Give control back to your users, scholars tell Facebook

In a new position paper, scholars from Oxford and Stanford recommended nine measures Facebook should take to make itself a better forum for free speech and democracy.

The report, titled “GLASNOST! Nine ways Facebook can make itself a better forum for free speech and democracy”, was jointly published by the Reuters Institute for the Study of Journalism and the Oxford University. The scholars, headlined by the historian Timothy Garton Ash, recommended Facebook take concrete steps related to three key aspects of the social network’s operation: content policy and moderation practices, news feed, and governance.

The starting premise of the report is that, with over 2.2 billion active users and being in the centre of past and present controversies and conversations, Facebook has gone beyond the stage where it could choose “between self-regulation and no regulation”. Decisions made inside Facebook could have strong political, social, and cultural impact on the world outside of it. “A single small change to the News Feed algorithm, or to content policy, can have an impact that is both faster and wider than that of any single piece of national (or even EU-wide) legislation,” the report says.

Instead, the authors argued, Facebook needs to make itself more transparent with both its policies and the interpretation and implementation mechanisms of these policies to the outside world including both its users, its customers, and other institutions, and engage more with regulators and the civil society, academia, and NGOs.

The authors recognised that Facebook has made efforts in all the three aspects over the past few years, especially after the Cambridge Analytica case was uncovered. They argued however that more should be done. Specifically the authors suggested the following:

Regarding “content policy and the moderation of political speech”, Facebook should

  • Tighten community standards wording on hate speech
  • Hire more and contextually expert content reviewers
  • Increase ‘decisional transparency’
  • Expand and improve the appeals process

Targeting at “News Feed”, the authors suggested that in order to move “towards more diverse, trustworthy political information”, Facebook should

  • Provide meaningful News Feed controls for users
  • Expand context and fact-checking facilities

When it comes to the company’s “governance”, the report recognises that Facebook has adopted “cautious glasnost” recently but in order to grow “from Transparency to Accountability” the company should

  • Establish regular auditing mechanisms
  • Create an external content policy advisory group
  • Establish an external appeals body

Admittedly, Facebook is far from being the only culprit. The authors also agreed that “many of the problems identified here are also found on other platforms, such as YouTube and Twitter.” Additionally, Facebook does have policies related to content and its moderation, though their interpretation or implementation could be called into question. Platforms like Twitter on the other hand, barely have a policy or standard practice in place.

Despite the authors’ claim that the “goal of this report is to focus on areas that Facebook itself can feasibly improve now”, it would require radical changes on Facebook’s side to put any of these recommendations into practice, both how the company is run, and how it is judged. The authors argued that “ideally, the user interface and experience on Facebook should be designed to promote active, informed citizenship, and not merely clickbait addiction for the commercial benefit of Facebook, the corporation.” However, commercial benefit is the most important index how a business is evaluated. In addition to stressing the company’s responsibilities beyond business returns, the authors could also remind it of the commercial damage from not acting in a responsible way. For example, advertisers would run away from the platform if a Cambridge Analytica type of scandal were to happen again.

The changes needed, as the authors also agreed, are easier said than done. Some suggestions are reasonable. For example, the report suggested Facebook, and other social platforms, consider industry wide self-regulating mechanisms following the model of the Financial Industry Regulatory Authority (FINRA), which oversees brokerage firms and the securities industry in the US. But it also agrees that it is hard to define the “industry” for the social networks. Other suggestions are much harder for Facebook and others to take. For example the report requests Facebook to open its data and, more importantly, its algorithms, which are the most guarded secrets in all internet companies.

The choice of the report’s title is also interesting. “Glasnost” is Russian for “openness, transparency”. Together with “perestroika”, Russian for “reform”, the concepts were popularised by the last Soviet leader Mikhail Gorbachev. The report suggested that, to achieve real change instead of merely glorified PR, “beyond glasnost, we need perestroika” from Facebook, a line almost surely from Professor Garton Ash, a leading scholar in Central and Eastern European history. If the young executives at Menlo Park are unaware of the historical connotation of these concepts, they may want to know that by embracing Glasnost and Perestroika, Gorbachev brought the Soviet empire to its demise.

The app economy is going from strength to strength

The latest report published by App Annie showed mobile apps had their best year in 2018, and will get better in 2019.

In the report titled “The State of Mobile in 2019 – The Most Important Trends to Know”, the mobile apps analytics firm App Annie showed the latest data of the mobile apps industry, as well as their projections for the near future.

In short, the apps industry is doing rather well. “Consumers spent $101 billion on apps globally in 2018. This is larger than the global live and recorded music industry, double the size of the global sneaker market, and nearly three times the size of the oral care industry,” said Danielle Levitas, EVP, Global Marketing & Insights, App Annie. “Mobile experiences are so central to how we live, work and play and with consumers spending 3 hours a day on mobile, it’s clear how vital this platform is for all businesses in 2019 and beyond.”

Here is a snapshot of the highlights:

App Annie 2019 Snapshot

A few additional data points also caught our eyes:

  • Consumers on average spent 50% more time in mobile apps in 2018 than they did in 2016. Social and Communications apps made up 50% of total time spent globally in apps in 2018, followed by Video Players and Editors (15%) and Games (10%);
  • In Indonesia, mobile users spent over 4 hours a day in apps — 17% of users’ entire day. In mature markets like the US and Canada, the average user spent nearly 3 hours a day in mobile apps in 2018;
  • On average, consumers in the US, Australia, South Korea, and Japan have over 100 apps on their smartphones;
  • 74% of all consumer spending on mobile apps was on games;
  • YouTube accounted for 9 of every 10 minutes spent in the top 5 video streaming apps in 2018. It was also the number 1 app by time spent in video streaming apps for all markets except China;
  • The global consumer spending on dating apps grew by 190% from 2016 to 2018. Tinder successfully defended its number 1 position.

In terms competition between apps and between companies, three Facebook apps occupied the top three spots on the table of monthly active users. The same trio also took the top spots on the most downloads table, but Facebook Messenger edge Facebook to the top. Netflix netted the highest consumer spend on apps (followed by Tinder), while Sony’s Fate/Grand Order sat at the top of the games enjoying the highest consumer spend. Tencent on the hand, thanks to its strong line-up of apps and games, was the company that consumers spent the most on in 2018.

App Annie 2019 MAU

App Annie 2019 downloads

App Annie 2019 spend

The firm predicted that in 2019, the total consumer spending in app stores will double that of the global box office, to reach $120 billion. When it comes to media consumption, the firm sees in 2019 that 10 minutes of every hour spent consuming media across TV and internet will come from video streaming on mobile. Increased availability of premium content and service will also help.

Two years ago, we started hearing from some quarters of the industry that apps economy was dead. To read the latest data from App Annie, that pronouncement was gravely premature.

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.

US operators belatedly act to protect user location data

AT&T and Verizon announced that they will terminate all remaining commercial agreements that involve sharing customer location data, following a report exposing the country’s mobile carriers’ failure to control data sharing flow.

Jim Greer, a spokesman for AT&T, said in a standard email to media: “Last year, we stopped most location aggregation services while maintaining some that protect our customers, such as roadside assistance and fraud prevention.” Referring to the Motherboard exposé, Greer continued, “In light of recent reports about the misuse of location services, we have decided to eliminate all location aggregation services — even those with clear consumer benefits.”

This is similar to the position T-Mobile’s CEO John Legere adopted when responding to the criticism from the US Senator Ron Wyden (D-Ore.). Verizon also announced that the company will sever four remaining contracts to share location data with roadside assistance services. After this Version will need to get customers’ explicit agreement to share their data with these third-party assistance companies. Sprint, which was also caught out by the Motherboard report, is the only remaining nation-wide carrier that has not announced its plan on the issue.

This is all good news for the American consumers who are concerned with the safety of their private data. On the other hand, mobile operators have hardly been the worst offenders when it comes to compromising the privacy and security of customer data. Earlier, Google was exposed to have continued tracking users’ location even after the feature had been switched off, while Facebook has been mired in endless privacy controversies.

Monetising user data is only a side and most likely insignificant “value-add” business for the mobile operators, because they live on the service fees subscrbers pay. But it is the internet heavyweights’ lifeline. This may sound fatalistic but it should not surprise anyone if the Facebooks and the Googles of the world come up with more innovative measures to finance the “free” services we have benn used to.

The reselling of personal data goes from strength to strength

In spite of the many moral panics of 2018, the abuse of personal data shows no sign of abating at the start of 2019.

You might assume the somewhat overblown Cambridge Analytica scandal, in which everyone got all outraged that some political campaigns used data obtained from Facebook to target their messages, would have resulted in a far more reticent approach to the commercialisation of personal data. A couple of recent stories, however, indicate the opposite is true.

Motherboard did an investigation that concluded ‘T-Mobile, Sprint, and AT&T are selling access to their customers’ location data, and that data is ending up in the hands of bounty hunters and others not authorized to possess it, letting them track most phones in the country.’

The investigation essentially concludes that the act of selling on personal data is intrinsically open to abuse. As soon as you hand this data to a third party you lose all control over how it is used. Quite a lot like the Cambridge Analytica case, in fact. Here’s a flow chart from the article, showing the journey resold data can take.

Motherboard data chart

Upon reading the piece a US Senator called Ron Wyden called out TMUS CEO John Legere, accusing him of not following through on a previous vow to stop selling on data in this way. Here’s Legere’s response.

Elsewhere the FT took a look at the kind of data aggregators that typically buy data from those who collect it in order to analyse it, repackage it, and sell it on as some kind of market insight. Referring to it as the ‘data broking industry, the report looks into how they operate and reveals that regulators, in Europe at least, are finally getting around to taking a closer look at how they operate.

It must be especially frustrating to proponents of GDPR that is seems to have negligible effect on what must sure have been one of the main industries is was designed to regulate. One source in the report refers to the likes of Oracle, Salesforce and Nielsen as ‘privacy deathstars’, that can sell on hundreds of datapoints tracking individuals’ every move.

Combined with growing evidence that financial services giants are behind much of the policing of online behaviour that was such a feature of 2018, it’s hard to avoid the conclusion that the internet is increasingly being used for the wholesale exploitation of individuals. Regulators seem ill-equipped to catch up with these privacy deathstars and it’s easy to imagine the state looking benignly at an industry that facilitates the tracking and manipulation of the public.

Samsung imposes Facebook on its smartphone customers and blocks uninstall

Smartphone giant Samsung has apparently struck a deal with Facebook to force the installation of the app on its phones.

The move, which was highlighted by Bloomberg, is not by itself remarkable. It’s not uncommon for smartphone OEMs to partner with third parties to preinstall their stuff on phones, although push-back against ‘bloatware’ has made this less common than it once was. What is causing some degree of backlash is the fact that it’s not possible to uninstall this imposed Facebook app, only to disable it.

The Bloomberg story quotes a Facebook spokesperson as saying the disabled app is effectively uninstalled as is no longer collects data for Facebook, but if that’s the case then why prevent its removal? Samsung didn’t provide Bloomberg with any further explanation.

This correspondent can confirm that this doesn’t just apply to new phones. I recently did a factory reset of my old Samsung Galaxy S7 in order to bequeath it to my son. Once the process was complete I was surprised to see the Facebook app appear on the home screen and can confirm that I wasn’t given the option to uninstall it.

Which raises a significant issue with the imposition of social media apps on phones that other reports seem to have overlooked: mental health. In a recent appearance on the Joe Rogan podcast, social psychologist Jonathan Haidt revealed a sharp increase in reported mental health issues among US teenagers and young adults in the last decade. As you can see in the clip below he theorises that a major contributing factor to this is social media use, especially on smartphones.

Many parents, this one included, have decided that their children should not use any form of social media, including IM apps such as Whatsapp, due to the threat they pose to their mental health. Not only does social media seem likely to make children more socially obsessive, self-conscious and distracted, it also facilitates some forms of bullying and leaves a digital footprint that it seems likely their adult selves will regret.

For this reason, on top of the general arrogant presumption involved in trying to commercially manipulate your own customers, this looks like a bad move by both Samsung and Facebook. Neither of them are in the strongest position to throw their weight around these days and the smartest thing to do in the light of this revelation would be for them to reinstate the ability to uninstall the Facebook app from Samsung phones.

 

Mission Difficult: Cleaning up Zuckerberg’s image

Facebook CEO Mark Zuckerberg has promised a quest down the digital highways to make himself more visible as the PR machine attempts to save the company’s brand.

Posting on his own Facebook page, Zuckerberg has stated he will host a series of discussions and debates concerning the role of technology and the internet in tomorrow’s society. Each of the events will be hosted on one of Facebook’s platforms, taking place every couple of weeks, as the usually publicity shy CEO attempts to reverse a very damaging 12 months for the brand.

“This will be intellectually interesting, but there’s a personal challenge for me here too. I’m an engineer, and I used to just build out my ideas and hope they’d mostly speak for themselves,” said Zuckerberg.

“But given the importance of what we do, that doesn’t cut it anymore. So I’m going to put myself out there more than I’ve been comfortable with and engage more in some of these debates about the future, the trade-offs we face, and where we want to go.”

Facebook’s impact on 2018 has been highly publicised and, more often than not, negative. For all the influence which the platform has on today’s society, the nefarious, ignorant and abusive side was showcased more than anything else. Whether it was executives knowingly pushing unethical features onto the consumer, suspect influences on incredibly important elections or failing to uphold promises to user privacy and data protection, 2018 was not a good year for the business.

Perhaps one of the most interesting chapters in this story has been Zuckerberg’s role of inaction and inaccessibility. Just when Facebook needed an influential figure to stand tall and confront the difficulties faced, Zuckerberg retreated to the shadows, compounding the problem. To date he’s refused to attend certain meetings with politicians and avoided taking responsibility for his company’s failings to the general public and the transformation of society.

There is of course nothing wrong with being shy or not enjoying being the centre of attention, but it comes with the territory when you are leading one of the most influential companies on the planet. Zuckerberg’s inability to tackle problems head on, sending minions instead or just not turning up at all, escalated the criticism and was a PR disaster.

By refusing to be accessible, Zuckerberg completely undermined and contradicted the concept of Facebook as a platform. He’s also damaged his relationship with rule makers at a critical time. Rules and regulations will be changing over the next couple of years as governments look to take more control over the OTTs. With millions being spent on lobbyists every year to try and encourage a more favourable regulatory landscape for Silicon Valley, Zuckerberg seems to be undermining these effort by antagonising politicians.

If Facebook is to return to yesteryears image of admiration and respect, not only does it have to clean up the platform, ensure data privacy and better protect its users, it has to ensure its CEO is sending the right message and its business practises are more transparent.

Not many people trust Facebook on the whole today and Zuckerberg’s reputation has been damaged. Something need to be done and this is certainly a step in the right direction.

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.

Washington DC takes Zuckerberg to court

The Attorney General for the District of Columbia has filed a lawsuit against Facebook on the grounds of failing to protect user’s privacy and enabling one of the biggest digital scandals to date.

It was only going to be a matter of time before one of the Attorney Generals took the opportunity to take Mark Zuckerberg and his cronies to court, the big question which remains is how many of them will do so. The Cambridge Analytica scandal might be old news in the eyes of the consumer nowadays, but the lawyers aren’t forgetting about it. Blood has been smelt and Washington DC is going to have the first bite.

“Facebook failed to protect the privacy of its users and deceived them about who had access to their data and how it was used,” said Attorney General Karl Racine.

“Facebook put users at risk of manipulation by allowing companies like Cambridge Analytica and other third-party applications to collect personal data without users’ permission. Today’s lawsuit is about making Facebook live up to its promise to protect its users’ privacy.”

The lawsuit itself relates back to the Cambridge Analytica scandal, focusing on Facebook’s inability to meet expectations and commitments when it comes to data protection and privacy, but also the firm’s role in allowing the 2016 Presidential Election to be manipulated. It’s the permission to use data, or lack thereof, which is the big issue here. Cambridge Analytica harvested the data and sold it onto a political consulting firm, none of which it was entitled to do.

This is perhaps one of the biggest grey areas of the digital economy as while technology firms have streamed ahead in how data can be commercialised, rule makers have struggled to keep pace. Firms like Facebook has taken advantage of this regulatory void but cases like this will aim to hold them accountable retrospectively.

This is one of the most difficult things about innovation. Because these firms are playing with new ideas for the first time there is no precedent to where the line between right and wrong should be. In most cases, this would be an effective defence, as while most governments will of course want to protect citizens, they will also want to encourage innovation and exploration. In this case however, Facebook might not be able to lean on this idea.

Recent documents released by the UK government demonstrate not only that Facebook was aware there might unethical and illegal aspects to these practises, but that this knowledge went from the bottom to the top of the organization. The internal emails, which were secured by Six4Three during its own lawsuit against Facebook, paint a very deceptive and nefarious picture of the firm, with no regard to the opinion or privacy of the user.

Facebook is in a hole right now, which seems to be getting deeper and deeper. While it cannot shake off the Cambridge Analytica scandal, new controversies are being thrown at the platform, including the most recent claim. Rumbling through the world as we speak are claims Facebook granted certain technology companies, such as Netflix and Spotify, access to user’s private messages.

Facebook will of course end up in court and considering it has admitted wrong-doing on several occasions, there will be heavy punishments laid out. One of the big questions which remain is how many of the Attorney Generals across the US will bring their own lawsuit forward.