Category Archives: Silicon Valley

Uber and the lawlessness of ‘sharing economy’ corporates

Frank Pasquale and Siva Vaidhyanathan write: In February, Airbnb chief executive Brian Chesky compared his firm’s defiance of local housing ordinances with that of Gandhi’s passive resistance to British rule. Meanwhile, a tweeter compared Uber to Rosa Parks, defying unjust laws. Chesky quickly backed down after widespread mockery. Companies acting out of self-interest comparing themselves with the noble heroes of civil rights movements is as absurd as it is insulting.

But there is a better analogy from the US civil rights era for law-flouting firms of the on-demand economy. It’s just not the one corporate leaders claim. They are engaged in what we call “corporate nullification”, following in the footsteps of Southern governors and legislatures in the United States who declared themselves free to “nullify” federal law on the basis of strained and opportunistic constitutional interpretation.

Nullification is a wilful flouting of regulation, based on some nebulous idea of a higher good only scofflaws can deliver. It can be an invitation to escalate a conflict, of course, as Arkansas governor Orville Faubus did in 1957 when he refused to desegregate public schools and president Eisenhower sent federal troops to enforce the law. But when companies such as Uber, Airbnb, and Google engage in a nullification effort, it’s a libertarian-inspired attempt to establish their services as popular well before regulators can get around to confronting them. Then, when officials push back, they can appeal to their consumer-following to push regulators to surrender. [Continue reading…]

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Goodbye Wall Street, hello Silicon Valley

The Wall Street Journal reports: More top Wall Streeters are California dreaming.

A technology-fueled gold rush is drawing seasoned financial executives with the promise of sunshine, fresh managerial challenges and compensation that can top even the seven-figure paychecks common in the investment world.

Blackstone Group LP said Friday that its chief financial officer, Laurence Tosi, is leaving the private-equity firm to become finance chief at Airbnb Inc., the booming home-rental service. He is just the latest Wall Street executive to move west to take advantage of massive investor interest in fast-growing companies seeking to upend entire swaths of the economy.

Mr. Tosi, 47 years old, has made a good living by any standard since he joined Blackstone following its 2007 initial public offering. He earned about $15 million last year, according to filings, and $33.8 million over the past three years, not including dividends and some other perks, such as proceeds from investments made in the firm’s funds. [Continue reading…]

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IBM announces major breakthrough: the world’s first 7-nanometer chips

The New York Times reports: IBM said on Thursday that it had made working versions of ultradense computer chips, with roughly four times the capacity of today’s most powerful chips.

The announcement, made on behalf of an international consortium led by IBM, the giant computer company, is part of an effort to manufacture the most advanced computer chips in New York’s Hudson Valley, where IBM is investing $3 billion in a private-public partnership with New York State, GlobalFoundries, Samsung and equipment vendors.

The development lifts a bit of the cloud that has fallen over the semiconductor industry, which has struggled to maintain its legendary pace of doubling transistor density every two years.

Intel, which for decades has been the industry leader, has faced technical challenges in recent years. Moreover, technologists have begun to question whether the longstanding pace of chip improvement, known as Moore’s Law, would continue past the current 14-nanometer generation of chips.

Each generation of chip technology is defined by the minimum size of fundamental components that switch current at nanosecond intervals. Today the industry is making the commercial transition from what the industry generally describes as 14-nanometer manufacturing to 10-nanometer manufacturing.

Each generation brings roughly a 50 percent reduction in the area required by a given amount of circuitry. IBM’s new chips, though still in a research phase, suggest that semiconductor technology will continue to shrink at least through 2018.

The company said on Thursday that it had working samples of chips with seven-nanometer transistors. It made the research advance by using silicon-germanium instead of pure silicon in key regions of the molecular-size switches.

The new material makes possible faster transistor switching and lower power requirements. The tiny size of these transistors suggests that further advances will require new materials and new manufacturing techniques.

As points of comparison to the size of the seven-nanometer transistors, a strand of DNA is about 2.5 nanometers in diameter and a red blood cell is roughly 7,500 nanometers in diameter. IBM said that would make it possible to build microprocessors with more than 20 billion transistors. [Continue reading…]

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Google eavesdropping tool installed on computers without permission

The Guardian reports: Privacy campaigners and open source developers are up in arms over the secret installing of Google software which is capable of listening in on conversations held in front of a computer.

First spotted by open source developers, the Chromium browser – the open source basis for Google’s Chrome – began remotely installing audio-snooping code that was capable of listening to users.

It was designed to support Chrome’s new “OK, Google” hotword detection – which makes the computer respond when you talk to it – but was installed, and, some users have claimed, it is activated on computers without their permission. [Continue reading…]

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In report on data collection practices, WhatsApp and AT&T fail the test

The New York Times reports: In the post-Snowden era, tech companies are increasingly being rated not only for the quality of their gadgets and services, but also for how they handle government requests for customer data. In the Electronic Frontier Foundation’s annual report on data collection practices, tech companies like Yahoo, Apple and Adobe earned top marks, while WhatsApp and AT&T came in last.

The report this week from the E.F.F., a nonprofit that focuses on digital rights, evaluated companies based on factors including their transparency to consumers about data requests and data retention, as well as their public positions on so-called back doors that grant government agencies access to customer data.

Apple, Adobe, Yahoo, Dropbox and Sonic.net were among those that scored highly. AT&T and WhatsApp, which earned the lowest marks, with one out of five stars, did not immediately have comments. Verizon Communications, which earned two stars in the report (down from four stars last year when the report had slightly different criteria) declined to comment. [Continue reading…]

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What the CIA and Silicon Valley have in common

Jonathan Vanian writes: The CIA’s top techie explained why the intelligence agency is interested in the same big data tech that businesses love.

Doug Wolfe, the CIA’s chief information officer, made an unusual sales pitch to Silicon Valley on Tuesday by arguing that the spy agency and the tech industry have a lot in common.

“Remember, a lot of the solutions we need are similar to the private sector,” he told the crowd at a tech conference in San Francisco, using some tech industry jargon in the process.

Wolfe, a 30-year veteran of the CIA, was trying to explain the intelligence agency’s interest in a hot technology for data-processing called Spark that’s the current rage for big data nerds. It lets businesses sift and analyze data much quicker than they could just a decade ago.

Of course, Wolfe stayed silent about why the CIA is so interested in processing huge amounts of data. But the reason was hardly a mystery. As part of its spy mission, the CIA invariably wants to quickly glean insights from huge troves of information it and fellow spooks at the National Security Agency collect on a daily basis. Records of international money transfers, cellphone calls, and biometric data about possible terrorists are just some of the inevitable areas of interest.

It’s the same kind of technology that many big businesses use everyday. It turns out that covert CIA operations and routine online marketing campaigns by retailers are much the same. [Continue reading…]

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Welcome to the new Wild West of data collection without regulation

The Nation reports: Nicole Keplinger, 22, had long seen ads on Facebook promising financial relief, but she always ignored them and assumed that they were scams. Keplinger was drowning in student debt after obtaining a worthless degree from the for-profit Everest College, whose parent corporation, Corinthian Colleges Inc., had recently collapsed under accusations of fraud and predatory lending. But when an offer arrived in her e-mail inbox in April — “Cut your student loan payment or even forgive it completely!” — she thought it seemed more legitimate than the rest, so she called the number.

The person on the other end was aggressive. “They wanted my banking information, my Social Security number, my parents’ number and their information. I was like, ‘Wait a minute,’” Keplinger recalled. Even after she said that she lived on a fixed income (on disability due to a kidney transplant), the telemarketer kept up the pressure. “They said I needed to get a credit card. I don’t know if they were going to take money off it or what… but why do I need to get a credit card if I’m trying to reduce my student loans?”

Keplinger lied and said she’d call back, but not everyone gets away. If she disclosed her bank information, her loans most certainly would not have been cut or forgiven. At best, she would have been charged a large fee for something she could do herself: get on government repayment programs such as forbearance or deferment. At worst, she might have had the money debited each month from her bank account without any benefit provided in return, or been ensnared by a “phantom-debt collector” — a distressingly common racket that involves telling people they owe phony debts and scaring them into paying. It’s the perfect ploy to attempt on people who have already been preyed upon by unscrupulous outfits like Corinthian and who, having been misled and overcharged, are understandably confused about how much money they owe. At the same time, the fact that Keplinger was e-mailed in addition to seeing ads on Facebook suggests that her information was in the hands of a “lead generator,” a multibillion-dollar industry devoted to compiling and selling lists of prospective customers online.

Welcome to a new age of digital redlining. The term conjures up the days when banks would draw a red line around areas of the city — typically places where blacks, Latinos, Asians, or other minorities lived — to denote places they would not lend money, at least not at fair rates. “Just as neighborhoods can serve as a proxy for racial or ethnic identity, there are new worries that big data technologies could be used to ‘digitally redline’ unwanted groups, either as customers, employees, tenants, or recipients of credit,” a 2014 White House report on big data warns. [Continue reading…]

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With ISIS using instant messaging apps, FBI seeks access to data

The Los Angeles Times reports: Islamic State militants and their followers have discovered an unnerving new communications and recruiting tool that has stymied U.S. counter-terrorism agencies: instant messaging apps on smartphones that encrypt the texts or destroy them almost immediately.

In many cases, U.S. intelligence and law enforcement agencies can’t read the messages in real time, or even later with a court order, because the phone companies and the app developers say they can’t unlock the coded text and don’t retain a record of the exchanges.

“We’re past going dark in certain instances,” said Michael B. Steinbach, the FBI’s top counter-terrorism official. “We are dark.”

The hole in U.S. surveillance capabilities was not mentioned during the recent congressional battle over the National Security Agency’s bulk collection of U.S. landline and cellphone data. Lawmakers ultimately agreed to scale back that program because of concerns it violated Americans’ privacy.

FBI officials now want Congress to expand their authority to tap into messaging apps such as WhatsApp and Kik, as well as data-destroying apps such as Wickr and Surespot, that hundreds of millions of people — and apparently some militants — have embraced precisely because they guarantee security and anonymity. [Continue reading…]

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Facebook isn’t a charity. The poor will pay by surrendering their data

Evgeny Morozov writes: Luxury is already here – it’s just not very evenly distributed. Such, at any rate, is the provocative argument put forward by Hal Varian, Google’s chief economist. Recently dubbed “the Varian rule”, it states that to predict the future, we just have to look at what rich people already have and assume that the middle classes will have it in five years and poor people will have it in 10. Radio, TV, dishwashers, mobile phones, flatscreen TVs: Varian sees this principle at work in the history of many technologies.

So what is it that the rich have today that the poor will get in a decade? Varian bets on personal assistants. Instead of maids and chauffeurs we would have self-driving cars, housecleaning robots and clever, omniscient apps that can monitor, inform and nudge us in real time.

As Varian puts it: “These digital assistants will be so useful that everyone will want one and the scare stories you read today about privacy concerns will just seem quaint and old-fashioned.” Google Now, one such assistant, can monitor our emails, searches and locations and constantly remind us about forthcoming meetings or trips, all while patiently checking real-time weather and traffic in the background.

Varian’s juxtaposition of dishwashers with apps might seem reasonable but it’s actually misleading. When you hire somebody as your personal assistant, the transaction is relatively straightforward: you pay the person for the services tendered – often, in cash – and that’s the end of it. It’s tempting to say that the same logic is at work with virtual assistants: you surrender your data – the way you would surrender your cash – for Google to provide this otherwise free service.

But something doesn’t add up here: few of us expect our personal assistants to walk away with a copy of all our letters and files in order to make a buck off them. For our virtual assistants, on the other hand, this is the only reason they exist. [Continue reading…]

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Why your employer would like to replace you with a machine

Zeynep Tufekci writes: The machine hums along, quietly scanning the slides, generating Pap smear diagnostics, just the way a college-educated, well-compensated lab technician might.

A robot with emotion-detection software interviews visitors to the United States at the border. In field tests, this eerily named “embodied avatar kiosk” does much better than humans in catching those with invalid documentation. Emotional-processing software has gotten so good that ad companies are looking into “mood-targeted” advertising, and the government of Dubai wants to use it to scan all its closed-circuit TV feeds.

Yes, the machines are getting smarter, and they’re coming for more and more jobs.

Not just low-wage jobs, either.

Today, machines can process regular spoken language and not only recognize human faces, but also read their expressions. They can classify personality types, and have started being able to carry out conversations with appropriate emotional tenor.

Machines are getting better than humans at figuring out who to hire, who’s in a mood to pay a little more for that sweater, and who needs a coupon to nudge them toward a sale. In applications around the world, software is being used to predict whether people are lying, how they feel and whom they’ll vote for.

To crack these cognitive and emotional puzzles, computers needed not only sophisticated, efficient algorithms, but also vast amounts of human-generated data, which can now be easily harvested from our digitized world. The results are dazzling. Most of what we think of as expertise, knowledge and intuition is being deconstructed and recreated as an algorithmic competency, fueled by big data.

But computers do not just replace humans in the workplace. They shift the balance of power even more in favor of employers. Our normal response to technological innovation that threatens jobs is to encourage workers to acquire more skills, or to trust that the nuances of the human mind or human attention will always be superior in crucial ways. But when machines of this capacity enter the equation, employers have even more leverage, and our standard response is not sufficient for the looming crisis. [Continue reading…]

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Silicon Valley likes to promise ‘digital socialism’ — but it is selling a fairytale

Evgeny Morozov writes: The outside world might regard Silicon Valley as a bastion of ruthless capitalism but tech entrepreneurs fashion themselves as believers in solidarity, autonomy and collaboration.

These venture humanitarians believe that they – and not the wily politicians or the vain NGOs – are the true champions of the weak and the poor, making the maligned markets deliver material benefits to those on the fringes of society. Some of the valley’s in-house intellectuals even cheer the onset of “digital socialism,” which – to quote digital thinker and environmentalist Kevin Kelly’s 2009 cover story in Wired – “can be viewed as a third way that renders irrelevant the old debates.”

Leaving aside the battles over the true meaning of “sharing” in buzzwords like “the sharing economy”, one can discern an intriguing argument in all this self-congratulatory rhetoric. The magnanimous Silicon Valley really wants to be the perfect antidote to the greedy Wall Street: if the latter yields an ever greater increase in income inequality, the former helps to bridge the gap in consumption inequality. [Continue reading…]

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Silicon Valley’s fake philanthropists

Maria Bustillos reports: The Puente de la Costa Sur community center sits at the end of a quiet street in Pescadero, an isolated farming town of about 5,000 nestled amid green hills just inland from California’s Pacific Coast. It’s a beautiful, lively place to be at sunset, right before the kids will be picked up from day care.

Rita Mancero is the petite program director who assists local immigrant and migrant farm workers with learning English and preparing tax returns; the center also offers college scholarships, helps with writing resumes, getting children vaccinated, applying for citizenship, even with Zumba classes. Mancero, who holds a master’s degree in education from Universidad YMCA in Mexico City, is a Red Cross instructor certified in CPR, a paralegal, a trained tax preparer. And a ham radio operator. Her biggest priority?

“The famous ‘Education Gap,’” she says. Her affection for the children in her care is direct and immediate.

Some of the grant money that funds the Puente de la Costa Sur center comes through the Silicon Valley Community Foundation, the largest such foundation in the country. Its assets have ballooned in recent years, from just over $2.9 billion in 2012 to more than $6 billion today. But the foundation’s direct grants to Silicon Valley’s surrounding communities last year amounted to just $8 million.

There have been many news stories about the vast sums contributed to philanthropy by Silicon Valley tech tycoons. Where does this money finally wind up? The short answer is that most of it stays put. Most of that $6 billion in assets at the Silicon Valley Community Foundation isn’t under the foundation’s real control, nor should the money be understood as even remotely intended to provide direct assistance to the residents of Silicon Valley. It might not even be money: It might be real estate, or stock, as in the case of the Zuckerbergs’ recent donation of 18 million Facebook shares, then valued at $991 million, according to the Wall Street Journal.

Donations like this one are, first and foremost, a wealth management tool: Assets are parked at the designated charity in order to obtain tax breaks, and these days they generally stay under the control of the donor. That is, the donor can’t take the money back, he’s “given” it, but he can direct its granting and its investment. [Continue reading…]

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America’s effort to rule the digital world

Evgeny Morozov writes: [To] grasp the full extent of America’s hypocrisy on the issue of information sovereignty, one needs to look no further than the ongoing squabble between Microsoft and the US government. It concerns some email content – relevant to an investigation – stored on Microsoft’s servers in Ireland. American prosecutors insist that they can obtain such content from Microsoft simply by serving it a warrant – as if it makes no difference that the email is stored in a foreign country.

In order to obtain it, Washington would normally need to go through a complex legal process involving bilateral treaties between the governments involved. But now it wants to sidestep that completely and treat the handling of such data as a purely local issue with no international implications. The data resides in cyberspace – and cyberspace knows no borders!

The government’s reasoning here is that the storage issue is irrelevant; what is relevant is where the content is accessed – and it can be accessed by Microsoft’s employees in the US. Microsoft and other tech giants are now fighting the US government in courts, with little success so far, while the Irish government and a handful of European politicians are backing Microsoft.

In short, the US government insists that it should have access to data regardless of where it is stored as long as it is handled by US companies. Just imagine the outcry if the Chinese government were to demand access to any data that passes through devices manufactured by Chinese companies – Xiaomi, say, or Lenovo – regardless of whether their users are in London or New York or Tokyo. Note the crucial difference: Russia and China want to be able to access data generated by their citizens on their own soil, whereas the US wants to access data generated by anybody anywhere as long as American companies handle it.

In opposing the efforts of other countries to reclaim a modicum of technological sovereignty, Washington is likely to run into a problem it has already encountered while promoting its nebulous “internet freedom” agenda: its actions speak louder than its words. [Continue reading…]

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Apple ‘failing to protect Chinese factory workers’

BBC News reports: Poor treatment of workers in Chinese factories which make Apple products has been discovered by an undercover BBC Panorama investigation.

Filming on an iPhone 6 production line showed Apple’s promises to protect workers were routinely broken.

It found standards on workers’ hours, ID cards, dormitories, work meetings and juvenile workers were being breached at the Pegatron factories.

Apple said it strongly disagreed with the programme’s conclusions.

Exhausted workers were filmed falling asleep on their 12-hour shifts at the Pegatron factories on the outskirts of Shanghai.

One undercover reporter, working in a factory making parts for Apple computers, had to work 18 days in a row despite repeated requests for a day off. [Continue reading…]

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The engine of the Uber economy: inequality

Leo Mirani writes: Of the many attractions offered by my hometown, a west coast peninsula famed for its deep natural harbor, perhaps the most striking is that you never have to leave the house. With nothing more technologically advanced than a phone, you can arrange to have delivered to your doorstep, often in less than an hour, takeaway food, your weekly groceries, alcohol, cigarettes, drugs (over-the-counter, prescription, proscribed), books, newspapers, a dozen eggs, half a dozen eggs, a single egg. I once had a single bottle of Coke sent to my home at the same price I would have paid had I gone to shop myself.

The same goes for services. When I lived there, a man came around every morning to collect my clothes and bring them back crisply ironed the next day; he would have washed them, too, but I had a washing machine.

These luxuries are not new. I took advantage of them long before Uber became a verb, before the world saw the first iPhone in 2007, even before the first submarine fibre-optic cable landed on our shores in 1997. In my hometown of Mumbai, we have had many of these conveniences for at least as long as we have had landlines—and some even earlier than that.

It did not take technology to spur the on-demand economy. It took masses of poor people.

In San Francisco, another peninsular city on another west coast on the other side of the world, a similar revolution of convenience is underway, spurred by the unstoppable rise of Uber, the on-demand taxi service, which went from offering services in 60 cities around the world at the end of last year to more than 200 today.

Uber’s success has sparked a revolution, covered in great detail this summer by Re/code, a tech blog, which ran a special series about “the new instant gratification economy.” As Re/code pointed out, after Uber showed how it’s done, nearly every pitch made by starry-eyed technologists “in Silicon Valley seemed to morph overnight into an ‘Uber for X’ startup.”

Various companies are described now as “Uber for massages,” “Uber for alcohol,” and “Uber for laundry and dry cleaning,” among many, many other things (“Uber for city permits”). So profound has been their cultural influence in 2014, one man wrote a poem about them for Quartz. (Nobody has yet written a poem dedicated to the other big cultural touchstone of 2014 for the business and economics crowd, French economist Thomas Piketty’s smash hit, Capital in the Twenty-First Century.)

The conventional narrative is this: enabled by smartphones, with their GPS chips and internet connections, enterprising young businesses are using technology to connect a vast market willing to pay for convenience with small businesses or people seeking flexible work.

This narrative ignores another vital ingredient, without which this new economy would fall apart: inequality. [Continue reading…]

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The death of tree-cutting journalism

As The New Republic imploded last week, the vanity of its editors and former editors was on full display when they claimed — on Facebook — that, “The promise of American life has been dealt a lamentable blow.”

Seriously?!

The magazine’s Wikipedia entry already captures the spirit of national mourning by referring to TNR in the past tense.

But did a publication with a circulation of 50,000 really have such a pivotal role in the life of the nation?

Are today’s media moguls — Chris Hughes, Jeff Bezos, Pierre Omidyar, et al — any worse than old ones like William Randolph Hearst, Rupert Murdoch, and Ted Turner?

The death of journalism can be overstated if it’s mostly about the loss of self-importance for those whose words once reliably became enshrined in the permanence of print — writers whose words now float freely as digital ephemera, all too easily lost.

For writing to be print-worthy, implies a certain value independent of whether it’s being read, yet this value is much more culturally ascribed than inherent.

The written word, through its permanence, is invested with the legal power of ownership.

The demise of printing press ownership, since print no longer requires paper, has reduced the value of journalism as it has expanded its availability.

Peter Beinart et al write:

The New Republic cannot be merely a “brand.” It has never been and cannot be a “media company” that markets “content.” Its essays, criticism, reportage, and poetry are not “product.” It is not, or not primarily, a business.

I’m with them in spirit — kind of.

Journalism should go in pursuit of truth — not profit. But those who dedicate themselves to this higher calling while also having the comfort of receiving a regular pay check, are being disingenuous about their lack of interest in money. The only reason they haven’t had to care too much about where the money comes from is because until now it has conveniently kept showing up in their bank accounts.

Emily Bell writes:

When an increasing number of Americans reach news on their phones, and 30% find their news through Facebook, so-called “legacy” journalism is over, at least as an independently constructed and distributed cultural good. So the question for Hughes, and would-be billionaire saviors like him, is what’s next.

“I think we have seen a number of things happen in the last 18 months which are moving things along,” Hughes told me, “from the ‘innovation’ report at the New York Times, what Ezra Klein is doing with Vox.com, the longform journalism that BuzzFeed has started to produce, and even Medium – which on the face of it is bringing a community around a spectrum from very serious longform journalism to bloggers and other diverse voices.”

Still, in rattling off the journalistic competition he admires, Hughes audibly winced over including BuzzFeed, which has become a Pavlovian stand-in through which the uninformed – even among former TNR staff – encapsulate the idea of “declining standards” in journalism. But BuzzFeed has achieved what every journalism organisation needs to: Buzzfeed is successful because of the internet, rather than in spite of it.

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How the NSA hacks cellphone networks worldwide

Ryan Gallagher reports: In March 2011, two weeks before the Western intervention in Libya, a secret message was delivered to the National Security Agency. An intelligence unit within the U.S. military’s Africa Command needed help to hack into Libya’s cellphone networks and monitor text messages.

For the NSA, the task was easy. The agency had already obtained technical information about the cellphone carriers’ internal systems by spying on documents sent among company employees, and these details would provide the perfect blueprint to help the military break into the networks.

The NSA’s assistance in the Libya operation, however, was not an isolated case. It was part of a much larger surveillance program—global in its scope and ramifications—targeted not just at hostile countries. [Continue reading…]

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Who made Apple successful? America’s deification of the entrepreneur

Strictly speaking, Tim Cook is not an entrepreneur since he didn’t start Apple — he simply replaced the irreplaceable Steve Jobs. Since then, the company has increased in value by $350 billion.

Since Apple’s success has continued without Jobs, is this a reflection of the talent of the less charismatic Cook?

“Tim Cook has created as much value as Steve Jobs,” says a headline in Quartz above a photo of a triumphant Cook.

“How high can he go?” asks the caption.

Buried down in the report is a note of realism: “How much credit does a CEO deserve for the performance of his company?”

I guess Apple’s 98,000 employees deserve to share some of the credit alongside their new leader.

And then there are the people who actually make the products that Apple sells, but who don’t even get the honor or financials rewards of being Apple employees.

Apple doesn’t make anything. It simply designs products and unless those designs were transformed into physical devices by human hands and machines operated by people, the designs themselves would remain nothing more than wonderfully intricate dreams.

While Apple has come to embody the dream of American free market capitalism, the people who turned that dream into a reality aren’t American — they’re mostly Chinese — but from Apple and its admirers, they receive virtually no credit.

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