The Low-Down: 2018-04-15

Apr 21, 2018

Has Big Data Become a Sham?

The co-evolution of complementary technologies like artificial intelligence may render the gathering of big data obsolete. JL

Brian Millar comments in Fast Company:

Organizations are hoarding data in the hopes they’ll point artificial intelligence at it and uncover undreamed-of insights. Big Data promised that each of us would become a special snowflake, all on our own. It’d tailor messages and recommendations specifically to each of us and create products that fit us like a suit. (But) 73% of all data gathered in organizations is not used."Major decisions are based on only a tiny sampling of data. You don’t always need a ton of data to find the right insights. You need the right data."

Affinity appears to be based on neural as well as social influences. And they can be modeled. JL

Natalie Angier reports in the New York Times:

New research suggests the roots of friendship extend even deeper than previously suspected. Researchers were able to train a computer algorithm to predict the social distance between two people based on the relative similarity of their neural response patterns. The brains of close friends respond in similar ways. The neural response patterns evoked by videos proved so congruent among friends, compared to patterns among people who were not friends, that researchers could predict the strength of two people’s social bond based on their brain scans alone.

Convergence is local as well as global. JL

AJ Katz reports in Ad Week:

The ability to offer a secondary content distribution platform for locally produced content to capture audience, advertiser revenue and to extend their brands makes OTT (over the top) an attractive proposition. National usage has tripled to 15 million OTT-only households since 2013. 62.5% of U.S. TV households (74 million) now have at least one digital streaming service, an internet-enabled video game console or an internet-enabled smart TV.

They are not the category leader in features, functionality or innovation. Which means their pricing status as the most expensive is unjustified in customers' minds.

The logical thing would be to reduce the price while improving the performance so that you can raise price later. But Apple is a proud organization, unaccustomed to taking lessons from others. JL

Jeremy Bloom reports on Thinknum:

Previous Apple tech - the iPhone, the iPad, the Apple Watch - brought something new to the category that leapfrogged the competition, but they failed to do that here. It costs too much - $349 vs Amazon and Sonos products that cost less than half that (you can get an Echo smart speaker for $99 and an Echo Dot for just $50). Apple's digital assistant, Siri, can't do as much as Amazon's Alexa "They've had all the components, but they're bringing them to market three years after Amazon."

Effective enough. JL

Sander van der Linden reports in Scientific American:

A model using Facebook likes (170 likes on average), predicted factors such as gender, political affiliation, and sexual orientation with impressive accuracy. Digital footprints can be leveraged for mass persuasion. Across three studies with 3.5 million people, psychologically tailored advertising, i.e. matching the content of a message to an individuals’ psychographic profile, resulted in 40% more clicks and 50% more online purchases than unpersonalized messages.

The point is that precision matters less than thought process and underlying principles. JL

Lionel Laurent reports in Bloomberg:

What’s the value of a cryptocurrency made of code with no country enforcing it, no central bank controlling it, and few places to spend it? Is it $2, $20,000, or $2 million? Can one try to grasp at rational analysis? How can something be worth $20, $600, and $15,000 within the same theory? One key reason stems from what we don’t know than what we do know. Those with long memories remember the quantitative analyses that underpinned the hot new asset classes of the past, from dot-com stocks to securitized art. It means science and snake oil, side by side.

How Alexa Is Spurring Brand Competition In the Race For AI Compatibility

Even though Google Assistant is reputed to have more advanced AI, will Amazon Alexa's head start translate from first mover advantage into dominance? JL

Allie Shaw reports in Venture Beat:

Alexa sales are so high for a reason. Hundreds of products from a range of brands integrate seamlessly with Alexa, allowing voice control on everything from light bulbs to washing machines. This connectivity lets customers build their own smart home according to what they need and want. The number of compatible devices separates Alexa from other AIs (like Siri and Google Assistant), and the rate of growth in the AI market could leave brands that won’t integrate with Alexa in the dust.

When demand for the trajectory of financial performance is expected to be greater than that for innovative creativity. JL

Jonathan Vanian reports in Fortune:

Google's factory X created a tool intended to solve a common complaint in IT departments—an overwhelming number of cybersecurity alerts. The software uses machine learning to filter out false alarms so that technicians concentrate on only the most important. Alphabet’s chief financial officer wants X to tackle projects that have a better chance of turning a profit. Software for a $93 billion global information security market fits the bill, aligning with a strategy to diversify its revenue and become a stronger rival to Microsoft and Amazon.

Television in its original form was also free.

And the internet was created, in part, by people motivated to break the ruling oligopoly it created. Sound familiar? JL

Feld Thoughts comments:

We are getting a first taste of how difficult it is for a world in which humans and computers are intrinsically linked. Is the problem (with Facebook) the leadership of Facebook, the people of Facebook, the users of Facebook, the software of Facebook, the algorithms of Facebook, what people do with the data from Facebook, or something else. Just try to pull those apart and make sense of it.

No one has gotten rich betting against Apple. Yet. But market saturation is becoming a fact of life.

And like Microsoft's reliance on Windows, there is growing concern that Apple has no sustainable second act. JL

Ian King reports in Bloomberg:

Apple Inc. and a slew of chipmakers fell after Taiwan Semiconductor, the leading chip manufacturer for the smartphone industry, issued a growth forecast that rekindled concerns the handset boom is waning. Taiwan Semiconductor predicted sales for the current quarter will be a billion dollars less than analysts had projected. That followed a report by the International Monetary Fund saying smartphone shipments declined for the first time, a reminder that the best days may be in the past.

How one investor's technological optimization becomes another's profit margin interference. JL

Alexander Osipovich reports in the Wall Street Journal:

Big investors say HFT erodes their profits. That’s because prices often drop when a large player is selling, or rise when the large player is buying—a phenomenon called “slippage” that’s often blamed on speedy traders. Slippage is “a multibillion-dollar-a-year problem” for the hedge-fund industry. Billionaire Steven A. Cohen is backing a startup that aims to prevent high-frequency traders from eating away at the profits of stock-pickers like himself.

Data show that optimizing performance means optimizing talent sooner rather than later. JL

Mike Barriere and colleagues report in the McKinsey Quarterly:

Companies that pinpoint value enablers find 60% are two layers below the CEO, and 30% are three layers or more below the CEO. The talent-related practice most predictive of winning against competitors was frequent reallocation of high performers to the most critical strategic priorities. "Fast” talent reallocators were 2.2 times more likely to outperform their competitors on total returns to shareholders than slow talent reallocators

Why Microsoft Is Putting Old Nemesis Linux In New Chip

The enemy of my enemy is my friend. JL

Shaun Nichols reports in The Register and Jay Greene reports in the Wall Street Journal:

To head off cyberattacks like the one that took down Twitter and Netflix, Microsoft is deploying widely used operating-system software. It won’t, however, be Windows. Microsoft plans to embed Linux, a rival technology former Chief Executive Steve Ballmer once called a “cancer,” in a new design for millions of internet-connected devices.The platform is Microsoft's foray into the trendy edge-computing space, while locking gadget makers into cloud subscriptions.

So it appears, new economy hype to the contrary, that selling homes is more profitable than selling information about homes. JL

Katie Roof reports in Tech Crunch:

Real estate platform Zillow changed up its business model, announcing that it plans to purchase and sell homes. This is a marked business change for the website, which is mainly a hub of information about real estate properties. Buying up homes will provide added costs and risks, so some investors didn’t like it. Shares fell 7% following the revelation.

When, on second thought...JL

Aaron Mak reports in Slate:

The feature, according to the screenshots, is part of a new “confidential mode” that also allows people to have recipients verify their identifications via text message and prevent emails from being forwarded, downloaded, copy and pasted, or printed. Facebook announced last week that it would be adding an “unsend” feature for all Messenger users after it was revealed that CEO Mark Zuckerberg and other executives had such an ability.

In the digital era, superficial attempts 'greenwash' won't work. The price of exposure for being inauthentic is higher than that of taking a controversial stand.

The enterprise leader has to lead - and the organizational response must be systemic, not episodic. JL

Dan Tynan reports in Ad Week:

“You can’t put the burden on your social media manager to tell the world how you feel." The message has to come from the top. It’s not enough to put out the right statements or endorse the right issues. Brands need to put their money where their messages are and take action. Companies live with old assumptions about who their customers are: bands can no longer count on customers remaining loyal. "It’s not a question of ‘I’m supporting a social cause because I want to create loyalty.’ You do it because it’s the right thing to do.”

FOMO - fear of missing out. JL

Eliot Brown reports in the Wall Street Journal:

SoftBank is injecting billions of dollars into tech, causing deep-pocketed global investors - and U.S. venture firms - to respond. A record level of late-stage money is flooding in, threatening to keep some startups out of the public markets even longer while heightening concerns that the sector is overvalued. The flood of money is richest for late-stage startups, but is starting to trickle down to younger companies. “We’re encouraging the excessive use of capital. We’re all doing it because it’s the game on the field.”

Personal information has been monetizable for some time. The question now, as the value of that data becomes clearer, is whether the current ownership model can survive. JL

David Floyd reports in Investopedia:

In the year 2022, $7,600 worth of personal information will be bought and sold per person. Data brokers just aren't that good at it. Matching cookies based on device IDs has a success rate of 2.9%. "The data that are publicly available, which can then be scraped by a broker, only amounts to 10% of the data a user creates. The rich information, such as likes, posts, check-ins, is off bounds." The data in silos or held by giant corporations is underutilized. The threat blockchain and other cryptographic techniques pose to data brokers is more immediate than the threat they pose to platforms.

A Powerful New Weapon In the Fight Against Shoddy Statistics

In a data-driven era, inaccurate interpretation can be as or more devastating than bad data. JL

Natalie Wolchover reports in The Atlantic:

The bulk of applications of the Pearson correlation coefficient are invalid. Often where it’s conclusions are not supported by the data. Health data, financial data, astrophysical data, meteorological data: People use (it) whether there is any plausibly linear relationship between the variables. We’ve been aware of the need for a correlation coefficient that can be applied regardless of whether there is a linear or nonlinear relationship, and can be applied when we have batches of variables on both sides.

An innovative approach to the confluence of research, technological development, marketing and national policy.

The question is whether, in the post-Brexit era, the UK still possesses the moral, legal and diplomatic authority to make it work. JL

James Vincent reports in The Verge, illustration by Alex Castro:

Between 2012 and 2016 the UK invested $850 million in AI, making it the third highest investor. But this pales in comparison with the $2.6 billion invested by China and the $18.2 billion invested by the US. The UK (should) “forge a distinctive role for itself as a pioneer in ethical AI" to play to its “particular blend of national assets,” and guide global development in the field. “An ethical approach ensures the public trusts this technology and sees the benefits of using it. It will also prepare them to challenge its misuse.”

The finding is potentially revolutionary because it says, in effect, that Apple does not own the product after it sells it.

That contention, if it upheld across products, companies, industries and nations, may upend the financial and legal basis on which almost all software driven products are now sold. JL

Jason Koebler reports in Motherboard, photo by Fixit:

Apple wants monopoly on repairs so they can keep high prices. They do not want to sell spare parts to anyone other than ‘to themselves.’Broken parts—with original manufacturer logos—are sent back to China to be refurbished and (then) to independent repair companies. Are those “counterfeit” or are they refurbished genuine parts? "It is not obvious to the court what trademark function justifies Apple’s imprinting the logo on so many internal components." “Apple does not ‘own’ the product after they have sold it. Others have the right to remove the logo and sell it as an unoriginal, compatible part.”

It's hard to scale originality. JL

Kyle Chayka reports in Re/code:

“Echo” is a good name for Amazon’s device because it creates an algorithmic feedback loop in which nothing original emerges.Alexa, how do I look? You look derivative, Kyle. We are moving from a time of human curation to a time in which algorithms drive an increasingly large portion of what we consume. This impacts not only the artifacts we experience but also how we experience them. If we do want to avoid reassigning our desires and creativity to machines, we become a little more analog.

It is not clear that investors and consumers will want to turn all of their financial needs - and data - over to Goldman, once described as 'the great vampire squid wrapped around the face of humanity,' anymore than they would want Facebook to manage their privacy concerns.

But internet marketing is nothing if not persuasive. JL

Liz Hoffmann and Peter Rudegeair report in the Wall Street Journal, vampire squid photo by MBARI:

Clarity Money’s app is to serve as the smartphone storefront for Goldman’s suite of retail products, which include wealth-management tools, home mortgages, point-of-sale loans and insurance policies. (It) uses algorithms and AI to help consumers lower bills, find a better credit card, and set savings goals. It aggregates information about their bank accounts and spending habits, collects fees for referring them to credit-card and other financial companies. It’s one million users will quadruple Goldman’s customer base.

Only if the 'plug and play' mentality in tech is supplanted by the realization that AI optimization is dependent on a systemic approach to implementation across individuals, skill sets, professions, processes, organizations, cultures, industries and global networks. JL

Erik Brynjolfsson and colleagues report in MIT Sloan Management Review:

The broader economic effects of AI, machine learning and associated new technologies stem from their characteristics as general purpose technologies: They are pervasive, improved over time and increases productivity by spurring complementary innovations. As with other transformative technologies, such as electricity, steam engines and IT, realizing the benefits of AI is not automatic, nor fast. Technologies with widespread potential require major adjustments to business processes, capital infrastructure and job design to realize their full economic value.

Google Creates Way for Artificial Intelligence To Isolate Voices In a Crowd

So much for blending in to the crowd. JL

Jeff Dunn reports in ars technica:

Google researchers attempted to replicate the cocktail party effect, or the human brain's ability to focus on one source of audio while filtering out others—just as you would while talking to a friend at a party. Google read the "face thumbnails" of people speaking in each video frame and a spectrogram of that video's soundtrack. The system is able to sort out which audio source belongs to which face

As services become more important to financial performance, companies are becoming more insistent that users of their hardware adapt their own brands.

Given rising negative attitudes about tech, the question is whether this will drive demand or spark resistance. JL

Tripp Mickle reports in the Wall Street Journal:

The tech giant is trying to accelerate the growth of its services business, which includes Apple Pay. Apple is nagging iPhone users to enroll in its mobile-payment service with a persistent red-circle badge. The strategy has worked with some, but is irritating others who say it is heavy-handed and exploits the tech giant’s clout in ways that could disadvantage rivals. The Apple push reflects how tech titans are using their own devices, software or data to promote their businesses. “It’s really antitrust behavior.”

Perhaps the most interesting implication is that citizen journalism is creating a 'little guy vs the system' dynamic that is shaking up journalism, but more to the point, scaring traditional powers, whoever they may be. JL

Justin Peters reports in Slate, photo by Missy Depino on Twitter via Daily News:

This story would not have been a story without Twitter and YouTube. “Two men ejected from Starbucks” is not the sort of hook that would have captured the imagination of a city editor. (But) mainstream media now regularly embed nonjournalists’ news-adjacent tweets, images, and videos into the stories they publish. These civilians set mainstream media’s news agenda rather than the other way around. Individual videos make incidents impossible to ignore. The corpus of videos ties each video into a broader systemic story.

Fortune 1000 companies are spending $2.4 billion annually managing privacy.

Which, given the potential losses in market cap, fines and opportunity cost, may be too low. JL

Marty Swant reports in Ad Week:

Businesses are deploying gatekeeping CPOs tasked with not only setting privacy strategy, but also protecting customers’ interests—while navigating the shifting landscape of regulatory compliance. 79% of institutions worth $10 billion or more have installed a privacy executive; while those worth between $15 billion and $25 billion say 81% have. The International Association of Privacy Professionals (IAPP), a nonprofit group focused on privacy, saw membership jump 40% to 35,000 this year.

It appears many cryptocurrency owners who embraced the magic fairy dust notion that crypto 'could not' be traced - or taxed - by governments are learning the hard way that anything which happens on the web involving data is, in fact, fair game.

All that noise about internet privacy recently? Yeah, that concerned ostensibly savvy investors, too. JL

Jessica Klein reports in Motherboard:

The IRS has clarified that virtual currency is to be “treated as property for US federal tax purposes,” meaning any gains between the time bitcoins were bought and when they were sold must be treated as capital gains. Crypto holders might not realize that every trade they make is taxable, and many exchanges don’t provide detailed transaction histories. Values have dropped and people who hadn’t turned their holdings into cash face the reality of owing money for 2017’s gains while paying with 2018’s coin values.

Forget government regulation as a threat. Congress seems unable to understand the internet, let along agree on what the problem is - and nevermind what should be done about it.

The real challenge to big tech - as it has been since the dawn of the dotcom era - is disintermediation. The very size of the FAANG companies, their pricing and thwarting of innovation, has made them ripe for the disruption that they presented to their predecessors. Revolutions always end up eating their own. JL

Matteo Zago reports in Medium:

Web 2.0 provided a fertile ground for corporations to monopolize control and profits. (Blockchain) will facilitate the decentralization of the World Wide Web, equalizing control and ownership. Immutability allows consumers to interact directly and costly financial process can be automated via smart contracts. DApps trade unused storage capacity across desktops, servers and storage devices in exchange for tokens. It will cost a fraction of what centralized storage platforms are offering

US Food and Drug Administration Approves AI Software Making Autonomous Diagnoses

The algorithm will see you now. JL

Angela Chen reports in The Verge:

For the first time, the US Food and Drug Administration has approved an artificial intelligence diagnostic device that doesn’t need a specialist to interpret the results. The software is autonomous and there’s “not a specialist looking over the shoulder of [this] algorithm. It makes the clinical decision on its own.” These diagnoses could be more convenient for patients (and more accurate than doctors). But not having a specialist raises the question of who will be responsible when the diagnosis is wrong.

Becoming a transportation and transportation services company offers more opportunity for monetization than simply being a ride-hailing company. JL

Luz Lazo reports in the Washington Post:

Uber’s move to acquire Jump signals the company’s willingness to continue to expand its reach beyond its core ride-hailing services. Uber has been working to partner with fixed transit systems and pursuing autonomous vehicle ventures, food delivery services and now bike sharing. “We’re committed to bringing together multiple modes of transportation within the Uber app so you can choose the fastest or most affordable way to get where you’re going, whether that’s in an Uber, on a bike, on the subway, or more.”

The big question is whether forcing corporations to reveal such information will actually change hiring and compensation behavior. JL

Vanessa Fuhrmanns reports in the Wall Street Journal, photo by Ng Guan in AP:

Between 2000 and 2015, American multinationals hired 4.3 million people in the U.S. but added 6.2 million overseas. U.S. multinationals in 2015 employed 28.3 million people domestically and 14.1 million abroad.“It’s another beneficial outcome of the pay-ratio disclosure. It’s more insight into how companies deal with their human capital, and that’s material information for investors.”

Despite everything, numbers rule and money talks. JL

Sandra Upson reports in Wired:

“It’s the two billion users." No other platform has the reach and the variety of ad formats that Facebook can offer. Facebook and Google combined will account for 65% of digital ad revenue in 2018. People spent 53 minutes per day on the platform in the first quarter of 2018, down from 58 minutes a year earlier. No other social platform comes close. Snapchat('s) in second place with 33 minutes per day. Facebook is appealing to marketers as long as people keep using the platform, which for the most part they are.

That company reorganization in the late 90s ended the standard Silicon Valley wealth creation train, despite its subsequent success. JL

Tom Metcalf and Anders Melin report in Bloomberg:

Chairman Art Levinson is the only insider to make the cut, and Apple stock accounts for just 20% of his fortune. The rest comes from his tenure at Genentech Inc., where he was chairman and CEO, and an early stake in Google. Tim Cook has $600 million. The iPhone-maker also has been selective with acquisitions (and) relatively small insider holdings since its recovery from the brink of bankruptcy in 1997 "messed up the cap table.”

In reality, the best way to optimize knowledge derived from data is through the effective application of judgment. JL

Jerry Muller comments in Knowledge@Wharton:

Growing opportunities to collect data, and the declining cost of doing so, contribute to the belief that data is the answer, for which organizations have to come up with questions. Human judgment — based on talent and experience — has become unfashionable. Measurement is in. (But) measurement is not an alternative to judgment: measurement demands judgment. Judgment about whether to measure, what to measure, how to evaluate the significance of what’s been measured, and to whom to make the measurements available.

Could Overblown Expectations for Autonomous Cars Cause Next AI 'Winter'

Artificial intelligence has gone through several cycles of belief and disappointment which affected funding and progress. It may be about to enter another one. JL

Frank Palermo reports in Venture Beat:

There have been two major AI winters so far: 1974-1980 and 1987-1993. These resulted from underestimating the difficulties in building intelligent machines and misunderstanding the technological limitations of the time, a mismatch between end users’ expectations and what the technology could achieve. As a society, we’ve never had a clear benchmark to align the capabilities of AI and the reality of the technology. If we want AI to continue to make progress we need one quickly.

It's hard to say right now. But it's something to which some thought should be given because it's likely to happen. JL

Raya Bidshahri reports in Singularity Hub:

It’s hard to imagine what our stream of consciousness will feel like when we can process thoughts and feelings 1,000 times faster, or how artificially intelligent brain implants will impact our capacity to love and hate. What will the illusion of “I” feel like when our consciousness is directly plugged into the internet? Overall, what impact will the process of merging with technology have on the subjective experience of being human?

There are limits to human performance? Say it ain't so! JL

Robbie Gonzalez reports in Wired, photo by Dan Riedlhuber in the St Albert Gazette:

Advances in training, technology, nutrition, and, yes, drugs, have fueled a dramatic upward trend in world-record athletic performances, from the marathon to the long jump to the 50 meter freestyle. But when it comes to hurling a five-ounce, leather-wrapped sphere as fast as possible, humans have plateaued. When the arm flings back, the shoulder ligaments experience 100 Newton meters of torque. At those forces, pitchers are throwing their arms off. The odds of them throwing much faster seem slim. Which may be a good thing, as fastballs are already at the limit of what batters can hit.

Tech innovation for mainstream autos. Not from Detroit or California, but from China. Get used to it. JL

Zac Estrada reports in The Verge:

Ford is living up to the promise of connecting its cars by equipping the new Focus with a mobile hotspot and offering an app to perform functions such as locking and unlocking the car. And a mild hybrid version of the Focus is expected next year in markets such as Europe. The mainstream Focus models for this country will come from one of its plants in China — rather than the Michigan plant that makes them now, or the plant in Mexico that was originally supposed to supply North American Focus demand.

If has been supplanted by how and when. The question is to what degree their business will be impacted - negatively or positively. JL

Christopher Mims reports in the Wall Street Journal, photo by Richard Levine in Zuma Press:

The laissez-faire environment in which they have operated is for the first time plausibly coming to an end. Facebook may be making most of the headlines right now, but Apple, Google and Amazon also are likely to face emboldened regulators who make rules not just for what companies do with our data, but for the devices that gather the data in the first place.

Very few people could understand what Steve Jobs was talking about when he presented the iPod.

Context matters. As does vision. And don't forget patience. JL

Greg Satell reports in Digital Tonto:

When Peter Drucker first met IBM CEO, Thomas J. Watson, “He began talking about something called data processing and it made absolutely no sense to me." Things that truly change the world always arrive out of context for the simple reason that the world hasn’t changed yet. They need to build up ecosystems and identify meaningful problems to solve. That takes time. Drucker may have thought Watson was a bit of a nut, but he kept talking to him. Today, both are considered visionaries.

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