You don’t need to understand AI to trust it, says German politician

The minister for artificial intelligence at the German government has spoken about the European vision for AI, especially how to grow and gain trust from non-expert users.

Prof. Dr. Ina Schieferdecker, a junior minister in Germany’s Federal Ministry of Education and Research (Bundesministerium für Bildung und Forschung, BMBF), who has artificial intelligence in her portfolio, recently attended an AI Camp in Berlin (or KI-Camp in German, for “künstliche Intelligenz”). She was interviewed there by DW (Deutsche Welle, Germany’s answer to the BBC World Service) on how the German government and the European Union can help alleviate concerns about AI among ordinary users of the internet and information technologies.

When addressing the question that AI is often seen as a “black box”, and the demand for algorithms to be made transparent, Schieferdecker said she saw it differently. “I don’t believe that everyone has to understand AI. Not everyone can understand it,” she said. “Technology should be trustworthy. But we don’t all understand how planes work or how giant tankers float on water. So, we have learn (sic.) to trust digital technology, too.”

Admittedly not all Europeans share this way of looking at AI and non-expert users. Finland, the current holder of the European presidency, believes that as many people as possible should understand what AI is about, not only to alleviate the concerns but also unleash its power more broadly. So it decided to give 1% of its population AI training.

Schieferdecker also called for a communal approach to developing AI, which should involve science, technology, education, and business sectors. She also demanded that AI developers should consider users’ safety concerns and other basic principles from the beginning. This is very much in line with what has been outlined in the EU’s “Ethics guidelines for trustworthy AI” published in April this year, where, as guideline number one, it is stated “AI systems should empower human beings, allowing them to make informed decisions and fostering their fundamental rights. At the same time, proper oversight mechanisms need to be ensured, which can be achieved through human-in-the-loop, human-on-the-loop, and human-in-command approaches.” As we subsequently reported, those guidelines are too vague and lack tangible measurements of success.

Schieferdecker was more confident. She believed when Germany, which has presumable heavily shaped the guidelines, assumes the European presidency in the second half of 2020, it “will try to pool Europe’s strengths in an effort to transform the rules on paper into something real and useable for the people.”

The interview also touched upon how user data, for example shopping or browsing records, are being used by AI in an opaque way and the concerns about privacy this may raise. Schieferdecker believed GDPR has “made a difference” while also admitting there are “issues here and there, but it’s being further developed.” She also claimed the government is working to achieve a data sovereignty in some shape and “offer people alternatives to your Amazons, Googles, Instagrams” without disclosing further details.

The camp took place on 5 December in Berlin as part of the Science Year 2019 programme (Wissenschaftsjahr 2019) and was co-organised by the BMBF and the Society for Information Technology (Gesellschaft für Informatik, GI), an industry organisation. The interview was subjected to a vetting process by the BMBF before it could be published. As DW put it, “the text has been redacted and altered by the BMBF in addition to DW’s normal editorial guidelines. As such, the text does not entirely reflect the audio of the interview as recorded”.

T-Mobile/Sprint merger may increase ARPU – what’s wrong with that?

On the first day of the TMUS/Sprinter merger antitrust trial it was revealed that a Sprint exec thinks the merged company will be able to raise prices.

Reuters reports that the prosecution presented WhatsApp messages from Roger Sole, Sprint’s CMO, to his former CEO Marcelo Claure, sent in 2017, that speculated Sprint’s ARPU (average revenue per user) could increase by five bucks after the merger. Sole is insisting this was just conjecture about some distant possible outcome, but it’s nonetheless being used as evidence against the merger.

The fundamental assumption underlying this is that consumers are always best served by lower prices, but is this necessarily the case? Sole also testified that even lowering prices had proven ineffective at luring and retaining new subscribers because as soon as they experienced how rubbish the Sprint network is, they left before you could say ‘churn’.

Sole is effectively highlighting the Catch-22 position MNOs always claim to be in when restricted by operators. If their ARPU is too low then they won’t have the cash to invest in the network, and then everyone loses out. Regulators will typically say ‘that’s your problem mate, we’re just worried about prices’, which is also a valid position, and one used to push back whenever consolidation threatens to take the number of MNOs in a given market below four.

There is little hard evidence, however, that three MNOs constitute insufficient competition and that a reduction from four to three necessarily increases prices. Moreover, the merger of the third and fourth players would presumably improve the network for customers of both, which could be viewed as justification for raising prices by itself.

As we’ve seen with the disappointing early showing from TMUS’s 5G network, MNOs will have to spend a lot of money to deliver on all the promises mad on behalf of 5G. That cash has to come from somewhere and it seems only fair that subscribers contribute. It is, of course, possible that any increase in ARPU just gets trousered by senior telco execs and investors, but that’s not reason enough to automatically oppose any attempt to do so.

Ericsson gets a $150 million bargain on its corruption fine from the US

Swedish kit vendor Ericsson got a $150 early Christmas present from US authorities after its fine for violating corruption laws was finally revealed.

The consequence of being found guilty of using back-handers to grease the wheels of commerce in Djibouti, China, Vietnam, Indonesia and Kuwait as recently as Q1 2017 is a fine of SEK1.06 billion. But since Ericsson had already accounted from a fine of SEK 11.5 billion that means it now has 150 million bucks more than it expected to. It can now spend that bonus wedge on Christmas presents which, of course, it will account for in a transparent and correct manner.

To be fair to Ericsson this is probably common business practice in some or all of those countries, but the trick is not to get caught isn’t it? Both the US Department of Justice and the Securities and Exchange Commission have had a piece of this action and seems to have split the winnings equally, so Christmas should be fun there too.

The DoJ is trousering 520,650,432 in return for promising to drop all charges if Ericsson keeps its hands clean for the next three years. Presumably, if Ericsson does comply and the charges are dropped, the DoJ won’t pay back the half a bil in spite of Ericsson no longer being legally guilty of doing anything wrong. That makes the whole thing smell like state extortion, but what do we know?

Meanwhile the SEC prefers to round its takings to the nearest 10k and is pocketing $539,920,000, which hilariously includes $81,540k in interest. This fine seems to be for the same activities so it’s not clear why Ericsson has to pay it twice. Maybe the fine was always going to be around a bil and the DoJ and SEC couldn’t agree on jurisdiction, so decided to split it down the middle.

“The DoJ proceeding is a criminal enforcement action and the SEC proceeding is a civil enforcement action,” explains the Ericsson announcement. “The agencies resolve their investigation independently of one another using their own discretion and applying different standards of proof.  As a result, the DoJ and SEC have come to different conclusions based on the same facts.”

“I am upset by these past failings,” said Ericsson CEO Börje Ekholm. “Reaching a resolution with the US authorities allows us to close this legacy chapter. We can now move forward and build a stronger company. The settlement with the SEC and DOJ shows that we have not always met our standards in doing business the right way. This episode shows the importance of fact-based decision making and a culture that supports speaking up and confronting issues. We have worked tirelessly to implement a robust compliance program. This work will never stop.”

“Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks.’” said U.S. Attorney Geoffrey Berman. “Today’s guilty plea and surrender of over a billion dollars in combined penalties should communicate clearly to all corporate actors that doing business this way will not be tolerated.”

“Implementing strong compliance systems and internal controls are basic principles that international companies must follow to steer clear of illegal activity,” said Don Fort, Chief of IRS Criminal Investigation.  “Ericsson’s shortcomings in these areas made it easier for its executives and employees to pay bribes and falsify its books and records.  We will continue to pursue cases such as these in order to preserve a global commerce system free of corruption.”

So the IRS got a piece of the action too – nice. Here are the specific pieces of naughtiness Ericsson admitted to committing to the DoJ, the charges for which, don’t forget, will probably be dismissed in three years’ time.

Between 2010 and 2014, Ericsson, via a subsidiary, made approximately $2.1 million in bribe payments to high-ranking government officials in Djibouti in order to obtain a contract with the state-owned telecommunications company valued at approximately €20.3 million to modernize the mobile networks system in Djibouti.  In order to effectuate the scheme, an Ericsson subsidiary entered into a sham contract with a consulting company and approved fake invoices to conceal the bribe payments.  Ericsson employees also completed a draft due diligence report that failed to disclose the spousal relationship between the owner of the consulting company and one of the high-ranking government officials.

In China, between 2000 and 2016, Ericsson subsidiaries caused tens of millions of dollars to be paid to various agents, consultants and service providers, a portion of which was used to fund a travel expense account in China that covered gifts, travel and entertainment for foreign officials, including customers from state-owned telecommunications companies.  Ericsson used the travel expense account to win business with Chinese state-owned customers.  In addition, between 2013 and 2016, Ericsson subsidiaries made payments of approximately $31.5 million to third party service providers pursuant to sham contracts for services that were never performed.  The purpose of these payments was to allow Ericsson’s subsidiaries in China to continue to use and pay third party agents in China in contravention of Ericsson’s policies and procedures.  Ericsson knowingly mischaracterized these payments and improperly recorded them in its books and records.

In Vietnam, between 2012 and 2015, Ericsson subsidiaries made approximately $4.8 million in payments to a consulting company in order to create off-the-books slush funds, associated with Ericsson’s customers in Vietnam, that were used to make payments to third parties who would not be able to pass Ericsson’s due diligence processes.  Ericsson knowingly mischaracterized these payments and improperly recorded them in Ericsson’s books and records.  Similarly, in Indonesia, between 2012 and 2015, an Ericsson subsidiary made approximately $45 million in payments to a consulting company in order to create off-the-books slush funds, and concealed the payments on Ericsson’s books and records.

In Kuwait, between 2011 and 2013, an Ericsson subsidiary promised a payment of approximately $450,000 to a consulting company at the request of a sales agent, and then entered into a sham contract with the consulting company and approved a fake invoice for services that were never performed in order to conceal the payment.  The sales agent provided an Ericsson employee with inside information about a tender for the modernization of a state-owned telecommunications company’s radio access network in Kuwait.  An Ericsson subsidiary was awarded the contract valued at approximately $182 million; Ericsson subsequently made the $450,000 payment to the consulting company and improperly recorded it in its books.

There was clearly a fair amount of dodgy stuff going on in the above cases, but none of it is especially shocking. Under-the-table payments are an endemic issue everywhere in the business world and the trick is to launder them such that they look legit. Ericsson clearly failed to do this and that’s really what it’s being punished for.

But nobody seems to be questioning the US’s jurisdiction in prosecuting this matter. None of the back-handers were paid in the US or even seemed to involve US companies, so why is the US policing this matter? Maybe the answer lies in the fines, none of which will apparently find their way to the countries supposedly corrupted by all this. Even with a $150 million discount, the US authorities are now the ultimate beneficiaries of Ericsson’s naughtiness.

Huawei takes the US FCC to court

The US telecoms regulator has moved to block federal funds being spent with Huawei and the Chinese kit vendor reckons that’s unlawful.

Huawei has filed a petition with the US Court of Appeals, requesting it to find the FCC move unlawful because it failed to follow basic due process. In free and open societies due process is a vital concept to protect private individuals and organisations from an oppressive state. It should ensure that everyone gets the same treatment under the law and prescribe the legal process that ideally should feature evidence of alleged crimes at some stage.

Huawei’s assertion is that the FCC has taken this action against it unilaterally and without any due process. Furthermore Huawei continues to insist that the US has yet to present any concrete evidence of the security threat it’s accused of posing. Since that security threat is the stated reason behind the FCC banning any federal funds being spent with Huawei, that’s another reason why it reckons the move is unlawful.

“The FCC claims that Huawei is a security threat, but the FCC chairman, Ajit Pai, has not provided any evidence,” said Huawei’s Chief Legal Officer, Dr. Song Liuping, at a press conference. “This is a common trend in Washington these days. ‘Huawei is a Chinese company’, that’s his only excuse. He has tried to spread fear about Huawei. He uses words like ‘backdoors’ to scare people. But they offer no proof.”

He went on to say how much Huawei wants to help the US with rural connectivity and how harmful to rural Americans actions like this are. He noted that Ericsson and Nokia manufacture kit in China too and even quoted Bill Gates’ criticism of a blanket suspicion of everything that comes from China. Finally he reasserted Huawei’s position that all this US aggro is to do with politics rather than security.

There does seem to have been a suspension of due process when it comes to Huawei having been found guilty as charged without evidence, trial, etc. It’s also hard to avoid the conclusion that Huawei has become a bargaining chip in the broader geopolitical tussle between the US and China. The US likes to think of itself as the land of the free, but due process is an essential prerequisite to freedom and shouldn’t be suspended for any reason.

Ericsson not expecting any nasty surprises as US corruption investigation nears conclusion

Following reports that the US investigation into historical corrupt practices is set to finally conclude, Ericsson has indicated the fine should be as previously anticipated.

Bloomberg has a couple of those handy anonymous insiders whispering in its collective ear that the investigation into its compliance with the US Foreign Corrupt Practices Act (FCPA) could unveil its final conclusion before the end of the year. The report somewhat weakly asserts that the resulting fine could be in excess of a billion bucks.

Considering Ericsson has already publicly accounted for a $1.2 billion fine this is an especially uncontentious claim to make. Nonetheless Ericsson felt the need to issue a press release responding to this press coverage, perhaps concerned that its silence on the matter may be interpreted as it having something to hide.

“In light of recent media coverage about the resolution of the investigations the Company will not comment other than to confirm that the provision of USD 1.2 still its current estimate of the amounts needed to cover the monetary sanctions, plus other related costs, as announced on September 26, 2019,” said the Ericsson statement.

So it seems highly unlikely that Ericsson will get stung for much more than that when the announcement is finally made. The company seems to have been in negotiations with US authorities over the size of the fine for a year or two, so it would be very odd if the process still held any surprises for anyone involved.

Huawei CFO updates her prison diary

Meng Wanzhou, the Huawei CFO being held in Canada awaiting deportation to the US to stand trial, had publicly reflected on her challenging year.

Published on the bit of the Huawei site reserved for broader publicity initiatives such as CEO interviews, Meng’s account is headed ‘Your warmth is a beacon that lights my way forward’. That sets the scene for a narrative focused on how tough the year since her arrest in Canada has been. She contrasts her busy life as a Huawei exec with her boring one under house arrest, in which she has so much spare time that she can now read books and even do some painting.

The warmth referred to seems to be messages of support from Huawei colleagues on the company’s internal messaging board and the crowds that turn up whenever she appears in court. On top of that even people delivering take-aways to Huawei campuses have left messages of encouragement such as “Go Huawei!” and “You can do it, Huawei!”

The prison diary is careful to send good vibes to her captors, from the Alouette Correctional Center for Women, to her security entourage, to the staff of the court she periodically attends. All this, says Meng, has given her the strength to keep on keeping on. “I’m no longer afraid of the rough road ahead,” writes Meng. “While my personal freedoms have been limited, my soul still seeks to be free. Amidst these setbacks, I’ve found light in the life around me.”

While we have no reason to doubt Meng’s sentiments are anything other than heartfelt, the fact that Huawei chose to publish this letter on its propaganda site does make you question the thinking behind the whole exercise. Huawei is clearly on a publicity drive ahead of Meng’s extradition hearing next month and its PR people have also taken the trouble to flag up this fairly accommodating piece on the matter from a Canadian publication. If Huawei is hoping to generate sympathy for Meng’s plight it might need to be a bit more subtle than this.

Huawei mobilizes is North American legal team once more

Embattled Chinese telecoms giant Huawei is reportedly going to challenge a recent FCC proposal, while there have been developments in the trial of its CFO in Canada.

Last month US telecoms regulator, the FCC, indicated it wants to ban Chinese vendors from receiving any money from its Universal Service Fund. Last week it formally proposed new rules ‘to remove bad actors from commission programs’. Specific bad actors weren’t identified, much to Hollywood’s relief, but the rules were clearly made with Chinese vendors in mind.

Now, according to the WSJ, Huawei is preparing a lawsuit to challenge the decision, with a formal announcement imminent. On the surface legal action such as this seems utterly futile, since the entire US state is clearly hostile to Huawei. But the US is supposed to have an independent judiciary devoted to due process, so anyone should be entitled to the safe treatment under the law, regardless of the political environment.

Meanwhile Huawei will also be hoping for impartial legal treatment in Canada, where its CFO Meng Wanzhou is under arrest, pending extradition to the US to be tried for a bunch of alleged crimes. The extradition hearing is due to take place in January and the CBC reports that Meng intends to ague that the crimes she is accused of don’t even exist.

“Initiating extradition proceedings in these circumstances would undermine Canada’s sovereignty and its independence on the world stage,” Meng’s lawyers reportedly reckon. “It is simply not Canada’s role to enforce American foreign policy through our laws, especially when such foreign policy is diametrically at odds with our country’s chosen legal framework.”

The core of the defense appears to be around ‘double criminality’, which means the act has to be a crime in both countries for extradition to be permitted. They seem to be saying financial deception Meng is accused of can’t be a crime in Canada because the sanctions it was supposedly designed to circumvent were US, not Canadian ones.

Australia sues Google for misleading users over location data

The Australian Competition and Consumer Commission has taken Google to court over allegations that it misled consumers over the collection of their location data.

The ACCC reckons that from 2017 at the latest Google broke the law when it made on-screen representations to Android users that it alleges misled consumers about the location data Google collected or used when certain Google Account settings were enabled or disabled. In short the ACCC is claiming Google gave users insufficient information to ensure their location data wasn’t collected if they didn’t want it to be.

“We are taking court action against Google because we allege that as a result of these on-screen representations, Google has collected, kept and used highly sensitive and valuable personal information about consumers’ location without them making an informed choice,” said ACCC Chair Rod Sims.

The problem is that Android has multiple settings that need to be adjusted if you don’t want your location data collected and the ACCC is alleging that Google didn’t flag up all of them. That will have resulted in some consumers thinking their location data wasn’t being collected when it still was. At the very least it seems Google has been insufficiently clear in communicating with Android users about this stuff.

Underlying a lot of the current wave of litigation towards internet giants is the desire by regulators and governments to retrospectively address the personal data land grab that characterised the first decade or so of the modern mobile device. Free services such as Android and Facebook have always sought payment in kind through the collection of personal data but have usually been very opaque in the ways they have gone about it. Regulators are now trying to shut the stable door after the horse has bolted.

Europe decides to punish Broadcom before its investigation is complete

The European Commission is in the process of investigating Broadcom for anticompetitive behaviour, but has imposed sanctions in advance of any conclusion.

Broadcom is considered to be dominant in the market for set-top box chips and some fixed line modems. The EC reckons it’s abusing that dominant position by persuading customers to go all-in on its products, thus unfairly restricting competition. The investigation was opened last June but the EC is so concerned about the effects of these practices that it has ordered Broadcom to stop them immediately.

“We have strong indications that Broadcom, the world’s leading supplier of chipsets used for TV set-top boxes and modems, is engaging in anticompetitive practices,” said EU Competition Commissioner Margrethe Vestager. “Broadcom’s behaviour is likely, in the absence of intervention, to create serious and irreversible harm to competition. We cannot let this happen, or else European customers and consumers would face higher prices and less choice and innovation. We therefore ordered Broadcom to immediately stop its conduct.”

The key word in that quote is ‘likely’. Vestager seems to be saying that mere suspicion is now reason enough for the EC to act against companies pre-emptively, in anticipation of the outcome of its investigation. What if the investigation concludes in favour of Broadcom? This seems to be a dangerous erosion of due process and an ominous precedent for any company that does business in Europe.

Broadcom now has 30 days to do the following or else:

  • Unilaterally cease to apply the anticompetitive provisions identified by the Commission and to inform its customers that it will no longer apply such provisions; and
  • Refrain from agreeing the same provisions or provisions having an equivalent object or effect in other agreements with these customers, and refrain from implementing punishing or retaliatory practices having an equivalent object or effect.

Those restrictions apply until the EC get around to concluding its investigation or three years, whichever is sooner. It’s common practice for big companies to chuck lawyers at these kinds of investigations in order to drag them out, so you can see where the EC is coming from with this kind of pre-emptive action. But due process exists for a reason and the EC seems to be saying it’s better that a few innocent companies may be hurt than any guilty ones go unpunished.

Apple U-turns again to pull HK map app under pressure from Beijing

Apple has removed the crowd-sourced app, favoured by the protesters in Hong Kong, from its local App Store, after being blasted by China’s state media.

The submission of the mapping app, developed on top of the web version which could enable users to instantly track the police movements, among other things on the roads, was first rejected by Apple, on the ground that “the app allowed users to evade law enforcement.” This caused strong protest from both local users in Hong Kong and politicians in the US so Apple reversed its decision and made the app available. The US Senator Josh Hawley (R-MO) told his followers on Twitter that Apple admitted it “mistakenly” failed to go through full review process the first time:

Shortly after the change of mind by Apple, the People’s Daily, one of the Chinese Communist Party’s major propaganda outlets, accused Apple of “helping HK rioters engage in more violence”. Apple quickly undertook a second reversal in days to take down the app. The company said in a statement on the decision that the app “has been used in ways that endanger law enforcement and residents in Hong Kong.” The web version is still available.

This is only one of the latest actions Apple has taken after finding itself caught in a perfect political storm. One day earlier it also removed Quartz, the online news publication, from the China App Store, following complaints from the Chinese government. Apple told Quartz that the app “includes content that is illegal in China”, reported The Verge.

Quartz believed this might refer to its discussion on VPN technologies, the use of which is illegal in China, and its coverage of and links to coverage of the ongoing protest in Hong Kong. Quartz’s website is also blocked by China’s Great Firewall. A week earlier when Apple updated its operating system, iPhone users who set their locale to  Hong Kong and Macau found the Taiwan flag had disappeared from emojis.

This is just one of the highest profile cases of global companies contorting themselves to appease local political interests, with China the centre of attention not the least because of its reputation as one of the most censorious countries, Apple vs. China only epitomises the delicate balance almost all global companies are forced to strike, and not always successfully. Whenever they enter markets that operate very differently to their domestic one, these companies, especially those from North America and Western Europe, have to make a choice between the values of their origin and market pressure.

Increasingly we have seen companies surrender to market pressure, which has led to more either remedial or even pre-emptive self-censorship. Such conflict has a long history in the digital age. Back in 2010, Google pulled out of China when it decided to no longer comply with the latter’s demand for censoring search results. In the same year, India, Indonesia, UAE, Saudi Arabia, among others, demanded access to the encrypted communication carried out by the then king of instant messaging, BlackBerry Messenger, for national security and data localisation purposes. RIM, the then owner of BlackBerry, bowed to the Saudi pressure, and Nokia, who also operated messaging services, decided to set up a local data centre in India.

Recently we have seen Google’s repeated attempts to re-enter China, by offering willingly to censor content to please the Chinese authorities, despite backlashes in its own office. Meanwhile games developer Blizzard had faced a backlash for acting against a Hong Kong protester, as has the US NBA for similar activity.