Even Google can get hacked… maybe

For those security staff who feel insecure or embarrassed about getting hacked, news that Google may have been disrupted by an external irritant will come as some comfort.

On November 12 for approximately 30 minutes as some services became unavailable after traffic was being rerouted through other networks. The company has not disclosed the specific nature of the disturbance, though it also hasn’t ruled out nefarious individuals.

“The issue with Google Cloud IP addresses being erroneously advertised by internet service providers other than Google has been resolved for all affected users as of 14:35 US/Pacific,” the company stated.

“Throughout the duration of this issue Google services were operating as expected and we believe the root cause of the issue was external to Google. We will conduct an internal investigation of this issue and make appropriate improvements to our systems to help prevent or minimize future recurrence.”

Network intelligence company ThousandEyes reported problems with its own G-Suite services, noting internet traffic from its own San Francisco office was traversing through China and Russia on its way back to Google, sparking some concerns. Unfortunately for ThousandEyes, this wasn’t a problem limited to the San Francisco office and was affecting all locations around the world.

No company is immune to the shady corners of the internet, though some would assume an organization as savvy and powerful as Google would be safer than most. Although the disturbance only lasted for a short period of time, for 30 minutes traffic was traversing through some countries which have a history of monitoring communications lines.

While this would be a perfect opportunity to jump on the ‘China is evil’ bandwagon, what is worth noting is traffic would drop upon hitting the Great Firewall of China, according to ThousandEyes’ investigation. Therefore it is logical to assume the attack was either an internal glitch from Google, or an external attack from someone aside from China.

For those who are constantly battling against the dark forces of the internet to keep customers and employees safe from prying eyes, take some comfort that even Google can get rocked by hackers, potentially…

Inward application of tech explains dumb pipe rhetoric

Every telco fears the ‘dump pipe’ label and the push towards commoditisation, but perhaps this trend is being compounded by an inward looking attitude in the application of potentially revolutionary technologies.

This is the conundrum; telcos are missing out on the cash bonanza which is fuelling companies like Facebook and Google, but to keep investors happy, executives are focusing more on improving profitability than replacing lost revenues, such as the voice and SMS cash cows of yesteryear. This might seem like quite a broad sweeping statement, and will not be applicable to every telco, or every department within the telcos, but statement could be proven true at Total Telecom Congress this week.

One panel session caught our attention in particular. Featuring Turk Telecom, Elisa and Swisscom, the topic was the implementation of AI and the ability to capitalize on the potential of the technology. The focus here is on automation, predictive failure detection and improving internal processes such as legal and HR. These are all useful applications of the technology, but will only improve what is already in place.

The final panellist was Google, and this is where the difference could be seen. Google is of course focusing on improving internal processes, but the main focus on artificial intelligence applications is to enhance products and create new services. Spam filters in Gmail is an excellent example, though there are countless others as the Deepmind team spread their influence throughout the organization.

The difference between the two is an inward and outward application of the technology. Telcos are seemingly searching for efficiency, while Google is looking to create more value and products. One will improve profitability of what already exists, the second will capture new revenues and open the business up to new customers. One is safe, the other is adventurous. One will lead a company down a path towards utilitisation, the other will emphasise innovation and expand the business into new markets.

Of course, there are examples of telcos using artificial intelligence to enhance offerings and create new value, but it does appear there is more emphasis on making internal processes more efficient and improving profitability.

This is not to say companies should not look at processes and business models to make a more successful business, but too much of an inward focus will only lead to irrelevance. We’ve mentioned this before, but the telcos seem to be the masters of their own downfall, either through sluggishness or a fear of embracing the unknown, searching for new answers.

The panel session demonstrated the notable difference between the two business segments. The internet players are searching for new value, while telcos seem more interested in protecting themselves. Fortune favours the brave is an old saying, but it is very applicable here.

Share price drops for both Amazon and Google after quarterlies

Despite reporting quarterly numbers most companies would kill for Amazon and Alphabet share prices dropped by 8.6% and 5% respectively due to investor disappointment.

More than anything else it shows the high demands of investors but also the confidence which is being placed in the internet giants. With Amazon reporting a revenue increase of 29% to $56.6 billion for the quarter, while Google parent company Alphabet reported $33.7 billion, up 21%, the expectations are certainly high.

Starting with Amazon, the revenue increase of 29% paled in comparison to the more than 10X lift in net income to $2.9 billion. While this would be a regular cash bonanza for most companies around the world, sales guidance between $66.5 billion and $72.5 billion for final quarter were lower than what the market wanted to hear. The more coy guidance for Amazon’s busiest quarter resulted in the 8.6% drop, after confidence during the day sent stock up 7%.

In Google’s HQ the story was slightly different. Revenues of $33.7 billion, up 21%, and net income of $9.1 billion, compared to $6.7 billion in 2017. Shares were down 5%, following a 4.4% rise across the day, after sales figures did not hit the expected heights. The last three months have been a tough period for investors to swallow with various scandals dropping share price by 8.8% over the last three months.

Of course, it wasn’t all bad news. The cloud unit for both businesses is continuing to rack up revenues with AWS up 45% to $6.7 billion across the quarter and Google’s other revenues segment, which features cloud up 29% to $4.6 billion. Encouragingly for both, Gartner estimates the worldwide public cloud services market is projected to grow 17% percent in 2019 to total $206.2 billion, up from $175.8 billion in 2018. IaaS is set to get the largest boost, forecast to grow 27.6% in 2019 to reach $39.5 billion. With so many businesses around the world citing a cloud-first approach, it’s amazing to think only 10% of workloads have been moved into the cloud.

The relatively new venture into the world of smart speakers and virtual assistants is proving to be a continued success story as well. For Amazon, the number of Alexa-compatible smart home devices has quintupled to more than 20,000 devices from 3,500, while the team have also started to launch new products such as a smart home security solution (Alexa Guard), and Alexa is expanding what it can give updates on as well, such sports with predictions, live streams, cooking instructions and maths homework. For Google. the Assistant has expanded to 20 languages and 76 countries, while the devices with screens will help YouTube business, which is attempting to blend in more direct response adverts as well as branding to its proposition.

There will of course be short-term wins for the pair in this space, but this is a long-term bet. Once the idea has been adopted by the mass market, the opportunities to make money through third-party relationships will be quite remarkable. Search revenues can be moved into the voice domain (effectively anywhere) and look how profitable search has been for Google. This is only one way to make money, but both Amazon and Google are putting themselves in a remarkably strong position for the future.

Both businesses might have suffered in the last 24 hours but they are still in incredibly dominant positions. The cloud units still have incredible growth potential, while the smart speaker ecosystem is starting to become a reality. For Google, the is delivering amazing profitability but sales growth does seem to be slowing slightly. Amazon is delivering on the North American market but the business is not as effective on the international scene, posting a loss of $385 million.

There are issues, but these are nothing compared to the billions being raked in and the growth potential in new, lucrative markets.

New Euro Android charges could be $40 per device

Google announced earlier this week that it was going to start charging Android smartphone makers for its apps but didn’t say how much.

Tech site The Verge, however, reckons it has got hold of some documents that detail the tariffs Google intends to impose on its blameless OEM partners to make sure it doesn’t lose a single euro of profit while it wrestles with the European Commission’s trust busters. According to this ‘confidential fee schedule’ Google could demand as much as $40 per device, it’s alleged.

But these monetary considerations could just end up being bargaining chips in a process through which Google forgoes the cash so long as OEMs play ball by preinstalling all the stuff it wants. In other words Google seems to be saying “We won’t insist our stuff is bundled with Android but we will fine anyone who doesn’t.”

In that context the actual amounts involved seem irrelevant, since Google may well write them off in exchange for docile compliance, but we’ve only done three paragraphs so we might as well have a look at how they will be calculated. Essentially OEMs will have to pay more for larger screens and for exporting to richer countries. So a top-end device into the UK could be stung for $40, while a rubbish phone into Greece might only cost an extra couple of bucks.

Google seems to be somewhat sulkily throwing down the gauntlet to the EC by saying “OK, two can play at that game – if you won’t let us bundle then we’ll punish OEMs. How do you like them apples?” The EC will presumably have a bit of a think about whether this new tactic still represents an abuse of Google’s market dominance and then act accordingly.

Google ups the ante with Europe by charging Android manufacturers for its mobile products

Under pressure to be seen to comply with an EU antitrust ruling, Google has indicated that the only way to do so is to start charging for what was previously given away.

Earlier this year Europe fined Google €4.3 billion for abusing its dominance in the smartphone OS market to force the bundling of its commercial products such as search onto every Android phone. The EC found this practice to be anticompetitive since it made it harder for any other apps to compete and this reduced consumer choice.

Accompanying its inevitable decision to appeal the fine, Google CEO Sundar Pichai insisted that the existence of Android has in fact led to more consumer choice, not less – an assertion proven by all the great Android devices you can buy. Regardless Google was given 90 days to comply with the ruling or face further fines, and we now know the nature of that compliance.

In a blog post Google VP of Platforms and Ecosystems Hiroshi Lockheimer detailed the concessions Google will be making in Europe while the appeals process is underway. In essence Google will now start charging any Android device OEM that ships into the EU for the use of its mobile apps. Furthermore it will charge separately for search and Chrome, since they’re the apps that seemed to upset the EC and, as a consequence, OEMs are free to muck about with Android itself if they want.

The justification given for this move is simple: Google needs to make up for the revenue it will lose by not being able to bundle its mobile apps with Android. “Since the pre-installation of Google Search and Chrome together with our other apps helped us fund the development and free distribution of Android, we will introduce a new paid licensing agreement for smartphones and tablets shipped into the EEA. Android will remain free and open source,” said the blog.

An underlying strategy, however, may be to illustrate Google’s point about all the benefits consumers have derived from Android. By charging what it previously gave away for ‘free’ (while making loads of money via the traffic through its mobile apps, of course), Google is saying that the consequence of the EU’s ruling will be for everything to become more expensive.

This is ultimately a fight over Google’s underlying business model of given stuff away and then monetising its users. But the EC does have a point the use of a dominant position to stifle competition via forced bundling and, as the former head of Internet Explorer and Windows at Microsoft notes in the tweet below, has a strong tradition of challenging this sort of thing.

One final thing to consider against Google’s claim that, if it can’t insist all its other stuff comes bundled with Android, it has to seek direct compensation is the matter of China. Google apps have been unbundled from Android there for some time and Google doesn’t seem to be getting any compensation there. If it can do that in China, why can’t it do it elsewhere?

Orange goes submarine with Google cable partnership

Orange has been announced as the latest partner to join Google on its monstrous mission to bulk out its connectivity infrastructure maze.

The telco will act as the French ‘landing partner’ for Google’s Dunant transatlantic submarine cable, which is set to come into operation in 2020. As part of the partnership, Orange will provide backhaul services to Paris, while also benefiting from fibre-pairs with a capacity of more than 30 Tbps per pair.

“I am extremely proud to announce this collaboration with Google to build a new, cutting-edge cable between the USA and France,” said Stéphane Richard, CEO of Orange. “The role of submarine cables is often overlooked, despite their central role at the heart of our digital world. I am proud that Orange continues to be a global leader in investing, deploying, maintaining and managing such key infrastructure. Google is a major partner for Orange and this project reflects the spirit of our relationship.”

Announced back in July, Dunant (named after Nobel Peace Prize winner Henri Dunant) is Google’s first private investment across the Atlantic and supplements one of the busiest routes on the internet. The cable will be 6,600km long, connecting the west coast of France to North Virginia in the US. The cable is set to be the first to connect the two countries in 15 years.

While many organizations are investing in infrastructure through consortiums, Orange has invested in more than 40 submarine cables, few have taken Google’s approach in being the sole investor. It might be a more expensive approach, though Google will have more control over capacity and the route of the cable, perhaps giving it a bit of an edge over competitors. The weight of such investments have been putting some dents in the spreadsheets, the CAPEX column doubled during the latest quarterly earnings call, though it does put Google in a solid position.

From Orange’s perspective, the partnership will strengthen the telcos position to support the development of new uses for its consumer and enterprise customers in Europe and America. It will also be in a stronger position to provide services to wholesale market such as content-providers and third-party operators.

Google adds some Pixels

Internet giant Google ramped up its involvement in the consumer hardware space with the launch of new Pixel branded smartphones and tablets as well as a home hub.

The Pixel 3 and its XL variant offer both an industrial design and spec upgrade on their predecessors. Initial impressions indicate the redesign is well received and the spec upgrades are significant. There also seems to be more AI stuff going on, including a call screening functions that taps into Duplex technology to save you having to interact with a caller if you’re not sure about them.

Google debuted a new device category in the form of the Pixel Slate – a tablet running Chrome OS that seems to be positioned as a direct competitor to Microsoft’s Surface product range, with an emphasis on hybrid laptop functionality. Once more initial takes seem positive, especially about its attempt to be the best of both worlds, although the full range of requisite peripherals and accessories does make it an expensive proposition.

Lastly we have the Home Hub, which is an AI-driven smart speaker with a 7-inch screen that will compete with equivalent products from Amazon and Facebook. One big difference is that Google is making a virtue of it not having a camera installed in an apparent bid for people to take it into the bedroom or even the bog. There’s also a physical mute switch to prevent the device listening to you, which seems like a good say to allay fears about being spied on by Google, but does call into question what the point of the device is.

“Our goal with these new products, as always, is to create something that serves a purpose in people’s lives – products that are so useful they make people wonder how they ever lived without them,” said Rick Osterloh, VP of Hardware at Google. “The simple yet beautiful design of these new devices continue to bring the smarts of the technology to the forefront, while providing users with a bold piece of hardware.”

The Pixel 3 starts at £739, with the XL coming in at £869. The Slate starts at £549 without peripherals, while the Home Hub will set you back £139. Google has managed to throw down the gauntlet to the majority of the consumer tech world with one set of launches, which is fun, but time will tell whether any of them are able to claim significant market share. Here’s a vid.

 

AI and security sets us apart from the crowd – Google Cloud CEO

Google Cloud is not winning the cloud battle with AWS and Microsoft Azure right now, but with security credentials and artificial intelligence smarts, CEO Diane Greene thinks the future looks profitable.

Speaking at Google Next ’18 event in London, Greene claims superior security and industry-leading AI are differentiators for Google Cloud which will lead it to the top of the rankings. This is a business which is not shy about spending its way to success, the last 18 months have seen huge amounts spent on infrastructure to fuel momentum in the cloud business, but it’s the value which Google Cloud can add to operations, not simply a pricing war and availability, which is the recipe for success.

“We’re still early in the cloud, only 10% of workloads are in the cloud, but this is where all the digital transformation is coming from,” said Greene. “There are bottom line and top line benefits. Cloud is becoming a working structure to how you can enforce change in companies.”

“It’s our AI, data analytics and security. AI is everyone’s biggest opportunity, and cybersecurity is everyone’s biggest threat, and Google has the best of these. AI is built into everything we do, completely infused into G-Suite. This is such a powerful technology and we’re so proud to have the world’s leading experts. It has such a power for good but we see the concerns in the world.”

This is of course not a new message. Artificial intelligence has been a talking point for Google Cloud for some time but why is it different today? Because the cloud is now normalised.

Considering how long the concept of cloud computing has been around, and the money which is spent each year, it is amazing to think only 10% of workloads have been moved to the cloud and there are still organizations out there who are resisting. However, most enterprise-scale or forward-looking businesses are taking a cloud-first approach to business. This is evidence the cloud has been normalised, and suggests the industry could become commoditized before too long.

Commoditization is not necessarily a bad thing, especially when you look at the room for growth. With the likes of Google, AWS and Microsoft Azure offering massive scale, the commoditization business model works and it also makes the cloud more accessible for those who have not considered migration so far. Initiatives like the Data Transfer Project, which aims to standardize cloud environments to allow for easier migration of data from one provider to another, will also help rollout cloud everywhere else, but this also helps Google.

With the idea commoditized, Google Cloud can start focusing further up the value chain, leveraging the capabilities which it has in-house. Security is an excellent differentiator to bring customers into the fray, though the value-added services in data analytics and artificial intelligence could set Google apart from the crowd.

AirAsia is a good example, as Greene ushered CEO Tony Fernandez onto the stage during the keynote session. AirAsia has leveraged the power of the cloud to continually build his business, the airline now has 250 planes, 200,000 staff and will serve 90 million customers this year, but this year the focus is on enhancing the business with artificial intelligence. The team are working on several areas from predictive maintenance of aircraft, through to weather predictions to inform customers of potential delays, and also using facial recognition to improve the customer experience. This is where Google Cloud can prove its worth; the value add for customers who have already embraced the concept of cloud computing.

Through Deepmind Google has created an artificial intelligence foundation which can be rivalled by few in the technology world. Having acquired the company for roughly $500 million, a bargain in an era of multi-billion dollar acquisitions, the Oxford scientists are providing value throughout the Google universe. On top of this, Greene highlighted investments in Google Brain, a separate deep-learning research team, an Advanced Solutions Lab in Dublin, as well as AI training workshops in 20 European countries.

Google might be losing the battle to secure the commoditized cloud business, AWS is a clear and runaway winner here, though the value-add segment of cloud is starting to emerge. The opportunity to build more advanced solutions on top of a basic cloud-orientated business model is perhaps another segment which will certainly be attractive. This is a segment which will be defined by artificial intelligence.

AWS and Microsoft Azure are both eyeing up the AI world with their own investments, though Google has arguably put itself in the lead through years of acquisition and investment in product areas with an eye on tomorrow’s profitability. The long-game might be starting to pay off.

Google resists the dark side of the force

Google has decided not to compete for a lucrative Pentagon cloud-computing contract, worth up to $10 billion, stating the project might conflict with its corporate values or AI principles.

The Joint Enterprise Defense Infrastructure (yes, JEDI) cloud project is an initiative to modernise and revise IT policies, improve security and remove barriers of adoption. The cloud computing and storage environment would extend from the ‘home-front to the tactical edge’, and would be accessible to all Department of Defense organizations, with self-service account set-up and provisioning. Companies are due to table their bid for the contract, which could last 10 years, by October 12.

Now it is plainly clear Google will not be one of those companies.

“We are not bidding on the JEDI contract because first, we couldn’t be assured that it would align with our AI Principles,” a Google spokesman said in a statement to Bloomberg. “And second, we determined that there were portions of the contract that were out of scope with our current government certifications.”

Not having the right capabilities and expertise should be considered a minor problem in this context. For a $10 billion contract, Google could acquire the right company to bolster in-house capabilities, but the main point of ignoring this tender is focused on the alignment of values, morals and principles.

While we do not doubt the Google executives are perfectly nice people, these are among the more successful businessmen and women on the planet, and people who achieve this lofty success do not do so through maintaining strong principles and morals. But the employees down the corporate ladder certainly do.

During April, Google faced an internal revolt thanks to participation in Project Maven, an initiative which improved the accuracy of drone strikes with artificial intelligence. Google employees decided using the company’s AI to kill people was stepping over the line and protested. Some threatened to quit, some actually did, and Google faced a PR and HR headache. It would appear avoiding the JEDI project is much more about circumnavigating another reaction from the Googlers around the world.

Following this incident, Google decided to put its AI principles down on paper. These principles would govern how the internet giant would conduct business and allow its AI technologies to be used. The first of these principles is to be socially beneficial, something some might point to should the company have decided to pursue the contract.

Google is a company which is only as good as the employees which work for it. The success is built on attracting the sharpest graduates and smartest enthusiasts, though many of these individuals would not be particularly interested in creating machines which kill. $10 billion might be a significant boost to the cloud business unit, but the collateral damage to the rest of the company could be much greater.

Fortunately for the Pentagon and the US government, Google is the only one which has found it conscience. They’ll be plenty of people who don’t mind working with the more destructive side of government.