Democrats eye up Bill of Rights for the Internet

With Silicon Valley seemingly not doing enough to empower the consumer in the digital era, Congressman Ro Khanna is working on new proposals to more tightly regulate the technology industry.

Congressman Khanna, the Democratic representative of California is suggest a new Bill of Rights for the Internet, which would provide more rights for the consumer in controlling how personal information is collected, transferred and utilised. The aim here is simple; pull the balance of power over to the side of the consumer.

While this does sound like a logical idea, the technology industry has largely slipped through the legislative grey areas for years, before such proposals could even be considered the Democrats would have to win the November mid-term elections.

The idea for the Bill would focus on the following principles. Individuals should have the right:

  1. To have access to and knowledge of all collection and uses of personal data by companies;
  2. To opt-in consent to the collection of personal data by any party and to the sharing of personal data with a third party;
  3. Where context appropriate and with a fair process, to obtain, correct or delete personal data controlled by any company and to have those requests honoured by third parties;
  4. To have personal data secured and to be notified in a timely manner when a security breach or unauthorized access of personal data is discovered;
  5. To move all personal data from one network to the next;
  6. To access and use the internet without internet service providers blocking, throttling, engaging in paid prioritization or otherwise unfairly favouring content, applications, services or devices;
  7. To internet service without the collection of data that is unnecessary for providing the requested service absent opt-in consent;
  8. To have access to multiple viable, affordable internet platforms, services and providers with clear and transparent pricing;
  9. Not to be unfairly discriminated against or exploited based on your personal data; and
  10. To have an entity that collects your personal data have reasonable business practices and accountability to protect your privacy.

Of course, many of these principles are ideas which should have been implemented before the internet ball got rolling. Now it is travelling at such a speed it might be difficult. Another factor to consider is the power of the internet giants. These are massive organizations, with heavy-hitting financial punches and an influential lobby. They won’t like the idea of such principles being written into law, so expect some notable resistance.

But first, to even consider such proposals, the Democrats would have to win the mid-term elections. All 435 seats in the House of Representatives are up for election, though 147 and 182 seats are considered safe for the Republicans and Democrats respectively. A further 51 will probably be won by the Republicans and 10 by the Democrats. The interesting battles are the ones which could go either way; 42 of these are currently held by the Republicans and 3 by the Democrats. A majority here has been set as a target, though to pass any new legislation, the Democrats would also have to win the Senate over.

In the Senate, 35 out of the 100 seats are being contested. Three of the contested seats are considered safe for the Republicans and 14 for the Democrats. 2 will probably be held by the Republicans and 8 probably held by the Democrats. 8 seats, four of which are held by either party, could go either way. Here it still looks like the Republicans will maintain control, dampening the potential for any new technology regulations.

The internet giants should have more regulations dictating the field of play, though with the current political landscape it does look like that will be difficult. Even if the Democrats win in the House, a scenario which some believe to be realistic, a Republican Senate will mean gridlock for future legislation.

We’re blindly walking the path to digital monopolization – think tank

British think tank ResPublica has claimed current competition law is not fit for purpose, and runs the risk of companies such as Google and Facebook creating digital monopolies and ultimately a losing position for the consumer.

In its latest report on the industry, ‘Technopoly and what to do about it: Reform, Redress and Regulation’, the think tank argues competition law needs to stop privileging big business and focus on the benefits of small businesses and market structure. The team is pointing towards the ‘kill in the crib’ emerging trends, with the super-powers of tomorrow acquiring any business which is deemed a potential threat in the long-run. Of course this is standard business practise, but without a more stringent view on what should and shouldn’t be allowed, acquisitions could lead to the death of competition.

“Digitalisation and the new world of Big Data are already conferring vast benefits… Not such good news are the new threats that digitisation poses to competition and the weakened capacity of insurgents to be lode-bearers of the new,” the think tank warned. “Investment in patents, copyrights and computerised systems has become a new form of intellectual capitalism.

“The company that gains first mover advantage (with the creation of the fastest growing network of digital users) is the company on the way to establishing a monopoly position, which can be further entrenched – as monopolies have always been – by buttressing that position through making its services as distinctive and non-reproducible as possible. If unconstrained by competitive alternatives, there is a danger that these companies can eliminate all potential competition through acquisition strategies.”

This is of course not a new argument, but we are starting to see the negative benefits of such dominance. Revenues are only widening, meaning the predatory nature of the major players will continue to increase as well as the vast amount of cash being thrown into R&D departments. We don’t think the argument of ‘they’ll be more innovative because they have more money’ offers much credibility, Facebook and Google are entitled to spend the billions however they please, but such a strangle hold on the consumer means more than reduced competition; it means less variety.

Such a dominance over revenues will mean a less stable business for the traditional media players, some of which are already facing the threat of extinction. The social media giants have already stated they do not wish to have editorial control over the news content on the platforms, though they will continue to fight fake news, threatening the ability for the general public to remain informed.

“The ‘Fantastic Four’ (Google, Facebook, Amazon and Apple) are now widely recognised to be dominating the technology sector and controlling the media,” the report states. “They have wrapped the planet with their platforms and inhabit all, or almost all offices, schools and homes. Their impact on communication is pervasive and the consequences for freedom of expression and press freedom is only now becoming clear.”

The main threat for ResPublica seems to be the suitability of current legislation. This is of course not the first time the readiness of the red-tape maze has been questioned, but it certainly is worth continuing to ask the question until it is answered. There does seem to be a lot of busywork taking place, but few governments or bureaucratic bodies seem capable of tackling the internet giants in the complicated, and often unruly, digital landscape.

“This is an exciting time in the sector, as companies seek to exploit the potential of AI, which could double economic growth rates in industrialised countries like ours – But the dominance of the current behemoths puts this at risk,” the report states.

“By tolerating anti-competitive strategies, failure to penalise bad behaviour and make law breakers pay, we are damaging innovation. This is why we propose a pan European approach to dealing with the sector, support for small and medium size enterprises to gain market entry and the use of the states’ purchasing power to ensure greater choice and diversity.”

Nokia’s new Technology Committee – good idea, poor execution

With the dust settled following Nokia’s Annual General Meeting now is the time to look at whether any of the changes will have a meaningful impact on the business.

Nine of the board members have been re-elected, each receiving a handsome payment of at least €160,000, and one new member has been introduced, the former Head of Nokia Networks Sari Baldauf. A dividend payment of €0.19 per share for the 2017 financial year has been set, and all the committees reporting into the board have been settled. Interestingly enough, the business has also decided to introduce a new one, the Technology Committee, but is it worth paying attention to?

The committee currently features six members, Bruce Brown, Jeanette Horan, Louis Hughes, Edward Kozel, Olivier Piou and Risto Siilasmaa, with Kozel acting at the Chair, and a mission statement to review Nokia’s innovation and technology strategies. The committee will meet at least twice a year, with the agenda being defined by the Chair in conjunction with the Nokia management team. The four objectives of the team will be as follows:

  • Provide opinion and advice on Nokia’s approach to major technology innovations
  • Assess trends which may result in disruption or opportunity
  • Evaluate risk and opportunity in the Nokia R&D programme
  • Judge Nokia’s technological competitiveness

When we first saw the news about the committee we liked the idea, but now we are not too sure. The theory is sound, but the execution seems to be poor.

On the surface the concept of an independent technology committee evaluating strategic and R&D decisions is a nice idea. When evaluating your own work, there is a tendency to be biased; a fresh eyes and minds to provide feedback is a sound theory, and could provide alternative thoughts to improve the foundation and direction of strategies. It takes a very mature person to open themselves up to critique from outside influences, but ultimately it can prove to be an excellent way to do business. Unfortunately, Nokia doesn’t seem to have done this.

The current committee is made up of individuals who were already working with Nokia in one form or another, being full-board members or contributors to another committee. This is a fresh perspective on the definition of ‘independent’, as most of these individuals would have already contributed to the Nokia strategy, directly or indirectly, in one form or another.

Brown has been a board member since 2012, Horan since 2017, Hughes since 2016, Kozel since 2017, Piou since 2017, while Siilasmaa is the current Chair of the Board of Directors having served since 2008. Nokia is essentially asking for validation on strategic thinking from its own cogs. Rubber stamping its own work offers questionable benefits.

Secondly, when you look at the individuals who are on the board, you also have to question whether this is the most innovative thinkers available to the business. There is no doubt these individuals are incredibly intelligent and astute businessmen and women, however looking at the CVs raises some questions. Brown is the former CTO of Procter & Gamble Company, Horan was a MD at IBM prior to the positive turnaround, Hughes’ experience was at Lockheed Martin and GM, Siilasmaa was CEO at F-Secure until 2006 before hitting the Board of Director circuit. These will all be very accomplished individuals, but whether this is the right experience to dig Nokia out of its slump and make it competitive again is another question.

Bringing Kozel and Piou onto the committee look like good moves however. Piou was CEO of Gemalto until 2016, while Kozel held various management team positions in the likes of Range Networks, Open Range and Deutsche Telekom over the years. This is the sort of experience which might provide alternative thinking to the Nokia norm, creating more creative and assertive decisions.

Nokia had an opportunity to do something very interesting with the technology committee, but after digging a little deeper it looks like little more than window dressing. We wouldn’t expect anything too revolutionary to come out of this apparent PR exercise.

Trump finishes posturing and squares up to China

President Donald Trump has often proved consistent with campaign promises, and kicking off a trade-war with China is just another example of his reliability.

The Mexican wall is still in the works, a bill to ease gun-carrying rights in schools passed House in December and federal regulations are disappearing faster than a toupee in a hurricane. Protecting the US people from the evil foreigners and their dastardly business ambitions was another which is now moving from dream to reality. Steel and aluminium tariffs are close and now Chinese technology is firmly on the radar.

Yesterday saw the signing of a Memorandum which the spin doctors in the White House say targets China’s economic aggression. 1300 products and services have been reviewed over the last couple of weeks, though the list has not been published yet. Ambassador Robert Lighthizer has been tasked with releasing this list within the next 15 days, though it is suspected there will be a heavy Chinese technology influence to it.

“This has been long in the making,” said President Trump during the signing ceremony. “You’ve heard many, many speeches by me and talks by me, and interviews where I talk about unfair trade practices.

“But we have one particular problem.  And I view them as a friend; I have tremendous respect for President Xi.  We have a great relationship.  They’re helping us a lot in North Korea.  And that’s China [the problem].”

The US has a trade deficit which Trump wants to address, and part of reversing this trend is to put Silicon Valley back on its mantle. While Silicon Valley still is viewed as the place to be worldwide for technology firms, this strangle-hold on the industry has been waning in recent years. Eastern Europe, India and China are just three of the regions across the world which has been making waves in technology, but part of the reason for China’s rise could be deemed as an uneven playing field.

China’s economy is generally protected by the government, as table stakes and working conditions do generally favour domestic companies over international businesses. This does seem to be the playbook when it comes to making an impact on the international scene; generate a ridiculous cash cow in the domestic market before taking advantage of advantageous trading conditions on the global stage. It’s the best of both worlds; just ask Huawei.

Few countries have taken a stance against this apparent advantage Chinese companies have on the global stage, mainly because of the riches which are on offer should you be able to break into China. It is one of the largest and fastest growing economies in the world, the world’s largest manufacturing economy and exporter of goods and second-largest importer of goods. In terms of digital transformation, many of these businesses are behind the curve compared to Westernised economies, and the increasingly affluent and digital aware consumers are prime for profit.

This is where Trump has to be very careful. Yes, standing up to China fulfils one of his campaign promises and inspires US citizens to be the self-appointed defenders of the free world once again, but is this the most pragmatic approach to encourage growth in the US technology sector? We’re not too sure.

When you look at companies like IBM, Google, Amazon, eBay, Intel, Apple, Microsoft and HP, these are not organizations which are going to make the desired profits without looking to the growth economies of the world. These companies, the internet giants to a lesser degree, are looking to economies like China to replace the lingering growth which was previously in the US. Putting walls up around countries will not work out well for the US tech sector; growth and profitability is in the international markets not the US domestic market.

Another interesting consequence of such a trade-war is not just the selling side, but manufacturing as well. It would be perfectly reasonable to assume that as well as blocking trade from the US, the Chinese government would be just as difficult in terms of manufacturing goods in the country as well. This would be bad news for Apple.

On the surface, Apple being unable to manufacture its products in China would be a win for Trump, as it might possibly force jobs back in the US, but it could have a very detrimental impact on Apple as a business. This is a very interesting article which explains the disaster it would be.

In short, for Apple to maintain current profitability levels with the manufacturing process taking place in the US, each unit would have to be sold in the $30,000 – $100,000 range. This is down to capacity. The US does not have the skills to meet market demand, Tooling engineering is an example, meaning supply would be reduced from hundreds of millions to millions. The US would of course be able to generate this workforce, but this would take years. This would put Apple is a very difficult situation.

Tariffs sound fantastic to Trump supporters, some of whom are becoming increasing afraid of the term ‘globalization’, and they do keep the President honest to campaign promises, but it doesn’t seem to be a very pragmatic move. It seems to be a short-term gain for a long-term catastrophe.

Now your correspondent does not claim to be a genius and would assume the people advising the President are more intelligent; surely these scenarios have been examined. Perhaps President Trump doesn’t care about the long-term of the US economy. Logically, we are not too sure how this benefits the US tech sector. The global economy is a thing and there is no going back. Success in a digital world which does not recognise international borders will only come with cooperation. Anyone who thinks trade barriers are going to be a good thing are quite frankly deluded.

Need for transparency is the ultimate sign of lost trust

Davos has kicked off this week in Switzerland and with come a lot of blue-sky thinking ideas, but one hit home for us; transparency is a terrible sign for the industry.

The comment came from Alphabet’s CEO Ruth Porter. “You’ve given up on trust if you need transparency,” and it is a very fair point which should be taken seriously. If you have trust, you don’t ask the wizard if you can peek behind the curtain. As soon as you do, you don’t trust the machine and banner wavers all over the country are calling for transparency. This is the position we are in right now, and it will only get worse.

The organizations who are the subject of the transparency demands are the ones who have built up an army of enemies. Uber is a prime example, having mobilized the entire taxi industry against it. Over the last couple of months we’ve seen numerous example of nefarious business practises and questionable personal behaviour. The trust was lost in Uber, the curtain pulled back and a tsunami of headaches hurled its direction.

Porter was the one pointing out the problem, but perhaps she will be facing some uncomfortable questions in the near future.

One of the big problems we see with the industry right now is education. In years gone, companies who were bringing new products to the market used to take the time to explain what these machines did and what the value was to the life of the consumer. Of course, not all of the details were released but there was an effort to comfort the consumer on why the world was changing. Change scares people after all, and this is why reactions to the evolving environment are so passionate.

Technology companies seem to have forgotten how important it is to take the consumer on a journey. There are of course adverts everywhere demonstrating how the technology can contribute the betterment of mankind, but generally what people don’t understand, they don’t trust. Simply showing the benefits doesn’t work, you have to build the entire picture, not just the glossy finish.

This is the challenge the big internet giants are facing right now. Alphabet/Google, Facebook, Amazon, Netflix, eBay, Microsoft or anyone you can think of. They are all falling into the same trap of trying to wow the consumer not educate them. Artificial intelligence is a prime example of this.

AI is an area of the technology industry which has the power to do great things, but it does also need the permission of the general public to capture, manipulate and pass on personal information in ways which might have been considered an invasion of privacy a decade ago. The information age is all about democratising you. Your personal information is everywhere and everyone knows everything and anything about you. Gradually we have come to accept this is a part of the digital economy, but the sorcery behind the curtain could scare a lot of people.

The internet giants are drip-feeding new AI features into products, so slowly and carefully we don’t realise experience and performance is getting incrementally better. Why not take credit you say? Because we don’t ask questions when we don’t realise what’s going on. And when we don’t ask questions, there is no need for answers. Don’t forget, AI isn’t just about improving our experience, it is about finding new ways to enhance advertising numbers and find new revenue sources.

This is where the internet giants are a bit more clever than Uber. Uber launched this new app on the world and it was revolutionary for the taxi industry. Such a significant change was a wonder for the consumer, but it also led to questions as to how it was possible. Uber has cemented its position in the economy, it isn’t going anywhere and will continue to grow, but you could argue the problems it is facing today were brought on by making such a profound change to the world. Like employees suffering with a Thursday morning hangover, Uber really only has one place to lay the blame.

The internet giants are gradually introducing more AI features into the world without explaining to the consumer fully. They are careful never to push technological advancements too far, as this would scare some, and scared people ask questions. Drip feeding new technology into the world is a sensible way to normalise a technology, but it needs to go hand-in-hand with education. If it doesn’t, the wonders hidden behind the curtain will start to stack up.

Before too long, there will be questions. One of the internet giants will do something wrong, or overreach and an investigation will be launched. The curtain will be drawn, and if the drip-feeding without explanation goes on for too long, the sheer volume of information which pours through the curtain will terrify people.

The average person on the street does not understand artificial intelligence, you could argue the vast majority do not, but it is ignorant Joe Bloggs who is filling the coffers of the internet giants with AI-sourced plunder.

Facebook’s Ruth Porter might point the finger at those who are having transparency demanded of them, but this is a bit hypocritical. More needs to be done to educate the world on what personal information is being stored, how it is being whored out to third-parties and what the benefit to the consumer is. Otherwise, the demons behind the curtain will start to develop very sharp teeth.