The Revolution: Bitcoin and/or Blockchain?

March 12, 2018 tukaglobal591 Comments

Dubai has vowed to become the ‘first blockchain-powered government in the world by 2020.’ PHOTO: RUSTAM AZMI/GETTY IMAGES

Some interesting recent articles on blockchain and crypto:

Why Blockchain Will Survive, Even If Bitcoin Doesn’t

Latest blockchain applications could bring overdue change to critical, if unsexy, functions in shipping, real estate and…diamonds

By Christopher Mims, WSJ, March 11, 2018

We’re now awash in “crypto” hype—cryptocurrencies like bitcoin and fundraising efforts like initial coin offerings. For every venture capitalist or technical expert, there’s a half-dozen hype men and fly-by-night startups making the entire space look like a 21st-century version of the Amsterdam tulip mania.

All that noise has obscured the bona fide efforts involving the underlying technology, blockchain. Of all the manifestations of crypto, it’s the most seemingly mundane applications of blockchain that could lead to the biggest and most concrete changes in all of our lives.

These applications can’t be found on a coin exchange, and they aren’t going to turn anyone into an overnight billionaire. But they could bring much-needed change to some of the world’s most critical, if unsexy, industries. This means new ways of transferring real estate titles, managing cargo on shipping vessels, mapping the origins of conflict materials, guaranteeing the safety of the food we eat and more. Using blockchain, you could prove that a particular diamond on sale in a Milan boutique came from a particular mine in Russia.

What is blockchain? It’s essentially a secure database, or ledger, spread across multiple computers. Everybody has the same record of all transactions, so tampering with one instance of it is pointless. “Crypto” describes the cryptography that underlies it, which allows agents to securely interact—transfer assets, for example—while also guaranteeing that once a transaction has been made, the blockchain remains an immutable record of it.

The third reason is that hype I mentioned. The current excitement around cryptocurrency gives blockchain the visibility to attract developers and encourage adoption. Companies that have taken an “If it ain’t broke, don’t fix it” attitude toward back-office processes and logistics IT might be ready to spend big on updating those systems when they hear the buzzword “blockchain.”

In this way, blockchain resembles another buzzword, “the cloud.” While detractors argued that the cloud was just “someone else’s computer,” it gave many industries new business processes, new ways to charge for services, disruptive startups and new divisions within existing companies and an ecosystem of supporting technologies. Blockchain has the same potential.

Blockchain All the Things

Take logistics. Already, 1.1 million items sold or on sale at Walmart are on a blockchain—including chicken and almond milk—helping the company trace their journey from manufacturer to store shelf. Global shipping giant Maersk uses the same technology from IBM to track shipping containers, making it faster and easier to transfer them and get them through customs.

While these projects are still a fraction of the overall tracking that goes on at these giants, they are expanding rapidly both within the organizations and across their industries. Other companies using blockchain technology to track goods include Kroger, Nestlé, Tyson Foods and Unilever, with many more yet to be announced, says Bridget van Kralingen, senior vice president of platforms and blockchain at IBM.

Everledger, a company started in April 2014 with the intention of creating a blockchain-based registry of every certified diamond in the world, already has 2.2 million diamonds in its registry. It’s adding about 100,000 diamonds a month, says Leanne Kemp, chief executive and founder.

By recording 40 different measures of each stone, including “physically unclone-able features,” Everledger is able to trace the journey of a stone from when it’s pulled from the earth to the day it’s purchased by a consumer. Every participant in that chain, from the miner to the cutter to the retailer, maintains a node—with a complete copy of the database—in the Everledger blockchain network.

Global shipping giant Maersk uses blockchain technology from IBM to track and transfer shipping containers and move them more quickly through customs. PHOTO: SUSANA GONZALEZ/BLOOMBERG

CartaSense is an eight-year-old Tel Aviv company that puts internet-connected sensors on freight pallets and uses analytics to determine when goods may be delayed or damaged. CartaSense customers, rather than physically handing off scanned and signed paper documents, use a blockchain database on which freight companies can record every stage of the journey of a package, pallet or shipping container. Kuehne + Nagel, one of the world’s largest freight companies, is one of CartaSense’s clients.

Replacing Regulations With Code

Blockchain is being implemented first within companies and centralized governments that can move quickly on new technologies.

Dubai, for example, has declared its intent to make itself the “first blockchain-powered government in the world by 2020.” That could streamline things in real estate, says Stephen McKeon, an associate professor of finance at the University of Oregon who studies blockchain. By moving the central record of all real-estate transactions onto a blockchain, Dubai could make it faster and easier to transfer property titles.

Because such “smart contracts” on a blockchain are code, they can contain rules about how they can be modified or transferred. In this way, blockchain could become a way to transfer the obligation of enforcement from bureaucrats to computers. For example, to prevent fraud, titles could be transferable only to certain accounts, or might transfer only after another condition, such as the transfer of funds in escrow, is met.

It’s too early to say whether blockchain, as both a technology and a movement, has the power to overcome issues that thwarted generations of software engineers. The most justifiable skepticism is that blockchain is incremental rather than revolutionary. In some cases, it isn’t much more than a marketing term imposed on systems that hardly differ from existing databases. (There’s a healthy debate about what blockchain even means, and even companies like CartaSense call their system a “blockchain-like technology.”)

But if it works, it has the potential to be a fundamental enabling technology, the way new standards for transmitting data across networks led to the internet. More concretely, it could someday underlie everything from how we vote to who we connect with online to what we buy.

Write to Christopher Mims at [email protected]

Appeared in the March 12, 2018, print edition as ‘Blockchain Has Power to Transform.’

Don’t Be Evil?

March 5, 2018 tukaglobal913 Comments

The alarm bells keep ringing on the tech quasi-monopolies that rule the Internet. There are two main issues to address: one is the ownership and control over personal data – this data rightly belongs to consumers, not network servers – and two is the positive network effects that drive these cos. to dominance.

How we analyze these tech titans differs along these two issues. Amazon, Apple and Microsoft sell products and product markets are not easily protected from competition. They are middlemen between producers/suppliers and consumers. I expect we will discover new competitive models to deliver goods and services, which will eat into these cos.’ dominance. The promise of blockchain technology is exactly to eliminate the middleman.

Google and Facebook are different animals. Search is starting to appear to resemble a public good, like public libraries. With the positive externalities of network effects, it also resembles a natural monopoly – the more people use a search engine, the better is the information obtained, meaning the search engine becomes ever more valuable. We probably don’t want to destroy this value. To me, this suggests that Google’s search engine eventually will become a publicly regulated utility – because the politics will demand it. We already see this outside the U.S.

Facebook, the ultimate social network, is going through some ups and downs because of issues of how it collects and uses personal information. My impression is that a single social network for all socializing needs is probably not the ideal solution. If correct, competition will eat into FB, which will start to break up into different targeted functions, reducing its value as a one-stop-fits-all OSN.

We shall see.

How Silicon Valley went from ‘don’t be evil’ to doing evil

www.ocregister.com/2018/03/03/how-silicon-valley-went-from-dont-be-evil-to-doing-evil/

March 4, 2018

The Google logo is seen at the Google headquarters in Brussels, Tuesday March 23, 2010.

By Joel Kotkin

March 3, 2018

Meet the new boss. Same as the old boss.

– The Who, “We won’t be fooled again”, 1971

Once seen as the saviors of America’s economy, Silicon Valley is turning into something more of an emerging axis of evil. “Brain-hacking” tech companies such as Apple, Google, Facebook, Microsoft and Amazon, as one prominent tech investor puts it, have become so intrusive as to alarm critics on both right and left.

Firms like Google, which once advertised themselves as committed to being not “evil,” are now increasingly seen as epitomizing Hades’ legions. The tech giants now constitute the world’s five largest companies in market capitalization. Rather than idealistic newcomers, they increasingly reflect the worst of American capitalism — squashing competitors, using indentured servants, attempting to fix wages, depressing incomes, creating ever more social anomie and alienation.

At the same time these firms are fostering what British academic David Lyon has called a “surveillance society” both here and abroad. Companies like Facebook and Google thrive by mining personal data, and their only way to grow, as Wired recently suggested, was, creepily, to “know you better.”

The techie vision of the future is one in which the middle class all but disappears, with those not sufficiently merged with machine intelligence relegated to rent-paying serfs living on “income maintenance.” Theirs is a world in where long-standing local affinities are supplanted by Facebook’s concept of digitally-created “meaningful communities.”

The progressive rebellion

Back during the Obama years, the tech oligarchy was widely admired throughout the progressive circles. Companies like Google gained massive access to the administration’s inner circles, with many top aides eventually entering a “revolving door” for jobs with firms like Google, Facebook, Uber, Lyft and Airbnb.

Although the vast majority of all political contributions from these firms, not surprisingly, go to the Democrats, many progressives — at least not those on their payroll — are expressing alarm about the oligarchs’ move to gain control of whole industries, such as education, finance, groceries, space, print media and entertainment. Left-leaning luminaries like Franklin Foer, former editor of the New Republic, rant against technology firms as a threat to basic liberties and coarsening culture.

Progressives are increasingly calling for ever growing tech monolith to be “broken up,” calling for new regulation to limit their size and scope. Many have embraced European proposals to restrain tech monopolies which now resemble “predatory capitalism” at its worse.

The right also rises

Traditionally, conservatives celebrated entrepreneurial success and opposed governmental intervention in the economy. Yet increasingly even libertarians, like Instapundit’s Glen Reynolds, have suggested that some form of anti-trust action may be necessary to curb oligarchic power. The National Review even recently suggested that these firms be treated as utilities, that is, regulated by government.

Conservatives are also concerned about pervasive political bias in the industry. The Bay Area, the heartland of the industry, has evolved as Facebook co-founder Peter Thiel notes, into a “one party state.” Ideological homogeneity discourages debate and dissent, both inside their companies.

More importantly, conservatives seek to curb their ability — increasingly evident as traditional media declines — to control content on the internet. As the techies expand their domain, America’s media, entertainment and cultural industries would seem destined to become ever less heterogenous in politics and cultural world-view.

A clear and present danger

Whether one sits on the progressive left or the political right, this growing hegemony presents a clear and present danger. It is increasingly clear that the oligarchs have forgotten that Americans are more than a collection of data-bases to be exploited. People, whatever their ideology, generally want to maintain a modicum of privacy, and choose their way of life.

The perfect world of the oligarchs can be seen in the Bay Area, where, despite the massive explosion in employment, even tech workers, due to high costs, do worse than their counterparts elsewhere. Meanwhile San Francisco, among the most unequal places in the country, has evolved into a walking advertisement for a post-modern dystopia, an ultra-expensive city filled with homeless people and streets filled with excrement and needles. It is also increasingly exporting people elsewhere, including many people making high salaries.

Of course, technology is critical to a brighter future, but need not be the province of a handful of companies or concentrated in one or two regions. The great progress in the 1980s and 1990s took place in a highly competitive, and dispersed, environment not one dominated by firms that control 80 or 90 percent of key markets. Not surprisingly, the rise of the oligarchs coincides with a general decline in business startups, including in tech.

We have traveled far from the heroic era of spunky start-ups nurtured in suburban garages. But a future of ever greater robotic dependence — a kind of high-tech feudalism — is not inevitable. Setting aside their many differences, conservatives and progressives need to agree on strategies to limit the oligarch’s stranglehold on our future.

Joel Kotkin is the R.C. Hobbs Presidential Fellow in Urban Futures at Chapman University in Orange and executive director of the Houston-based Center for Opportunity Urbanism (www.opportunityurbanism.org).

The Trouble With GAFA

February 27, 2018 tukaglobal375 Comments

A recent article from US News and World Report on the dominance of technology and the degeneration of political discourse. Zingales co-wrote an interesting book, Saving Capitalism from the Capitalists, that I previously posted about here.

The Trouble With Google and Facebook

Are the internet giants monopolies?

By James Warren Contributing Editor for OpinionFeb. 21, 2018, at 3:30 p.m.

LUIGI ZINGALES PROVIDES a window onto news illiteracy or at least social media’s penchant for the provocative over the reasoned.

Zingales is an economist at the Booth School of Business at the University of Chicago, whose main floor walls are lined with a photographic Murderer’s Row of Nobel laureates (nine, actually) in economics. You can occasionally find a real, live Nobelist at the salad bar in the upscale cafeteria just off an airy lobby atrium where elite students from around the globe (our future tech moguls, Fortune 500 chiefs and perhaps even well-heeled dictators) can be found chatting with an unmistakable aura of privilege and intellectual superiority.

The Padua, Italy native has inspired a nasty kerfuffle by inviting former Trump administration adviser Steve Bannon to campus (date to be determined), prompting both accusations of his promoting a “Nazi” and a sit-in by protesters during one of his classes. The university, where (some joke) fun goes to die, has long been the most honorable bastion of free speech and won’t buckle, as President Robert Zimmer reiterated during a conversation with The Wall Street Journal.

But if the citizenry were less ideologically convulsed, it might pay attention to Zingales’ actual work, which includes questions about more troubling forces than a humbled former Donald Trump Svengali.

In sum, are Facebook and Google monopolies?

Zingales first broached the matter in a podcast he co-hosts with Kate Waldock of Georgetown University and now goes into greater detail both in a conversation with George Mason University’s Tyler Cowen found in Booth’s magazine and in a phone chat.

Zingales is troubled by their power, but Cowen really isn’t as he noted some obvious realities: Most people love them and the price is right. They have ascended because they’re doing a better job than media competitors. Their growing market share, especially of ad dollars, is a function of being very good during a period where our choice in media has never been greater.

Zingales demurred and contends, for starters, that we pay a greater price than imagined, most notably in the personal data we give up. Oddly, we may not place as great a value on that data as we might and do seem less and less concerned about privacy. We don’t really appreciate all the information we routinely dispense as we google and post on Facebook.

So, to that extent, data is the new oil and Facebook is our new Rockefeller, harkening to the days of Standard Oil’s monopoly. Cowen disagrees, noting that, in his mind, Facebook’s product is free and it doesn’t have a monopoly on his attention, as Rockefeller did on our gasoline.

Zingales countered that the control of data is worse and gives the giant platforms an increasing hold over other sectors, especially as artificial intelligence grows. It’s not quite a traditional monopoly but a dangerously unceasing leverage of influence.

In his very civil debate with Cowen, he said, “I’m not advocating regulation; I’m advocating a reallocation of data ownership. I don’t want to tax them; I want more competition. You want, as you said, a walled garden. In a walled garden, there are two factors at play. One benefits the consumer. The other creates a moat to block competitors from coming in and to build a bigger and bigger monopoly.”

“These companies discriminate on a commercial basis. If you are a competitor, you’re at the bottom of the list,” he added. “If I own the railways, I can’t charge you double the price because you’re my competitor, while my friends get it for free. That’s the law of the land in the U.S.: If you are a public utility with certain characteristics, you must provide service on equal terms to everybody.”

And, while he pointed to the effectiveness of European media and data regulation (and argued that prices have gone down and competition increased for products such as phones), he doesn’t call for immediate regulation but, at the minimum, a more explicit understanding of the giants’ power.

“It’s not a straightforward thing,” he says in a phone chat. “The solution is not saying there is no problem or jumping the gun. In my first line of attack, it’s saying I want to make the market more competitive by introducing rules to make it more competitive.“

Take a look at the increasing Facebook-Google stranglehold on digital advertising. Yes, there is greater access these days to information (including, he jests, people wasting time on academics’ blogs), but really good information has to be paid for. The decline in that lifeblood of a democracy is vivid, especially in local media markets.

“I am not trying to go back to good old days. They weren’t that good and they are not coming back. But saying there is no problem would be excessive. Facebook and Google are extremely good at transmitting information but not at creating information,” he says.

Good information is a public good, he contends, as he was reminded of when watching “The Post,” the Steven Spielberg-Meryl Streep-Tom Hanks movie on The Washington Post’s coverage of the Pentagon Papers.

He recalls how when The Post was concerned about The New York Times’ blockbuster initial coverage, “they go out and buy ten copies of The Times. We are not used to that anymore. Modern technology has made ease of reproduction easier,” and disrupted business models. These days, just find a free digital version of the story.

If the Justice Department’s antitrust division sought his counsel, he’d try to figure ways to increase competition, be stricter with Google in assuring search brings unbiased results from both a commercial and political point of view and try to somehow limit the size of the digital ad market it and Facebook control.

“Maybe put a strict limit that they can’t control more than x-percent in that market,” he says. Some of the very media concentration limits ditched by Trump’s Federal Communications Commission should probably be revived for the internet age, he suspects, with last week’s Robert Mueller indictments of Russian trolls only underscoring the influence of Facebook, especially (not to mention the growing inability of Americans to distinguish real from phony).

“I’m not against [Facebook and Google],” Zingales says. “I just worry about their power.”

And then, of course, there’s that guy, Bannon, and the very harsh public debate that’s included the depressingly liberal use of the word “Nazi.” It’s perhaps more concerning than the role of Facebook and Google.

“We don’t have a date yet. But what’s shocked me is that extremism of some positions. I am actually more worried about the future of the nation as a result,” he says.

From Disruption to Dystopia

February 21, 2018 tukaglobal448 Comments

Very interesting article by Joel Kotkin, who researches the economics and politics of cities. It portrays a future that resembles feudalism more than free market democratic capitalism. I’d optimistically venture there will eventually be a more humanist backlash against the future dominance of technology.

From Disruption to Dystopia: Silicon Valley Envisions the City of the Future

The unaffordable Bay Area, Google’s new neighborhood ‘built from the internet up,’ and China’s police state each offer glimpses of what the tech giants plan to sell the rest of us.

by Joel Kotkin

The tech oligarchs who already dominate our culture and commerce, manipulate our moods, and shape the behaviors of our children while accumulating capital at a rate unprecedented in at least a century want to fashion our urban future in a way that dramatically extends the reach of the surveillance state already evident in airports and on our phones.

…

The drive to redesign our cities, however, is not really the end of the agenda of those who Aldous Huxley described as the top of the “scientific caste system.” The oligarchy has also worked to make our homes, our personal space, “connected” to their monitoring and money machines. This may be a multibillion-dollar market soon, but many who have employed such devices at home—appliances that track our activities and speak to us like loyal servants—find them “creepy,” as they should, given that their daily activities are fed back to enrich the high-tech hive mind. Both the city and house the future may owe more to Brave New World than Better Homes and Gardens.

This is a vision of the urban future in which the tech companies’ own workers and whatever other people with skills the machines haven’t yet replaced are a new class of urban serfs living in small apartments, along with a much larger class of dependent persons living on “income maintenance” and housing or housing subsidies provided by the state. “Bees exist on Earth to pollinate flowers, and maybe humans are here to build the machines,” observes professor Andrew Hudson-Smith, from University College London’s Centre for Advanced Spatial Analysis. “The city will be one big joined-up urban machine, and humans’ role on Earth will be done.”

Tech Dystopia?

February 7, 2018February 8, 2018 tukaglobal437 Comments

Below are excerpts from a fascinating series of articles by The Guardian (with links). The articles address many of the ways that Internet 2.0 network media models such as Google, Facebook, YouTube, Instagram, etc. are transforming, and in many cases undermining, the foundations of a democratic humanistic society. These issues motivate us at tuka to design solutions to the great question of life’s meaning.

Personally, I don’t believe this dystopia will come to pass because humans are quite resilient as a species and eventually our humanist qualities will dominate our biological urges and economic imperatives. We have free will and ultimately, we choose correctly.

Perhaps that is an overly optimistic opinion, but Internet (or Web) 3.0 technology is rewriting the script with applications that reassert human control over the data universe. We will build more humanistic social communities that employ technology, with the emphasis always on the human. We see this now with the growing refusal to surrender to Web 2.0 by tech insiders.

See excerpts and comments below.

“If politics is an expression of our human will, on individual and collective levels, then the attention economy is directly undermining the assumptions that democracy rests on.” If Apple, Facebook, Google, Twitter, Instagram, and Snapchat are gradually chipping away at our ability to control our own minds, could there come a point, I ask, at which democracy no longer functions?

‘Fiction is outperforming reality’: how YouTube’s algorithm distorts truth

Paul Lewis February 2, 2018

There are 1.5 billion YouTube users in the world, which is more than the number of households that own televisions. What they watch is shaped by this algorithm, which skims and ranks billions of videos to identify 20 “up next” clips that are both relevant to a previous video and most likely, statistically speaking, to keep a person hooked on their screen.

Company insiders tell me the algorithm is the single most important engine of YouTube’s growth. In one of the few public explanations of how the formula works – an academic paper that sketches the algorithm’s deep neural networks, crunching a vast pool of data about videos and the people who watch them – YouTube engineers describe it as one of the “largest scale and most sophisticated industrial recommendation systems in existence”.

We see here the power of AI data algorithms to filter content. The Google response has been to “expand the army of human moderators.” That’s a necessary method of reasserting human judgment over the network.

The primary focus of the article then turns to politics and the electoral influences of disinformation:

Much has been written about Facebook and Twitter’s impact on politics, but in recent months academics have speculated that YouTube’s algorithms may have been instrumental in fuelling disinformation during the 2016 presidential election. “YouTube is the most overlooked story of 2016,” Zeynep Tufekci, a widely respected sociologist and technology critic, tweeted back in October. “Its search and recommender algorithms are misinformation engines.”

Apparently, the sensationalism surrounding the Trump campaign caused YT’s AI algorithms to push more video feeds favorable to Trump and damaging to Hillary Clinton. One doesn’t need to be a partisan to recognize this was probably true for this particular media channel and its business model that values more views more than anything else.

However, this reality can also be distorted to present a particular conspiracy narrative of its own:

Trump won the electoral college as a result of 80,000 votes spread across three swing states. There were more than 150 million YouTube users in the US. The videos contained in Chaslot’s database of YouTube-recommended election videos were watched, in total, more than 3bn times before the vote in November 2016.

This, unfortunately, is cherry-picking statistical inferences concerning the margin of voting support. What was significant in determining the 2016 election outcome was not 80,000 votes across three states, but a run of popular vote wins in 2,623 of 3,112 counties across the U.S. This 85% share could not be an accident, nor could it be due to the single influence of disinformation, Russian or otherwise. The true difference in the election was not revealed by the popular vote total or the Electoral College vote, but by the geographical distribution of support. One can argue about which is more critical to democratic governance, but this post is about electronic media content, not political analysis.

The next article further addresses how technology is influencing our individual behaviors.

‘Our minds can be hijacked’: the tech insiders who fear a smartphone dystopia

Paul Lewis October 6, 2017

Justin Rosenstein had tweaked his laptop’s operating system to block Reddit, banned himself from Snapchat, which he compares to heroin, and imposed limits on his use of Facebook. But even that wasn’t enough. In August, the 34-year-old tech executive took a more radical step to restrict his use of social media and other addictive technologies.

A decade after he stayed up all night coding a prototype of what was then called an “awesome” button, Rosenstein belongs to a small but growing band of Silicon Valley heretics who complain about the rise of the so-called “attention economy”: an internet shaped around the demands of an advertising economy.

The extent of this addiction is cited by research that shows people touch, swipe or tap their phone 2,617 times a day!

There is growing concern that as well as addicting users, technology is contributing toward so-called “continuous partial attention”, severely limiting people’s ability to focus, and possibly lowering IQ. One recent study showed that the mere presence of smartphones damages cognitive capacity – even when the device is turned off. “Everyone is distracted,” Rosenstein says. “All of the time.”

“The technologies we use have turned into compulsions, if not full-fledged addictions,” Eyal writes. “It’s the impulse to check a message notification. It’s the pull to visit YouTube, Facebook, or Twitter for just a few minutes, only to find yourself still tapping and scrolling an hour later.” None of this is an accident, he writes. It is all “just as their designers intended”.

Tristan Harris, a former Google employee turned vocal critic of the tech industry points out that… “All of us are jacked into this system. All of our minds can be hijacked. Our choices are not as free as we think they are.”

“I don’t know a more urgent problem than this,” Harris says. “It’s changing our democracy, and it’s changing our ability to have the conversations and relationships that we want with each other.”

…

Harris believes that tech companies never deliberately set out to make their products addictive. They were responding to the incentives of an advertising economy, experimenting with techniques that might capture people’s attention, even stumbling across highly effective design by accident.

“Smartphones are useful tools,” says Loren Brichter, a product designer. “But they’re addictive. Pull-to-refresh is addictive. Twitter is addictive. These are not good things. When I was working on them, it was not something I was mature enough to think about.”

The two inventors listed on Apple’s patent for “managing notification connections and displaying icon badges” are Justin Santamaria and Chris Marcellino. A few years ago Marcellino, 33, left the Bay Area and is now in the final stages of retraining to be a neurosurgeon. He stresses he is no expert on addiction but says he has picked up enough in his medical training to know that technologies can affect the same neurological pathways as gambling and drug use. “These are the same circuits that make people seek out food, comfort, heat, sex,” he says.

“The people who run Facebook and Google are good people, whose well-intentioned strategies have led to horrific unintended consequences,” he says. “The problem is that there is nothing the companies can do to address the harm unless they abandon their current advertising models.

But how can Google and Facebook be forced to abandon the business models that have transformed them into two of the most profitable companies on the planet?

This is exactly the problem – they really can’t. Newer technology, such as distributed social networks tracked by blockchain technology, must be deployed to disrupt the dysfunctional existing technology. New business models will be designed to support this disruption. Human behavioral instincts are crucial to successful new designs that make us more human, rather than less.

James Williams does not believe talk of dystopia is far-fetched. …He says his epiphany came a few years ago when he noticed he was surrounded by technology that was inhibiting him from concentrating on the things he wanted to focus on. “It was that kind of individual, existential realization: what’s going on?” he says. “Isn’t technology supposed to be doing the complete opposite of this?”

The question we ask at tuka is: “What do people really want from technology and social interaction? Distraction or meaning? And how do they find meaning?” Our answer is self-expression through creativity, sharing it, and connecting with communities.

Williams and Harris left Google around the same time and co-founded an advocacy group, Time Well Spent, that seeks to build public momentum for a change in the way big tech companies think about design.

“Eighty-seven percent of people wake up and go to sleep with their smartphones,” he says. The entire world now has a new prism through which to understand politics, and Williams worries the consequences are profound.

The same forces that led tech firms to hook users with design tricks, he says, also encourage those companies to depict the world in a way that makes for compulsive, irresistible viewing. “The attention economy incentivizes the design of technologies that grab our attention,” he says. “In so doing, it privileges our impulses over our intentions.”

That means privileging what is sensational over what is nuanced, appealing to emotion, anger, and outrage. The news media is increasingly working in service to tech companies, Williams adds, and must play by the rules of the attention economy to “sensationalize, bait and entertain in order to survive”.

In the wake of Donald Trump’s stunning electoral victory, many were quick to question the role of so-called “fake news” on Facebook, Russian-created Twitter bots or the data-centric targeting efforts that companies such as Cambridge Analytica used to sway voters. But Williams sees those factors as symptoms of a deeper problem.

It is not just shady or bad actors who were exploiting the internet to change public opinion. The attention economy itself is set up to promote a phenomenon like Trump, who is masterly at grabbing and retaining the attention of supporters and critics alike, often by exploiting or creating outrage.

Orwellian-style coercion is less of a threat to democracy than the more subtle power of psychological manipulation, and “man’s almost infinite appetite for distractions”.

“The dynamics of the attention economy are structurally set up to undermine the human will,” Williams says. “If politics is an expression of our human will, on individual and collective levels, then the attention economy is directly undermining the assumptions that democracy rests on.” If Apple, Facebook, Google, Twitter, Instagram, and Snapchat are gradually chipping away at our ability to control our own minds, could there come a point, I ask, at which democracy no longer functions?

Our politics will survive and democracy is only one form of governance. The bigger question is how does human civilization survive if our behavior becomes self-destructive and meaningless?

Competition in the Digital Age

January 21, 2018January 21, 2018 tukaglobal498 Comments

How to tame the tech titans

The Economist, Jan. 18, 2018

The dominance of Google, Facebook and Amazon is bad for consumers and competition [And suppliers.]

NOT long ago, being the boss of a big Western tech firm was a dream job. As the billions rolled in, so did the plaudits: Google, Facebook, Amazon, and others were making the world a better place. Today these companies are accused of being BAADD—big, anti-competitive, addictive and destructive to democracy. Regulators fine them, politicians grill them and one-time backers warn of their power to cause harm.

Much of this techlash is misguided. The presumption that big businesses must necessarily be wicked is plain wrong. Apple is to be admired as the world’s most valuable listed company for the simple reason that it makes things people want to buy, even while facing fierce competition. Many online services would be worse if their providers were smaller. Evidence for the link between smartphones and unhappiness is weak. Fake news is not only an online phenomenon.

But big tech platforms, particularly Facebook, Google, and Amazon, do indeed raise a worry about fair competition. That is partly because they often benefit from legal exemptions. Unlike publishers, Facebook and Google are rarely held responsible for what users do on them; and for years most American buyers on Amazon did not pay sales tax. Nor do the titans simply compete in a market. Increasingly, they are the market itself, providing the infrastructure (or “platforms”) for much of the digital economy. Many of their services appear to be free, but users “pay” for them by giving away their data. Powerful though they already are, their huge stockmarket valuations suggest that investors are counting on them to double or even triple in size in the next decade.

There is thus a justified fear that the tech titans will use their power to protect and extend their dominance, to the detriment of consumers (see article). The tricky task for policymakers is to restrain them without unduly stifling innovation. [Blogger note: Mostly they are interested in continuing to exploit their monopsony power over suppliers – and customers are valuable suppliers of free data.]

The platforms have become so dominant because they benefit from “network effects”. Size begets size: the more sellers Amazon, say, can attract, the more buyers will shop there, which attracts more sellers, and so on. By some estimates, Amazon captures over 40% of online shopping in America. With more than 2bn monthly users, Facebook holds sway over the media industry. Firms cannot do without Google, which in some countries processes more than 90% of web searches. Facebook and Google control two-thirds of America’s online ad revenues.

America’s trustbusters have given tech giants the benefit of the doubt. They look for consumer harm, which is hard to establish when prices are falling and services are “free”. The firms themselves stress that a giant-killing startup is just a click away and that they could be toppled by a new technology, such as the blockchain. Before Google and Facebook, Alta Vista and MySpace were the bee’s knees. Who remembers them?

However, the barriers to entry are rising. Facebook not only owns the world’s largest pool of personal data, but also its biggest “social graph”—the list of its members and how they are connected. Amazon has more pricing information than any other firm. Voice assistants, such as Amazon’s Alexa and Google’s Assistant, will give them even more control over how people experience the internet. China’s tech firms have the heft to compete but are not about to get unfettered access to Western consumers.

If this trend runs its course, consumers will suffer as the tech industry becomes less vibrant. Less money will go into startups, most good ideas will be bought up by the titans and, one way or another, the profits will be captured by the giants.

The early signs are already visible. The European Commission has accused Google of using control of Android, its mobile operating system, to give its own apps a leg up. Facebook keeps buying firms which could one day lure users away: first Instagram, then WhatsApp and most recently tbh, an app that lets teenagers send each other compliments anonymously. Although Amazon is still increasing competition in aggregate, as industries from groceries to television can attest, it can also spot rivals and squeeze them from the market.

The rivalry remedy

What to do? In the past, societies have tackled monopolies either by breaking them up, as with Standard Oil in 1911, or by regulating them as a public utility, as with AT&T in 1913. Today both those approaches have big drawbacks. The traditional tools of utilities regulation, such as price controls and profit caps, are hard to apply since most products are free and would come at a high price in foregone investment and innovation. Likewise, a full-scale break-up would cripple the platforms’ economies of scale, worsening the service they offer consumers. And even then, in all likelihood one of the Googlettes or Facebabies would eventually sweep all before it as the inexorable logic of network effects reasserted itself.

The lack of a simple solution deprives politicians of easy slogans but does not leave trustbusters impotent. Two broad changes of thinking would go a long way towards sensibly taming the titans. The first is to make better use of existing competition law. Trustbusters should scrutinize mergers to gauge whether a deal is likely to neutralize a potential long-term threat, even if the target is small at the time. Such scrutiny might have prevented Facebook’s acquisition of Instagram and Google’s of Waze, which makes navigation software. To ensure that the platforms do not favor their own products, oversight groups could be set up to deliberate on complaints from rivals—a bit like the independent “technical committee” created by the antitrust case against Microsoft in 2001. Immunity to content liability must go, too.

Second, trustbusters need to think afresh about how tech markets work. A central insight, one increasingly discussed among economists and regulators, is that personal data are the currency in which customers actually buy services. [Yes.] Through that prism, the tech titans receive valuable information—on their users’ behavior, friends and purchasing habits—in return for their products. Just as America drew up sophisticated rules about intellectual property in the 19th century, so it needs a new set of laws to govern the ownership and exchange of data, with the aim of giving solid rights to individuals. [Exactly. Facebook is NOT free.]

In essence, this means giving people more control over their information. If a user so desires, key data should be made available in real time to other firms—as banks in Europe are now required to do with customers’ account information. Regulators could oblige platform firms to make anonymised bulk data available to competitors, in return for a fee, a bit like the compulsory licensing of a patent. Such data-sharing requirements could be calibrated to firms’ size: the bigger platforms are, the more they have to share. These mechanisms would turn data from something titans hoard, to suppress competition, into something users share, to foster innovation.

None of this will be simple, but it would tame the titans without wrecking the gains they have brought. Users would find it easier to switch between services. Upstart competitors would have access to some of the data that larger firms hold and thus be better equipped to grow to maturity without being gobbled up. And shareholders could no longer assume monopoly profits for decades to come.

Welcome to Web 3.0

The Genius? of Silicon Valley?

January 12, 2018January 10, 2018 tukaglobal580 Comments

Here’s a review of Franklin Foer’s new book, World Without Mind: The Existential Threat of Big Tech. What we’re seeing here is the slow breaking of the next wave of tech, from Web 2.0 to Web 3.0, where the users take back control and are treated as more than mindless sources of data. It took a long time to transition the world out of feudalism and we’re still in the very early stages of throwing off the yolk of data exploitation and tyranny. Algorithms cannot guide humanity.

The genius and stupidity of Silicon Valley

theweek.com/articles/731764/genius-stupidity-silicon-valley

Knowledge is a tricky thing.

Acquiring and deploying it to change the world through technological innovations can inspire great confidence and self-certainty in the person who possesses the knowledge. And yet, the confidence and self-certainty is nearly always misplaced — a product of the knower presuming that his expert knowledge of one aspect of reality applies equally to others. That’s one powerful reason why myths about the place of knowledge in human life so often teach lessons about hubris and its dire social, cultural, and political consequences.

Franklin Foer’s important new book, World Without Mind: The Existential Threat of Big Tech, is best seen as a modern-day journalistic retelling of one of those old cautionary tales about human folly. Though he doesn’t describe his aim in quite this way, Foer sets out to expose the foolishness and arrogance that permeates the culture of Silicon Valley and that through its wondrous technological innovations threatens unintentionally to wreck civilizational havoc on us all.

It’s undeniable that Silicon Valley’s greatest innovators know an awful lot. Google is an incredibly powerful tool for organizing information — one to which no previous generation of human beings could have imagined having easy and free access, let alone devising from scratch, as Larry Page and Sergey Brin managed to do. The same goes for Facebook, which Mark Zuckerberg famously created in his Harvard dorm room and has become a global powerhouse in a little more than a decade, turning him into one of the world’s richest men and revolutionizing the way some two billion people around the world consume information and interact with each other.

That’s power. That’s knowledge.

But knowledge of what?

Mostly of how to program computers and deploy algorithms to sort through, organize, cluster, rank, and order vast quantities of data. In the case of Facebook, Zuckerberg obviously also understood something simple but important about how human beings might enjoy interacting online. That’s not nothing. Actually, it’s a lot. An enormous amount. But it’s not everything — or anything remotely close to what Silicon Valley’s greatest innovators think it is.

When it comes to human beings — what motivates them, how they interact socially, to what end they organize politically — figures like Page and Zuckerberg know very little. Almost nothing, in fact. And that ignorance has enormous consequences for us all.

You can see the terrible problems of this hubris in the enormously sweeping ambitions of the titans of technology. Page, for instance, seeks to achieve immortality.

Foer explains how Page absorbed ideas from countercultural guru Stewart Brand, futurist Ray Kurzweil, and others to devise a quasi-eschatological vision for Google as a laboratory for artificial intelligence that might one day make it possible for humanity to transcend human limitations altogether, eliminating scarcity, merging with machines, and finally triumphing over mortality itself. Foer traces the roots of this utopianism back to Descartes’ model of human subjectivity, which pictures a spiritual mind encased within and controlling an (in principle, separable) mechanical body. If this is an accurate representation of the mind’s relation to its bodily host, then why not seek to develop technology that would make it possible to deposit this mind, like so much software, into a much more durable and infinitely repairable and improvable computer? In the process, these devices would be transformed into what Kurzweil has dubbed “spiritual machines” that could, in principle, enable individuals to live on and preserve their identities forever.

The problem with such utopian visions and extravagant hopes is not that they will outstrip our technological prowess. For all I know, the company that almost instantly gathers and ranks information from billions of websites for roughly 40,000 searches every second will some day, perhaps soon, develop the technical capacity to transfer the content of a human mind into a computer network.

The problem with such a goal is that in succeeding it will inevitably fail. As anyone who reflects on the issue with any care, depth, and rigor comes to understand, the Cartesian vision of the mind is a fiction, a fairy tale. Our experience of being alive, of being-in-the-world, is thoroughly permeated and shaped by the sensations, needs, desires, and fears that come to us by the way of our bodies, just as our opinions of right and wrong, better and worse, noble and base, and just and unjust are formed by rudimentary reflections on our own good, which is always wrapped up with our perception of the good of our physical bodies.

Even if it were possible to transfer our minds — our memories, the content of our thoughts — into a machine, the indelible texture of conscious human experience would be flattened beyond recognition. Without a body and its needs, desires, vulnerabilities, and fear of injury and death, we would no longer experience a world of meaning, gravity, concern, and care — for ourselves or others. Which also means that Page’s own relentless drive to innovate technologically — which may well be the single attribute that most distinguishes him as an individual — would vanish without a trace the moment he realized his goal of using technological innovations to achieve immortality.

An immortal Larry Page would no longer be Larry Page.

Zuckerberg’s very different effort to overcome human limits displays a similar obliviousness to the character of human experience, in this case political life — and it ends with a similar paradox.

Rather than simply providing Facebook’s users with a platform for socializing and sharing photos, Zuckerberg’s company has developed intricate algorithms for distributing information in each user’s “news feed,” turning it into a “personalized newspaper,” with the content (including advertisements) precisely calibrated to his or her particular interests, tastes, opinions, and commitments. The idea was to build community and bring people together through the sharing and dissemination of information. The result has been close to the opposite.

As Facebook’s algorithms have become more sophisticated, they have gotten better and better at giving users information that resembles information they have previously liked or shared with their friends. That has produced an astonishing degree of reinforcement of pre-existing habits and opinions. If you’re a liberal, you’re now likely only to see liberal opinions on Facebook. If you’re conservative, you’ll only see conservative opinions. And if you’re inclined to give credence to conspiracy theories, you’ll see plenty of those.

And maybe not just if you favor conspiracy theories. As we’ve learned since the 2016 election, it’s possible for outside actors (like foreign intelligence services, for example) to game the system by promoting or sponsoring fake or inflammatory stories that get disseminated and promoted among like-minded or sympathetic segments of the electorate.

Facebook may be the most effective echo chamber ever devised, precisely because there’s potentially a personalized chamber for every single person on the planet.

What began with a hope of bringing the country and the world together has in a little over a decade become one of the most potent sources of division in a deeply divided time.

And on it goes, with each company and technology platform producing its own graveyards full of unintended consequences. Facebook disseminates journalism widely but ends up promoting vacuous and sometimes politically pernicious clickbait. Google works to make information (including the content of books) freely available to all but in the process dismantles the infrastructure that was constructed to make it possible for people to write for a living. Twitter gives a megaphone to everyone who opens an account but ends up amplifying the voice of a demagogue-charlatan above everyone else, helping to propel him all the way to the White House.

Foer ends his book on an optimistic note, offering practical suggestions for pushing back against the ideological and technological influence of Silicon Valley on our lives. Most of them are worthwhile. But the lesson I took from the book is that the challenge we face may defy any simple solution. It’s a product, after all, of the age-old human temptation toward arrogance or pride — only now inflated by the magnitude of our undeniable technological achievements. How difficult it must be for our techno-visionaries to accept that they know far less than they’d like to believe.