Switzerland surprised to hear it will be regulating Facebook’s cryptocurrency

In a testimony before the US Senate Facebook indicated its Libra cryptocurrency will run from Switzerland, but it forgot to ask the Swiss if that was OK.

David Marcus, who is heading up Libra on Facebook’s behalf, testified before the US Senate Banking Committee in response to profound alarm from US lawmakers at the prospect of the social media giant developing its own currency. According to CNBC he said the data and privacy regulation of the currency will be overseen by a Swiss agency, as that’s where Libra will be based, but they say that’s the first they’ve heard of it.

In his testimony, which you can watch in full here if that’s your thing, Marcus said the Swiss Federal Data Protection and Information Commissioner (FDPIC) will keep an eye on the data protection side of things, which must have only offered partial reassurance to US senators worried their citizens were vulnerable to having their data exploited yet again.

Imagine their horror, then, when they read the CNBC report and learned that Facebook and its Libra pals haven’t even made contact with the FDPIC yet. This failing, later confirmed by Facebook itself, it just the latest slip-up in what has been a frankly shambolic launch. You’d think Facebook would have dotted every ‘i’ and crossed every ‘t’ before unveiling a grand plan to revolutionise the global banking system and its failure to even check in with one of the proposed regulators it just embarrassing.

As TechCrunch notes, the data privacy side of all this is arguably the greatest concern as there will apparently be little control over developers that use the platform. Given the negative consequences of a fairly minor misuse of Facebook user data by Cambridge Analytica it’s baffling to see Facebook be so cavalier about this. The likelihood of Libra ever being set free is, on balance, increasingly small.

US politicians alarmed by Facebook’s cryptocurrency masterplan

The announcement of a new currency led by Facebook has caught the attention of US law-makers and not in a good way.

The Chairwoman of the House Financial Services Committee, Maxine Waters, is alarmed by the prospect of a massive company with a patchy track record when it comes to data protection and censorship having control of a global currency. She published the following statement on the matter soon after the unveiling of Libra.

“Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data,” said Waters. “It has also exposed Americans to malicious and fake accounts from bad actors, including Russian intelligence and transnational traffickers. Facebook has also been fined large sums and remains under a FTC consent order for deceiving consumers and failing to keep consumer data private, and has also been sued by the government for violating fair housing laws on its advertising platform.

“With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users. The cryptocurrency market currently lacks a clear regulatory framework to provide strong protections for investors, consumers, and the economy. Regulators should see this as a wake-up call to get serious about the privacy and national security concerns, cybersecurity risks, and trading risks that are posed by cryptocurrencies.

“Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action. Facebook executives should also come before the Committee to provide testimony on these issues.”

Waters isn’t the only representative to express concern and at least one Senator has joined the party, as you can see in the tweet below. Regulators are going through a period of realising they were very slow to acknowledge the magnitude of social media and they should be keen to show they’ll be less complacent about money than they were information. It seems likely that Facebook will have to jump through a lot more hoops to launch this product than it has had to previously.

Facebook leads corporate cryptocurrency initiative Libra

Social media giant Facebook has announced the launch of Libra, a ‘stablecoin’ apparently designed to revolutionise the digital payments market.

Such ambition would be highly questionable if it weren’t for the fact that Facebook has managed to get loads of other blue-chip companies involved, including Visa, Mastercard, PayPal and Coinbase. This gives the project a sense of scale and legitimacy that it wouldn’t have if this was just another gimmick to help Facebook exploit its users once more.

“Libra’s mission is to create a simple global financial infrastructure that empowers billions of people around the world,” blogged Facebook CEO Mark Zuckerberg. It’s powered by blockchain technology and the plan is to launch it in 2020. This is especially important for people who don’t have access to traditional banks or financial services. Right now, there are around a billion people who don’t have a bank account but do have a mobile phone.”

Blockchain is a pretty complicated business, so to get how this works we recommend you go to the Libra site, read the Libra white paper and watch the videos below. Libra is described as a ‘stablecoin’, which means its value is pegged to regular currencies and thus won’t fluctuate like Bitcoin famously does. There’s also talk of almost no fees, so it will be interesting to see what incentive all the members of the Libra consortium have to participate.

Facebook’s own interests will be represented by a subsidiary called Colibra, which will produce a digital wallet that will be available in Facebook’s messaging apps as well as its own standalone one. “From the beginning, Calibra will let you send Libra to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low to no cost,” said the announcement. “And, in time, we hope to offer additional services for people and businesses.”

This seems like a very ambitious project, the motives for which are still somewhat unclear. The narrative is all about extending financial services to the unbanked, but you have to assume Facebook expects to monetise this service eventually. The prospect of a company that unilaterally excludes any users it disapproves of being in control of a global currency is chilling.

 

NYC public transport finally gets the mobile payments memo

Despite the US being the leading voice in the technology industry, adoption of some pretty well-established technologies has been lagging across the country.

That is about to change in New York before too long, as the public transport system gets a much-needed upgrade to include Near-field communication (NFC) payments. Last week, Google announced it had integrated its payments system into the New York public transport system, and now Apple is getting in on the movement.

The contactless payment revolution has been sweeping the globe in recent years, drastically changing the way we work, play and get around. In London, for example, you can almost hear the groans of waiting customers when the now “old fashioned” chip and PIN method of payment is used. But contactless payments are now much more wide-spread than a speedy round of beers down the pub.

Contactless payments were first introduced on London buses in December 2012, and later extended to Underground and National Rail services in September 2014. The Oyster Card system is quickly becoming a thing of the past, with Transport for London (TfL) now claiming more than 50% of journeys are completed using contactless payments. In fact, TfL believes it is saving between 9-14% on fare collection because of the introduction of contactless payments.

Of course, London is not the only city which is making use of the new technology. Globally, there are now more than 100 cities making use of contactless payments, including the likes of Sydney (introduced in 2018), Moscow (2017) and Madrid (2017).

What is worth noting is there are different types of systems. Madrid, for instance, requires you to buy a specific ticket as opposed to using your debit of credit card, while Sydney only upgraded to NFC mobile payments earlier this year. That said, progress is progress.

And the benefits are more than just operational efficiencies for the public transport systems. It is substantially quicker than traditional means, a very important factor when you consider how many people are moving out of the countryside and into the cities nowadays. According to the UN, 68% of the world population is projected to live in urban areas by 2050, up from c.55% today. There will be considerable strain placed on public transit systems before too long.

In New York, this is an upgrade which is long-overdue. Google is introducing its mobile payments systems to the Subway from May 31st, as will Apple. The tap-to-pay system will only be available on the 4/5/6 lines between Grand Central Station in Manhattan and Atlantic Avenue-Barclays Center in Brooklyn to start with, as well as the buses in Staten Island. This is only the beginning however, as the plan is to rollout the system across the entire public transport network over the next few months.

Over time this system will begin to improve. Google has already said it will continue to work with The Metropolitan Transportation Authority to bring more features with Google Maps and Google Assistant, much like it does with many other cities around the world.

Welcome to the digital world New York!

Estonia is best digital home away from home, report says

Expats voted Estonia to the top of their digital life quality list in a new survey.

InterNations, a social network for expats, recently conducted a global survey to gauge the perception of digital lives enjoyed by those living in a foreign country. 68 countries were featured. Although most of the findings confirmed the conventional wisdom, the report also threw up a couple of surprises.

Overall, the Nordic countries ranked high, with Finland, Norway, and Denmark all in the top 5 best countries for digital life table. But topping the list is Estonia, which ranked exceptionally high on the e-government index, with 94% of all expats surveyed feeling satisfied with the availability of the country’s administrative services. Estonia also topped the table of unrestricted access to online services. The country, similar to other Baltic and Nordic countries, adopts a light-touch approach towards Internet. Following Estonia on the e-government satisfaction list is Singapore, with Norway coming second on the unrestricted access to online service table.

Unsurprisingly, South Korea, which leads the world in broadband access, also tops the league of high-speed internet at home, followed by Taiwan and Finland. Expats were also asked to rate their experience of cashless payment. The four Nordic countries took the top 4 positions, with Estonia rounding off the top 5. Finland was ranked in the first place, with 96% expats saying they are happy with the experience.

A question that is particularly relevant to expats is how easy it is to get a local mobile number. Here we see a bit surprise. Myanmar, which ranked at the bottom of the overall Digital Life table, came on top in this list, followed by New Zealand and Israel.

On the other end of the tables, China was only beaten by Myanmar to the bottom of the overall Digital Life table and sat comfortably at the bottom of “Unrestricted Access to Internet”, thanks to the all powerful Great Firewall. This is particularly pertinent for expats who would have a stronger need for the global social networks more than the local residents, to communicate with their home countries. 83% of all expats were unsatisfied with their access to social networks from China, followed in the second from bottom by Saudi Arabia, where 46% said they were unsatisfied.

The ranking may not be a big surprise, but the margin between the bottom two countries may be. The only table that China was not in the bottom 10 was the one on cashless payment. But, maybe surprisingly, with all the fanfare about the contactless payment experience enabled by companies like Alibaba and Tencent, expats living in China did not manage to take the country to the top 10 table either.

Best and worst countries for Digital Life

Europe approves new internet rules designed to rein in Amazon and co

As part of the overall Digital Single Market programme, the European Parliament has voted to approve new regulations claiming to protect European businesses and consumers when using online platforms to trade.

The “Regulation on platform-to-business trading practices” has been almost two years in the making since the publication of a document titled “Online Platforms and the Digital Single Market: Opportunities and Challenges for Europe” by the European Commission in May 2016.

The EU executives were understandably happy with the passing of the new rules. “We are delighted by the overwhelming support to the new rules on online platforms’ trading practices among the members of the European Parliament. As the first-ever regulation in the world that addresses the challenges of business relations within the online platform economy, it is an important milestone of the Digital Single Market and lays the ground for future developments. Not only will it improve trust, predictability and legal certainty, it will also offer new and accessible options for redress and resolution of disputes between businesses and platforms,” said the official statement, jointly signed off by Andrus Ansip, the Commission’s Vice-President for the Digital Single Market, Elżbieta Bieńkowska, Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, and Mariya Gabriel, Commissioner for Digital Economy and Society.

What drove the Commission to undertake such an initiative two years ago was the understanding that there is a lack of a redress mechanism when the European SMEs encounter problems when trading on the global platforms (companies singled out include Booking.com, Facebook, eBay, and Amazon), for example, “delisting without statement of reasons or sudden changes of Terms and Conditions”. The Commission has also assessed the effectiveness of legislative vs. non-legislative measures, but believed an EU-wide legislation is necessary.

The Regulation is aimed to achieve three main objectives as are outlined in the Impact Assessment Summary published a year ago:

  1. To ensure a fair, transparent and predictable treatment of business users by online platforms
  2. To provide business users with more effective options for redress when they face problems
  3. To create a predictable and innovation-friendly regulatory environment for online platforms within the EU

Although it has been approved by the European Parliament, the regulation still needs to be formally passed by the Council of the European Union, which represents the governments of the member states and can be roughly seen as another “chamber” of the union’s legislature. There is no definite timeline on when the Council will make the decision. However, by the reading of the press statement where the Commissioners thanked the member states “for their great efforts to reach a good compromise in a very short period of time. This is yet another positive development ahead of the upcoming European elections,” the Council may not be able to vote on it before the European Parliamentary election in May. After the final approval, the regulation will enter into force 12 months after it is published in the Official Journal.

This is the latest internet-related legislation the EU has made recently. On 15 April the Council passed the updated Copyright Directive “fit for the digital age”, which has proved controversial.  There are also legislation and regulation updates in member states. France has started levying 3% income tax on digital companies with sales in excess of €25 million in France and €750 million globally, without waiting for an EU-wide tax regime as part of the Digital Single Market. The UK, still an EU member state at the time of writing, has not only considered setting up a new regulator to oversee the digital world and started the consultation process of a “code of practice for online services” to protect children, but will also formally introduce the “porn block” on 15 July, which has been called “One of the Worst Ideas Ever” by some critics.

RCS is here to stay and doing well

RCS has been touted as a saviour when the SMS value has been destroyed by OTT messaging services, but without much success, but it may finally have find its moment.

Mavenir, the software company, presented on day 1 of MWC 2019, promoting its rich communication solutions offered by Rakutan. The key benefits, or the main use cases that RCS can differentiate from OTT messaging actually are less to do with taking consumers back to texting each other, or P2P messaging, but rather the communication between businesses and consumers, or A2P messaging.

This view is corroborated by Infobip, a Croatia-based messaging platform that provides aggregated OTT messaging services (e.g. WhatsApp, LINE, Viber, KakaoTalk, etc.) for their corporate clients, which the clients then can use for customer service and CRM. However, the company told Telecoms.com that its dominant business, which it has seen annual growth of between 30% and 40%, is SMS and RCS based services.

One of the use cases is helping businesses improve customer engagement. Despite that on feature comparison RCS is mostly playing catching up on OTT messaging services, SMS and RCS tramp OTTs in consumer trust. To quote Guilliaume Le Mener, Manevir’s SVP for Enterprise Business, RCS is a “clean channel”, not tarnished by the privacy scandals committed by Facebook and co, or the over monetisation by others. Research shared by Mavenir showed 97% of SMS / RCS are opened within 3 minutes.

In one case, Infobip was hired by Twitter to reengage the inactive users, after the social media giant failed the mission with its early efforts through email. Thanks to its rich features, RCS messages can enable users to explore the content directly. For those users on phones not compatible with RCS, brands can choose to fall back on SMS with a web line. The results were much more improved also owing largely to the capability of producing rich analytics to evaluate the campaign effectiveness and make quick decisions on any changes needed.

In addition to A2P messaging, RCS is also being used by brands to engage consumers in P2A, that is engaging directly with the brands through messaging. On the brand side the service can be handled by bots. This will then need to be supported by AI and analytics which will be another business opportunity for the RCS solution providers. With OTTs also actively moving into the P2A domains, again this is an area that operators need to have a stronghold for RCS before it is too late.

For Rakuten, RCS may be particularly meaningful, as, coming from an internet service and MVNO background, Rakuten has a big range of digital service tied to a user’s Rakuten ID. RCS will be a key instrument to maintain and strengthen customer engagement when it builds out its 5G network from ground up.

Half of British millennials are getting sick of the internet – report

A new EY report shows 50% of 25-34-year olds are looking to ‘digital detox’, the highest proportion of all age groups.

The “Decoding the digital home 2019” report, published by EY, the professional service firm, was done based an online survey of 2,500 British households in late 2018. In addition to the high proportion of youth wishing to increase their time away from smartphones and other internet connected devices, more people are spending less time online. The percentage of households spending more than 30 hours online per week has gone down from 34% a year ago to 28%, while those spending less than 10 hours online has slightly increased from 18% to 21%.

There are also other surprises. For example, more consumers are happy with their fibre connections (59%, up from 54% a year ago) but also higher number of young people are ready to ditch the fixed broadband (43%). 42% of 18-24-year olds are happy to pay a premium to get the latest gadgets, but only 18% of the 25-year olds and above, who would have more disposable income, are prepared to do so.

The key message that the telecoms and internet industries should take away from the survey, however, is that consumers want simplicity, proof of trust, and assurance of security.

Both service and content providers are confusing consumers with over-complex packages, causing anxiety among users, including the youth. 46% of households think there are too many different broadband, mobile, and content bundles, so most of them will not add anything new to the packages they already subscribe to. Content providers are trying to maximise the distribution channels they can use, therefore making their content available across different packages, platforms, and apps. However, nearly a quarter of all surveyed households found it hard to track their favourite content. This number rose to close to 40% among the 18-24-year olds, the so-called “digital natives”.

The high-profile cases of comprised private data have instilled more caution to consumers. 72% of respondents said that even when dealing with brands they trust they would be very cautious about disclosing their personal financial information online.

On the other hand, the heated debates over “fake news” have driven more consumers less confident in the “new media”. 44% of households responded that they now only trust the traditional news sources. In a teaser to an upcoming report, EY disclosed that over half of all households only watch the five traditional channels on TV.

But it is not all bad news especially for the mobile industry. In 15% of the households surveyed, smartphones are now the main devices to go online with (up from 11% in 2017), at the expense of laptops (down from 44% to 39%). When it comes to consumer spending, slightly more are willing to pay for ad-free streaming (up from 16% to 18%) and slightly fewer are holding their purse strings as tightly as possible when it comes to spending on communication services (down from 55% to 53%)

“Our latest survey highlights both opportunities and challenges for TMT providers. They will be pleased to see that consumers are willing to pay for premium services, but they will also be concerned that customers are overwhelmed and confused by the variety of bundles available,” said Praveen Shankar, EY’s Head of Technology, Media and Telecommunications for the UK & Ireland. “Looking ahead, it is essential for providers to simplify their propositions and offer easier to understand and clearly communicated product and services.”

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