Thursday, October 30, 2014

Early Indications October 2014: Who’s Watching?

I didn’t really go looking for this particular constellation of ideas, but several good pieces really got me connecting the dots and this month’s letter represents an effort to spell things out with regard to surveillance.

1) The Economist published one of its special reports on September 13 on online advertising. Entitled “Little Brother,” the report argues that mobile devices combined with social networks are providing advertisers — and more importantly, a complex ecosystem of trackers, brokers, and aggregators illustrated in Luma Partners’ now-famous eye-chart slides with unprecedented targeting information. One prominently quoted survey asserts that marketers have seen more change in the past two years than in the previous 50. Among the biggest of these shifts: programmatic ad buying now works much like algorithmic trading on Wall Street, with automated ad bidding and fulfillment occurring in the 150 milliseconds between website arrival and page load on the consumer device.

[As I type this, Facebook announced that the firm made $3.2 billion in one quarter, mostly from ads, nearly $2 billion of it from mobile.]

Given that surveillance pays dividends in the form of more precise targeting — one broker sells a segment called “burdened by debt: small-town singles” — it is no surprise that literally hundreds of companies are harvesting user information to fuel the bidding process: online ad inventory is effectively infinite, so user information is the scarce commodity and thus valued. This marks a radical reversal from the days of broadcast media, when audience aggregators such as NBC or the New York Times sold ad availability that was constrained by time or space. Thus the scarcity has shifted from publishers to ad brokers who possess the targeting information gleaned from Facebook, GPS, Twitter, Google searches, etc. Oh, and anyone who does even rudimentary research on the supposedly “anonymous” nature of this data knows it isn’t, really: Ed Felten, a respected computer scientist at Princeton, and others have repeatedly shown how easy de-anonymization is. (Here’s one widely cited example.)

2) In another sign that surveillance is a very big deal, not only for advertising, the always-astute security guru Bruce Schneier announced that his next book Data and Goliath, due out in March, addresses this issue.

3) Robots, which for our purposes can be defined as sensor platforms, are getting better — fast — and Google has acquired expertise in several forms of the discipline:

-the self-driving car (that has severe real-world limitations)

-Internet of Things (Nest and Waze)

-autonomous military and rescue robots (Boston Dynamics and Schaft).

4) A September 28 post by Steve Cheney raised the prospect of Google moving some or all of the aforementioned robot platforms onto some version of Android. While he predicted that “everything around you will feel like an app,” I’m more concerned that every interaction with any computing-driven platform will be a form of surveillance. From garage-door openers and thermostats to watches to tablets to “robots” (like the one Lowes is prototyping for store assistance) to cars, the prospect of a Google-powered panopticon feels plausible. (I looked for any mention of robotics in the Google annual report but all the major acquisitions were made in this fiscal year, so next year's 10-K will bear watching on this topic.)

5) Hence Apple’s recent positioning makes competitive sense. When Tim Cook said “A few years ago, users of Internet services began to realize that when an online service is free, you’re not the customer. You’re the product.” he was ahead of the curve, I believe: according to the Economist report, only .00015% of people use those little triangle things to opt out of online ad tracking. In Cook’s and Apple’s narrative, premium prices implicitly become more reasonable to those who value privacy insofar as there is no “audience commodity” as at eBay, Amazon, Google Twitter, or Facebook.

6) One other thing to consider here is how that information is being processed at unprecedented scale. When The Economist noted the likeness of ad-buying to algo trading, we enter the world of artificial intelligence, something Google counts as a core competency, with 391 papers published not to mention untold portions of secret sauce.

Some very smart people are urging caution here. Elon Musk was at MIT for a fascinating (if you’re a nerd) discussion of rockets, Tesla, the hyperloop, and space exploration. Thus for someone serious about a Mars space base to warn against opening an AI Pandora’s box was quite revealing:

“I think we should be very careful about artificial intelligence. If I were to guess like what our biggest existential threat is, it’s probably that. So we need to be very careful with the artificial intelligence. Increasingly scientists think there should be some regulatory oversight maybe at the national and international level, just to make sure that we don’t do something very foolish. With artificial intelligence we are summoning the demon. In all those stories where there’s the guy with the pentagram and the holy water, it’s like yeah he’s sure he can control the demon. Didn’t work out.”

(The complete MIT talk is here)

Musk is not alone. The University of Oxford’s Nick Bostrom recently wrote Superintelligence (maybe best thought of as an alternative excursion into Kurzweil-land), a book that quite evidently is grappling with the unknown unknowns we are bumping up against. He knows of what he speaks, but the book is, by his own admission, a frustrating read: no generation of earth’s population has ever had to ask these questions before. The book’s incompleteness and tentativeness, while making for a suboptimal read, are at the same time reassuring: someone, both informed and set in a broad context, is asking the questions many of us want on the table but lack the ability, vocabulary, and credibility to raise ourselves.

In a nutshell, there it is: mobile devices and social networks generate data points that supercomputing and sophisticated analytical tools turn into ad (or terrorist, or tax-cheat) profiling data. Computing liberated from desktop boxes and data centers moves in, and acts on, the physical world, extending surveillance further. Apple positions itself as a self-contained entity selling consumers stuff they pay for, not selling eyeballs/purchase histories/log-in fields/expressed and implied preferences to advertisers. In sharp contrast, Google has repeatedly shown — with Streetview, wi-fi access point mapping, Buzz, and Google+ — a desire to collect more information about individuals than many of those individuals would voluntarily reveal. With AI in the picture, the prospect of surveillance producing some very scary scenario — it may not accurately be called a breach, just as the flash crash wasn’t illegal — grows far more likely. Human safeguards didn’t work at the NSA; why should they work in less secure organizations? Like Bostrom, I have no ready answers other than to lead a relatively careful digital existence and hope that the wisdom of caution and respect for privacy will edge out the commercial pressures in the opposite direction.

Next month: unexpected consequences of a surveillance state.