Who can control the algorithm that decides how much credit you get? Who can query it? Who can change it? CC-licensed photo by Jeff Geerling on Flickr.

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A selection of 11 links for you. Use them wisely. I’m @charlesarthur on Twitter. Observations and links welcome.

How big tech is dragging us towards the next financial crash • The Guardian

Rana Foroohar:

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[the wealth divide has been emphasised by] the rise of intangibles such as intellectual property and brands (both of which [Apple] has in spades) relative to tangible goods as a share of the global economy. As Jonathan Haskel and Stian Westlake show in their book Capitalism Without Capital, this shift became noticeable around 2000, but really took off after the introduction of the iPhone in 2007. The digital economy has a tendency to create superstars, since software and internet services are so scalable and enjoy network effects (in essence, they allow a handful of companies to grow quickly and eat everyone else’s lunch). But according to Haskel and Westlake, it also seems to reduce investment across the economy as a whole. This is not only because banks are reluctant to lend to businesses whose intangible assets may simply disappear if they go belly-up, but also because of the winner-takes-all effect that a handful of companies, including Apple (and Amazon and Google), enjoy.

This is likely a key reason for the dearth of startups, declining job creation, falling demand and other disturbing trends in our bifurcated economy. Concentration of power of the sort that Apple and Amazon enjoy is a key reason for record levels of mergers and acquisitions. In telecoms and media especially, many companies have taken on significant amounts of debt in order to bulk up and compete in this new environment of streaming video and digital media.

Some of that debt is now looking shaky, which underscores that the next big crisis probably won’t emanate from banks, but from the corporate sector. Rapid growth in debt levels is historically the best predictor of a crisis. And for the past several years, the corporate bond market has been on a tear, with companies in advanced economies issuing a record amount of debt; the market grew 70% over the past decade, to reach $10.17tn in 2018. Even mediocre companies have benefited from easy money.

But as the interest rate environment changes, perhaps more quickly than was anticipated, many could be vulnerable.

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If it all goes tits up, then the tech companies will get the blame, rather than the banks.
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Global smartwatch shipments leap to 14 million units in Q3 2019 • Strategy Analytics

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According to the latest research from Strategy Analytics, global smartwatch shipments grew an impressive 42% annually to reach 14m units in the third quarter of 2019. Apple Watch maintained first position with 48% global smartwatch marketshare, while Samsung held second place, and Fitbit clung on to third.

Steven Waltzer, Senior Analyst at Strategy Analytics, said, “Global smartwatch shipments grew an impressive 42% annually from 10.0 million units in Q3 2018 to 14.2 million in Q3 2019. Smartwatch growth continues to soar, as consumers increasingly accessorize their smartphones with fitness-led and health-focused wearables.”

Neil Mawston, executive director at Strategy Analytics, added, “Apple shipped 6.8 million smartwatches worldwide in Q3 2019, rising an above-average 51% from 4.5 million in Q3 2018. Apple Watch remains a long way ahead of the chasing pack and its global smartwatch marketshare has grown from 45% to 48% in the past year. Apple Watch continues to fend off strong competition from hungry rivals like Fitbit and Samsung. Apple Watch owns half the worldwide smartwatch market and remains the clear industry leader.”

Steven Waltzer, Senior Analyst at Strategy Analytics, added, “Samsung shipped 1.9 million smartwatches worldwide in Q3 2019, almost doubling from 1.1 million a year ago. Samsung’s global smartwatch marketshare has jumped from 11% to 13% during the past year. Samsung is firmly established as the world’s number two smartwatch vendor. Recent new models, such as Galaxy Watch Active 2, should enable Samsung to improve its global smartwatch presence during the upcoming Q4 holiday season.”

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This is a long, long way from a mature market. Though it’s looking a lot like the tablet market, or the iPod market: Apple collects all the money and has a sizeable share; everyone else scrabbles for scraps.
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This solar farm has to switch off every second day due to negative prices • RenewEconomy

Giles Parkinson:

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When Australia’s renewable energy portfolio reached its important milestone on Wednesday of providing 50% of the main grid’s demand for the first time, one solar farm couldn’t be part of the fun, and had to look on from the sidelines.

The sight of wind and solar farms being switched off when wholesale electricity prices fall into negative territory has become increasingly common over the last few months, particularly in Queensland and South Australia.

But the facility that appears to have been affected the most has been the 95MW Tailem Bend solar farm in South Australia, owned by Vena Energy and operating since earlier this year.

Tailem Bend has an off-take agreement with Snowy Hydro that broadly requires it to switch off when wholesale electricity prices go into negative territory, although the details are likely to be more complex than that.

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It’s bizarre that Australia is such a huge user of solar power, and yet its politicians are so indifferent to the risks posed by climate change.
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The wonderful world of Chinese hi-fi • The Verge

Dan Nosowitz on the rise of the surprisingly cheap, surprisingly hi-quality “Chi-fi”:

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Chinese brands cut out all of that [branding/marketing/testing] stuff. Only the biggest and most ambitious of these companies even bother with a website; most of them have little more than a vendor page on AliExpress. Some of these companies buy their drivers — the actual speakers — from the same factories that provide Sennheiser and Beats with theirs. Tin Audio uses Knowles balanced armature drivers for its T3 model; those are the most important thing inside this product. Those same drivers, or at least very similar ones, can also be found in Ultimate Ears IEMs that cost hundreds or even thousands of dollars. The factories that make the drivers don’t care who they sell to; they maintain a certain level of quality because their clients depend on that. And once you’ve sourced the parts, it’s not expensive at all to put them together. “If you have a van and a bottle of glue,” Klasco says, “you can be in the business.”

What you sometimes end up with is a headphone with shockingly high-end internals, meaning excellent sound quality, from a company that has essentially no overhead. Those companies can still make a solid profit — if anyone can find their stuff.

It’s difficult to say how much intellectual property theft is in the mix. There’s rampant counterfeiting going on in these same Chinese tech hub cities, and you can often find homegrown Chinese brands sitting alongside counterfeit Western products at the markets and conventions around China (and on AliExpress and Amazon, for that matter). Klasco told me that he’ll often just ask vendors at these conventions for a tour of their facilities. If they make excuses for why he can’t come visit, the company might be doing something they want to keep quiet — reselling, or counterfeiting, or worse.

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EU unhappy with changes to Google’s Shopping service • Mediapost

Laurie Sullivan:

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Google’s efforts to drive more traffic to European comparison shopping rivals have failed, Margrethe Vestager, Europe’s Competition Commissioner, told attendees at a conference.

Two years ago, Vestager fined Google $2.65bn (€2.4bn) for favoring its own price-comparison shopping service, citing anti-competitive business practices.

Google then offered to allow competitors to bid for advertising space at the top of a search page, giving them the opportunity to compete on equal terms.

“We may see a show of rivals in the shopping box,” she told attendees, according to one report. “We may see a pickup when it comes to clicks for merchants. But we still do not see much traffic for viable competitors when it comes to shopping comparison.”

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The problem has always been that Google could put its own shopping adverts for free on top of any organic SEO, so it wins from those. If rivals have to buy adverts, it wins from those (and sees the data on what succeeds). It can’t be made fair without wholesale reform.
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I ranked every UK constituency by deprivation and then coloured them by party affiliation – for fun! • CityMetric

Alasdair Rae:

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What would it look like if we made a map of UK politics that wasn’t a map at all? What if we mapped out all 650 UK constituencies based on their level of deprivation, ranked them in ten equal groups of 65 and then coloured them by the party who won in each area in 2017?

Well, we’d have something that looks quite like a patchwork quilt of UK politics, as you can see below. The most deprived constituencies are in the left hand column, the least deprived are in the right hand column. In each column, constituencies towards the top are more deprived than the ones at the bottom.

[Click for larger version]

I originally attempted this in 2017 and with a new election looming and UK politics very much in a state of flux, I thought it would be interesting to do it again. Constituencies are coloured by who won in 2017, not the medley of party affiliations we ended up with at the end of the current parliamentary session.

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That’s interesting enough, but then you get into Remain/Leave by deprivation per constituency, which turns out to have no clear correlation apart from a lot of Remain at the least deprived end.

This is one of the more interesting ways to slice and dice the data on parties and constituencies. (Via Sophie Warnes’s Fair Warning newsletter.)
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Financial crime through video games is on the rise; counter-terrorists win • The Economist

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On October 28th Valve announced it was stopping the trading between players of “container keys”—an in-game gambling device that players can buy (with real money) to try to win (virtual) rewards such as special weapons or clothing. The firm says “nearly all” of the trades of such keys were “believed to be fraud-sourced”. It is a rare admission of the growing problem of using video games to facilitate financial crime.

The company has released no further details, and did not reply to a request for information from The Economist. But it seems likely that the keys, which were bought with stolen credit cards, were then traded between accounts on Steam’s marketplace. Players cannot withdraw real money from their accounts, but in-game credit can be used to buy new virtual rewards or games. There is a burgeoning market (on third-party websites) for accounts already loaded up with virtual cash. Criminals can cash out by selling to gamers keen to acquire games or virtual items cheaply.

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You’ll need to register to read more, but it’s quite a move that Valve is taking this seriously.
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Child abusers run rampant as tech companies look the other way • The New York Times

Michael Keller and Gabriel Dance:

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Approaches by tech companies are inconsistent, largely unilateral and pursued in secret, often leaving pedophiles and other criminals who traffic in the material with the upper hand.

The companies have the technical tools to stop the recirculation of abuse imagery by matching newly detected images against databases of the material. Yet the industry does not take full advantage of the tools.

Amazon, whose cloud storage services handle millions of uploads and downloads every second, does not even look for the imagery. Apple does not scan its cloud storage, according to federal authorities, and encrypts its messaging app, making detection virtually impossible. Dropbox, Google and Microsoft’s consumer products scan for illegal images, but only when someone shares them, not when they are uploaded.

And other companies, including Snapchat and Yahoo, look for photos but not videos, even though illicit video content has been exploding for years. (When asked about its video scanning, a Dropbox spokeswoman in July said it was not a “top priority.” On Thursday, the company said it had begun scanning some videos last month.)

The largest social network in the world, Facebook, thoroughly scans its platforms, accounting for over 90% of the imagery flagged by tech companies last year, but the company is not using all available databases to detect the material. And Facebook has announced that the main source of the imagery, Facebook Messenger, will eventually be encrypted, vastly limiting detection.

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How Airbnb’s fight to overturn a New Jersey law imploded • Ars Technica

Paris Martineau:

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In 2015, Mayor Steve Fulop entered into an agreement with Airbnb that was estimated to potentially earn the city up to $1m in occupancy tax revenue a year. In exchange, Airbnb worked to get Jersey City officials to implement rules legalizing short-term rentals. Airbnb touted its work with Jersey City as an exemplary partnership, highlighting it at length in PR materials concerning regulations in the following years. At the time of the agreement, Jersey City officials lauded Airbnb and explicitly encouraged the use of the platform generally in statements issued at the time.

City officials now say that the legalization of short-term rentals was a grave mistake. When the deal was struck in 2015, there were around 300 active Airbnb listings in Jersey City. Within one year, that number had grown to roughly 2,000, according to an Airbnb press release from December 2016. At present, there are upward of 3,000 Airbnb listings in Jersey City, the majority of which are whole-home rentals—where the owner isn’t present during the guests’ stay—and are operated by hosts that run multiple properties, according to data from Inside Airbnb, an independent site tracking the company. (Airbnb questioned the methods used to collect the data, but did not provide WIRED with any evidence disputing the claims.)

Officials say that the boom converted precious housing stock into de facto hotels, resulting in higher rents, quality of life issues in neighborhoods plagued by transient occupants, and an exacerbated housing crisis. It’s a concern echoed by many cities, as local government officials around the nation grapple with how best to handle the increasing popularity of short-term rental platforms like Airbnb, HomeAway, and VRBO in high-tourism areas.

In June 2019, the Jersey City council introduced a new ordinance aimed at remedying these issues. Starting in January 2020, rentals of a whole home or apartment where the owner isn’t present are capped at 60 days a year; renters are largely barred from listing their homes on platforms like Airbnb and HomeAway; and short-term rentals are banned in many multifamily buildings, among many other provisions. The ordinance passed, but Airbnb poured money into the city to gather resident signatures in opposition. Within 20 days of the ordinance’s passage, the company gathered more than 20,000 signatures, forcing a referendum.

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The referendum went 70% against AirBnB (on a pretty small turnout; 26,000 votes total, and only 8,000 pro-AirBnB, which makes the 20,000-signature thing look a bit odd). Neighbours tend not to like short-term lets, and until you get a city to being 50% AirBnB “hosts”, there’ll always be more neighbours than hosts.
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“The @AppleCard is such a fucking sexist program… • Thread Reader App (via Twitter)

David Hansen found his wife assigned a different credit limit on her Apple/Goldman Sachs credit card, even though he and she are essentially the same financially – though she, it turned out, has a higher credit score than him:

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So let’s recap here: Apple offers a credit card that bases its credit assessment on a black-box algorithm that 6 different reps across Apple and GS have no visibility into. Even several layers of management. An internal investigation. IT’S JUST THE ALGORITHM!

So nobody understands THE ALGORITHM. Nobody has the power to examine or check THE ALGORITHM. Yet everyone we’ve talked to from both Apple and GS are SO SURE that THE ALGORITHM isn’t biased and discriminating in any way. That’s some grade-A management of cognitive dissonance.

Apple has handed the customer experience and their reputation as an inclusive organization over to a biased, sexist algorithm it does not understand, cannot reason with, and is unable to control. When a trillion-dollar company simply accepts the algorithmic overlord like this…

What’s even worse is how complete and unquestioned the faith of these Apple reps were in the wisdom of THE ALGORITHM. To be point of essentially credit shaming my wife, assuming her score must have been lower than mine, and roping us into a TransUnion shakedown to check.

So yeah, I completely stand by my original charge: @AppleCard is a sexist program. It does not matter what the intent of individual Apple reps are, it matters what THE ALGORITHM they’ve placed their complete faith in does. And what it does is discriminate. This is fucked up.

It’s also fucked up how they chose to raise my wife’s limit without ever addressing the root of the issue. Let’s just, essentially, bribe one loud mouth on Twitter, then we don’t have to actually examine our faulty faith in THE ALGORITHM…

This is the soft undermining of people’s sense of self. The algorithm might discriminate out of biased historical training data, faulty but uncorrectable inputs, programming errors, or malicious intent. You’ll never be able to know.

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Lots (and I mean LOTS) of people on Twitter thought this was (a) simply about gender discrimination (b) were happy to say “well, I’m sure that the banks must have good reasons, who are we to argue?”, thus demonstrating that they’d entirely missed his point – and also reinforcing it.

(Thread Reader App, by the way, creates a page of a thread: you respond to any tweet in a single person’s thread with “@threadreaderapp unroll” and it puts them onto a single page. Very useful.)
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British electricity since 2012 by Andrew Crossland • Infogram

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The charts below show the energy mix each year. Note how coal is being squeezed out by gas and renewables.

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I’d say that the thing to note is that consumption has gone down enormously – from 318TWh in 2012 to 272TWh in 2018, a fall of 15% – even while GDP has risen. Obvious question: is that due to a decline in manufacturing (especially steel) output, which is especially reliant on electricity? Hard to find clear data immediately, but it looks like output has stayed essentially the same.
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Errata, corrigenda and ai no corrida: none notified