UK Labour party pledges to nationalise much of BT if elected

A key policy of the Labour party ahead of the UK general election next month is to make broadband ‘free’ by nationalising Openreach.

Renationalising infrastructure is a core Labour policy in the run up to next month’s election and now that includes broadband. The good news for BT, and fans of property rights in general, is that Labour plans to buy the following using public funds it will get from somewhere: Openreach, the parts of BT Technology that deal with backhaul, BT Enterprise and BT Consumer. The bad news is that BT will have no say in the matter and Labour will decide on the price.

“It’s time to make the very fastest full-fibre broadband free to everybody, in every home in every corner of our country,” said Jeremy Corbyn, leader of the Labour party. “Making it free and available to all will open up opportunities for everybody, at the cutting edge of social and economic change. By creating British Broadband as a public service, we will lead the world in using public investment to transform our country, reduce people’s monthly bills, boost our economy and improve people’s quality of life.”

“This is public ownership for the future,” said John Mc Donnell, Labour’s Shadow Chancellor. “A plan that will challenge rip-off ‘out-of-contract’ pricing – and that will literally eliminate bills for millions of people across the UK. Every part of this plan has been legally vetted, checked with experts, and costed.”

Here are some of the ‘notes to editors’ from the Labour announcement:

  • Labour will deliver free full-fibre broadband to all individuals and businesses by 2030. We will integrate the broadband-relevant parts of BT into a new public entity, British Broadband, with a mission to connect the country. Labour will aim to deliver free full-fibre broadband to at least 15-18 million premises within five years.
  • This will be paid for through Labour’s Green Transformation Fund, with the costs of maintaining the network paid by a tax on multinationals (including tech giants like Google and Facebook).
  • To deliver this we will adopt a public mission to roll-out the remaining 90-92% of full-fibre across the country, as well as acquiring the necessary access rights to the existing 8-10% of full-fibre assets.
  • All current workers in broadband infrastructure and broadband retail services will be guaranteed jobs in the new public entity and be guaranteed the same or better terms and conditions.
  • There is a one-off capital cost to roll-out the full-fibre network of £15.3 billion (in addition to the Government’s existing and not-yet-spent £5 billion commitment), which will be paid for from our Green Transformation Fund;
  • The cost of bringing parts of BT into public ownership be set by Parliament and paid for by swapping bonds for shares, as occurs with other public ownership processes;
  • Full-fibre has low maintenance costs once rolled out, which can be estimated at around £230 million a year, which will be more than covered by a system unitary taxation of multinationals, which involves treating multinational companies as single entities, and taxing UK-based multinationals on the share of their global profits that reflects their UK share of their global sales, employment and assets.

Unsurprisingly such a radical pledge has provoked some robust responses, especially since McDonnell had said as recently as July that he had no plans to nationalise BT. The company itself is keeping its cards pretty close to its chest, offering only the following statement.

“It should be a top political priority to super-charge the roll-out of full fibre broadband and 5G right across the UK so we can build the digital economy of the future.  Whatever the result of the election, we’d encourage the next Government to work with all parts of the industry to achieve that. It’s a national mission that’s bigger than any one company.”

Others have been more forthcoming, however. “These proposals would be a disaster for the telecoms sector and the customers that it serves,” said Julian David, CEO of UK tech sector trade body TechUK. “Renationalisation would immediately halt the investment being driven not just by BT but the growing number of new and innovative companies that compete with BT.

“Full Fibre and 5G are the underpinning technologies of our future digital economy and society. The majority of the estimated £30bn cost for Full Fibre is being borne by the private sector. Renationalisation would put this cost back onto the taxpayer, no doubt after years of legal wrangling, wasting precious time when we can least afford it.  These proposals would be a huge set back for the UK’s digital economy which is a huge driver for growth.”

“Today’s announcement highlights the importance of full fibre access for all,” said Lloyd Felton, Chief Exec of County Broadband. “However, it also shows an alarming lack of understanding about the complex nature of full fibre rollouts and the fact that, unlike by comparison the rail industry that operates rail franchises, the industry has already invested billions of pounds in building its own infrastructure over which the service is delivered, in direct competition to BT.

“This proposal would almost certainly lead to delays, or at worst, derailment of existing full fibre investment and new network rollouts. It is a broad-brush, and makes no mention of how customers would be served and supported and provides no recognition for what has been achieved by the many Alternative Network providers who are currently active in providing a competitive full fibre solution.

“The competitive nature of the current market in the UK has meant consumers already benefit from one of the lowest cost broadband services in Europe. Broadband is an essential utility and whilst we share the ambition to bring future-ready full fibre connectivity to every home and business, we believe a mix of public and private investment is the only realistic strategy to deliver the service efficiently, without the need to bring significant cost to the public purse.”

Ofcom isn’t commenting and Openreach is leaving it to BT. We understand that there is an unprecedented exchange of views taking place within the UK telecoms industry, however, and look forward to the outcome of that. We also asked a few industry experts what they thought of Labour’s plans.

“There is no denying that the UK is far from a leader in full-fibre broadband, but the market is really starting to move as Openreach’s rollout plans are complemented by a long list of alternative / competitive network providers – Virgin, Talk Talk, CityFibre, Hyperoptic, and many more,” said Phil Kendall, Analyst at Strategy Analytics.

“A survey of The Independent Networks Cooperative Association (INCA) members showed an aspiration to pass 16 million premises with fibre by 2025. If there is a role for government in this it would be to support pushing broadband coverage out to all communities, so the areas that the private market will struggle to cover profitably, not torching the whole sector.

“If nationalizing Openreach doesn’t kill off some or all of those competing providers or wholesalers then offering free fibre broadband to everyone definitely will. For the average voter, there are good optics on this – free broadband, like free Wi-Fi or free roaming, is a nice populist idea and getting the evil webscale giants to pay for it is perfect. But this is a hugely destructive attempt to fix a sector that isn’t anywhere near as broken as Labour seems to think.”

“On the face of it this is not completely insane,” said telecoms analyst William Webb. “BT was, of course, publicly owned about 30 years ago. There have been state-led fibre deployments, most obviously in Australia, and while this hasn’t gone particularly well, nor had UK fibre deployment under the current model until recently.

“There is always a tension between a competitive market, which we currently have, but which will often not deliver socially desirable outcomes; and a publicly provided service, which will deliver those outcomes but tends to have well known downsides including a lack of innovation, possibly high prices (even if these are charged to taxpayers, not consumers), slow responses to changes and so on.

“But, of course, there are massive issues. The biggest is how we would transfer out of an environment with multiple competing providers in a way that compensates all fairly, that doesn’t slow things down, and that rationalises duplicated resource. Another is the extent to which we really need fibre everywhere and whether a state-led masterplan is reactive to real needs – this was one of the biggest issues in Australia. And as fixed and mobile converge with services like fixed wireless access, intervention will spill across into the mobile arena, potentially destabilising that competitive market.

“Fundamentally, I guess, it comes down to whether you believe in state ownership or market forces. Both can be made to work. But with the market forces approach appearing to work probably as well as it could right now, changing approach feels almost certain to slow things in the short to medium term.”

“It’s great to have bold aspirations but we’ve seen how challenging they are to implement,” said TMT Analyst Paolo Pescatore. “For sure, connectivity needs to improve and so does coverage. There are so many companies laying cables and installing masts. The best way is to forge partnerships which will help lower costs for all including consumers.”

There are coherent arguments in favour of nationalising natural monopolies, but the way Openreach has been regulated alongside the presence of competitive alternative fibre providers means this isn’t one of those cases. There are just so many flaws and pieces of sloppy, wishful thinking in this proposal that if it were a different time of year we’d assume it was a joke.

Firstly there’s the costing alone. Labour not only plans to quadruple Conservative broadband spending pledges, it needs to find the cash to buy over half of BT. Despite the hit to its share price this announcement has delivered, BT’s market cap is still around £19 billion, so that’s another £10 billion or so Labour would have to dig up, depending on how fair it intends to be to BT shareholders. And as for getting US tech giants to pay for the maintenance, good luck with that.

Then you have the underlying concept of forced state appropriation of private property. If Labour is willing to force one of the UK’s biggest companies to sell half of itself to the state, at a price it has no say in, then are any other companies safe? The effect on business sentiment of moves like this is likely to be catastrophic.

But finally, as many people have indicated above, we have the extreme improbability that the state will do a better job of fibre rollout than the private sector currently is. NBN is a great example of the folly of such initiatives and once a Labour government is forced to confront hard financial realities, work on the network would likely grind to a halt.

All politicians try to bribe the electorate in the run up to general elections, but the trick is to at least make it plausible that they will be able to deliver if they do win power. This policy is not only damaging for UK telecoms infrastructure and business in general, it also has no chance of being put into practice as promised. Labour has massively over-reached with this move.

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

Apple has removed the crowd-sourced app HKmap.live, 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.

US warns Italy over the Huawei job

US Secretary of State Mike Pompeo is back in Europe and this time he is attempting to scare the Italians into line.

It has been a quiet few months for the White House enforcer, though Pompeo is back in the European ring throwing punches towards Italy and his old foe, Huawei. At a press conference in Rome, the same line has been delivered to the Italian press; if Italy works with Huawei, it does not bode well for its relationship with the US.

“And so to the extent that an Italian company makes a decision to invest in or provide equipment that has a network that our national security teams – our intelligence teams, our Department of Defence – conclude isn’t a trusted network, where we have risk to our information that we can’t figure our way through, we’ll have to make some very difficult decisions,” Pompeo said.

“We want to be a partner with Italy in all of these things, but it is not the case that we will sacrifice America’s national security to put our information in a place where there’s risk that adversaries or the Chinese Communist Party might have access to that.”

Although this is the most relevant point to the telecommunications industry, it should also be noted there is existing tension between the US and Italy.

The US is unhappy over loans and subsidies which have been granted to EU aerospace company Airbus. Thanks to this assistance, Airbus is now able to challenge US rival Boeing on the global stage, though the means by which success has been realised has irritated the White House. Tariffs have been suggested on certain European food exports such as whiskies from Ireland and Scotland, as well as wine and cheese from Italy.

While there have been protests from officials against the tariffs, the World Trade Organization (WTO) has said the US is free to pursue the charges if it chooses to. This has led to increased tension between the US and various European nations, including Italy. During his four-day tour of the country, Italian farmers exchanged stern words with Pompeo to demonstrate their frustration.

It might not be directly relevant to the Huawei saga, but it is another chapter in the story which indicates the US and Italian Governments are not on the friendliest of terms.

In terms of the telco and technology space, Italy has not made any commitments to ban Huawei to date, though Pompeo seems to think it is necessary to edge the Italian Government along. It is a message which the statesman has delivered on several occasions to European counterparts; if you work with Huawei, we might not work with you.

What is odd, however, is that the Italian telecommunications scene hasn’t been the most profitable for Huawei to date. Vodafone and Telecom Italia both rely on Ericsson as their main equipment provider, while Iliad recently announced it was continuing its relationship with Nokia. Wind Tre’s main supplier Chinese state-owned ZTE, which might irritate a few in the US, though Huawei, the victim of much of the White House’s aggression, isn’t a major player here.

More than anything else, this seems to be more symbolic from Pompeo. There might be other distractions in the world of politics, but it is always useful to re-iterate it point about Huawei.

This threat from the White House is not necessarily new however. The same has been said to the UK, largely ignored by the Germans, irritated Hungary and proved somewhat successful in Poland. Only the Poles have taken a firm stance against Huawei, aligning themselves with the US by signing an agreement on 5G security which effectively bars Chinese vendors from supplying equipment for Polish 5G networks.

Looking at the economics side of the argument, the US accounts for 9.3% of all exports, making it the third-largest destination behind Germany and France. Wine accounts for 4.1% ($1.83 billion) of the exports to the US, pasta 0.69% ($310 million) and cheese 0.71% ($317 million). The US is a very important trade partner of the Italian economy, and the tariffs mentioned above will certainly have an impact.

While banning Huawei from the Italian market would not necessarily have a material impact, it would be a symbolic gesture. This is another example of the US attempting to harness support in its on-going battle with the Chinese, though the Pompeo threat causes any reaction from the Italian Government remains to be seen.

What did we learn from the Tory Party Conference?

In a couple of words; not a lot.

Considering there was the big claim of £5 billion investment into rural broadband, Prime Minister Boris Johnson has promised a rapid acceleration of fibre investment and 5G is on everyone’s lips, not a huge amount of homage was paid to the telecoms and technology industry.

Perhaps we should not be surprised. Brexit is dominating the headlines and politicians seem more interesting in insulting those on the other side of the Commons than addressing actual policies. There were of course passing references to things that matter, but this is the spearhead of the political circus.

Andrea Leadsom, Secretary of State for Business, Energy and Industrial Strategy

Leadsom might not hit the headlines for telecoms and technology news that often, but her department is one which we should pay considerable attention to. In a brief address, the message was simple; success in-hand with the Government not in-spite of it. How this works out remains to be seen, there are plenty of sceptics out there.

“We’re standing on the cusp of a new industrial revolution, and for the first time since the first industrial revolution, the UK is positioned to lead in extraordinary new ways,” said Leadsom.

“Those memories shaped my politics, but it was Margaret Thatcher’s vision of a shareholding democracy and her introduction of the right to buy that shaped my personal ambition -and that is to help everybody to build a secure life for themselves and their families.

“So, I want to see a better environment for business, less red tape and lower taxes to incentivise them.”

This is a claim many business leaders will want to see. Lower taxes and less regulation to worry about. What is worth noting, this is a very generalist claim. The telecoms and technology segments are overdue a regulatory overhaul and this will not change because a politician is chasing headlines with a soundbite.

One area which is worth paying attention to is the idea of automation. This segment of the speech was directed more towards autonomous vehicles and drones as opposed to a workforce overhaul, though it could indicate there are some new policies in the pipeline. This Government has been very keen on gaining a leadership position in the growing world of autonomous driving and drone management already, and it would not surprise us to see another incremental step forward soon enough.

Sajid Javid, Chancellor of the Exchequer

This is the speech many in the telecommunications and technology world would have been paying attention to, and it might well have fallen short of expectations.

Over the weekend, it was reported Javid was going to announce new investment to encourage investment in the UK’s hardest to reach areas. $5 billion to ensure the UK does not create another digital divide which the Government has been working to correct ever since. The investment was confirmed, though little else was offered to add colour to the new policy.

The investment will be used to ensure fibre deployments reach the most difficult 20% of households and businesses throughout the UK. But like his colleagues, Javid elected to concentrate the majority of his speech on a bit of Corbyn-bashing.

One area which could be worth keeping an eye on is the promise to continue the devolution of power throughout England. Although this will please some in the regions, those who seek regulatory consistency will perhaps exhale deeply.

There will of course be regional variances in how regulations are designed and implementing, Cowbridge is very different to London after all, however the risk of devolution is a mix-match of red-tape. Negotiations with hundreds of councils throughout the UK, all of which have their own demands and requirements. It is the stuff of nightmares for a cash-intensive industry.

Nicky Morgan, Secretary of State for Digital, Culture, Media and Sport

Amazingly, the person with the most relevance had the least to say.

In short, Morgan congratulated the Conservative party for what it had achieved thus-far, quoted figures, promised the UK is the best place in Europe for tech and talked-dirty about the Labour Party leadership.

Perhaps the most meaningless speech of the day.

Key take-aways from today at the Conference

It is difficult to cut through the noise, but we will do our best. A lot of today was hyping the Conservative Party, undermining the Labour Party and chasing headlines.

However, the idea of re-nationalism was consistently attacked. Lesser regulations have been championed. While technology and telecoms will form the central pillars of the UK economy moving forward.

There are a couple of interesting soundbites to take-away from today, and perhaps more than was offered during the Labour Party Conference, but we were hoping for more than posturing. Perhaps that was our short-coming.

Presidential hopeful criticizes lack of tech knowledge in US Government

Senator Elizabeth Warren has launched a Twitter tirade to blast Government officials who are seeking regulatory advice from those who will be subject to the stricter regulation.

Although understanding the consequences of new regulation from those who would be deemed most impacted in a sensible way to operate, it does appear Warren believes there is too much reliance on outside sources.

Critics of government agencies and regulatory officials will be quick to raise a glass. For some, the competency of bureaucrats is woefully lacking when it comes to understanding the nuances of the technology industry. This is perhaps understandable, the segment moves at a remarkable pace after all, however it does create the difficult regulatory landscape where companies are free to duck and dive through the grey areas of inaction, inadequacy or a lack of progress.

“I’ve got a plan to end lobbying as we know it — but strengthening Congress’ independence requires us to do more,” Warren said on Twitter. “We must invest in resources to allow members of Congress to make informed decisions without relying on self-interested outside sources.

“My plan revives and modernizes the Office of Technology Assessment, shores up congressional support agencies, and transitions congressional staff to competitive salaries — so we can have competent public policy that actually holds big corporations accountable.”

Warren has hit the nail on the head when it comes to understanding why the chasm between the technology industry and the rules governing it is so wide; those who understand how the industry works, go work for the private sector. This is down to the salaries which are being paid, and also the work itself. Do the best and brightest in the work want to work drafting rules and red-tape, or would they rather work on creating cutting edge technologies and services?

Pumping more cash into these agencies and organizations will not solve the problem of a skills shortage, but it will address one of the difficulties.

To be fair to Warren, she is addressing a problem which plagues politics; the influence of interest groups. This is not an issue restricted to Washington, though as the US is home to some of the worlds’ most influential technology companies, it is perhaps more apparent in the country than anywhere else.

With the issue of net neutrality, the telcos threw cash at the lobbyists. And when it comes to the break-up of Big Tech, Silicon Valley began signing cheques which would make eyes water. Over the course of 2018, Google spent $21.7 million on lobbyists, AT&T spend $18.5 million, Amazon $14.4 million, Facebook $12.6 million and Comcast $15.6 million. These figures are only lobbyist spend in the US, and it is also worth bearing in mind associations would have their own spend as well.

The lobby industry is a powerful one in the US, this is not something which will change unless there is a significant upheaval, though politicians and officials could be less susceptible to it. This is where Warren is making a very valid point.

Industry should be consulted on up-coming regulatory evolution, this is only reasonable as regulation is not supposed to destroy business models, however it is important those asking the questions should have a comprehensive understanding. It will (theoretically) stop officials being misled, over- or under-compensating and aids future proofed regulation.

This will be a monumental challenge for Warren and her team, though it is a lot more achievable than previous claims make by the Presidential hopeful.

In announcing her plans to charge towards the White House, Warren also declared war on Silicon Valley. In an age where politicians are making big promises, Warren raised the stakes by suggesting the break-up of Big Tech.

Dissecting these companies is a daunting task, but it is also one which a few might question the logic of. Yes, the internet giants need to be held more accountable through regulation and greater scrutiny on acquisitions which could lead to a less competitive marketplace, however these are the companies which are driving the US economic dominance on the world stage. Weakening the positions of these companies could very well undermine the pursuit of success and open the door for competitors in other nations to mount a challenge.

However, with the announcement made via Twitter, the US Government would certainly be in a better position if more ably-minded, tech enthusiasts were on the payroll. Many criticise the sluggish nature and short-sightedness of governments, irrelevant to their nationality or location, and Warren is proposing a model to reassert the capability of the Government.

Another question which you have to ask is where the money to fund these salaries is going to come from? Either some departments are deprived, taxes are further straining, monies are borrowed, or industry is asked to contribute. The latter is the most likely, though this would give another reason for industry to line the pockets of the lobbyists.

In truth, this suggestion is a nightmare for the residents of Silicon Valley. These companies have benefitted unimaginably from the regulatory chasm, seeking profits through the introduction of new business models which traditional industry could not dream of.

Ironically, the suggestion of tackling lobbyists will probably make the whisperers and nudgers even richer.

The internet is now 10% of US economy: a regulatory conundrum

Placing more stringent regulations on a sector is a delicate equation to balance, especially when it contributes so much to the national economy.

According to estimates from the Internet Association, the industry now accounts for 10.1% of the overall US economy, directly employing 4% of the working population and indirectly supporting a further 8.7%. These are the figures which have placed the politicians in such a precarious position.

Silicon Valley is driving progress in the US, however it has arguably become too powerful. The years of the ‘Wild Web’ cannot be allowed to continue, though politicians and regulators have to be careful when designing and placing the shackles on these monstrous companies; the last thing anyone wants is to inhibit or undermine an industry so important to economic growth.

Over the course of 2018, the Internet Association estimates the industry contributed $2.1 trillion to the US economy. This is more than double the $966 billion from five years ago, accounting for as much as 10.1% of the total. The number of jobs it also supports has doubled from 2014, directly employing 6 million individuals, while 13.1 million jobs were indirectly supported by the internet companies.

In comparison to other segments, the internet sector grew nine times faster than the US economy as a whole between 2012 and 2018. Since 2007, the US economy has grown by 41.8% compared to growth of 372% for the internet’s contribution. It is now the fourth largest sector in the US, only behind manufacturing, public administration and real estate.

And some might suggest this is only the tip of the iceberg. As more digital products and innovations are introduced, alongside more traditional aspects of our daily lives heading online, growth would presumably only head one direction.

As mentioned beforehand, this presents a conundrum to the politicians and regulators.

It has become increasingly popular over the last few months to point the finger of accusation at Silicon Valley. According to the politicians, these are companies who are navigating around the rules, ignoring the privacy rights of citizens and offering the opportunity for nefarious actors to trick, con and mislead.

Everyone realises the internet economy has to be brought under control through a stricter regulatory regime. The companies involved have not been responsible enough with the light-touch regulatory environment which has been afforded to them, however the iron fist of regulation cannot strike too hard. This is an industry which is thriving and adding so much value to the US economy, and subsequently, society.

Internet Association figures

If the US is to maintain its leadership position in the global economy, the internet industry is critically important, likewise the telecommunications industry.

5G is a topic which is dominating the headlines and will continue to do so. Those who harness the connectivity euphoria earliest could dominate the international markets for decades to come.

Launching 5G first is not necessarily anything to shout about, but the nation which can scale these networks the quickest will put themselves in an excellent position. Soon enough, the innovators will start to think of new products and services which have been enabled by 5G, irrelevant to whether they are consumer or enterprise focused, though the success of these products will depend on how widespread 5G connectivity actually is.

If you don’t have a large enough 5G network, these innovators cannot test their new ideas at scale, validate business models, or make the necessary tweaks to protect their investment from fast-followers. This concept was very evident in the 4G era.

The idea of Facebook as a mobile product or Uber did not exist until the 4G networks had scaled. There are numerous other examples, though these two are the most obvious. Once 4G networks and devices had been adopted by the mass market, these companies grew rapidly, contributing notably to the US economy.

Let’s compare this to a country which was slow to scale 4G networks. Someone might have had the same idea as Uber founder Travis Kalanick in the UK let’s say, but without the scaled 4G network, the idea couldn’t be validated or test properly, funding would have been more difficult to secure, domestic growth would have been stifled and less funds would have been available for international expansion. By the time the UK version was ready to push out internationally, it might have been so far behind Kalanick in the US the business died.

We have of course made this comparison up, but it proves a point of the importance of scaling the network, not just being the first to launch commercial services.

The same could be said about 5G networks. New businesses will emerge with this new connectivity dynamic, but where will the best ideas have the opportunity to scale domestically, before launching an assault on the global markets. Another interesting element is the attraction of foreign dollars. It you have the best network, you will lure R&D investments to the country from the likes of China, Germany and the UK. How many companies have a R&D centre in Silicon Valley nowadays?

All of these ideas will contribute to the success of the internet economy in the US.

However, the industry is at a critical point. It is facing a regulatory crack-down and 5G is quickly developing all around the world. Politicians and regulators need to create new rules to govern and force accountability, though they need to be careful they do not shackle an industry which is providing so much stimulus to the national economy.

US general public in favour of breaking up Big Tech

The technology industry has caught the sharp-end of the stick from point-scoring politicians in recent months, however it does appear the aggressors are representative of the people.

It should not be considered unusual to see some of the rhetoric stepped-up a level with the Democratic Presidential Candidate heating-up, though that could only be the tip of the iceberg. Recent election campaigns have seemingly specialised in grand promises, see Brexit and 2016 Presential Election, and there is little evidence sanity will be restored to the political arena.

The technology industry is an easy target for these imposing statements, and this seems unlikely to change.

According to research from think tank Data for Progress, almost two-thirds of the US general public support the notion of breaking-up big tech. And worryingly for the residents of Silicon Valley, the boundaries of political divide seem to matter very little. It does appear everyone has it in for Big Tech.

Of those who identify as in support of the Democrat party, 29% and 34% either strongly or somewhat support the break-up of big tech to encourage more competition. For Republican supporters, the numbers are 29% and 31%, and for those who identify as independent, 32% and 34% support the move.

These questions are quite generalist, but there is support to tackle the growing influence of Silicon Valley and its powerful residents. One of the reasons for this might be the highly-publicised data scandals which has dominated headlines over the last 12-18 months. The frequency of these incidents does not paint a favourable light on the ability or attitude of Big Tech.

More interesting research which builds this momentum comes from research firm Morning Consult.

Morning Consult research

As you can see from the graph above, the majority of respondents to the survey either support the continuation of the current scrutiny of the technology industry or would want to see it increased. Considering the current political position is uncomfortable for Big Tech, these numbers will not be soothing.

Interestingly enough, perhaps the biggest aggressor from the Democrat side of the political arena is gathering momentum in the battle for a nomination. Former Vice-President Joe Biden might have been the bookies favourite for the Democrat nomination for some time, though it appears Massachusetts Senator Elizabeth Warren is putting-up a very credible challenge.

Polling data from CNN suggests Warren is leading the race for the Democrat nomination, though this position could gather momentum as the process unfolds. As more potential nominees drop out of the race, votes will be dispersed amongst the remaining contenders; 20% have selected Warren as their next-best choice, with Biden only collecting 10% of the reshuffled votes.

It is way too early to make any predictions regarding the nominees or the outcome of the 2020 election, though there is another forecast worth bearing in mind. According to Real Clear Politics, a website which aggregates polling opinions from different news outlets in the US, if the election was to be held tomorrow, Warren would beat Trump, however Biden would lose comprehensively.

Again, this data has to be taken with a pinch of salt, there is a lot which can change over the next twelve months, but some will be sitting uncomfortably in Silicon Valley. Traditionally, the Democrat party has been much more politically aligned with the emerging technology segment, though Warren is one of the most aggressive critics.

Announcing her intention to compete for the keys to the White House in March, Warren has made the issue of Big Tech the focal point of her campaign. This is the big-ticket promise that we mentioned earlier in the article; Warren was one of the first to suggest the break-up of Big Tech and the reversal of acquisitions which look anti-competitive with the benefit of hindsight.

Since this point, the critical crowd has grown. The FTC is investigating Facebook for its acquisitions of WhatsApp and Instagram, as is the House Judiciary Committee. Google is at the centre of a      Department of Justice and House Judiciary Committee enquiry. The Apple App Store is facing an anti-competition probe, and Amazon’s eCommerce platform is under investigation as well.

Although all of these investigations are geared towards the activity of a single company, the outcome will set precedent which can be applied throughout the rest of the industry. If one loses, everyone in Silicon Valley is exposed to the same dangers.

Big Tech bosses might have expected the criticism and scrutiny would have continued, though these individuals might not have thought the general public would care so much.

30 Attorney Generals on verge of announcing Google probe – sources

Sources familiar with the matter have suggested an antitrust probe involving more than 30 State Attorney Generals could be launched as soon as next Monday.

Although the specifics of the investigation are yet to make it into the public domain, the threat is looming large for Google. Three separate sources have suggested Google is in the crosshairs, according to the Washington Post, another incremental step in the US as lawmakers look to dilute the power and influence of one of Silicon Valley’s poster boys.

Comments are difficult to come by, though lawyers are seemingly ready to down weapons and reach across the political divide to address a growing debate. Bickering politicians can usually be relied on to be lethargic and ineffective, though it seems Silicon Valley is antagonising Washington enough to force friendships in an increasingly hostile and partisan political climate.

That said, it would surprise few if the investigation is officially launched next week, as there have been various public offices stating their disapproval over the power and influence Google wields.

The crux of the issue is a simple one; should a company like Google be able to access such vast amounts of information. If data is the new oil, Silicon Valley is OPEC. Combining this potential gold mine with the already bulging bank accounts could create a worrying position.

One question which remains is how responsibly companies like Google are exerting this power. Are the internet giants fuelling campaigns of defensive acquisition, swallowing up potential competitors to prevent a dilution of market share? Are initiatives being implemented to prevent growth of these rivals and kill an idea before it can even consider scaling? These are areas which could be deemed monopolistic, an abuse of a dominant position, a big no-no in today’s world.

The monopolistic accusations are just a single element of the mix though. Conservative voices have suggested the left-leaning internet giants are demonstrating bias, offering prominence to some political commentary and hiding certain opinions.

“If big tech companies are not living up to their commitments and representations regarding being open to all political viewpoints and free of bias and restrictions on the basis of policy preference, then they should be held accountable for their false, misleading and deceptive trade practices,” said Texas First Assistant Attorney General Jeff Mateer.

Mateer and the Texas Attorney General office believe Google has been restricting the advertisement of some Republican political events, while Facebook has been censoring pro-Trump articles and Twitter limited the visibility of Republican politicians. These are unproven claims right now, but they demonstrate the ‘us’ and ‘them’ mentality which is a common theme though the relationship between Silicon Valley and Washington.

For the politicians, the perceived preference of the internet giants on political matters is another reason power and influence should be diluted. An antitrust investigation, gathering 30 Attorney Generals behind the same cause, could be one way to tackle the problem.

Another area which is unclear is the extent of such a probe. Google has been named as the party of interest in this report, though it would surprise few if the likes of Amazon, Twitter or Microsoft were dragged into the fray also; Silicon Valley is increasingly becoming Enemy Number One in Washington.

Twitter and Facebook move to block Chinese state-backed disinformation campaign

US social media sites have announced coordinated action designed to counter a propaganda campaign apparently designed to undermine the Hong Kong democracy protests.

Twitter was the first site alerted to this activity, with some users flagging up sponsored posts from state-run media that seemed biased against the mass gatherings in Hong Kong that are protesting moves to give the Chinese state greater power over the semi-autonomous region.

Twitter also published a blog post titled Information operations directed at Hong Kong, in which it said “We are disclosing a significant state-backed information operation focused on the situation in Hong Kong, specifically the protest movement and their calls for political change.” This took the form of almost a thousand phoney accounts apparently designed to amplify messaging undermining the legitimacy of the Hong Kong protests, which have now been suspended.

Removing any doubt about censorship activity being coordinated between internet giants, Facebook then announced it is acting on a tip from Twitter to remove a few accounts suspected of ‘inauthentic behaviour’ from China. “Although the people behind this activity attempted to conceal their identities, our investigation found links to individuals associated with the Chinese government,” said the Facebook announcement.

Lastly, while not explicitly referring to China, this propaganda campaign has clearly prompted Twitter to announce it will no longer accept advertising from state-controlled news media entities. Somewhat belatedly is has dawned on Twitter that state-controlled media is sometimes a tiny bit biased towards the state that controls it, which can have direct political consequences. Who knew?

Meanwhile US President Donald Trump is persisting with his claims that Google exerted some deliberate influence against him in the 2016 US general election. He cites an unspecified report that claims up to 16 million votes were manipulated in favour of his opponent Hilary Clinton in the election and called for Google to be sued.


Clinton herself has unsurprisingly queried the validity of the claim by attacking the, still unspecified, source. A number of other media have also criticised the presumed source of the claim, most of which make no secret of their antipathy towards Trump. As ever Trump’s tweet will have an underlying tactical purpose, in this case to threaten Google and any other internet company that maybe tempted to use its platform to favour his 2020 opponent.

US Security Advisor lands to rub shoulders with BoJo

US National Security Advisor John Bolton has landed in the UK over the weekend to attend various meetings over the next two days, and its not difficult to imagine what is on the agenda.

Bolton has been a regularly featured name in Republican Presidential administrations since the early 80s and is credited with being one of the more hawkish members of the current ruling mob. With Brexit a key concern for many parties around the world, the up-coming deadline is likely to feature in many conversations, though with the newly-appointed Prime Minister available for coaxing, China and Iran will also feature heavily.

Prime Minister Boris John is somewhat of an unknown entity in recent months. BoJo has never been far away from Brexit headlines, but after an exit from the Foreign Department in 2018, other comments have been largely immaterial. During the Conservative Leadership campaign, BoJo was kept under control by the PR gurus, with many assuming public engagements would likely do more damage than good to leadership ambitions. This does create somewhat of a void when it comes to the stance against China.

This is an area where BoJo has remained relatively quiet. Of course, there has been the odd outburst and political PR plug, but the relationship with China during the Johnson leadership is still relatively undefined. This could be seen though the latest update on the on-going Supply Chain Review.

During the Supply Chain Review update last month, then-Secretary of State Jeremy Wright gave little-to-no details on the Government stance. Legislative updates were promised, and homages paid to the value of increased supply chain diversity, but no decision, or suggestion of, on the role of Huawei in the UK were offered. Reading between the lines, Wright did not want to stick his neck out when a new PM was on the verge of being appointed.

Where BoJo sits is an unknown entity.

BoJo has made some big promises on the campaign trail for the leadership position, while he still has to deliver on the big Brexit claims made three years ago. Some of these were built around the idea trade negotiations would be simpler outside of the European Union, suggesting China would play a role in the post-Brexit future of the UK. This contradicts the US relationship however.

The Trump administration is very anti-China, with Huawei absorbing the largest damage in this prolonged trade-conflict. BoJo is somewhat of a pet favourite of President Donald Trump, however it will be interesting to see whether the ego-stroking with be returned from Number 10. Downing Street.

With Bolton in town, it is not difficult to imagine how the conversations with evolve. Bolton is a constant critic of the European Union, labelling the bureaucrats ‘EUroids’ in one of his books. His aggressive stance against China has been clear over the last few months, and we suspect this will continue through discussions over the next couple of days.

The decision on Huawei in the UK is still hanging in the balance. Bolton is very well-placed to nudge the UK towards a more strident position against China, though how healthy this is for the UK remains to be seen. The next couple of days might offer some interesting insight to the BoJo administration and the UK’s position in the international conflict which has dominated headlines for months.