Start Up No.1,086: the trouble with monopsony, YouTube has Russia in a spin, a G20 concordat on digital tax?, deepfakes get worryingly easier, and more


Smile! Hackers want to know you’re happy. CC-licensed photo by Delta News Hub on Flickr.

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A selection of 10 links for you. Buy shares in balaclavas. (Or baclava, why be fussy.) I’m @charlesarthur on Twitter. Observations and links welcome.

US Customs and Border Protection says photos of travelers were taken in a data breach • The Washington Post

Drew Harwell and Geoffrey Fowler:

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U.S. Customs and Border Protection officials said Monday that photos of travelers had been compromised as part of a “malicious cyber-attack,” raising concerns over how federal officials’ expanding surveillance efforts could imperil Americans’ privacy.

Customs officials said in a statement Monday that the images, which included photos of people’s license plates, had been compromised as part of an attack on a federal subcontractor.

The agency maintains a database including passport and visa photos that is used at airports as part of an agency facial-recognition program. CBP declined to say what images were stolen or how many people were affected.

But CBP makes extensive use of cameras and video recordings at the arrival halls of international airports as well as land border crossings, where vehicle license plates are also captured.

A CBP statement said none of the image data had been identified “on the Dark Web or Internet.” But reporters at The Register, a British technology news site, reported late last month that a large haul of breached data from the firm Perceptics was being offered as a free download on the dark web.

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A malicious cyberattack rather than an accidental cyberattack? These things are always going to be catnip to a certain group – apparently, in this case, professionals seeking to sell the data. (Though you’d expect this to be amateurs offering it so it can be validated as stolen; or state actors doing the same.)

Suddenly makes it hard to argue that this data should be retained, though.
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Monopsony, not monopoly, is the tech industry’s biggest threat • Fast Company

Glenn Fleishman:

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The flip side of monopoly, a monopsony results when one company is the sole buyer of a given product or service, including contract and employee labor. Like a monopoly, a monopsony can also result in higher prices and stagnating wages.

The paradox of the digital economy is that certain monopsonies have kept prices low. Logically, you would think that companies that have enormous power to flex would reap the highest profit they can. But we’re in an odd market moment, one that seemingly can’t last. Competition may drive prices down, but companies can’t infinitely squeeze vendors or sell below cost forever. At some point, suppliers balk or go under, or monopsonists crack as their business models prove unsustainable – or courts order changes. Is the end nigh?

Digital economy upstarts – even those 20-plus years old – may face avid competition for what they offer. Amazon isn’t the only company that can sell you any given book – thousands can. In a reader comment on an article at Deadline in 2014 about an Amazon/Hachette pricing dispute, Ward Anderson wrote, “Amazon sells about 50% of the books in North America. And the books it does not sell are readily available elsewhere. That’s not a monopoly.”

Similarly, you can opt to take a Lyft or a taxi instead of an Uber. And hotels, motels, and even Craigslist room rentals compete with AirBnb.

Yet regulators, consumers, and skeptics have feared that tech giants might exercise a de facto monopoly because they drown out other options through attention and convenience. In a monopoly scenario, prices would rise. So far, however, across a wide swath of products and services, they’ve remained low, and many large firms are known to price below cost, or are at least suspected of doing so. This can be illegal under the Sherman Act if this behavior is found to be predatory, as in a 1993 case Walmart lost. Such outcomes are rare, though. The FTC tuts-tuts at the notion of low prices being problematic these days, so long as they are not specifically designed to create a monopoly and raise prices.

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In a sense, what we (as users) see as monopolies are what those on the other side see as monopsonies. Websites don’t have much choice about optimising for Google; it’s important to be on that first page of search results. Uber drivers, Lyft drivers, do they have a choice? Amazon has shown its power as a monopsony over book publishers a number of times. Perhaps the internet makes it easier for them to arise.
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Looking for free speech in Russia? Try YouTube • The New York Times

Neil MacFarquhar:

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“The entire social, political part of television is controlled by the authorities,” said Leonid G. Parfenov, an independent news anchor who has been shut out of state TV since 2004 for being too critical of the government. “For that reason, you cannot consider this television journalism — it is just propaganda, they are just employees of the presidential administration.”

Yet voices that the government would mute are heard regularly by tens of millions of Russians in another format: YouTube.

For more freewheeling opinions and commentary — particularly from those critical of President Vladimir V. Putin — YouTube has become the leading way to reach Russian audiences. In particular, it is challenging — if not supplanting — state TV as a source of information for the young…

Free-speech advocates fear that Russia will try to follow the Chinese model of heavy state internet censorship, and the Kremlin has taken initial steps in that direction.

But some critics say that the main threat to Russian YouTube stems from its own success. New money, shows and advertisers are pushing aside the homespun channels that have made it an important outlet, threatening to marginalize serious content, especially politics.

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Irony that the social network that Russia can’t manipulate is the one that manipulates it back. And of course the recommendation algorithm will take viewers off down rabbit holes…
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Personal details of 23m drivers given out by DVLA • The Times

Graeme Paton:

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The information watchdog is to hold an inquiry after the Driver and Vehicle Licensing Agency released the personal details of a record 23 million vehicle owners last year.

The Times has learnt that an unprecedented 63,600 records a day were handed to third parties including bailiffs and private investigators, often allowing motorists to be aggressively pursued for parking and toll road fines.

The DVLA charged organisations to obtain almost 7.8 million records, suggesting that it made £19.4m from the release of the data of almost two thirds of all vehicle owners in the UK.

Motoring groups called for an independent inquiry amid questions over how a data release on this scale could be properly policed, particularly in light of the rigorous new General Data Protection Regulation (GDPR) introduced across Europe last year.

There are fears that not all organisations that obtained the vehicle records did so legitimately, nor put them to a proper use.

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Digital giants face tax setback after G20 agreement • Financial Times

Robin Harding:

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Digital companies such as Facebook and Google will soon have to pay taxes regardless of their physical presence or measured profits in a country after G20 finance ministers agreed to accelerate a radical shake-up of cross-border corporate tax.

In a communiqué issued after their meeting in Fukuoka, Japan, finance ministers from the world’s largest economies said they aimed to agree on new rules “by 2020”. But there are still big differences to resolve, with the US, home to most of the world’s digital giants, opposed to rules that treat digital companies differently to others.

The proposals will lead to higher tax bills for some of the world’s most valuable companies and transform the basic tenets of international tax for a world where economic value comes from flows of ideas and data rather than physical goods.

“We have a new economic model based on digital activities and based on the sale and exchange and use of massive data,” said Bruno Le Maire, the French finance minister. “For the time being there is no fair taxation of this new economic model.”

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Hard to figure out what the communique is saying, to be honest. But it’s surely a good move.
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AI deepfakes are now as simple as typing whatever you want your subject to say • The Verge

James Vincent:

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In the latest example of deepfake technology, researchers have shown off new software that uses machine learning to let users edit the text transcript of a video to add, delete, or change the words coming right out of somebody’s mouth.

The work was done by scientists from Stanford University, the Max Planck Institute for Informatics, Princeton University, and Adobe Research, and shows that our ability to edit what people say in videos and create realistic fakes is becoming easier every day.

You can see a number of examples of the system’s output, including an edited version of a famous quotation from Apocalypse Now, with the line “I love the smell of napalm in the morning” changed to “I love the smell of french toast in the morning.”

This work is just at the research stage right now and isn’t available as consumer software, but it probably won’t be long until similar services go public. Adobe, for example, has already shared details on prototype software named VoCo, which lets users edit recordings of speech as easily as a picture, and which was used in this research.

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What do we think, a year? Less?
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Google rewards reputable reporting, not left-wing politics • The Economist

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To test for favouritism, The Economist ran an experiment, comparing a news site’s share of search results with a statistical prediction based on its output, reach and accuracy.

We first wrote a program to obtain Google results for any keyword. Using a browser with no history, in a politically centrist part of Kansas, we searched for 31 terms for each day in 2018, yielding 175,000 links.

Next, we built a model to predict each site’s share of the links Google produces for each keyword, based on the premise that search results should reflect accuracy and audience size, as Google claims. We started with each outlet’s popularity on social media and, using data from Meltwater, a media-tracking firm, how often they covered each topic. We also used accuracy ratings from fact-checking websites, tallies of Pulitzer prizes and results from a poll by YouGov about Americans’ trust in 37 sources.

If Google favoured liberals, left-wing sites would appear more often than our model predicted, and right-wing ones less. We saw no such trend. Overall, centre-left sites like the New York Times got the most links—but only about as many as our model suggested. Fox News beat its modest expectations. Because most far-right outlets had bad trust scores, they got few search results. But so did Daily Kos, a far-left site.

Our study does not prove Google is impartial. In theory, Google could serve unbiased links only to users without a browsing history. If fact-checkers and Pulitzer voters are partisan, our model will be too.

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Not surprising, but good to have The Economist do the legwork.
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When will the climate emergency make the earth too hot for humans? • NY Mag

David Wallace-Wells:

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Since 1980, the planet has experienced a 50-fold increase in the number of places experiencing dangerous or extreme heat; a bigger increase is to come. The five warmest summers in Europe since 1500 have all occurred since 2002, and soon, the IPCC warns, simply being outdoors that time of year will be unhealthy for much of the globe.

Even if we meet the Paris goals of two degrees warming, cities like Karachi and Kolkata will become close to uninhabitable, annually encountering deadly heat waves like those that crippled them in 2015.

At four degrees, the deadly European heat wave of 2003, which killed as many as 2,000 people a day, will be a normal summer.

At six, according to an assessment focused only on effects within the U.S. from the National Oceanic and Atmospheric Administration, summer labor of any kind would become impossible in the lower Mississippi Valley, and everybody in the country east of the Rockies would be under more heat stress than anyone, anywhere, in the world today.

As Joseph Romm has put it in his authoritative primer Climate Change: What Everyone Needs to Know, heat stress in New York City would exceed that of present-day Bahrain, one of the planet’s hottest spots, and the temperature in Bahrain “would induce hyperthermia in even sleeping humans.” The high-end IPCC estimate, remember, is two degrees warmer still.

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As he also points out, every mass extinction apart from that of the dinosaurs in the Earth’s history has been caused by greenhouse gas warming.
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iOS 13 shows a map of where apps have been tracking you • 9to5Mac

Chance Miller:

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As you can see in the screenshots above, iOS 13 presents popup notifications when an app is using your location in the background. The notification also shows a map of the location data a specific app has tracked. The above screenshots show location data tracked by the Tesla app as well as the Apple Store app.

In addition to showing the map, the notification also presents the app’s reasoning for needing background location access. This is Tesla’s explanation:

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Tesla uses your location to show your proximity to your vehicle (while the app is open), and to optimize phone key on your support vehicles (while the app is in the background).

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And the explanation for the Apple Store app:

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We’ll provide you with relevant products, features, and services depending on where you are.

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…Ideally, the new pop-up reminder notifications with map will make users more aware of how often apps are tracking them in the background. In certain instances, always allowing location access makes more sense – such as Tesla – but the developer explanations will have to convince users of that.

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Nice idea. It’s probably going to freak app developers out.
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The battle in Israel to build an unhackable phone • FT

Mehul Srivastava:

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The Intactphone is used by senior UN officials, heads of states and, in one country the company will not name, by a national prosecutor whose predecessor was hacked.

Its cost ranges anywhere from a few thousand dollars to the millions. The most expensive set-up includes privately hosted servers that generate the ephemeral encryption keys that lock each individual communication into a sealed vault, and dozens of phones distributed among government officials.

The company saw a boost after the Israel Innovation Authority took a stake and helped market the technology abroad, especially in the US and in Mexico. Now it is developing a commercial version, that will run on a custom-built phone designed to mimic the look of a normal smartphone. That would allow people to carry a secure phone without drawing attention.

“In the first few years we have had the product battle-test by some very high-tech customers — intelligence agencies, governments,” said Mr Sasson. “Now we are going wider.”

The battle lines are oddly concentrated in Israel, where NSO and Communitake are part of an industry that includes companies like Cellebrite, recently valued at $600m, which unlocks encrypted smartphones for governments, and Verint Systems, the $3.7bn cyber surveillance company that has hundreds of engineers in Israel working on software used by the FBI and European law enforcement.

They thrive on graduates of the Israeli army’s surveillance units, including Unit 8200, the signals intelligence and decryption division from which Eran Karpen, Communitake’s chief operating officer, hails. And they also benefit from Israel’s reputation for world-beating cyber surveillance, and the mystique of its intelligence agencies, especially in the Middle East.

For smaller companies like Communitake, that is a key asset.

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I’m a little wary of this story, because there’s no external validation of its claims. Which governments have bought it? Why hasn’t everyone bought it? There are plenty of claims, but actual empirical proof is much harder to come by.
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Errata, corrigenda and ai no corrida: none notified

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