Start Up: Facebook’s Russian fess-up, how IBM spun Watson, North Korea in perspective, and more


How long can HTC keep the Vive VR headset alive – or vice-versa? Photo by wuestenigel on Flickr.

A selection of 11 links for you. Facebook, Russians, that’s how it is sometimes. I’m @charlesarthur on Twitter. Observations and links welcome.

Facebook says it sold political ads to Russian company during 2016 election • The Washington Post

Carol D. Leonnig, Tom Hamburger and Rosalind S. Helderman:

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Representatives of Facebook told congressional investigators Wednesday that it has discovered it sold ads during the U.S. presidential election to a shadowy Russian company seeking to target voters, according to several people familiar with the company’s findings.

Facebook officials reported that they traced the ad sales, totaling $100,000, to a Russian “troll farm” with a history of pushing pro-Kremlin propaganda, these people said.

A small portion of the ads, which began in the summer of 2015, directly named Republican nominee Donald Trump and Democrat Hillary Clinton, the people said. Most of the ads focused on pumping politically divisive issues such as gun rights and immigration fears, as well as gay rights and racial discrimination.

The acknowledgment by Facebook comes as congressional investigators and special counsel Robert Mueller are probing Russian interference in the U.S. election, including allegations that the Kremlin may have coordinated with the Trump campaign…

…Even though the ad spending from Russia is tiny relative to overall campaign costs, the report from Facebook that a Russian firm was able to target political messages is likely to fuel pointed questions from investigators about whether the Russians received guidance from people in the United States — a question some Democrats have been asking for months.

“I get the fact that the Russian intel services could figure out how to manipulate and use the bots. Whether they could know how to target states and levels of voters that the Democrats weren’t even aware really raises some questions. I think that’s a worthwhile area of inquiry,” Sen. Mark Warner (Va.), the ranking Democrat on the Senate Intelligence Committee, said during a May airing of the podcast Pod Save America. “How did they know to go to that level of detail in those kinds of jurisdictions?”

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Facebook digital ads figures differ from census data: analyst • Reuters

David Ingram and Rama Venkat Raman:

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Figures Facebook gives advertisers about its potential reach differ from US census data, an investment analyst said on Tuesday, renewing questions about how tech companies verify the value of their digital marketing space.

Facebook, Alphabet Inc’s Google and other internet companies have faced persistent scrutiny from advertisers about how many people watch ads online and how to measure their views.

Facebook’s ad-buying website tells advertisers that the world’s largest social network has a potential reach of 41 million 18 to 24 year olds in the United States, whereas US census data shows that last year there were 31 million people living in the country between these ages, Brian Wieser, a Pivotal Research Group senior analyst, said in a note.

The gap persists for 25 to 34 year olds and is not widely known among ad agency executives, Wieser wrote in the client note, adding that the gap may cause large advertisers to step up demands for third-party measurement services.

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It is possible that people are lying fabulously about their age to Facebook. But 10 million of them? This is embarrassing for Facebook.
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IBM pitched Watson as a revolution in cancer care. It’s nowhere close • Stat News

Casey Ross and Ike Swetlitz:

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contrary to IBM’s depiction of Watson as a digital prodigy, the supercomputer’s abilities are limited.

Perhaps the most stunning overreach is in the company’s claim that Watson for Oncology, through artificial intelligence, can sift through reams of data to generate new insights and identify, as an IBM sales rep put it, “even new approaches” to cancer care. STAT found that the system doesn’t create new knowledge and is artificially intelligent only in the most rudimentary sense of the term.

While Watson became a household name by winning the TV game show “Jeopardy!”, its programming is akin to a different game-playing machine: the Mechanical Turk, a chess-playing robot of the 1700s, which dazzled audiences but hid a secret — a human operator shielded inside.

In the case of Watson for Oncology, those human operators are a couple dozen physicians at a single, though highly respected, U.S. hospital: Memorial Sloan Kettering Cancer Center in New York. Doctors there are empowered to input their own recommendations into Watson, even when the evidence supporting those recommendations is thin.

The actual capabilities of Watson for Oncology are not well-understood by the public, and even by some of the hospitals that use it. It’s taken nearly six years of painstaking work by data engineers and doctors to train Watson in just seven types of cancer, and keep the system updated with the latest knowledge.

“It’s been a struggle to update, I’ll be honest,” said Dr. Mark Kris, Memorial Sloan Kettering’s lead Watson trainer. He noted that treatment guidelines for every metastatic lung cancer patient worldwide recently changed in the course of one week after a research presentation at a cancer conference. “Changing the system of cognitive computing doesn’t turn around on a dime like that,” he said. “You have to put in the literature, you have to put in cases.”

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Stat News does a great in-depth report.
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Worldwide shipments of AR/VR headsets maintain solid growth trajectory in the second quarter • IDC

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The worldwide market for Augmented Reality (AR) and Virtual Reality (VR) headsets grew 25.5% year over year in the second quarter of 2017 (2Q17) as shipments reached 2.1 million, according to the International Data Corporation (IDC) Worldwide Quarterly Augmented and Virtual Reality Headset Tracker. Volumes declined slightly from the prior quarter, but recent price cuts on existing products and announced plans for new products are expected to lay the groundwork for a successful holiday season.

“Growth in the VR market has been rather sluggish compared to other recently introduced technologies as the amount of investment and, more importantly, the need for end user education is extremely high for VR,” said Jitesh Ubrani senior research analyst for IDC’s Mobile Device Trackers. “Though the recent price cuts across all major platforms will help alleviate one of the barriers to adoption, providing consumers the opportunity to learn about products and try before they buy is still a significant hurdle faced by most companies.”

Virtual reality products once again made up more than 98% of shipments in the combined AR/VR market. On the VR side, screenless viewers accounted for over half of all the headset shipments during the quarter. Tethered VR headsets captured 43%, up from the 34% in the previous quarter, driven in large part to Sony’s ongoing success with the PlayStation VR and Oculus increasing shipment volumes thanks to price cuts.

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Of note: IDC reckons HTC was 5th largest, shipped 94,500 units, for a share of 4.4%. Its headset is pricier than rivals. In August, its revenues plummeted by 50% year-on-year to a 13-year monthly low. I don’t think HTC is long for this world, at least as an independent entity.
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North Korea: why the West freaks out but South Korea doesn’t • Lowy Institute

Robert Kelly, who is an American professor in South Korea:

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This current [South Korean] president, Moon Jae In, wanted to emphasise domestic issues such as corruption and social welfare, which elected him. Instead, North Korea has consumed his first four months in office.

By contrast, Americans seem to rediscover the North Korean threat whenever it pops up. US attention toward Asia is mixed at best. Elites care, but I doubt most regular Americans care much about the ‘pivot to Asia’ or North Korea, especially compared to the war on terror and the ‘clash of civilizations’ cultural anxieties it activates.

The upshot is that whenever North Korean bad behaviour spikes enough to make it international news, Americans suddenly pay attention. But in the interim, the South Koreans have also been paying attention. So they appear sanguine when Western journalists suddenly show up at those peaks.

Americans are curiously alarmist about their ‘thick security’. This is a point Stephen Walt has helpfully made again and again at his Foreign Policy blog. The United States is remarkably safe. Ensconced between two oceans and two weak neighbours and far from the tightly-packed Eurasian cauldron of competition, the US is one of the most secure great powers in history. Yet we Americans are prone to extraordinary outbursts of national security panic, most recently on display after 9/11. In response to approximately 3,000 fatalities, the US has killed orders of magnitude more people than that in so many wars in the Middle East that analysts now use terms like ‘forever war’ to describe our engagement there. Neoconservatism as a foreign policy posture is based on the notion that American security is constantly threatened, even in weak, far-away places like Yemen or Venezuela.

North Korea activates these impulses more than most rogues. America depicts North Korea in outlandish terms – video games and movies repeatedly depict North Korea invading the US, acquiring super-weapons, or otherwise as crazy. In my media experience, this has sunk in. I am regularly asked if the Kims are crazy, insane, war-mongers, and so on. They are not. They are just gangsters, not suicidal ideologues.

My own sense is that #2 is probably more causal. We are prone to threat-inflation, and North Korea is so easy to caricature.

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Kelly is the man made famous by his children busting in when he was giving a TV interview. But he lives there and knows what’s going on. The US is going batshit over Kim Jong-Un for no sensible reason at all.

Note well his observation: “Neoconservatism as a foreign policy posture is based on the notion that American security is constantly threatened, even in weak, far-away places like Yemen or Venezuela.” Very insightful.
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Apple’s refusal to approve India’s anti-spam app angers regulators • Bloomberg

Saritha Rai:

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The Telecom Regulatory Authority of India has been trying unsuccessfully to get its Do Not Disturb software included in the App Store. The program lets people share spam call and text message logs with the agency, which uses the data to alert mobile operators to block the spammers. Apple has said the app violates its privacy policy, according to the regulator.

The standoff could impact Apple’s efforts to expand in India, where half a billion smartphones will be sold by 2020. The Cupertino, California-based company has been in discussions with India’s government to open retail stores and secure permission to sell used iPhones imported into the country. Apple has put forth a long list of demands, including tax breaks and other concessions, to set up manufacturing facilities. 

“Nobody’s asking Apple to violate its privacy policy,” said Ram Sewak Sharma, chairman of the Delhi-based telecom regulator. “It is a ridiculous situation, no company can be allowed to be the guardian of a user’s data.”

The regulator is currently seeking public and stakeholder comments on a consultative paper on users’ control over their personal information and rules on the flow of data through telecommunications networks. The process, scheduled to be completed in September, could eventually lead to new rules governing user data. That could also become part of the telecom licensing process, Sharma said.

Any new measures could affect not just Apple, but Facebook, Google and other technology companies that handle large amounts of private and personal information.

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Russians have hacked dozens of US energy companies, researchers say • Buzzfeed

Kevin Collier:

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A hacker group linked to the Russian government has acquired an unprecedented level of access to companies that supply power to the US power grid, a cybersecurity firm says.

Symantec, a California-based firm that provides cybersecurity services and worldwide research against online threats, says the group, which it’s nicknamed Dragonfly 2.0, may have compromised more than a dozen American companies in recent months.

Dragonfly – also called Crouching Yeti, or Energetic Bear, depending on which researcher you talk to – was an established hacker group that attacked energy sector targets around the world from at least 2011 until 2014, when it went quiet after its tactics were exposed by public research. Researchers at Symantec have declined to specifically cite Russia as the culprit, though they do say it’s a state-sponsored attack. Researchers at other firms, like CrowdStrike and FireEye, have tied Dragonfly to the Russian government.

“This is the first time we’ve seen this scale, this aggressiveness, and this level of penetration in the US, for sure,” Eric Chien, technical director of Symantec’s Security Technology & Response Division, told BuzzFeed News.

“What we’re seeing is them getting into dozens, as far as we know, likely more, of organizations who are basically energy companies. We’re talking about organizations who are supplying power to the power grid,” Chien said.

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Not “on-off” capability, but concerning even so.
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Xiaomi partners with Google for Mi A1 smartphone, targeting developing markets • Forbes

Yue Wang:

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Over the past three years, Xiaomi has entered as many as 40 countries across regions, selling its phones and smart devices at cost to compete with brands like Apple and Samsung as well as China’s own Huawei, OPPO and Vivo for the attention of users in countries like India and Russia. The pace of expansion accelerated dramatically this year, with Xiaomi breaking into a dozen countries including Greece, Indonesia, Paraguay and Poland for the very first time, confirmed the company’s Senior Vice President Wang Xiang in a recent interview with Forbes.

In addition to partnering with online marketplaces and physical distributors in new markets, Xiaomi is also linking arms with Google’s parent company, Alphabet, to beef up its appeal. The company announced on Tuesday its $230 Mi A1 smartphone that will run on Google’s Android One operating platform, which will be the first Xiaomi device that doesn’t use the company’s default MIUI system. The handset, initially available in 40 markets including India, Indonesia, Russia and Mexico, is aimed at attracting users who are more familiar with Google-provided services, according to Wang. He also said that Xiaomi and Google have agreed to share revenues, but declined to provide more details. The Mi A1 will be available for purchase on September 12.

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Android One is back – except only with Xiaomi, seems like. Perhaps more will follow. But it doesn’t seem like a great plan to do revenue-sharing with Google, unless it’s on Play Store purchases and so on. China isn’t panning out as the stronghold Xiaomi thought it would be (OPPO and vivo are eating that up).
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Isle of Man firm to launch 250 million-pound Dubai property priced in bitcoin • Reuters

Gertrude Chavez-Dreyfuss:

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The Knox Group of Companies, with headquarters in the Isle of Man, announced late on Tuesday it will launch a residential and commercial property development in Dubai valued at £250m ($325m), with residences that can be purchased in the digital currency bitcoin.

The company said the 2.4m-square-foot (22.3-hectare) property venture called Aston Plaza and Residences, consisting of two residential towers and a shopping mall, will be the first major real estate development that will accept bitcoin as payment.

The Dubai project is one step toward efforts to push bitcoin into the mainstream. Maligned and ridiculed in its early days, bitcoin hit a record high of $4,870 on Friday, surging more than 400% so far this year.

The whole project is expected to be completed by late 2019.

“This a great opportunity for the crypto-currency community to offload some of its significant gains, especially the early adopters, and actually deploy them in hard-core assets which I‘m building,” Knox’s chairman, Doug Barrowman, said in an interview with Reuters.

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I think Barrowman is actually playing a different game: he’s wagering that if people buy now in bitcoin, he holds onto the payment, and bitcoin appreciates against the dollar, so he wins twice over.

Now we’re hoping for bitcoin to plummet, aren’t we?
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Huawei surpasses Apple to be summer’s second largest smartphone brand • Counterpoint Research

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According to the latest research from Counterpoint’s Market Pulse for July 2017, Huawei has surpassed Apple in global smartphone sales consistently for June and July. With August sales looking strong for the Chinese vendor, a hat-trick for Huawei could be on the cards.

Discussing this key competitive development, Counterpoint’s Research Director Peter Richardson, notes, “This is a significant milestone for Huawei, the largest Chinese smartphone brand with a growing global presence. It speaks volumes for this primarily network infrastructure vendor on how far it has grown in the consumer mobile handset space in the last three to four years. The global scale Huawei has been able to achieve can be attributed to its consistent investment in R&D and manufacturing, coupled with aggressive marketing and sales channel expansion.”

Mr. Richardson adds, “While this streak could be temporary considering the annual iPhone refresh is just around the corner, it nevertheless underscores the rate at which Huawei has been growing. However, a weak presence in the South Asian, Indian and North American markets limits Huawei’s potential in the near-to mid-term to take a sustainable second place position behind Samsung.”

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The official calendar quarters run from July to September, and Apple’s sales always dip in the summer months (when overall global sales are also lower), so there’s a little bit of cherry-picking here. But the point about Huawei’s size is fair. What we don’t know is whether it’s making any money at it. And in the end, that’s the point of being in business.
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Facebook offers hundreds of millions of dollars for music rights • Bloomberg

Lucas Shaw and Sarah Frier:

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Facebook is offering major record labels and music publishers hundreds of millions of dollars so the users of its social network can legally include songs in videos they upload, according to people familiar with the matter.

The posting and viewing of video on Facebook has exploded in recent years, and many of the videos feature music to which Facebook doesn’t have the rights. Under current law, rights holders must ask Facebook to take down videos with infringing material.

Music owners have been negotiating with Facebook for months in search of a solution, and Facebook has promised to build a system to identify and tag music that infringes copyrights. Yet such a setup will take as long as two years to complete, which is too long for both sides to wait, said the people, who asked not to be named discussing details that aren’t public.

Facebook is eager to make a deal now so that it no longer frustrates users, by taking down their videos; partners, by hosting infringing material; or advertisers, with the prospect of legal headaches.

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So it’s talking about building something just like ContentID, the system YouTube uses for identifying music. (Doesn’t it already exist, in Shazam’s system? Though it has to identify in noisy environments too.) This might be a way for the music business to play Facebook and YouTube off against each other, trying to ratchet up payments particularly from the latter – which music companies have always said are too low (because they’re monetised through ads).
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