Tag Archives: internet companies

Who Controls Peoples’ Data?

The McKinsey Global Institute estimates that cross-border flows of goods, services and data added 10 per cent to global gross domestic product in the decade to 2015, with data providing a third of that increase. That share of the contribution seems likely to rise: conventional trade has slowed sharply, while digital flows have surged. Yet as the whole economy becomes more information-intensive — even heavy industries such as oil and gas are becoming data-driven — the cost of blocking those flows increases…

Yet that is precisely what is happening. Governments have sharply increased “data localisation” measures requiring information to be held in servers inside individual countries. The European Centre for International Political Economy, a think-tank, calculates that in the decade to 2016, the number of significant data localisation measures in the world’s large economies nearly tripled from 31 to 84.

Even in advanced economies, exporting data on individuals is heavily restricted because of privacy concerns, which have been highlighted by the Facebook/ Cambridge Analytica scandal. Many EU countries have curbs on moving personal data even to other member states. Studies for the Global Commission on Internet Governance, an independent research project, estimates that current constraints — such as restrictions on moving data on banking, gambling and tax records — reduces EU GDP by half a per cent.

In China, the champion data localiser, restrictions are even more severe. As well as long-established controls over technology transfer and state surveillance of the population, such measures form part of its interventionist “ Made in China 2025 ” industrial strategy, designed to make it a world leader in tech-heavy sectors such as artificial intelligence and robotics.

China’s Great Firewall has long blocked most foreign web applications, and a cyber security law passed in 2016 also imposed rules against exporting personal information, forcing companies including Apple and LinkedIn to hold information on Chinese users on local servers. Beijing has also given itself a variety of powers to block the export of “important data” on grounds of reducing vaguely defined economic, scientific or technological risks to national security or the public interest.   “The likelihood that any company operating in China will find itself in a legal blind spot where it can freely transfer commercial or business data outside the country is less than 1 per cent,” says ECIPE director Hosuk Lee-Makiyama….

Other emerging markets, such as Russia, India, Indonesia and Vietnam, are also leading data localisers. Russia has blocked LinkedIn from operating there after it refused to transfer data on Russian users to local servers.

Business organisations including the US Chamber of Commerce want rules to restrain what they call “digital protectionism”. But data trade experts point to a serious hole in global governance, with a coherent approach prevented by different philosophies between the big trading powers. Susan Aaronson, a trade academic at George Washington University in Washington, DC, says: “There are currently three powers — the EU, the US and China — in the process of creating separate data realms.”

The most obvious way to protect international flows of data is in trade deals — whether multilateral, regional or bilateral. Yet only the World Trade Organization laws governing data flows predate the internet and have not been thoroughly tested through litigation. It recently recruited Alibaba co-founder Jack Ma to front an ecommerce initiative, but officials involved admit it is unlikely to produce anything concrete for a long time. In any case, Prof Aaronson says: “While data has traditionally been addressed in trade deals as an ecommerce issue, it goes far wider than that.”

The internet has always been regarded by pioneers and campaigners as a decentralised, self-regulating community. Activists have tended to regard government intervention with suspicion, except for its role in protecting personal data, and many are wary of legislation to enable data flows.  “While we support the approach of preventing data localisation, we need to balance that against other rights such as data protection, cyber security and consumer rights,” says Jeremy Malcolm, senior global policy analyst at the Electronic Frontier Foundation, a campaign for internet freedom…

Europe has traditionally had a very different philosophy towards data and privacy than the US. In Germany, for instance, public opinion tends to support strict privacy laws — usually attributed to lingering memories of surveillance by the Stasi secret police in East Germany. The EU’s new General Data Protection Regulation (GDPR), which comes into force on May 25, 2018 imposes a long list of requirements on companies processing personal data on pain of fines that could total as much as 4 per cent of annual turnover….But trade experts warn that the GDPR is very cautiously written, with a blanket exemption for measures claiming to protect privacy. Mr Lee-Makiyama says: “The EU text will essentially provide no meaningful restriction on countries wanting to practice data localisation.”

Against this political backdrop, the prospects for broad and binding international rules on data flow are dim. …In the battle for dominance over setting rules for commerce, the EU and US often adopt contrasting approaches.  While the US often tries to export its product standards in trade diplomacy, the EU tends to write rules for itself and let the gravity of its huge market pull other economies into its regulatory orbit. Businesses faced with multiple regulatory regimes will tend to work to the highest standard, known widely as the “Brussels effect”.  Companies such as Facebook have promised to follow GDPR throughout their global operations as the price of operating in Europe.

Excerpts from   Data protectionism: the growing menace to global business, Financial Times, May 13, 2018

Internet and Facebook are the Same and No Shame

download

And then there’s Free Basics, the two-year-old project Chief Executive Officer Mark Zuckerberg has called an online 911. In about three dozen developing countries so far, Free Basics—also known as Internet.org—includes a stripped-down version of Facebook and a handful of sites that provide news, weather, nearby health-care options, and other info. One or two carriers in a given country offer the package for free at slow speeds, betting that it will help attract new customers who’ll later upgrade to pricier data plans…

Facebook says Free Basics is meant to make the world more open and connected, not to boost the company’s growth….On Dec. 21, 2016,  the Indian government suspended the program, offered in the country by carrier Reliance Communications….

“Who could possibly be against this?”
Opponents, including some journalists and businesspeople, say Free Basics is dangerous because it fundamentally changes the online economy. If companies are allowed to buy preferential treatment from carriers, the Internet is no longer a level playing field, says Vijay Shekhar Sharma, founder of Indian mobile-payment company Paytm....“We don’t see Free Basics as philanthropy. We see it as a land grab, says Pahwa.

[On Feb. 8, 2016, the Telecom Regulatory Authority of India ruled against Facebook’s scheme.]

Adi Narayan, Facebook’s Fight to Be Free, Bloomberg Business Week, Jan. 14, 2016

The Beauty of Platform Capitalism

keep calm and love data

Hardly a day goes by without some tech company proclaiming that it wants to reinvent itself as a platform. …Some prominent critics even speak of “platform capitalism” – a broader transformation of how goods and services are produced, shared and delivered.   Such is the transformation we are witnessing across many sectors of the economy: taxi companies used to transport passengers, but Uber just connects drivers with passengers. Hotels used to offer hospitality services; Airbnb just connects hosts with guests. And this list goes on: even Amazon connects booksellers with buyers of used books.d innovation, the latter invariably wins….

But Uber’s offer to drivers in Seoul does raise some genuinely interesting questions. What is it that Uber’s platform offers that traditional cabs can’t get elsewhere? It’s mostly three things: payment infrastructure to make transactions smoother; identity infrastructure to screen out any unwanted passengers; and sensor infrastructure, present on our smartphones, which traces the location of the car and the customer in real time. This list has hardly anything to do with transport; they are the kind of peripheral activity that traditional taxi companies have always ignored.

However, with the transition to knowledge-based economy, these peripherals are no longer really peripherals – they are at the very centre of service provision.There’s a good reason why so many platforms are based in Silicon Valley: the main peripherals today are data, algorithms and server power. And this explains why so many renowned publishers would team up with Facebook to have their stories published there in a new feature called Instant Articles. Most of them simply do not have the know-how and the infrastructure to be as nimble, resourceful and impressive as Facebook when it comes to presenting the right articles to the right people at the right time – and doing it faster than any other platform.

Few industries could remain unaffected by the platform fever. The unspoken truth, though, is that most of the current big-name platforms are monopolies, riding on the network effects of operating a service that becomes more valuable as more people join it. This is why they can muster so much power; Amazon is in constant power struggles with publishers – but there is no second Amazon they can turn to.

Venture capitalists such as Peter Thiel want us to believe that this monopoly status is a feature, not a bug: if these companies weren’t monopolies, they would never have so much cash to spend on innovation.  This, however, still doesn’t address the question of just how much power we should surrender to these companies.

Making sure that we can move our reputation – as well as our browsing history and a map of our social connections – between platforms would be a good start. It’s also important to treat other, more technical parts of the emerging platform landscape – from services that can verify our identity to new payment systems to geolocational sensors – as actual infrastructure (and thus ensuring that everybody can access it on the same, nondiscriminatory terms) is also badly needed.

Most platforms are parasitic: feeding off existing social and economic relations. They don’t produce anything on their own – they only rearrange bits and pieces developed by someone else. Given the enormous – and mostly untaxed – profits made by such corporations, the world of “platform capitalism”, for all its heady rhetoric, is not so different from its predecessor. The only thing that’s changed is who pockets the money.

Excerpt from Evgeny Morozov, Where Uber and Amazon rule: welcome to the world of the platform, Guardian, Nov. 15, 2015

Who is Afraid of Google?

image from wikipedia

[Some] worry that Google could prove to be the ultimate digital monopoly. They do not think that its reason for being is primarily online search or the advertising business; they see it as being in the business of mining any and all data it can accumulate for new profit streams. The data hunger such a goal demands is the main reason, they argue, why Google is entering markets as diverse as self-driving cars, smart homes, robotics and health care. “Google is trying to leverage the advantage it has in one area into many others,” says Nathan Newman, a lawyer and technology activist. The idea is that Google could use its assets—its data, its unparalleled ability to exploit those data, its brilliant employees and knack for managing them—to take control of other industries.

For such a data-centric conglomerate to get ever more dominant seems against the flow of history and intuitively unlikely. But intuitive views of the direction of internet competition have been wrong before, as the existence of giants like Google, Amazon and Facebook bears witness. And should it show signs of coming to pass, the current antitrust skirmishes will give way to an epic battle on the scale of the one against Standard Oil. “If we will not endure a king as a political power,” said John Sherman, the senator who gave his name to America’s original antitrust law, “we should not endure a king over the production, transportation and sale of any of the necessaries of life.” Even one that makes things very, very easy.

Excerpt from Internet monopolies: Everybody wants to rule the world, Economist, Nov. 29, 2014. at 19

The Equinet: decentralization v. enclosure of internet

Internet, image from wikipedia

“The Internet governance should be multilateral, transparent, democratic,and representative, with the participation of governments, private sector, civil society, and international organizations, in their respective roles. This should be one of the foundational principles of Internet governance,” the external affairs ministry says in its initial submission to the April 23-24 Global Multistakeholder Meeting on the Future of Internet Governance, also referred as NETmundial, in Sao Paulo, Brazil.  The proposal for a decentralised Internet is significant in view of Edward Snowden’s Wikileaks revelations of mass surveillance in recent months.

“The structures that manage and regulate the core Internet resources need to be internationalized, and made representative and democratic. The governance of the Internet should also be sensitive to the cultures and national interests of all nations.”The mechanism for governance of the Internet should therefore be transparent and should address all related issues. The Internet must be owned by the global community for mutual benefit and be rendered impervious to possible manipulation or misuse by any particular stake holder, whether state or non-state,” the ministry note says.  NETmundial will see representatives from nearly 180 countries participating to debate the future of Internet…

The US announced last month of its intent to relinquish control of a vital part of Internet Corporation for Assigned Names and Numbers (ICANN) – the Internet Assigned Numbers Authority (IANA).  “Many nations still think that a multilateral role might be more suitable than a multistakeholder approach and two years back India had proposed a 50-nation ‘Committee of Internet Related Policies’ (CIRP) for global internet governance,” Bhattacharjee added.

The concept of Equinet was first floated by Communications Minister Kapil Sibal in 2012 at the Internet Governance Forum in Baku, Azerbaijan.  Dr. Govind, chief executive officer, National Internet Exchange of India, is hopeful that Equinet is achievable. “Equinet is a concept of the Internet as a powerful medium benefiting people across the spectrum. It is all the more significant for India as we have 220 million Internet users, standing third globally after China and the US.”  “Moreover, by the year-end India’s number of Internet users are expected to surpass that of the US. The word Equinet means an equitable Internet which plays the role of an equaliser in the society and not limited only to the privileged people.”

He said the role of government in Internet management is important as far as policy, security and privacy of the cyber space is concerned, but the roles of the private sector, civil society and other stakeholders are no less. “Internet needs to be managed in a more collaborative, cooperative, consultative and consensual manner.”  Talking about the global strategy of renaming Internet as Equinet, he said: “Globally the US has the largest control over the management of the Internet, which is understandable since everything about Internet started there. Developing countries have still not much say over the global management of the Internet. But it is important that the Internet management be more decentralised and globalised so that the developing countries have more participation, have a say in the management where their consent be taken as well.”  The ministry note said: “A mechanism for accountability should be put in place in respect of crimes committed in cyberspace, such that the Internet is a free and secure space for universal benefaction. A ‘new cyber jurisprudence’ needs to be evolved to deal with cyber crime, without being limited by political boundaries and cyber-justice can be delivered in near real time.”

But other experts doubt the possibility of an Equinet or equalising the Internet globally.  Sivasubramanian Muthusamy, president, Internet Society India, Chennai, who is also a participant in the NETmundial, told IANS that the idea of Equinet is not achievable.  “Totally wrong idea. Internet provides a level playing field already. It is designed and operated to be universally accessible, free and open. Internet as it is operated today offers the greatest hope for developing countries to access global markets and prosper.”  “The idea of proposing to rename the Internet as Equinet has a political motive, that would pave way for telecom companies to have a bigger role to bring in harmful commercial models that would destabilize the open architecture of the Internet. If India is considering such a proposal, it would be severely criticized. The proposal does not make any sense. It is wrong advice or misplaced input that must have prompted the government of India to think of such a strange idea,” he said.

Excerpt from India wants Internet to become Equinet, Business Standard, Apr. 20, 2014

The Nationalization of Internet: example 1

emergency switch at nuclear power plant Switzerland. Image from wikipedia

The Swiss government has ordered tighter security for its own computer and telephone systems that could block foreign companies from key technology and communications contracts.  The governing Federal Council’s decision Wednesday cited concerns about foreign spies targeting Switzerland.

National Security Agency leaker Edward Snowden, who worked for the CIA at the U.S. mission to the U.N. in Geneva from 2007 to 2009, has released documents indicating that large American and British IT companies cooperated with those countries’ intelligence services.According to a Swiss government statement, contracts for critical IT infrastructure will “where possible, only be given to companies that act exclusively according to Swiss law, where a majority of the ownership is in Switzerland and which provides all of its services from within Switzerland’s borders.”

Swiss govt tightens tech security over NSA spying, Associated Press, Feb. 5, 2014

Bullies: how to sell flawed software and beat the market

computer chips

[T]he odds are almost zero that the NSA hasn’t tried to influence Intel’s chips.” In 2012 a paper from two British researchers described an apparent backdoor burned into a chip designed by an American firm called Actel and manufactured in China. The chip is widely used in military and industrial applications. Actel says the feature is innocent: a tool to help its engineers fix hardware bugs…

Now America’s tech giants stand accused not just of mishandling their customers’ data, but, in effect, of knowingly selling them flawed software. Microsoft has always denied installing backdoors. It says it has “significant concerns” about the latest leaks and will be “pressing the government for an explanation”. The damage goes well beyond individual companies’ brands. American technology executives often use their economic clout to shape global standards in ways that suit their companies. Now that will be harder. American input to international cryptographic standards, for example, will have to overcome sceptical scrutiny: are these suggestions honest, or do they have a hidden agenda? More broadly still, America has spent years battling countries such as Russia, China and Iran which want to wrest control of the internet from the mainly American engineers and companies who run it now, and give a greater role to governments. America has fought them off, claiming that its influence keeps the internet open and free. Now a balkanisation of the web seems more likely. Jason Healey of the Atlantic Council, a think-tank, says that the denizens of Washington, DC, have lost sight of the fact that the true source of American cyber-power is neither the NSA and its code-breaking prowess nor the offensive capabilities that produced the Stuxnet virus, which hit centrifuges at an Iranian nuclear plant; it is the hugely successful firms which dominate cyberspace and help disseminate American culture and values worldwide. By tarnishing the reputations of these firms, America’s national-security apparatus has scored an own goal.

NSA and Cryptography: Cracked Credibility, Economist, Sept. 14, 2013, at 65