Newsletter #2 – Are House Prices About to Fall?

June 3, 2022 in Weekly Newsletter

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.

 

Newsletter #1 – Why are Car Rental Prices Skyrocketing?

May 30, 2022 in Weekly Newsletter

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.

Newsletter 30 – Breaking Up Is Never Easy

December 11, 2020 in Weekly Newsletter

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,

Newsletter 29 – The Future of Banking

December 3, 2020 in Weekly Newsletter

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.

Newsletter 28 – Fixing ePrivacy

November 28, 2020 in Weekly Newsletter

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.

 

Newsletter 27 – Image Based Sexual Abuse

November 20, 2020 in Weekly Newsletter

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.

Newsletter 26 – Breaking Encryption in a Specific and Limited Way

November 13, 2020 in Weekly Newsletter

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.

Newsletter 25 – It Worked?

November 6, 2020 in Weekly Newsletter

In many senses, the sequence of results in the US election have been the worst case scenario we could have imagined. An early vote too close to call, counting protracted over many days, with Trump leading in early days and each subsequent batch of votes counted shifting towards Biden. It’s the exact scenario we thought would lead to the least stability, that would provide fertile ground for conspiracy, false claims, outrage, riots and violence.

And yet, so far, the worst of those fears haven’t happened.

As predicted, Trump has been calling the process rigged and claiming widespread fraud. But the effect has been more muted than you might expect when the US president calls an election rigged. All media organisations have behaved exactly as one would have hoped, reporting not just on his statements, but also, in the headline, pointing to the baselessness of his claims.

Social media companies have been doing their part too. By my count, 50% of Trump’s tweets on Wednesday were restricted or carried fact-check warnings. Facebook has been doing similar, suppressing or labelling the most egregious of all the posts. YouTube, as usual, has been doing very little.

Probably the most important piece in all this has been Fox news, the most important media platform for American conservatives, which as far as I have seen, has been responsibly reporting as false these claims by the president.

With these approaches combined, the president’s avenues for spreading disinformation – his social media accounts and popular media gatekeepers – have been substantially diminished. I’m personally happy about this, but I can see why some would be concerned about this power being in the hands of non-democratic institutions.

It’s a fair concern, but I actually think this power is less concentrated than ever. In the past this power was available to a small number of TV stations and newspapers, but now a response like this has to be co-ordinated among 3 major tech companies, several TV networks and half a dozen media organisations, all of whom with different political leanings and commercial interests. They’re all acting in unison because it is obviously and overwhelmingly the right thing to do, and something they have been preparing for for months.

The effect of grassroots disinformation is harder to gauge now too, with a lot of “Stop the Steal” type Facebook groups popping up since Tuesday. New York Times reporter Davey Alba has a good running list of all the misinformation being spread, the effect of which will probably take a while to discern.

My early optimism may be proven wrong in the coming days and weeks as Trump continues play his strategy out, but for now I’m impressed that, given an unprecedented scale of the attempt to undermine the election, things are holding up reasonably well. How you can standardise and apply these policies to all other democratic elections outside the US, or where the candidate hasn’t announced their plans to undermine the election months in advance like a bad bond villain, are the next challenge.

📰 News

RTE Player. An FOI request from solicitor Simon McGarr revealed that, in the last 2 years, the RTE board has only been given one briefing about the RTE player. Which doesn’t seem like a good number of times for something that should be more strategically important. On the other hand, am I the only one who doesn’t think the RTE player is that bad? Link.

UK Covid App. The NHS’ Covid app had the wrong settings applied and didn’t warn close contacts when it should have. Link.

Steve Bannon, two days after appearing on RTE radio, had his Twitter and Youtube accounts suspended for calling for the beheading of Dr Fauci and the FBI director. Link.

YouTube. The Trump campaign bought the YouTube homepage for election day. Boris Johnson did the same thing in their last election and it was very effective. Link.

Home testing. The Irish company LetsGetChecked has launched home covid-19 tests, with results available within 3-4 days. Link.

💡 Interesting Links

Eye tracking. From the dystopian future category, college students are doing their tests in their bedrooms due to Covid, so some universities are deploying eye-tracking technology so the students’ own web cams can spy on them to try prevent cheating. Grim. Link.

Myanmar. “Weeks before an election, Burmese social media are awash with fake news and vitriol.Link.

Aerosols. Some useful visualisations of how Covid is spread in different scenarios, like restaurants, bars and schools. Link.

One for the runners. Spotify will soon let you stream directly from your watch, without needing your phone nearby. Link.

Newsletter 24 – Should Companies Be Political?

October 30, 2020 in Weekly Newsletter

Two weeks ago the CEO of coinbase, a tech company with about 1,000 staff, publicly shared a new internal policy about their company mission, which explicitly excludes talking about political issues that aren’t specifically related to their product or industry.

It has become common for Silicon Valley companies to engage in a wide variety of social activism, even those unrelated to what the company does, and there are certainly employees who really want this in the company they work for. So why have we decided to take a different approach? The reason is that while I think these efforts are well intentioned, they have the potential to destroy a lot of value at most companies, both by being a distraction, and by creating internal division.

This came after many employees expressed frustration that the company wasn’t expressing public support for Black Lives Matter. The post generated a lot of discussion among tech leaders and ultimately resulted in 60 employees leaving the company.

On the other end of the spectrum, Expensify, an expense tracking tool for small businesses, sent an email to their 10 million customers imploring them to vote for Joe Biden!

Many praised the Coinbase CEO’s memo, attempting to pull the company out of the weeds of politics. Others, like Twitter’s ex-CEO, criticised it as an abdication of leadership.

I can certainly see the merit of much of the criticism. If your employees face discrimination on the basis of their gender, religion, race or sexuality, advocating for their rights is distinctly different from endorsing political candidates. Supporting a local pride festival, making statements in support of racial equality or gender-pay-parity don’t strike me as incompatible with the mission of most companies, or their duty of care to their employees.

On the other hand, I also see the logic in some of his argument. A company is a group of people who come together to build a product or deliver a service, with responsibility to follow the law, make customers happy and generate shareholder return. If people want to advocate for other political change, should they not join different groups of people who come together for those purposes? Like campaigns, political parties and trade unions?

Popular conceptions of capitalism are shifting, with many people considering a company’s responsibility to a wider group of stakeholders, like employees, local communities, the environment and the wider economy.

My personal politics likes a lot of this. In particular, the increasing acknowledgment that environmental sustainability is a responsibility of corporations too. However, I don’t think we acknowledge the trade-off we’re making and the risk we’re creating if we advocate a multi-stakeholder approach.

Often the winner in this move is the CEO and senior management. In a more 1980’s version of capitalism, when we measured CEOs against a single goal of maximising shareholder value, it was a crude yardstick, and didn’t produce ideal societal outcomes, but it had the distinct advantage of being simple and measurable.

Whereas before the CEO could get fired when the share price dropped, they now have the flexibility to argue that they’re doing a good job because they were balancing shareholder value against the interest of some other group of stakeholders. It’s a lot of extra wiggle room, which reduces accountability and concentrates power.

We can hope they use this increased power for good, but I’m not sure we should trust that they will.

If you’re supportive of companies engaging in social activism specifically, or just wider stakeholder-serving in general, Matt Levine succinctly describes the power shift that will accompany it. “It is productive—not 100% accurate, but a useful heuristic—to assume that all corporate governance debates in the U.S. are about whether shareholders or managers should have more power to control the corporation. There are other stakeholders, sure, but they are mostly tools in the shareholder/manager fight, not power centers in themselves.”

That’s why the Expensify CEO was able to justify a Biden support email to 10 million customers – because “Expensify depends on a functioning society and economy; not many expense reports get filed during a civil war,” – while the CEO of Soylent said he was voting for Kanye, and, if we’re not holding them to the singular goal of profit-maximising, what is the new rule set that constrains either of them?

📰 News

Section 230. The big tech CEOs were in front of US congress again this week, officially to discuss “Section 230”, the piece of US law that makes tech companies immune from liability for what their users post, upload or tweet. It’s an important and difficult ongoing debate – should we treat them more like telecoms companies, who aren’t responsible for the content of a text message they deliver, or more like newspapers, whose editors are wholly responsible for the information they publish? Unfortunately, after all the questioning, we’re none the wiser.

As the New York Times reported “The theatrics, which often devolved into shouting, meant that the topic of the hearing — the future of a legal shield for online platforms — was barely debated.

In Ireland, in every election or referendum I’ve been involved in, a daily activity of most Communications Managers is to argue with RTE that your side isn’t being treated fairly or getting enough coverage. Even if that’s not entirely true, the theory goes that at least they’ll think twice about anything that could advantage the opposition, because they’ll get an earful for it. That happens behind closed doors mostly, because you can sound like a crank calling RTE or the BBC biased publicly. People have less sympathy for tech CEOs being shouted at, which is fine, I guess, but it still results in a cycle of politicians shouting at the referee trying to pressure them on specific decisions, rather than engaging in the more important debate about what rules these refs should be following. Link.

Arrested for posts. 10 people have been charged with sharing, on Facebook and Twitter, the names of the two boys who murdered Ana Kriegel. As both were 13 at the time, it is illegal to share information about them. Without commenting on the law itself, if it is to be prosecuted this seems to me like the right approach. Many disagree, with journalists like Matt Cooper and Tom Lyons calling for Facebook and Twitter to face punishments for allowing the posts to be published in the first place. Link.

In both the US and Irish case, this is a difficult debate but one we need to be having more. I worry about laws that mandate pre-screening of content will result in companies being over-cautious and prohibiting much speech and expression that we don’t want to stop. Stricter rules will also disproportionately hurt the smaller tech companies. Facebook, Google and (probably) Twitter have the resources to implement more restrictive rules, but most of their smaller competitors don’t.

Some positive next steps here would be laws that mandate transparency for content moderation policies and processes, to set targets for how quickly offending content is removed and to ensure people have a fair right of appeal if they feel their posts have been removed unfairly. There’s a difference between hosting content and amplifying it too, which could be regulated in different ways. Beyond that it gets more difficult to weight the trade-offs.

Oversight. The Facebook Oversight Board (aka the “supreme court”) is starting to hear cases. Select content moderation policies will be discussed and debated in public. I’m optimistic about this one. Link.

Whatsapp. In the last week of the US presidential campaign misinformation campaigns are ramping up on messaging platforms like Whatsapp and SMS. We probably won’t get a full sense of their scale and impact until months after the election, if at all. Link.

💡 Interesting Links

AOC. US Congresswomen Alexandria Ocasio Cortez and Ilhan Omar live-streamed themselves playing to new hit game “Among Us” to get young people to vote. Over 400k people watched it live, and millions since. Here’s the highlight reel – link.

Tables Turned. Activists are using facial recognition to identify police. Link.

Spam Bias. Someone decided to audit the algorithms that decide which emails should go into spam folders, with surprising results. Outlook, for example spammed a job application containing the word “Nigeria”, but didn’t when the word was removed. Link.

 

Newsletter 23 – The Moderation Wars Escalate

October 22, 2020 in Weekly Newsletter

As we enter the final weeks in the run up to the US election, actions, tensions and rhetoric are all escalating in the ongoing cat-and-mouse saga of content moderation online.

A big step-change happened last week when the NY Post published an article about supposed leak of hacked emails relating to Biden. If you haven’t read the details, it seems to be a largely invented story pushed by the Trump campaign to try re-create the email scandal story that hurt Clinton in 2016. Once they story was published, each Social Media company and indeed each media company had a choice to make in how they handled it.

Facebook tweaked their algorithm to dampen the viral spread of the article and added a warning notice. Twitter blocked it completely, prohibiting users from sharing a link to the article, and in some cases blocking users who do. YouTube, as it often does, did nothing.

Twitter’s action was the most extreme and caused a huge reaction from the republican party (who, as a reminder, are currently in power). Twitter back-tracked fairly quickly, stating that the article had been blocked under their standard policy to block articles that contain hacked or leaked personal information, but now that they see how “newsworthy” it is, they’ll let it run with warning labels. Republicans, including the president, are accusing Twitter and the others of election interference and promising hash sanctions.

There are lots of questions we’re all struggling with, which this event re-hashes. We want platforms to block fake news, but what about real news orgs running (probably) fake stories? Freedom of speech, freedom of press. What rules should apply to a story like this? Should the same rules apply to newspapers covering the story?

It’s impossible to know the counter-factual of what would have happened if Twitter hadn’t made such a move – would everyone now be talking about the details of the “leak”, like they did in 2016? Or would it have had much less impact in general, lasting one media cycle before fading without excitement?

Difficult to know, and therefore difficult to know exactly what the right call is to make in cases like this. One thing for certain is that more unique, norm-destroying events will keep happening between now and election day.

📰 News

Electoral Reform. Cabinet agreed to a draft electoral reform bill this week, which will set up an Electoral Commission in Ireland for the first time. This will cover things like creating a modern register of electors (e.g. registering to vote online) and better regulation of political advertising online. I didn’t think they’d keep moving fast on this, but it looks like they might be on schedule to establish it by next summer, which is great. Link.

Driverless Cars. In a big move for the industry, Waymo have just started offering their driverless car taxi service to the public one US city. Link. Tesla started rolling out it’s self-driving software to a small number of customers yesterday, with plans to have it in all cars by the end of the year. Link.

Re-Org RTE. I’ve mentioned a few times in this newsletter that I think RTE could benefit from a move away from being channel-focused and towards a model where we have a distribution organisation (digital & broadcast) and content production (written, video and audio). In a digital age we need a “state broadcaster” a little bit less, and a “state content producer” (or funder of content production) even more – in particular local content and journalism. This week Disney announced a similar re-org, separating production and distribution. I think it will be an interesting one for the state broadcaster to watch. Link.

Antitrust. In ongoing antitrust news this week, the EU commission has drawn up a hit-list of 20 big tech companies that they want to face tougher regulations than their smaller competitors (link) and the US department of Justice is about to file against Google for anti-competitive behaviour (link).

GroupWatch. Disney+ has introduced a new feature which lets up to 7 people watch a synced stream of a movie or show, and pop emoji reactions on each other’s screens. Another nice example of technology helping us be together, apart. Link.

💡 Interesting Links

Buy Local. I don’t know about you, but I find Amazon incredibly difficult to browse. It’s good when I know exactly what I want, but terrible for perusing. Just one of the many reasons I’m going to be doing as much of my Christmas shopping as I can in Irish shops online, which could use the boost after a tough year. If you’re considering similar, Conor Pope in the Irish Times has a great list of 100 Irish retailers. Link.

Coronatime. “The days blend together, the months lurch ahead, and we have no idea what time it is. The virus has created its own clock.” Link.

NYT Business Model. This is a great presentation on the New York Times’ digital business model, and how it’s now financially thriving, just a decade after it neared financial collapse. Link.

Government as a Platform. “Reorganizing the work of government around a network of shared APIs, open-standards and canonical datasets, so that civil servants, businesses and others can deliver radically better services to the public, more safely, efficiently and accountably.Link.

🎧 Podcasts

The Daily did a great summary of the NY Post story about Biden and the ensuing fallout. Link.