Just a quick list of five interesting items that I came across this week.

First Abu Dhabi bank is/was considering a takeover of Standard Chartered, in what would be a demonstration of the financial firepower of the emirate. StanChart is a perennial takeover target, owing to a structural constraint: it generates revenue mostly in Asia and Africa, but is a UK-regulated bank, which puts it at a competitive disadvantage compared to the domestic lenders it competes with. However, actually taking it over would involve dealing with hugely disparate regulatory frameworks across StanChart’s markets, and so in practice I reckon a deal is unlikely to happen… (FT $)

This conversation on Nilay Patel’s Decoder podcast, on the structure and dynamics of the microchip industry, is one of the most interesting and lucid things I’ve listened to recently. The parts on the state-of-the-art technologies involved and how they translate into a hugely capital-intensive industry in particular were fascinating. Perfect for a commute. (The Verge)

AI image generators like DALL-E and Stable Diffusion are bad at generating realistic hands in pictures, largely because of the photos they’ve been trained on. This is a good reminder of the limitations of ML models, that also applies to ChatGPT for example, except that the blind spots there are harder to identify. (BuzzFeed)

It seems there are two big overarching story arcs in tech right now. One of them is the Twitter saga. Blow-by-blow accounts of Musk’s careening takeover may exert a morbid fascination, but the most interesting aspect of the story is the meteoric rise of the Fediverse, and Mastodon in particular. While on the surface the latter seems like a replacement for Twitter, it’s actually developed with a completely different philosophy, a throwback to the open web of the late 1990s and early 2000s, before most of our interactions moved to walled gardens with a profit motive, like Facebook and Twitter.

This fundamental difference has pros and cons. There is no incentive for Mastodon as a business to push features and content that promote “engagement”, unlike Facebook and Twitter, and hence it should be able to avoid degenerating into the cesspool that most for-profit social media has become. On the other hand, absent this pressure, the service may only ever attract genuine enthusiasts, and never achieve the kind of cultural relevance Twitter in particular achieved. Of course, that is only a loss depending on your point of view, and if it is the price to pay for a more civilised online forum, it’s probably worth paying.

What is certain is that the chaos at Twitter yanked Mastodon into the limelight after years or relative obscurity, and that has triggered a new cycle of intense experimentation and innovation, across services, protocols and apps. The last such cycle was when the launch of Twitter coincided with the launch of the iPhone, and it ended up defining how we interacted with our devices and services for the ensuing ten years. From that angle alone it’s worth paying attention to. Second, the current frenzy around Mastodon and its distributed protocols feels like an emerging second chance for social media, which is exciting.

Happy new year, dear reader! I wish you all the best for 2023 and thank you for being a subscriber.

Close-up: notes on e-government

A couple of weeks ago, at the traditional ProjectiveGroup end-of-year offsite, Florian Marcus of Proud Engineers gave an interesting presentation on digitalisation in the public sector. It was mainly based on examples from Estonia, which is of course widely known for being a pioneer in government tech.

Three key points really struck me.

With the summer holidays still in full swing, the tech industry seems to be in a holding pattern of sorts, although there are stirrings here and there. The autumn promises to be interesting, with the war in Ukraine, high energy prices and constrained funding environment.

What next for the ad-tech business model?

Those tech companies that rely on advertising, such as Facebook Meta and Google Alphabet, have partly blamed some of their recent drops in performance on Apple’s “App Tracking Transparency” (ATT) feature. This feature gives iPhone users the option to ask an app not to track their activity, and if they opt not to, App Store guidelines prevent the app from tracking. In principle this is a great feature, although it is a bit marred by the fact that Apple does allow some tracking for its own advertising division, but doesn’t make it available to third parties.

What is clear though is that for companies like Meta and Alphabet, ATT makes it more difficult to precisely target advertising, which forces them to charge less for each ad. However, interestingly, the detrimental impact of ATT doesn’t really appear to show up in the numbers.

Quite a few interesting things that popped up on our radar over the last week, so let’s get to it without further ado.

The week in crypto

Three thoughts on the space this week, based on what I saw.

First, crypto as an asset class. Despite crypto’s less than rosy performance since the beginning of the year, interest from “traditional” asset managers doesn’t seem to have disappeared. Crypto exchange Coinbase and fund management behemoth Blackrock have signed an agreement (FT $) that allows Blackrock to offer crypto through its main investment platform. Deals like this take months to close and implement, so I wouldn’t necessarily take it as a bullish sign in the current bear market though. As Benedict Evans notes in his excellent newsletter, the deal also seems inconsistent with Coinbase’s stance that it doesn’t list securities. Regulators might take note.

(Late) Summer Reads

The summer holiday season is already more than halfway, but if you’re still looking for an easy, yet intelligent and thought-provoking read, I highly recommend Venomous Lumpsucker, by Ned Beauman.

It’s a common trope that the best way to understand the human condition is through literary fiction, and Venomous Lumpsucker does not disappoint in this regard. It is a work of dystopian science-fiction set in the near future, and it does an excellent job warning of the dangerous roads our society is traveling down, not by evil design but rather by low-grade selfishness and general apathy.

Central to the novel is the environmental destruction wrought by our social, economic and political system and our deeply flawed attempts to do something about it. Beauman effortlessly skewers a swathe of issues, chief among which our misplaced faith in the ability of markets to solve our problems, but also covering regulatory capture and corruption, and ill-thought technological advances. And he does so with enviable clarity and succinctness, as illustrated by these few quotes.

This iteration of Surveilled is shorter and more of a link list. From now on I’m going to worry less about the format about the newsletter, and instead just point you to things I thought were interesting, sometimes with a more developed essay of some short.

More and more “post-mortems” on the crypto crash are coming out, primarily focusing on Three Arrows Capital, Celsius (FT $) and Voyager. No doubt they will not be the last, and since these stories are written in medias res, they cannot be relied upon for far-reaching conclusions.

A few common threads emerge though. First is that the complexity of the industry seems to have increased by a few orders of magnitude compared to 2018. It is now sufficiently complex that it is nearly impossible to anticipate where the heaviest blows will land, just like in the global financial crisis of 2008. More significantly, since the DeFi and TradFi worlds are becoming more entwined (FT $), there is a growing risk of contagion between the two. This is guaranteed to heighten regulators’ alarm.

Back in December of 2017, my fellow commuters on the bus to work were glued to their phones, looking at the balance of their crypto portfolios and excitedly texting their friends about how to spend the money. Almost exactly a year later, Bitcoin reached a trough, having dropped more than 80% over the period. Since then, the pattern has repeated, with the latest run up in prices really taking off in the second half of 2020, and now ending again in a crash, with Bitcoin down 66% from the peak to date.

The question now is, are we in a situation similar to 2018, and are crypto markets taking a momentary break before another huge run-up, or is there something more fundamental going on? The problem is that the term “crypto” covers many things, all with differing degrees of emotional investment on behalf of proponents and opponents, and the answers tend to break down along these lines.

First, and most narrowly, crypto refers to the tokens like Bitcoin, Ethereum or Tether that are traded like a commodity. Right from the start in 2008, crypto tokens were extolled as a form of gold, a hedge for inflation, and an asset independent of the vagaries of central banks around the globe. By extension, the tokens are positioned as the foundation for a new model of financial intermediation (or rather, lack thereof) known as Decentralised Finance (DeFi), that could replace our existing financial infrastructure.

Unfortunately, the arrival this year of inflation levels not seen in decades and the war in Ukraine triggered turmoil in financial markets comparable to that of the global financial crisis (GFC) in 2008, and put the new models enabled by crypto to their most severe test yet. So far it seems they have conclusively failed. Most crypto tokens, rather than being a hedge against inflation, moved in exactly the same direction as other risky assets. Investors have lost a lot of money, and high-profile bankruptcies of crypto funds, exchanges, lenders etc. have begun. The dysfunctions of the market have also become apparent, with even the largest exchanges suspending withdrawals of some tokens because of an inability to keep up with trading volumes and a lack of liquidity. Not exactly confidence-enhancing signals.

Hi, Frederik here with *gasp* a new issue of Surveilled. The last one was eons ago, and I’m very grateful that you remained subscribed all this time. If this reminds you that you meant to unsubscribe but you haven’t gotten round to it yet, you can unsubscribe in one click, no hard feelings. I don’t think this is the start of a new, regular schedule, but I do intend for the next issue to come around sooner. Do drop me a line with any questions or comments just by replying to this message, I always enjoy hearing from you. And as always, thanks for reading!

Book review: This Is How They Tell Me the World Ends, by Nicole Perlroth

The rise to prominence of technology in our society and hacking have gone hand-in-hand from the start. Spotting a vulnerability in a system and then exploiting it to do something you’re not supposed to, like making free phone calls or downloading the personal information of all US government employees, is a source of pride for many an engineer. In the early days of computing and tech, pride was often the only motivation. With time, the hacker community started making a distinction between “white hats”, who published the vulnerabilities they found, enabling the tech companies to fix them, and “black hats”, that instead used them for nefarious purposes. White hats were offering their services to tech companies against payment, but this remained mostly a cottage industry for a long time. Meanwhile, national intelligence agencies and militaries had little interest in breaking into commercial software, and focused what electronic warfare abilities they had on their enemies’ systems.

All this started to change in the mid-2000s, when we started turning to the digital realm almost exclusively for our communications, financial transactions, and most everything else. Huge amounts of our most sensitive data were now stored on the systems of commercial companies, who in turn were focused on getting their products out as quickly and cheaply as possible. They were less focused on protecting their users’ data, witness the many data leaks that started occurring with increasing frequency since then.

My archives tell me it’s slightly more than a month since the last issue of Surveilled, although it feels like it was decades ago to me. Pandemic fatigue (we’ve been in lockdown in Malaysia since early May again, with little sign of improvement) plays a big part, but the main reason behind this gap is undoubtedly that I’ve been unhappy with the format of the newsletter for some time.

And yet, the urge to write still appears to be there, hence a new issue. After the first hiatus of the newsletter, I said I wanted to write more long-form content, to develop underlying themes and concepts more, instead of focusing on news, which others do far better than me. The “Goodbye for now” issue at the end of last year contains a few pointers for news, if you’re interested.

Unfortunately, that kind of writing proved incompatible with a weekly frequency though, and hence most issues focused on “newsy” links. But with all the other sources of news out there, and a noticeable uptick in tech coverage from mainstream outlets, I feel this adds less and less value, and I want to move away from it. Hence, I’ll focus on long-form content from now on, and that probably means this newsletter will become less regular, and certainly not weekly. There may still be links, but more in the spirit of “this is interesting” rather than “this is what happened last week”.

As always, thanks for reading and let me know what you think by replying to this mail.

It was Apple’s WorldWide Developers’ Conference last week, so the rest of the tech world was pretty quiet. Hence, only five links instead of six this week.

Six Five Links

The FBI and Australian Federal Policy ran an encrypted communications platform for several years. It ended up being used by criminals around the world, but the law enforcement agencies could read everything of course. Last week they proceeded to arrest 800 people on the back of the evidence obtained. Similar to previous operations like Encrochat and Sky Global, although those networks already existed and were compromised, rather than set up from scratch. This seems like a sensible approach, but I wonder if it weakens those same agencies' appeals to weaken security for all by installing backdoors etc. (The Verge)

Global streaming platforms are breathing new life in European content creation. The platforms like Netflix, Amazon, Disney+ etc. want local content across their global markets, and are able to offer production budgets often multiple times larger than what creators are used to. Overall this seems like a positive evolution, even if there are concerns about exaggerated uniformity in the results. It's also another illustration that the problems now confronting the streaming business are not tech problems, but media and culture problems. (FT $)

The last few issues have seen somewhat more developed “Six Links” stories, and this issue is no exception. It allows for more context, but perhaps it’s also redundant, so let me know if you have any strong feelings either way on this format.

Six Links

Bitcoin’s energy usage is becoming a problem for the industry–The Financial Times takes a at the energy use of Bitcoin, after Tesla’s decision to stop accepting it as payment, and also mentions a group in New York that bought a decommissioned power plant to turn it back on and start mining crypto. In a classic “option value” problem, the high prices of Bitcoin have made mining it more attractive, and it seems the problem is now becoming large enough to attract governments’ attention as well. Despite to address the issue, it looks like this may become Bitcoin’s Achilles heel, perhaps allowing other coins to gain further ground. Relatedly, crypto exchanges in South Korea are to meet new regulatory requirements (primarily linking trading accounts to real bank accounts) and hence may be forced to shut. As the industry expands, more attention from regulators is also inevitable.

Issue 76

Very short issue today, since it seems that most of what happened this week was a continuation of previous stories. Recap in bullet form below. Still amounts to more than six links in the end.

Issue 75

Another issue without a column, although the first item in the Six Links section almost graduated to that level. As a result, there are way more than six links in this issue, so I renamed the section ‘Six Things’ for the occasion.

Six Things

Issue 74

Six Links

–Calling this highly anticipated would be an understatement, and at least the board upheld Facebook’s initial decision. Most of the decision’s reasoning, however, focuses on the deficiencies in the social media giant’s rules and its enforcement thereof. The board highlighted the arbitrariness, and asked the company to come up with clear rules that apply to everyone. So in the end, this episode served more to highlight the big challenge Facebook itself and society at large face to police a platform with almost half the world’s population as user. In related news, the state of Florida fining social media platforms for banning politicians, although it is likely to be struck down in court.

Issue 73

The tech news cycle was dominated mostly by earnings reports last week, which overall were very good for the industry. Others do a much better job than me compiling and commenting on all that, so the links this week are more about ideas and context than news.

Six Links

Issue 72

The trend is to keep it short and crisp lately, so here is another attempt to give a comprehensive overview of what happened during the week in six links (ok, a few more but all related...)

Published Elsewhere

It’s no longer about technology, but about business models–An opinion piece that takes stock of efforts to digitise the economy versus where the industry is moving on its own, published in The Edge Weekly Malaysia on 19 April. Read

Surveilled

Issue 71

Another “links only” issue this week, due to feverish activity on a professional project. Hopefully more time for Surveilled next week. Also, introducing a new section this week, read on.

Issue 70

Another shorter issue this week, I didn’t come across anything that seemed to warrant the “one big story” treatment, although there are a couple of items in the “Six Links” that could well develop into one at some point.

Six Links

Some 500M records of Facebook users leaked, with email addresses and phone numbers–Among them, and just looking at Europe, the private info of EU Justice Commissioner Didier Reynders and Luxembourg Prime Minister Xavier Bettel. Not particularly surprising, but could be more dangerous than it seems with the inclusion of phone numbers (think two-factor authentication using SMS), and true to form, Facebook’s response to the incident leaves to be desired. The data was obtained through a vulnerability that was fixed in 2019, but individual users were not warned that their data might have been exposed. Read (Wired)

One Big Story: what happened to contact tracing?

Nearly a year ago, I wrote an opinion piece with the title “Does Big Tech hold a key to restarting the economy?” In the first few weeks of the lockdown, amidst all the bewilderment, our collective hopes alighted on the devices in our pocket. We could summon a car at the tap of a button and chase virtual Pokemon characters around our garden, so surely the combination of always-on location tracking, big data and AI would offer a way to get the pandemic under control and let life resume.

If this was Big Tech’s opportunity to redeem itself after mounting disquiet about privacy invasion and society-destroying engagement algorithms, one year later we can only conclude they failed to take it. The only large-scale contact tracing success I’m aware of is in South Korea, and even then it was done mostly the old-fashioned way, by scrutinising credit card receipts and calling people on the phone. The rest of us have gone through successive lockdowns of varying length and strictness, with mounting personal and economic consequences.

That is not to say technology as a whole failed us. The breathtaking speed at which the vaccines were developed is an amazing success story of technological innovation, albeit in biology and medicine, instead of information–to the extent that they can still be neatly separated, that is. The forced adoption of remote working has limited the economic damage, and will hopefully have laid the foundation for a more flexible approach to work in the future. And on the more mundane end, ecommerce and, yes, the ability to have food delivered at home through an app has made lockdowns somewhat more bearable for many.

Surveilled

Issue 68

A shorter issue this week, I didn’t come across anything that seemed to warrant the “One Big Story” treatment, but still six interesting things below.

Surveilled

Issue 67

Issue 61

A weekly summary of what I've found interesting at the intersection of economics, finance and technology.

Hey friends, after a couple of months hiatus, I think I’ve found a rhythm–aided in no small part by the kids returning to school after a protracted lockdown–that would allow me to write Surveilled on a regular basis again. I never quite stopped following the news of course, and it’s also a case of feeling a stronger urge to write about some of them again that brought us here. So let’s see how it goes, and thank you very much for sticking around all this time.

One Big Story

Surveilled is taking a break

It’s an understatement to say that 2020 has been a challenging year. Apart from the pandemic that has affected everyone, my family and I also moved countries and I embarked on an entirely new professional challenge, which turns out to have a higher workload than before.

Because of the prolonged lockdown in Kuala Lumpur that has shut schools since early October, forcing us to look after the kids full-time, the number of available hours in a day has also dwindled. You’ve already seen the result, the newsletter’s frequency has been less regular than it should have been.

Because of these two facts, together with a busy 2021 ahead, the newsletter will go on hiatus for a while. I’m not sure for how long and in what format it will ever come back, hopefully that’ll become clearer as we go along. A break is probably a good thing too from a creative aspect, I haven’t really been happy with the format of the newsletter for a while.

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Issue 64

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Issue 63

A weekly irregular summary of what I've found interesting at the intersection of economics, finance and technology.

Apologies for the longer than expected hiatus, I struggled to live up to the “weekly” part of the description due to Malaysia’s budget period, which is prime time for the various economic think thanks and media. If you’re at all interested in that, there is a selection of links below. The other big event in the period since the last issue was the US presidential election of course, which is covered in the first big story below.

Surveilled

Issue 62

A weekly summary of what I've found interesting at the intersection of economics, finance and technology.

From Elsewhere

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Issue 61

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Issue 60

A weekly(-ish!) summary of what I've found interesting at the intersection of economics, finance and technology.

Big Stories

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Issue 59

A weekly(-ish!) summary of what I've found interesting at the intersection of economics, finance and technology.

Big Stories

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Issue 58

A weekly(-ish!) summary of what I've found interesting at the intersection of economics, finance and technology.

Big Stories

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Issue 57

A weekly summary of what I've found interesting at the intersection of economics, finance and technology.

Apologies for the irregular posting schedule lately, building a new set of routines and an operating rhythm after moving countries in the midst of a pandemic is proving to be challenging. We’re getting there though, so I’m hopeful we’ll be back to our regular schedule soon.

Surveilled

Issue 56

A weekly summary of what I've found interesting at the intersection of economics, finance and technology.

Shorter edition this week as well, but I’m working on a couple of longer pieces that should appear soon. Stay tuned…

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Issue 55

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Issue 54

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Issue 53

Issue 52

A weekly summary of what I’ve found interesting at the intersection of economics, finance and technology.

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Issue 51

A weekly summary of what I've found interesting at the intersection of economics, finance and technology.

Headlines

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Issue 50

A weekly summary of what I've found interesting at the intersection of economics, finance and technology.

Headlines

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Issue 49

A weekly summary of what I've found interesting at the intersection of economics, finance and technology.

Headlines

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Issue 48

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Issue 47

A weekly summary of what I've found interesting at the intersection of economics, finance and technology.

Our Covid-19 contact tracing future is still shaking out, but in line with the relaxation of lockdown measures in most parts of the world, there seems to have been an uptick in non-pandemic related news, judging by the stories highlighted below.

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Issue 46

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Issue 45

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Issue 44

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Issue 43

A weekly summary of what I've found interesting at the intersection of economics, finance and technology.

Headlines

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Issue 42

A weekly summary of what I've found interesting at the intersection of economics, finance and technology.

This is the fourth issue of Surveilled written while under some form of social distancing order. The format this week is different from usual again, with one much longer piece, and a couple of shorter links. As always, stay safe and stay healthy.

Surveilled

Issue 41

A weekly summary of what I've found interesting at the intersection of economics, finance and technology.

All of us are presumably still busy dealing with the fallout of the COVID-19 pandemic, so again we’ll be keeping it short this week, there are presumably more pressing matters for everyone to attend to.

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Issue 40

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Issue 39