period cash was directed into a new division, the ‘strategic imperatives’ unit, which was intended to capitalise on a newly founded segment; intelligent computing.

In January this year, IBM proudly posted its first quarterly growth figures for seven years. Big Blue might not be the towering force it was decades ago, but it is heading in the right direction, with cloud computing and artificial intelligence as the key cogs.

Convergence, convergence, convergence

Convergence is one of those buzzwords which has been on the lips of every telco for a long time, but few have been able to realise the benefits.

There are a few glimmers of promise, Vodafone seem to be making promising moves in the UK broadband market, while Now TV offers an excellent converged proposition. On the other side of the Atlantic, AT&T efforts to move into the content world with the Time Warner acquisition is a puzzling one, while Verizon’s purchase of Yahoo’s content assets have proved to be nothing but a disaster.

Orange is a company which is taking convergence to the next level. We’re not just talking about connectivity either, how about IOT, cyber-security, banking or energy services. This is a company which is living the convergence dream. Tie as many services into the same organisation, making the bill payer so dependent on one company it becomes a nightmare to leave.

It’s the convergence dream as a reality.

Europe’s Great Tax Raid

This is one of the more recent events on the list, and while it might not be massive news now, we feel it justifies inclusion. This developing conversation could prove to be one of the biggest stories of 2019 not only because governments are tackling the nefarious accounting activities of Silicon Valley, but there could also be political consequences if the White House feels it is being victimised.

Tax havens are nothing new, but the extent which Silicon Valley is making use of them is unprecedented. Europe has had enough of the internet giants making a mockery of the bloc, not paying its fair share back to the state, and moves are being made by the individual states to make sure these monstrously profitable companies are held accountable.

The initial idea was a European-wide tax agenda which would be led by the European Commission. It would impose a sales tax on all revenues realised in the individual states. As ideas go, this is a good one. The internet giants will find it much more difficult to hide user’s IP addresses than shifting profits around. Unfortunately, the power of the European Union is also its downfall; for any meaningful changes to be implemented all 28 (soon to be 27) states would have to agree. And they don’t.

Certain states, Ireland, Sweden and Luxembourg, have a lot more to lose than other nations have to gain. These are economies which are built on the idea of buddying up to the internet economy. They might not pay much tax in these countries, but the presence of massive offices ensure society benefits through other means. Taxing Silicon Valley puts these beneficial relationships with the internet players in jeopardy.

But that isn’t good enough for the likes of the UK and France. In the absence of any pan-European regulations, these states are planning to move ahead with their own national tax regimes; France’s 3% sales tax on any revenues achieved in the country will kick into action on January 1, with the UK not far behind.

What makes this story much more interesting will be the influence of the White House. The US government might feel this is an attack on the prosperous US economy. There might be counter measures taken against the European Union. And when we say might, we suspect this is almost a certainty, such is the ego of President Donald Trump.

This is a story which will only grow over the next couple of months, and it could certainly cause friction on both sides of the Atlantic.

Que the moans… GDPR

GDPR. The General Data Protection Regulation. It was a pain for almost everyone involved and simply has to be discussed because of this distress.

Introduced in May, it seemingly came as a surprise. This is of course after companies were given 18 months to prepare for its implementation, but few seemed to appreciate the complexity of becoming, and remaining compliant. As a piece of regulation, it was much needed for the digital era. It heightened protections for the consumer and ensured companies operating in the digital economy acted more responsibly.

Perhaps one of the most important components of the regulation was the stick handed to regulators. With technology companies growing so rapidly over the last couple of years, the fines being handed out by watchdogs were no longer suitable. Instead of defining specific amounts, the new rules allow punishments to be dished out as a percentage of revenues. This allows regulators to hold the internet giants accountable, hitting them with a suitably large stick.

Change is always difficult, but it is necessary to ensure regulations are built for the era. Evolving the current rulebook simply wouldn’t work, such is the staggering advancement of technology in recent years. Despite the headaches which were experienced throughout the process, it was necessary, and we’ll be better off in the long-run.

Next on the regulatory agenda, the ePrivacy Regulation.

Jio piles the misery on competitors

Jio is not a new business anymore, neither did it really come to being in 2018, but this was the period where the telco really justified the hype and competitors felt the pinch.

After hitting the market properly in early 2016, the firm made an impression. But like every challenger brand, the wins were small in context. Collecting 100,000s of customers every month is very impressive, but don’t forget India has a population of 1.3 billion and some very firmly position incumbents.

2017 was another year where the firm rose to prominence, forcing several other telcos out of the market and two of the largest players into a merger to combat the threat. Jio changed the market in 2017; it democratised connectivity in a country which had promised a lot but delivered little.

This year was the sweeping dominance however. It might not be the number one telco in the market share rankings, but it will be before too long. Looking at the most recent subscription figures released by the Telecom Regulatory Authority of India (TRAI), Jio grew its subscription base by 13.02 million, but more importantly, it was the only telco which was in the positive. This has started to make an impact on the financial reports across the industry, Bharti Airtel is particularly under threat, and there might be worse to come.

For a long-time Jio has been hinting it wants to tackle the under-performing fixed broadband market. There have been a couple of acquisitions in recent months, Den Networks and Hathway Cable, which give it an entry point, and numerous other digital services initiatives to diversify the revenue streams.

The new business units are not making much money at the moment, though Jio is in the strongest position to test out the convergence waters in India. Offering a single revenue stream will ensure the financials hit a glass ceiling in the near future, but new products and aggressive infrastructure investment plans promise much more here.

We’re not too sure whether the Indian market is ready for mass market fixed broadband penetration, there are numerous other market factors involved, but many said the initial Jio battle plan would fail as well.

Convergent business models are certainly an interesting trend in the industry, and Jio is looking like it could force the Indian market into line.

Redundancies, redundancies, redundancies

Redundancy is a difficult topic to address, but it is one we cannot ignore. Despite what everyone promises, there will be more redundancies.

Looking at the typical telco business model, this is the were the majority have been seen and will continue to be seen. To survive in the digitally orientated world, telcos need to adapt. Sometimes this means re-training staff to capitalise on the new bounties, but unfortunately this doesn’t always work. Some can’t be retrained, some won’t want to; the only result here will be redundancies.

BT has been cutting jobs, including a 13,000-strong cull announced earlier this year, Deutsche Telekom is trimming its IT services business by 25%, the merger between T-Mobile and Sprint will certainly create overlaps and resulting redundancies, while Optus has been blaming automation for its own cuts.

Alongside the evolving landscape, automation is another area which will result in a headcount reduction. The telcos will tell you AI is only there to supplement human capabilities and allow staff to focus on higher value tasks, but don’t be fooled. There will be value-add gains, but there will also be accountants looking to save money on the spreadsheets. If you can buy software to do a simple job, why would you hire a couple of people to do it? We are the most expensive output for any business.

Unfortunately, we have to be honest with ourselves. For the telco to compete in the digital era, new skills and new business models are needed. This means new people, new approaches to software and new internal processes. Adaptation and evolution is never easy and often cruel to those who are not qualified. This trend has been witnessed in previous industrial revolutions, but the pace of change today means it will be felt more acutely.

Redundancy is not a nice topic, but it is not always avoidable.

CMA backs super complaint against loyalty penalties

The Competition and Markets Authority (CMA) has backed a ‘super complaint’ raised by Citizens Advice which suggests UK consumers are being ripped off by loyalty penalties on services such as broadband.

The super complaint was raised by in September by Citizens Advice, asking the CMA to investigate whether customers were effectively being punished by service providers, so called stealth price rises for example. The areas being called into question were cash savings, mortgages, household insurance, mobile phone contracts and broadband.

The CMA agrees with the points raised by Citizens Advice, suggesting the segments in question gain £4 billion a year through ripping off loyal customers.

“Our work has uncovered a range of problems which leave people feeling ripped off, let down and frustrated,” said Andrea Coscelli, CEO of the CMA. “They shouldn’t have to be constantly ‘on guard’, spending hours searching for or negotiating a good deal, to avoid being trapped into bad value contracts or falling victim to stealth price rises.”

Looking specifically at the telcos, this is a frustrating point for many consumers. UK telcos show very little desire to reward customers, setting in processes and systems which make it impossible to leave. Many will give up on trying to navigate the red-tape maze as the poor experience proves to be favourable to the frustrations of trying to leave. By making this process as difficult as possible, the telcos don’t have to worry that much about retention and can instead focus on luring new customers.

The CMA has pointed this out during its own investigation, ensuring that one of the recommendations made to government and regulators will be to simplify the exiting process. This will intend to tackle the process, systems and the fees which customers face when attempting to secure a better deal.

It appears the telcos are much better at scaring customers away from exiting than enticing them to stay with positive customer service. Your correspondent can confirm this is the case after trying to end a Vodafone contract last year. It took a ridiculous amount of time, engagement with several staff who had no idea what they were doing (or was this trained in to make the process as painful as possible?) but the mission was stubbornly completed.

“We know that the better deals are often found by switching provider,” said Richard Neudegg, Head of Regulation at uSwitch.com. “But many companies make this more difficult by not being transparent enough about the options available or how to take your custom elsewhere. We are pleased to see the CMA identify this as an area for improvement, to ensure the power to get better deals is placed firmly in the hands of consumers.”

One specific complaints which has been firmly aimed at the telcos concerns subsidized handsets. The CMA highlights telcos should not be allowed to charge the same amount per month once the handset has been fully paid for. This will be a frustration from the consumer, but like the ridiculous nature of roaming fees, because the industry has stuck together little progress has been made.

Above all else, the CMA opinion adds to the already well-known position that telcos are not at all customer-centric organizations and have a lot to do if they want to be considered relevant for the digital economy.

The cloud is booming but no-one seems to have told Oracle

Revenues in the cloud computing world are growing fast with no end in sight just yet, but Oracle can’t seem to cash in on the bonanza.

This week brought joint-CEOs Safra Catz and Mark Hurd in front of analysts and investors to tell everyone nothing has really changed. Every cloud business seems to be hoovering up the fortunes brought with the digital era, demonstrating strong year-on-year growth, but Oracle only managed to bag a 2% increase, 1% for the cloud business units.

It doesn’t matter how you phrase it, what creative accounting processes you use, when you fix the currency exchange, Oracle is missing out on the cash grab.

Total Revenues were unchanged at $9.6 billion and up 2% in constant currency compared to the same three months of 2017, Cloud Services and License Support plus Cloud License and On-Premise License revenues were up 1% to $7.9 billion. Cloud Services and License Support revenues were $6.6 billion, while Cloud License and On-Premise License revenues were $1.2 billion. Cloud now accounts for nearly 70% of the total company revenues and most of it is recurring revenues.

Some might point to the evident growth. More money than last year is of course better, but you have to compare the fortunes of Oracle to those who are also trying to capture the cash.

First, let’s look at the cloud market on the whole. Microsoft commercial cloud services have an annual run rate of $21.2 billion, AWS stands at $20.4 billion, IBM $10.3 billion, Google cloud platform at $4 billion and Alibaba at $2.2 billion. Oracle’s annual run rate is larger than Google and Alibaba, those these two businesses are growing very quickly.

Using the Right Scale State of the Cloud report, enterprises running Google public cloud applications are now 19%, IBM’s applications are 15%, Microsoft at 58% and AWS at 68%. Alibaba is very low, though considering the scale potential it has in China, there is great opportunity for a catapult into the international markets. Oracle’s applications are only running in 10% of enterprise organizations who responded to the research.

Looking at the market share gains for last quarter, AWS is unsurprisingly sitting at the top of the pile collecting 34% over the last three months, Microsoft was in second with around 15%, while Google, IBM and Alibaba exceeded the rest of the market as well. Oracle sits in the group of ten providers which collectively accounted for 15% of cloud spending in the last quarter. These numbers shouldn’t be viewed as the most attractive.

Oracle is not a company which is going to disappear from the technology landscape, it is too important a service provider to numerous businesses around the world. However, a once dominant and influential brand is losing its position. Oracle didn’t react quick enough to the cloud euphoria and it’s looking like its being punished for it now.

Europe is losing in the race to secure digital riches – DT CEO

Despite politicians around the world declaring the importance of technology and insisting their nation is one of the world leaders in digital, Deutsche Telekom CEO Tim Hottges does not believe Europe is competing with the US and Asia.

This might seem like somewhat of a bold statement, but it is entirely true. The US, led by the internet players of Silicon Valley, have dominated the consumer technology world, while the China and Japan’s heavyweight industries have conquered the industrialised segments. Europe might have a few shining lights but is largely left to collect the scraps when the bigger boys are done feasting on the bonanza.

“Europe lost the first half of the digitalisation battle,” said Hottges, speaking at Orange’s Show Hello. “The second half of the battle is about data, the cloud and the AI-based services.”

In all fairness to the continent, there has been the odd glimmer of hope. Spotify emerged from Sweden, Google’s Deepmind was spun-out of Oxford University, while Nokia and Ericsson are reconfirming their place in the world. There is occasionally the odd suggestion Europe has the potential to offer something to the global technology conversation.

What has been achieved so far cannot be undone. The US and Asia are dominant in the technology world and Europe will have to accept its place in the pecking order. That said, lessons must be learnt to ensure the next wave of opportunity does not pass the continent by. A new world order is being written as we speak, and it is being written in binary.

If Europe is to generate momentum through the AI-orientated economy, it will have to bolster the workforce, create the right regulatory landscape (a common moan from the DT boss), but also make sure the raw materials are available. If data is cash, Europeans are paupers.

As it stands, less than 4% of the world’s data is stored in the European market, according to Hottges. This is the raw material required to create and train complex, AI-driven algorithms and business models. If European data is constantly being exported to other continents, other companies and economies will feel the benefits. More of an effort needs to be made to ensure the right conditions are in place to succeed.

Conveniently, the data collected through Orange’s and DT’s new smart speaker ecosystem will be retained within the borders of the European Union. There need to be more examples like this, forcing partners to comply with data residency requirements, as opposed to taking the easy route and whisking information off to far away corners of the world.

Another interesting statistic to consider is the number of qualified developers in Europe. Recent research from Atomico claims there are currently 5.7 million developers across the continent, up 200,000 over the last 12 months, compared to 4.4 million in the US. Everyone talks about the skills gap, though it seems Europe is in a better position than the US if you look at the number of professional developers alone.

Europe has lost the first skirmishes of the digital economy, and to be fair, the fight wasn’t even close. However, the cloud-oriented, intelligent world of tomorrow offers plenty more opportunities.