In “Economics 101”, there’s a general sense that demand and supply have an ebb and flow to them. The general understanding is that if demand is high and supply is low, prices rise. But this price rise, in turn, encourages more suppliers to come meet that demand.

What this simple model fails to account for, however, is how dramatic differences in outcome are depending on how flexible the supply is.

When supply is flexible, increasing demand can result in an increase in supply. So if a government has a policy goal of increasing supply, they can take steps to increase demand. They can place big advanced orders for solar panels, for example, so that producers have the confidence to ramp up production. Or they can provide subsidies to households to buy them, again with much the same effect.

When supply is in-flexible, however, increasing demand just makes everything worse. Direct purchases, as we discussed two weeks ago, just reduce private supply. Governments often give subsidies, or worse, give or guarantee loans for things with in-flexible supply. In the US, for example, top-tier college places are limited (almost by definition, if exclusive status is part of what they sell), but the Government provides loans to prospective students, and prices have spiralled. Letting people get into debt to compete with each other, or giving subsidies, when supply is in-flexible, usually translates into price increases roughly equal to the loan-limits or subsidies.

To try counteract this phenomenon in the housing market (which has very in-flexible supply right now), the European Central Bank makes it harder for buyers to compete with each other by going deeper into debt, with lending limits and minimum deposit requirements.

In 2016 the Irish Government introduced a Help-to-Buy scheme, which sought to skirt the deposit requirements for some first time buyers by having the Government pay half of it. Despite criticisms you might expect based on the logic above, they expanded the scheme to cover (up to) the entire deposit in 2020.

The Parliamentary Budget Office has just published an analysis of the scheme, finding that it caused house prices to rise (a small amount), cost 43% more than planned and mostly subsidised expensive houses, where a third of recipients didn’t even need the cash to meet the 10% deposit, but got it anyway.

Will it be renewed in the upcoming budget? Expanded is my guess.

📰 News

Selling AIB | The Irish State emerged from the global financial crisis owning much of the country’s retail banking system, after having to rescue it. I had hoped someone would come up with proposals to do something fun or interesting with even one of the banks, like an infrastructure bank or a strategic investment bank tied to an ambitious industrial policy. Alas, since no such plans materialised, I guess the second best option is to sell the bank and use the cash where we do have ambitious plans.

After a pause during COVID, the department of finance has resumed selling our two thirds ownership of AIB, with the minister explaining that “the Irish Government believes that banking is an activity that should be provided by the private sector and that taxpayer funds which were used to rescue the banks should be recovered and used for more productive purposes.”

Peak Employment | Under the category of good news phrased as bad news, “Economist Kieran McQuinn of the ESRI has warned that the national unemployment rate will fall to 4% next year, fuelling sharp wage increases.”

💡 Interesting Links

Team Transitory  | Some good signs on inflation which would indicate that major supply constraints are getting resolved. Rates for shipping containers are falling (but still a long way off pre-pandemic levels) as are some commodity prices. Could be a blip though, still too early to spot a trend.

Whiplash | If you feel like we’re living in bizarre economic times, the Bank of International Settlements’ Annual Economic Report might help you understand why (or at least confirm that your feelings are accurate). Adam Tooze writes:

“In the last 18 months we have seen the fastest global growth in 50 years, followed by the most rapid slowdown, creating what is in the BIS’s view, a global economic configuration unprecedented in history. 

Specifically, we have never seen such a combination of already rapid inflation and rapidly slowing growth with elevated financial vulnerabilities, notably high indebtedness against a backdrop of surging house prices.

The BIS remarks that “(t)he absence of historical parallels makes for a highly uncertain outlook”.

In the current conjuncture, if you aren’t puzzled you don’t get it. This isn’t your common or garden slowdown. Admitting to disorientation is a sign of honesty and realism.”

Childcare Costs | The economist published this chart showing the amount an average couple spends on childcare, as a percentage of their disposable income. Look at Germany! The last numbers I saw on this in Ireland (in 2019) put us at 29% for a couple and 42% for a single parent. 

They also share this tidbit – “Compared with other countries, Britain has a relatively high share of mothers in part-time work. One recent study estimated the gains from shuffling men and women according to aptitude, pulling productive women into work and kicking unproductive men out. Astonishingly, it calculated that Britain’s average output per worker could be as much as 30% higher.

If you were to design a country’s economic model from scratch, there’s a few different places you could start. You might, for instance, start by broadly thinking about the society you want. You’d consider your values and goals, and those of your fellow citizens. You then consider what economic tools and practices have the best track record for achieving those goals.

If you’re thinking about how your economy should deliver healthcare you’d start by saying, for example, “fairness is a key value and a top priority of ours”, and so your goal is probably to provide healthcare on the basis of those who need it most, or where treatment provides the biggest improvement, rather than to those who can most afford it. So you might decide that the state should build and run the hospitals. 

On the other hand, “liberty” or “freedom” might be an important value of yours. You might try to express these values by giving people within your society a good range of personal choice, so you might want to create a price-based market for chemists, or non-essential healthcare like orthodontics.

If I was to sketch that approach as a simple framework, it might look something like this:

You start with your values and goals at the top level, then pick the tools and practices that help deliver on them. I’ve highlighted in green where I think “Capitalism” sits in this model – a collection of Tools & Practices, like ‘price-based markets’, ‘free movement of capital’, ‘stock markets’, ‘corporations’, etc..

I think this framework describes broadly the approach of modern progressives, or Democratic Socialists or Market Socialism.

Another place to start when designing your new economy is to say that the tools of Capitalism provide economic growth and prosperity, but it needs a complimentary political system to moderate it’s excesses and redistribute it’s wealth, or to fill in the gaps that Capitalism can’t address. We have Economic issues (the realm of Capitalism) and Social issues (the realm of Government)

In this framing, “Capitalism” is both the tools and the goals. It is the underpinning of all things in the realm of the economy and wealth generation. A social system runs alongside it. Your values might dictate the interaction between the two pillars, even if the contents in each pillar are constant:

This is the framing I believe most of the political centre in Western countries take. Politics is framed as a balancing act between the two. I mostly think this is what “liberals” mean when they talk about Capitalism. A finance sector can earn globs of money, pay some tax, which can fund an NHS. The thinking comes from “the right”, but Bill Clinton and Tony Blair and Barack Obama were electorally very successful operating within this framing.

A third approach to designing an economy might be to start with Capitalism as your overall ideology and value set. “Capitalist” is what a country should be. Competition is a core value. Those who have more (because they earned it), get more. Government should be subservient to, and act in service of these values, to defend them with police and armies and rule of law, with enforcing contracts and paying for schools to educate future workforces. Social benefits happen when the Government gets out of the way.

I’m not sure that any modern country operates in this way, but I do believe that it has been a very dominant narrative about how Western countries do (or should) operate. To me, this is the “Capitalism” definition of Regan and Thatcher – something more than just a set of tools or goals, it is a value system and an ideology that must underpin everything.

In many ways, I think “Capitalism as an Ideology” is a powerful framing if you want to shift the balance of power, in the second model, away from the Social pillar and towards the Economic pillar. It makes the question of how you govern Capitalism difficult to ask, and makes a question like “when should you use Capitalism?” seem nonsensical. This is what Regan, Thatcher and others did in the 80s and they were very successful at it. 

They shifted the meaning of Capitalism up the value chain, from just a set of tools, to a set of goals and their underpinning ideology. This frame shift was so successful, and so dominant that I think it’s coming back to bite.

It is the framing used by the strongest critics of Capitalism, which leads to a very common debate these days where people are shouting past each other. Someone, who uses “Capitalism” to mean the dominant economic and political ideology, criticises some element of market failure, or regulatory capture, or inequality and gets a lot of support for this view. Then others, who think of Capitalism as either of the first two definitions, are dumbfounded! To them, this is exactly the opposite of what Capitalism is!

Speaking about the baby feeding formula shortage in the US, for example, author Bess Kalb tweeted recently that “The formula shortage is an example of how free market capitalism does exactly what right wing fear-mongers think socialism will do.”

65 thousand people (and bots, I guess) liked this post, but it (and the many other similar statements), also drove some people crazy, pointing out that Capitalism is about “free markets”, and this is not one!

This is how I think about the competing definitions of Capitalism, and how I try navigate conversations with people when I agree that the current system is badly in need of a change (Capitalism as an ideology), but also that many of the same economic tools (Capitalism as a set of tools) will play an important part of any prosperous future we might build.

📰 News

The (mini) resurgence of unions | This week my various newsfeeds have been full of videos of Mick Lynch, the General Secretary of the UK’s National Union of Rail, and his very effective communication style. If you haven’t seen any, here’s a good sample. This level of social media support and virality echoes the successful labor movements in the US earlier this year, with both Amazon and Starbucks workers unionising for the first time.

The new energy in unions is translating into results too, with Unite having won 75% of disputes since their new leader, Sharon Graham, took over eight months ago, according to a great profile in the Guardian.

These developments are very welcome, in my view, because they come at the end of a decades-long decline in the power of organised labour. In Ireland, for example, the CSO Labour Force Survey found 26% of employees were members of a union in 2021, compared with 33% in 2005.

Within this decline is a notable difference between men and women. Both were at 33% in 2005. In 2021, only 22% of men were union members but 29% of women still were, a number that has remained fairly constant over that period. A UCD Smurfit School report published in the Irish Times last weekend found similar. 

Government Housing | Last week we looked at the economics involved in the state building houses alongside the private market, rather than purchasing housing from within the private market. This week the Land Development Agency has announced a start date for work on 600 state-built houses near the Dublin/Wicklow border. They announced that “on completion, this will be the largest public housing scheme in the State.” More of this please.

💡 Interesting Links

Cassandra | If you’ve watched The Big Short, Michael Burry was played by Steve Carell in the movie that showed him predicting the crash and great recession of 2008. He’s still quite an active commentator and in the last year or so he has been ringing the alarm bells again. He argues that, because the economy was dramatically inflated beyond its actual, underlying productive capacity, we are only just getting started on a large market drop and ensuing recession. This video is a good summary of his arguments, and a good articulation of the worst case scenario.

Engineering Unemployment | Inflation is high because lots of people have spare money, but due to COVID in China, Russia’s war and other supply issues, the world economy isn’t able to make stuff fast enough to meet their demand. It’s possible that even without the supply issues, there would still be more money (and demand) than the global economy is equipped to meet. So too much money and not enough capacity to supply lead to inflation. 

One way to solve this is to fix all of our supply chain problems and invest in our productive capacity but a) that will take some time and b) it’s not something central banks have the power to do. Something they do have the power to do is make people have less money.

Because of this, many central banks have been calling on Governments to do the first set of those things – fix supply constraints. In turn, people have been calling on central banks to make people have less money, by raising interest rates and causing a recession. Larry Summers, the former Treasury Secretary (finance minister) in the US, for example, has called for it quite explicitly:

“We need five years of unemployment above 5% to contain inflation — in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment,”

I think this is a very grim thing to call for, but I don’t underestimate the number of people who might find it appealing. Inflation is broad and hurts everyone a little bit, but unemployment only hurts a small number (a lot). I’m sure the Larry Summers of the world never envision that they’ll be part of the 5% unemployment rate that they’re calling for, and so it could be an argument that gathers steam. 

Luckily, I don’t see either the US Fed or the ECB signalling that they’ll go this far. There’s a big difference between bringing rates up a bit from zero, and deliberately engineering a recession. Let’s hope they don’t succumb to the pressure.

When you apply for a mortgage, the bank needs to decide how much they might lend you. To do this, they’ll look at your income and decide what size of a loan repayment you could afford each month. These payments will be a combination of the house price (divided into monthly payments over 30 odd years) and the bank’s interest.

This pretty much dictates the price of the house you can afford, with only three ways to increase that number:

1. You could have savings in addition to your deposit, maybe through a gift or inheritance.
2. Your income changes. If it goes up, the bank will lend you more.
3. The interest rate changes. If it goes up, your monthly payments go up and so the total mortgage they will lend you comes down.

An interest rate change can have a significant effect. €1,500 per month would get you a €360k mortgage at 3%, but it would only cover a €319k mortgage at 4%. 

That’s a €41k lower mortgage for you if the interest rate increases by one percentage point.

When you start bidding on a house, the upper limit the bank is willing to lend you feels like the most important factor at play, but equally as important is the upper limit faced by the people bidding against you!

This is why the lending restrictions (of 3.5 times your annual salary) are of benefit to every new buyer. If a bank let you borrow 5 times your salary, they’d also do the same for the people bidding against you. The houses wouldn’t get any better, but we’d all end up paying more for them.

The same logic is true for interest rates. If the central bank raises interest rates, and the banks pass that on, then everybody’s upper limit comes down. (Or at least everyone using a mortgage to buy).

This is why people are predicting that house Prices might fall – or at least stop rising so fast – if the ECB raises interest rates. Christine Lagarde has said they’ll raise their rates half a percentage point by September. If Irish banks pass that on (and it’s possible they wouldn’t), it will be half as drastic as my example above.

House prices need to stabilise, and 85% of Irish people want them to fall, but interest rate raises are the least fun way to do that. On paper they fall, but your mortgage payments are still the same (or higher) due to the higher interest payments.

📰 News

Housing Poll | I mentioned above that 85% of Irish People wanted house prices to fall, but the same amount also want first time buyers to be able to borrow more than 3.5 times their salary, which would of course just raise house prices. All this according to a RedC Poll in the Sunday Business Post.

Dublin Airport | Last week we talked about the car rental market and the crazy inflation it’s seeing. They made a very knee-jerk decision to sell off half their fleet in the early stages of the pandemic, things are rebounding faster than expected and they are unable to rapidly undo their mistake. I think this is pretty much the same story with Dublin Airport. They made 248 staff redundant at the start of lockdown and are now struggling to re-hire 300. In car rentals, which is a price-based market, the limited supply went to the highest bidder – a.k.a price inflation. The service of getting your bags x-rayed for a flight isn’t a price-based-market, so provision is on a first-come-first serve basis. Inflation here manifests as queues, which is a good way to think about what might happen if we try to tackle inflation in other areas with price controls.

Inflation | The CSO released their latest inflation figures, broken down by household type. While inflation was 6.1% for higher income households, it was 7.6% for lower income houses. The gap seems mostly driven by fuel and heating (which is a bigger percentage of your spending if you’re poorer) and rents. Coupled 

💡 Interesting Links

Capitalism isn’t very good at restraining resource usage. It drives great efficiency in the amount we can squeeze from a natural resource, but that usually results in us using more, not less. So it’s great to see that, after millenia of expansion, we seem to have gone past the peak of using land for agriculture.

During lockdown I wrote a weekly email covering the important news from the tech sector, summarised and placed in the Irish context. It kept me sane during lockdown, but I paused in 2021 once I started a new job (writing tech policy at TTC Labs).

I’ve missed it dearly, so now I’m resuming the newsletter but with a different topic – the Irish Political Economy. In a similar format as before, I’ll be looking at the week’s major stories in the Irish and Global economy, trying to put them in context and exploring how government policy can help.

If that’s your cup of tea, you can subscribe here. I hope you’ll enjoy!

Why are Car Rental Prices Skyrocketing?

Maybe you’ve seen this tweet from CNN’s Donie O’Sullivan, being quoted almost €2k for renting a car while he’s home in Ireland for a week.

Or you’ve heard stories like this one from my friend Eoin Hayes, whose brother was quoted €10k for a 3 week rental.

€10k is approximately the same price I paid for my Volkswagen Polo, only I got mine for keeps!

To put it mildly, this is wild. It will also potentially have some knock-on effects on the number of tourists who can afford to visit the island this summer.

It’s presumably all COVID related, but what exactly is going on? Why is it more acute in Ireland than other areas? What are the options for getting it fixed and how long will that take?

Is it Price Gouging?

Some of the initial public comments have been to accuse the car rental companies of price gouging. In most other areas of pandemic-related-inflation it is true that many businesses are using the current supply constraints to increase their profits. Still, I don’t think it’s accurate to say that corporate greed *caused* the problem. Many businesses have always been greedy, and they’re certainly *exploiting* the current situation, but their greed didn’t cause it.

There are 13 large car rental companies in Ireland. If greed alone would let them raise prices, they would have done it years ago. Something fundamental has changed to allow them all do this in unison.

A good rule of thumb with inflation is that price rises are the symptom, not the cause.

Answer: They Sold All Their Cars

The standard way to run a car rental business is to borrow some money, use it to buy a big fleet of cars, then earn money by renting those cars out to companies and individuals. Say your monthly loan repayments on a Fiat Panda are €250 per month, but you charge a rental price of €100 per week. As long as you’re renting it out for 3 weeks of the month, you’re in business. Across your whole fleet, the difference should be big enough to pay staff, buildings and other costs, and some profit for yourself too.

In 2020, as the pandemic hit and almost all international travel ground to a halt, this model became very unviable. As long as you owned the cars, you had to make the monthly repayments, but there were no more Americans coming to discover their ancestors, so your Fiat Panda was rented for zero weeks in a month. So you’d have to borrow more money, work out a deal with the bank or sell the car to cover the loan.

According to the Car Rental Council of Ireland, there were about 21,500 rental carsin Ireland as the pandemic hit. By the start of 2022 there were 10,000. They sold over half of the national fleet.

I don’t know much about the rental car market, but I assume a level of buying and selling to match your fleet size to seasonal travel trends is normal, so this might have seemed precarious, but not crazy, at the time.

They Can’t Buy New Cars

As the summer of 2022 approaches, tourism numbers are returning to pre-pandemic levels, but the car rental companies are struggling to replenish their fleet. They bought 697 new cars in Jan 21, for example, but only 369 this January.

The main cause here is that, ironically, the car manufacturers also took an over-sized reaction to the start of the pandemic. When they closed their factories in March 2020, they cancelled all of their orders for microprocessor chips. Or, more importantly, they cancelled their place in the queue for microprocessor chips. Consumer electronics companies jumped in and took their place in the queue, and the queues got longer as chip production itself was also slowed by the pandemic.

All this meant that once car manufacturing plants re-opened, they were at the very end of a very long queue. Add in Brexit and other pandemic supply chain issues, and Ireland imported only 63,317 cars in 2021, compared with 113,926 car imports in all of 2019.

There are other potential compounding factors, such as reports that car dealerships are preferring to sell their limited supply of cars to retailers (at full price) rather than to rental companies (in bulk, at discount), or that so few cars got purchased during the great recession a decade ago, there there is now far fewer second hand cars on the market than normal.

What Next?

As always with inflation, price is the symptom, not the cause, so price caps or price control won’t solve the underlying problem. Or, more accurately, they will just switch the situation from “highest bidder gets the car” to “first in line gets the car”, but it won’t increase the number of people able to rent cars this summer. It would reduce the profits of the car rental companies and keep money in the pockets of tourists, which is fine if that’s your goal, but that could hamper the ability and incentive to rapidly replenish supply.

With no obvious way to quickly increase the rental fleet, the prices are likely to remain high this year and probably next year too. I’m not sure if Government could have stepped in two years ago to provide credit to prevent this – the specifics of the bottlenecks were probably to hard to predict. Alternative supply will be key – including public transport, taxis, tour busses, all of which will feel extra strain from tourism this summer. In some instances, travel bloggers are even renting delivery vans as cheaper alternatives.

💡 Interesting Links

The Market for Electricity Production

In the UK, during the ad break for Deal or No Deal, or at half time in an England game, so many people go to boil the kettle at the same time that the national grid needs to plan for huge surges of energy demand. Spikes like this (called TV Pickup) make it very difficult to balance supply and demand in an energy market, and present challenges as we move to sustainable (but less consistent) sources like wind and solar.

Fergus McCullough has an interesting writeup on the market for electricity production in Ireland. Renewables came from almost nowhere in 2008, to 43% of production in 2020 (image below), but gas still acts as the backbone of supply, able to ramp up and down for every ad break of the Late Late.

Why Income Taxes Were Unexpectedly High

The top rate of income tax in Ireland is 40%. Higher actually, when you include USC and others, but I’ll stick to the simple numbers for this example. If you earned €50,000 last year you didn’t, however, pay 40% of that as tax. This is because we have a progressive tax system, so you pay different tax rates on different portions of income. In this example, you would have paid 20% tax on your first €35k – which is about €7k. You’d only pay a 40% tax rate on the remaining €15k – which is about €6k.

So even though your top rate of tax is 40%, you’d only pay about €13k in tax, which is a  26% effective tax rate. (No more maths after this, promise!)

However, if you got a €5k pay rise last year (congrats!) all of that extra €5k would be taxed at the top rate of 40%. By definition, all salary increases are taxed at your highest rate.

If somebody on a €20k salary got the same €5k tax rate, they would only pay the lower rate of 20% on that raise, as their new salary is still under the threshold.

In 2021, the Irish state collected €4 billion (17%) more in income taxes than was planned for in the budget. Caoimhín Ó Tiománaigh has done some great analysis on this, published in a full report and as a tweet thread, but the summary is that, like in our example above, lots of people got salary increases (and new jobs) and paid the highest available tax rate on them.

This was unexpectedly high, and because all salary increases happen at the margin, the level of income tax collected rose even faster than wages did. Most of this increase happened in higher earning jobs, at the higher rate of tax, so the effect on taxes collected was even more amplified.

As recovery continues into the future, however, it might happen mostly in lower wage sectors (i.e. service industry getting back on its feet), so the report cautions against banking on this outsized effect on income taxes to to continue.

Continued Spiral or Soft Landing?

David McWilliams makes a fairly stark, and grim prediction that inflation will continue at pace in Ireland, followed by a recession. In the US the Federal Reserve is raising interest rates, which will raise the cost of borrowing (including mortgages) and many economists predict this will soften the growth in house prices. McWilliams doesn’t believe the same will happen here, with Ireland’s inflation decoupled from mainland Europe and the ECB unwilling to raise rates because of high energy costs. He predicts house prices (and prices more generally) will continue to soar. It’s 2004 all over again.

Noah Smith is predicting the opposite for the US – a soft landing with a small recession. He shares a few reasons which I thought would be interesting to list below and contrast with McWilliams’ predictions for Ireland:

1. As mentioned above, the US Fed is raising interest rates, and the property market is already showing signs of cooling. Since McWilliam’s article was published, the ECB has signalled potential interest rate increases, but small ones, so that’s a small plus for the “soft landing” column here.

2. In the US, The COVID stimulus has stopped and people are finished spending the money they saved during lockdown. In Ireland, PUP ended in March, and savings levels have dropped in half, but they’re still much higher than the US and spending shows no sign of slowing down. + 1 for McWilliams.

3. Central bank lending in the US is down and the government ran a surplus in April (a.k.a “implemented austerity”), both of which remove inflationary pressure and neither of which are true here.

Comparing both sets of logic, I think McWilliams’ prediction is directionally correct, but the ECB rate increases might (hopefully) soften the blow.

🎧 Podcasts

This week I’ve started listening to Hot Mess, on the Climate Crisis in Ireland, by Philip Boucher-Hayes and RTE.

Hello friend!

I’ve really enjoyed writing these weekly emails since the start of lockdown, and I hope you’ve enjoyed reading them, but after today’s email I’m going to put the project on an indefinite pause. It’s been a wonderful exercise, giving me an excuse and a deadline to read, write and understand more deeply some of the ongoing debates and trends I find most interesting. It’s also opened up a few opportunities for me, which I’m going to invest more time in exploring.

So thanks for all the support and kind words of encouragement!

Speaking of break-ups, both Amazon and Facebook have recently become the subjects of unrequited break-up requests, with varying levels of severity.

The European Commission formally opened an investigation into Amazon in what I think is the smartest approach they could have taken. Many were worried that regulators would focus on their “own brand” products. For example, is it unfair that Amazon Basics batteries are promoted above Duracell batteries?

While it’s true that the move has been bad for Duracell, it’s hard to claim that cheaper batteries have been a worse outcome for consumers. If regulators had charged that Amazon Basics are anti-competitive, then surely that would have applied to Tesco own brand, Superquinn Sausages and St. Bernard Cola. (Those last two might be dated references….)

The Commission hasn’t taken this approach and instead have focused on the fact that Amazon is both the host of their marketplace and an actor within it.

To explain how that works, imagine a standard shopping centre, like the Ilac centre in Dublin. Dunnes Stores is the largest store in the centre, but there are also many other stores in the centre who also sell similar products. H&M, Argos, TK Maxx all sell items similar to what you can find in Dunnes, but this is ok. Dunnes might be the biggest store, maybe even the anchor tenant in the centre. Their lease agreement might stipulate that they’re the only supermarket in the centre, but probably not more than that.

Now imagine that Dunnes also owned the Ilac centre. Not only that, but they also owned all the cash registers that the other stores had to use. This is similar to how Amazon works. When you buy a book on the Amazon website (what they call their Marketplace), you might be buying from Amazon the business, or a smaller, separate business who are selling through Amazon.

The commission have charged that Amazon have been using their knowledge of the sales data of smaller businesses on their marketplace to compete with them unfairly.

This would be like if Apple, because they own the App store, are using what they know about an app like Spotify to the advantage of their competing service, Apple Music. Or like Dunnes having knowledge of every item sold by other businesses in the rest of the shopping centre.

Meanwhile, in the US, the Federal Trade Commission, who approved Facebook’s decision to acquire Instagram in 2012 and Whatsapp in 2014 have voted 3-2 to sue the company to undo these acquisitions.

They have charged that Facebook “has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users.”

This has many interesting angles, in particular because it challenges our traditional concepts of anti-trust. It’s clear how Amazon or Dunnes crushing competition would lead to higher prices, which is the usual standard applied, but how do you calculate consumer benefit when the product is free?

The cost implications of lowered competition would be felt by advertisers through the price they have to pay to reach their target audience. In this case, the question of market dominance all depends on how you define the market. While it’s true that Facebook and Instagram combined have close to 100% of social media advertising, that’s probably closer to 50% of digital advertising, which in turn is 25% of overall advertising.

If your target market is 25 year old college graduates, did the Facebook acquisition of Instagram make it more expensive or less expensive to reach them? From experience as an advertiser, the cost has certainly come down compared with press, radio or TV advertising, but it’s hard to know the counter-factual of how this would have run with an independent Instagram.

More importantly still is the question of whether a break-up will fix any of the problems declared? I don’t think an independent Instagram has a more successful time fighting hate-speech, or election interference or bullying? Maybe they compete more aggressively with each-other on feature-sets, but significantly more so than they are already competing with Snapchat, Twitter, YouTube and TikTok?

The US Governments success probably depends on their ability to paint a compelling “what if” vision for what an independent Whatsapp and Instagram could have become, as significant providers of consumer choice that doesn’t exist. This will be a tough challenge and one that is certainly made harder by the growth of TikTok, which is closing in on 1bn active users.

The suit to break-up Microsoft in the early 2000’s had a similar challenge. Everyone used excel because everyone else used excel. Nobody wanted to use a competing spreadsheet, or word processor, or presentation tool, because they wouldn’t be compatible with Microsoft Office. Splitting Microsoft Office apart from Microsoft Windows probably wouldn’t have changed that – they would have just become two companies with monopoly positions in operating systems and productivity software, rather than one.

More targeted rules to force interoperability and data sharing, to restrict specific anti-competitive practices rather than broad calls to “break them up” will have more positive effect, I would presume. The European approach rather than the US one.

Even those are a difficult balance to strike. I’m old enough to remember when the worst thing social networks could do was share data with third parties for privacy reasons, but now the FTC wants Facebook to stop “imposing anticompetitive conditions on access to APIs and data.”

New challenges and interesting times! This is certainly an interesting set of developments to watch unfold.

📰 News

The general scheme of the Online Safety and Media Regulation Bill has been published ahead of being brought to the house. The bill will look to replace the Broadcasting Authority of Ireland with a Media Commission, which covers both traditional TV and Radio and video-on-demand services. This will mean the RTE player and Netflix will abide by the same rules as TV broadcasters, including the obligation to create News and Current Affairs programming. We’ll also be implementing an EU rule that “video on-demand services to meet a quota of 30% European Works,” which sounds very French.

This org will also have an Online Safety Commissioner, who works with online platforms to fight harmful behaviours. The bill aims to give it some teeth – the ability to criminally charge senior management and fines of €20m or 10% of turnover (which would be $16bn for YouTube, which seems steep!). Link.

Vaccine Priority. The Department of Health have release their list detailing how people will be prioritised for the Covid-19 vaccine. Good to see that they’ve detailed the rationale and ethical principles used to arrive at each cohort’s position on the list. Link.

Pornhub, the largest host of online pornography, updated their policies to further discourage abuse on the platform. Videos, which could previously be uploaded by anyone, can now only be uploaded by verified users. They’ve also beefed up their moderation efforts, licensing tools from YouTube and Microsoft to help identify and remove illegal content proactively. This is a positive move, if they implement it properly, with much room for improvement still left. I’ll stay sceptical until they publish results. It mirrors the broader trend away from a wild-west, laissez-faire internet. Link.

Warner Bros have announced that their entire 2021 line-up of movie releases will each be released in cinemas and online at the same time. This is a dramatic move because of the pandemic, but it’s also the acceleration of a trend that had been happening long before this year. Link.

Privacy vs Security. It’s a painful reality that every time a company allows people to share files online, someone will use it to share child abuse images. Every service that allows people to message each other, someone will use it to groom or blackmail children. These companies actively scan messages and files for this content, but new EU privacy rules will make much of this scanning illegal as of Dec 20th. All policy involves trade-off, but this one is one of the most difficult ones we’ll face over the next few years. Link.

Snapchat Lottery. YouTube pays video creators a portion of the ad revenue it generates on their videos. Most other social platforms don’t pay creators. Snapchat, in an effort to attract creators from TikTok, has announced a lottery. It will give $1m per day to the most popular video on the platform. It’s a very cool approach, I always love to see experiments like this. Link.

💡 Interesting Links

Cities in 2021. As the end of the pandemic slowly comes into view, a prediction that cities will bounce back — but they won’t look like the places we lived in before we’d ever heard of COVID-19. Link.

Digital Charity. How Venmo and Cash App upended a century-old charity model. Link.

Protein Folding. The way a protein folds is very important to the way it functions, or so I’m told. So to understand the fundamentals of that branch of science, I presume it’s important to be able to predict the way a protein will fold. This has been a known-impossibility for the last 50 years, so scientists seem excited that Googles “AlphaFold” AI project has cracked the puzzle. Link.

Written for Robots. The National Bureau of Economic Research says companies are now writing their corporate filings in such a way that bots which scrape and summarise them will generate more positive summaries and conclusions. What a time to be alive. Link.

Breakup Songs. In keeping with today’s theme of breakups, the song “rät” is Penelope Scott’s breakup love letter to Elon Musk and Silicon Valley. Listen on Spotify, YouTube.

In South Africa the lotto numbers last week were 5, 6, 7, 8, 9 and 10! There were 20 winners. Link,

Ten years ago no bank in Ireland had a mobile app. Getting set up for online banking required card readers and letters in the post and sacrificing your first born. The IMF had also just come to town too.

Fast forward 10 years and there are now about 1 million Revolut users in Ireland, transferring rent money, splitting bills, buying rounds (although less of that of late) all as easily as sending a text. Our phones can tap to make payments and I genuinely can’t remember the last time I used an ATM.

Quite a dramatic change from a decade ago, and most of that change has come in the last 3 or 4 years alone. When we think about how different our daily banking and money will be a decade from now, it can be hard to imagine what might change.

The biggest changes to banking will most likely be similar to what has happened in many others – unbundling. The concept of a single, large institution that stores your savings, accepts your salary, allows you to make transfers, assess you for loans and mortgages and has a branch in every village, is possibly coming to an end. All of these various layers of services will be separated out and, if we do things right, each become marketplaces for many new, innovative companies to take their place.

A good analogy is to think of your mobile phone network. It used to be the case that Vodafone built the network infrastructure, handled all the billing systems AND managed all the services, like SMS, phone calls, picture messaging, Vodafone Live etc.

Nowadays the mobile networks are the only providers of the base layers – the infrastructure and the network – with hundreds of messaging, calling and other services on top. Like Whatsapp, Viber, Skype, Messenger etc. Vodafone still does messaging and voice calls, but with lots of competition. They never developed video calling.

A similar trend will happen in banking. The big, core banking functions – namely holding everyone’s money, will probably remain with the large institutions. On the very top layer – the apps that people use on a daily basis – are already emerging, like Revolut and N26. Expect many more of these.

It will be interesting to see if the middle layer – in particular loan making – can become a thriving market for companies too, rather than dominated by the big banks like it is now.

Just like I can be a Vodafone and Whatsapp customer today, I could have my money in AIB, but my credit card, money transfer and loans from three different companies.

This obviously poses some existential questions for the big banks. What do AIB and Bank of Ireland do when their lucrative fee-based services face much more competition. This could also open them up to competition on the other side too – if I use a Revolut-like app to manage my daily banking, do I really care if the funds are stored in Bank of Ireland or another large European Bank? Or even directly with the ECB? Maybe Europe only needs 5 big core banks like Danske and Santander, not 3 or 4 smaller ones in each member state.

All of this is being enabled by European regulation and, as of yesterday, just got a big acceleration when Stripe, the payments company, announced their Treasury service (“Banking as an API”), which will let any young app development company to offer innovative, consumer friendly banking services, but without having to build the infrastructure of a bank.

It’s like how Whatsapp didn’t have to create an entire mobile phone network to re-invent SMS.

This is an exciting service launch, and an exciting few years for the re-making of the banking industry. Link. Link 2.

📰 News

Amazon‘s growth this year is astonishing. They hired 427,000 people in the first 10 months of the year. That’s an average of 1,400 people hired per day. Link.

Google News. This is an interesting development. Google’s deal to pay publishers will include giving readers free access to articles are usually behind a paywall. Seems positive for papers, readers and Google. One to watch. Link.

Microsoft announced an analytics dashboard for their corporate Office 365 suite of tools. This would let bosses see “productivity scores” for their employees. After wide backlash at the Orwellian nature of the service, they have correctly decided to roll it back. Link.

EU/US Tech Strategy. I don’t think it should be surprising that Europe is leading the way in pushing regulations that define how the internet, which operates across all countries, can be shaped by the values and rules of individual countries. The EU by its very nature is an institution built to find common laws that can work across diverse countries and cultures. The ideal next step would be for an alignment between the US and EU, for which Marietje Schaake and Tyson Barker lay out a compelling roadmap. Link.

💡 Interesting Links

In Myanmar, Facebook created their first “country-specific” guidelines for policing hate speech, false information and malicious falsehoods ahead of their recent elections. Early results seem positive. Link.

Captchas don’t prove you’re human, they prove you’re American. Link.

Ikea are using drones in their warehouses to automate inventory checking. Pretty cool. Link.

Stripe (run by the Irish Collison brothers) is creating and funding a market for carbon capture technologies. It’s great to see a company step into a much needed gap here. Much like Governments who agreed to pay-in-advance for Covid vaccines, they’re doing the same for technologies that will capture carbon from the air and sea, to help spur the development. Link.

Anonymizer. Here’s a cool tool, designed to confuse facial recognition tools. Upload a picture of yourself and it’ll use AI generate fake people that look kind-of like you. Like computer generated cousins, which you can then use as a profile picture without compromising your privacy. Link.

If those cookie notices that pop up on many websites were annoying you before, I have bad news for you, because they are only increasing in number and the resolution needed to clear them up is still a while away. From mid-October the Irish Data Protection Commissioner started enforcing the law in this area after a 6 month grace period, which has lead to a significant increase in the number of websites

Although many people blame this on GDPR, the rules are mostly detailed in a slightly older European directive called the ePrivacy Directive. The GDPR just created big fines and enforcement mechanisms, so everyone started to take notice.

I thought it would be good to have a look at the plans to resolve this. The main piece of the puzzle is the EU’s replacement legislation, called the ePrivacy Regulation. This is a similar size of legislation to the GDPR and together they will form the bedrock of the Europe’s vision for a regulated internet over the coming decades.

The GDPR concerned itself with information that companies create about us (which we call “data”). Who is allowed to record data about us, what level of consent do we have to give and what responsibilities do organisations have when they create and manage this data about us.

The ePrivacy regulation, on the other hand, concerns itself with privacy in communications. It looks at two broad areas – 1) communications between our devices and 2) storage of information on our devices.

When we think about communication between our devices (mobiles, laptops, tablets), the world has changed significantly in the last 5 years alone. I created my first Whatsapp group in 2014. Before that, almost all digital communications I sent by text message or phone call was delivered by my mobile network. Vodafone, O2 or Meteor, as it was back then.

These Telcos were fairly well regulated. Now, however, most of our communications is conducted through companies like Whatsapp, or Facebook messenger, or Snapchat. Regulation needs to catch up with this, to modernise the rules that Telcos play by, and to sure everyone plays by the same rules.

The challenge is to create enough regulations to ensure confidentiality and security for European citizens when we’re sending instant messages or emails, but not to make the regulations so burdensome that no new startups can come along to offer better services and challenge the incumbents, or so that the quality of services available in Europe decline.

Much of this is still being debated, but in general everyone seems happy that the content of your message will be confidential (and most likely encrypted), so that no company can read it without your express consent. The more contentious points are around the metadata of your messages – for example, who a text message was from, or to, what time it was sent and from what location. It’s obvious that your phone company should keep metadata to know how many texts you have sent so that they can bill you properly, but can whatsapp, for example, create a list of the people you text most frequently, without your consent?

The one area where legislators feel there might be a case for looking at the content of messages is fighting child sexual abuse. This is very difficult, because there isn’t any way to do this without breaking encryption, so they have agreed to kick the can down the road and discuss this point last.

Other interesting areas here concern communication between two devices, but not two people. Should you need to consent for the communications from your driverless car, or your healthcare device, or your AR glasses or your networked kettle? (Yes, is the general answer) And if so, how?

The second half of the ePrivacy Regulation is focused on information stored on your device, and in particular, cookies. They acknowledge that the current system is not working, so they’re trying to answer the question – what level of data capture and cookies should be reasonably allowed without having to ask someone’s consent, and what should someone have to consent to, even if it is awkward?

Think about analytics. Should someone have to ask everyone’s permission to count the number of people that visit their website, or what sections they visit? Probably not, and severely limiting it could just make digital businesses worse at serving our needs. On the other hand, using analytics tools to build a profile of us, our repeat behaviour and personalising our experiences should probably require our consent.

One proposed solution is a technical one, where you can have browser settings to indicate, for example, that you’re ok with all analytics cookies, but not with advertising cookies. You could then browse around multiple websites without being interrupted and asked for permission. Although, even in this scenario, it’s hard to see why each individual company wouldn’t still show you a pop-up asking for permission to track you with ad cookies on their site alone, even though you’ve opted-out more generally. So the pop-up problem may persist.

The main focus of the debate on both of these areas is around the concept of “legitimate interest“. Should the regulations ban all of these activities without consent as a baseline, then allow only selected activities? Or should they do the opposite – allow companies to place cookies or read metadata when they have “legitimate interest”, but then list all the specific examples where “legitimate interest” doesn’t apply?

I think of it like fraud prevention. You can either assume all potential customers are criminals and make them jump through hoops to prove they’re not (which is why setting up online banking is a nightmare), or you assume good faith by default, but then put in many measures to catch fraudsters. This provides for a better experience for most people, but allows a few bad actors to slip through the net.

The latter is the “legitimate interest” approach, saying organisations can do a small amount of cookie-ing and metadata processing without our consent in a way that folks would generally consider “reasonable,” but then go on to list the specific cases which definitely aren’t “legitimate interest”, and re-iterate that consent is needed for all other instances.

I think this approach is best. It makes compliance just a little bit easier for most businesses who aren’t taking the mick and, most importantly, doesn’t unintentionally restrict future innovations from new startups.

The ePrivacy Regulation was supposed to come into effect with GDPR in 2018, but it’s still being debated, trying to find the balance between the privacy rights of individuals and the burden on businesses.

📰 News

Tech jobs. 10 years ago we were worried that most tech jobs in Ireland were support, sales and admin roles, but since then we’ve done a great job at attracting roles that create things too – product and developer roles. In another positive development here, Microsoft announced 200 engineering jobs in Dublin. Link.

Apple reduced the cut it takes on in-app purchase from 30% to 15%, but only for small developers (earning under $1m year). This seems like a political move to avoid framing the fight as Apple vs. small businesses, but I don’t think it gets them around the fact that they’re charging competitors, like Spotify, a 30% tax. Link.

Subsidising news. It looks like Google have agreed to pay French news outlets for sending traffic to them, after the French regulator demanded they do. I really thought Google might just remove news links, as they’ve done elsewhere. Link.

💡 Interesting Links

Unscientific Machine Learning? There is a myriad of articles being published decrying how AI and machine learning is being used by big tech. It’s often hard to discern the important stuff from the politicized chicken little stuff, but when MIT publish a piece titled “The way we train AI is fundamentally flawed” and it’s based on reports from within Google, it’s worth reading. Their concern is the industry standard way we currently test machine learning models. We use training data, create models, then ask the models questions like “Is this a cat?” or “Does this x-ray look like cancer?” If the model passes the test, we release it into the real world, where often it then fails. The problem, they say, is that our testing is generally trying to prove that the models work, whereas we should be trying to prove they don’t work, and only relying on them when we can’t break them. Link. Reminds me of this wonderful brain teaser – link [Youtube]

Data for Research. Researchers and academics want access to the data tech companies have, Richard Allan explores some of the reasons those companies might be reluctant to share. Link.

Productivity overload. One interesting aspect of the rise of the knowledge worker is that, unlike in industrial assembly lines, where increasing productivity is the responsibility of management and company owners, the productivity of autonomous knowledge worker becomes their personal responsibility, and all the anxiety that comes with it. Link.

As I write this, details are emerging about a Discord server (an online chat group), consisting of up to 500 Irish men who have been sharing thousands of private images of women without their consent. Early reports indicated that most of the images are ones the women would have shared with a romantic partner, privately, which have since been forwarded and shared repeatedly, eventually being added to these massive collections of thousands of such images.

The scale of this recent discovery and the technology platform being used are novel, but unfortunately none of the other pieces of the story are new.

This trend involves two overlapping phenomena. Firstly, a change in personal behaviours, particularly in romantic relationships, facilitated by technology. Secondly, a deeper, more organised misogyny online which is radicalising young men at an alarming rate.

In recent years there have been many high-profile cases like this. In 2016 there were reports of a Facebook group of up to 200 men on a college campus sharing pictures of women they’ve slept with. In 2017, a video of journalist Dara Quigley naked was shared online, leading to her tragic suicide.

This recent story was different in both scale and intensity. It involved men trading thousands and thousands of images in collections they have built up over time. This is reminiscent of the “celebgate” incident in 2014, where the men involved would deploy elaborate schemes to attain and trade these intimate pictures, almost as if they were trading cards. I remember reading about one young man who would find a girl he liked on Facebook, message her boyfriend and offer to trade her nudes for celebrity images he might have, or try to blackmail the boyfriend into making the exchange.

That level of intent seems to be present in the Irish case too. Hundreds of men pouring hundreds of hours into acquiring, trading and discussing these private images. The discussions on these forums are less about scintillation and attraction and much more about deep seated contempt, anger and misogyny.

This trend is a powerful undercurrent in spaces men occupy online. There is an industry of pseudo-intellectuals and self-help-gurus preying on the frustrations and loneliness of young men, who feel robbed of a world promised as theirs to inherit, and being taught that women and feminism are to blame.

These young men can be militant when they organise online, with the most high-profile case being “Gamergate” in 2015, which involved incredible levels of targeted harassment towards women in the computer game industry. Like the generations of men before them who decried the acceptance of women in Golf clubs and country pubs, this generation aggressively defended a space they felt was theirs alone.

After the initial peak of activity, much of this group turned their focus to politics, creating “pepe the frog” memes and becoming one of the first sizeable support bases for a candidate with long odds and not much popular support – Donald Trump.

So where do we go from here? Let’s look at the technology, legislative and cultural options available to us.

The technology platform in use in this case was Discord, a chat-room type software which is incredibly popular with young people, with over 250m users worldwide. But before it was Discord it was often Facebook or Reddit, who have since staffed and resourced moderation more adequately to combat this activity.

Unlike hate-speech, bullying or political fact-checking, image-based sexual abuse is relatively easy to spot and remove, it is mostly just a question of resourcing and financing moderation teams and AI systems to do the work.

Unfortunately, as end-to-end encryption becomes the default for most messaging platforms, fighting this from a tech perspective alone might become more difficult, so to address this we also need legal changes and cultural changes.

On the legal side, sharing sexual images of a person without their consent is not currently illegal in Ireland. The Harassment, Harmful Communications and Related Offences Bill which seeks to rectify this is working its way through the Dáil, moving to committee stage in December. This is positive and something our legislators should prioritise and expedite.

Of bigger importance again still is the cultural change needed. This is a tech newsletter, not a psychology one, so I can only offer a non-expert opinion here.

I have faith in the promise of young men in this country, I know they can grow to become better men than my generation and the generations before me. Indeed, many of them already have. We don’t help them by setting the bar low, and we don’t help the good ones thrive by letting the bad ones off the hook.

Through awareness campaigning, consent education, consciousness raising and empathy growing, I think we can build for a future where more and more men, when we’re sent or we see an image that was clearly private, personal and shared without consent, that our first reaction will be disgust or sadness, not enjoyment or interest.

Until that’s the case however, and for the cohort of men for whom that will never be the case, we need much stronger laws and increased resourcing of enforcement by all tech platforms to protect women’s privacy, safety and lives in a way that any citizen of a free country should have the right to expect. 

📰 News

Graham Dywer, convicted of the murder or Elaine O’Hara, may win his argument that the mobile phone data used to help convict him was obtained in contravention of EU law. The case is due before the ECJ in January. Link.

Paying Publishers. In several countries there is legislation at various stages of drafting and discussion about taxing tech companies to subsidise media companies. Some of this is progressing without waiting. Several publishers have already struck direct licensing fees with Facebook, YouTube already pays content creators, and now Instagram are planning a revenue-share programme with publishers. Link.

Global Rules. In an interesting case that I think sets a bad precedent, an Austrian supreme court has ruled that Facebook must remove specific posts not just in Austria, but all over the world. Link.

Driverful Cars. Uber are looking to sell their driverless car unit. Full driverless technology is a lot further off than many (myself included) would have predicted it’d be by 2020. Link.

💡 Interesting Links

Grilling YouTube. If you’ve been reading this newsletter for a while you’ll know my pet-peeve is how little scrutiny YouTube gets when it is one of the worst places for harmful content spreading online. So I was delighted to see this piece in Wired suggesting the get grilled alongside the others. Link.

Warning Labels on Trump’s Facebook posts, claiming that he had won the election, only slowed their spread by 8%. I’m not sure their goal was to reduce sharing, so trying to measure believability might be more important. Twitter, who did aim to limit sharing, reduced quote tweeting by 29% on their flagged tweets. Link.

Moderation Cartels. “The fear that a single actor can decide what can or cannot be said in large parts of the online public sphere has led to growing calls for measures to promote competition between digital platforms. To what extent should platforms have consistent content moderation policies? If standards and guardrails are imposed on the public sphere, should platforms work together to ensure that the online ecosystem as a whole realizes these standards, or would society benefit more if it is every platform for itself?” Link.

Reddit Quarantine. A paper looked at Reddit’s “quarantining” of harmful forums (called subredits), instead of banning them completely. It dramatically reduced the number of people seeing content from the subreddits, but the regular users seemed to become more defensively hardened in their beliefs. Link.

You’ve probably seen the encryption notice in the little yellow box on a Whatsapp chat.

“Messages are end-to-end encrypted. No one outside of this chat, not even Whatsapp, can read or listen to them.”

This level of encryption and privacy has never been available to the average citizen before now. It was traditionally the tool of government spies and big banks, but now every global citizen with a smartphone is starting to get privacy and encryption by default in all of their daily communications tools.

On the whole this is a positive development, but it won’t be without its drawbacks and costs. Compared to unencrypted channels like email, text-message and phone calls, modern end-to-end encrypted tools give everyone the same level of privacy – whether their actions are good or evil.

Encrypted messages help activists organise against authoritarian regimes, help journalists and whistleblowers communicate and stops employees in big companies reading our messages, or the companies themselves selling or leaking our message data. Equally, however, it renders invisible the communications of criminals, terrorists and traffickers, to name just a few.

So you can understand why law enforcement agencies are constantly seeking ways to weaken encryption, to legislate that it must only be 99% impenetrable, with the 1% reserved for their access. As Karlin Lillington reports in the Irish Times, “Garda Commissioner Drew Harris has increasingly been floating an argument for back doors. Noting the growing use of encrypted phones by gangs, he said a few times over this year that gardaí need (and expect) legislation that will supply a mysterious “electronic key” to break encrypted devices.”

This effort is, unfortunately, completely misguided. There is no possible way to make end-to-end encryption breakable by one group and not by others. If my government can access my messages, so can foreign governments. If it’s possible for law enforcement to access it, it will inevitably be accessed by criminals.

It is against this backdrop that the European Council of Minister publish a draft resolution calling for a a balance between the security encryption provides to individuals and the wider public security it removes. Many tech and privacy advocates have reacted very negatively to the resolution, seeing this as a call to find ways to break encryption (in a specific and limited way) which could ultimately make us all less safe.

I’m less pessimistic. I was surprised that this is the first resolution from any western Government I’ve seen that doesn’t call for some kind of back-door. The tenor of the resolution seems to recognise that they don’t actually know what to do and are suggesting that groups from industry, academia, law enforcement and industry should be assembled to explore it.

There’s a few interesting approaches that don’t involve breaking encryption, which should definitely be supported and explored. If someone sends you a message containing something illegal, for example, it may have been encrypted in transit from them to you, but now that you have it there’s no reason you can’t share it with authorities. Tools can be made available to make that reporting process easier and more secure.

On the other hand, my optimism could be misplaced. The resolution calls for “technical solutions for gaining access to encrypted data,” which could be the start of a discussion that ends with proposals for breaking encryption, in which case the proposals should be resisted.

Either way, as encrypted messaging becomes the de-facto option for most of the worlds population over the coming years, expect this debate to become a prominent and recurring one.

📰 News

Trump’s next move. Assuming the US courts hold strong and Joe Biden becomes president in January, what does Trump do next? Ezra Klein makes a compelling case that the next step is an “autocracy-in-exile”. No defeat and retreat. 10s of millions of Americans believe the election was stolen from him and them, so we should expect that he will build a media ecosystem to keep this alternative-reality alive. In the ongoing saga of Trump and Trumpism the challenge for social media companies is that they don’t become the place where this reality is created, and for traditional media companies that they cover it without enhancing it. Link.

Spice Bag By Drone. On a lighter note, Irish drone delivery company Manna are launching a trial of delivery by drone in Oranmore, Galway. Order something (small) from Tesco, Just Eat or Camille Thai and it’ll be dropped in your garden minutes later. Link.

Nutrition labels. Apple will be displaying privacy “nutrition labels” on all apps in their app store from next month. These are simplified, standardised notices on what data an app collects and how it uses it. Link.

Move slow, don’t break things. After Twitter changing the way re-tweets work and Whatsapp limiting the number of times a message can be forwarded, Facebook has now announced another feature attempting to add friction and slow the pace of misinformation spreading. The people who run Facebook groups (which are “in probation”) will have to manually approve each new post. Link.

The New York Times is now earning more from digital revenue than print. A significant milestone. Link.

💡 Interesting Links

The Pope is praying for AI to be kind. It’s funny, but he’s not wrong Link.

Whatsapp are launching a disappearing text feature. You can send a message to someone and it’ll delete off their phone after a set amount of time. Could have saved a local politician some recent bother. Link.

Surveillance. Another good reason not to build a city-wide factial recognition system. In Moscow you can pay hackers $200, give them someone’s picture and they’ll give you their movements over the previous month. Link.