A weekly summary of what I’ve found interesting at the intersection of economics, finance and technology.
The beginning of last week was marked by the fundamental reorganisation at Deutsche Bank (FT $). It’s letting go of its global investment banking ambitions, and cutting some 18,000 jobs in the process. There were problems specific to Deutsche of course, but in general, investment banks have a way to make money only for their employees, so overall this decision should be welcomed (FT $) by the other stakeholders. It’s also likely that at least some of the 18,000 employees would have expected the chop, since employment in the sector has turned into a transactional affair (FT $), rather than a career. The persistent difficulties banks have to embed a change in their corporate culture, for example to promote compliance, is also a side-effect of this evolution.
The FTC voted to levy a 5bn USD fine on Facebook, because of a string of privacy violations. The fine is meaningless for Facebook (its shares went up on the news), and most reactions to the news have been predictably negative towards the company. Tim Wu’s take in particular is well thought-through. The issue is that traditional measures for anti-competitiveness don’t apply to the tech industry. Since Facebook and others’ products are free to use, a monopoly causes no monetary damage to consumers through high prices, which is the classic measure of a monopoly. The only way to effect significant change in the surveillance economy is through new legislation that puts privacy front and centre and provides drastic measures to enforce compliance. Eventually, the cost of complying with the regulation may become prohibitively costly, leading companies to stop collecting everything they can. On the other hand, this could also reduce competition in the sector. As usual in economics, the answer is “it depends.”
Yet another example of outrageous “tech hubris”. Videoconferencing app Zoom left behind a locally running webserver on Mac users’ machines when uninstalled. The webserver’s purpose was to reinstall the app without asking the user’s permission when connecting to a Zoom call. That’s bad enough in itself, but the webserver allowed anyone to patch any other user into a video call, again without asking their permission. To cap it all off, the company doesn’t seem to think it’s a particularly big issue… The arrogance and incompetence on display is breathtaking, and seems sadly representative of the industry today (see also the Superhuman tracking pixel issue covered last week.) The term “nonconsensual technology” quoted in the article above is a fantastic description of this alarming trend.
Wired takes a look at child tracking app Life360, which allows parents to track minute details of their kids’ lives. Aside from the negative effects on child development, which are bad enough, I would like to know how the parents feel about the company selling the data to price insurance policies…Read (Wired)
Flemish broadcaster VRT obtained more than 1,000 Google Assistant recordings with all sorts of private data. While this wasn’t the result of a technical breach, it just shows that the whole principle behind an always-on recording device in your house is a bad idea. Read (Wired)
Extensive and considerate follow-up on last week’s controversy: “Superhuman’s Superficial Privacy Fixes Do Not Prevent It From Spying on You…” : Twitter (Twitter)
Every year, commercially available satellite images are becoming sharper and taken more frequently; another step to constant surveillance? Read (MIT Technology Review)
Approximately 900 7-Eleven Japan customers altogether lost 510,000 USD after hackers hijacked their newly launched 7pay app accounts… Read (ZDNet)
Turns out that an asset that can double or halve in value in a week shouldn’t be relied upon to prop up struggling local economies. Read (Wired)
UK market regulators are planning to ban derivatives on cryptocurrencies for retail investors, warning it is “impossible” to value them reliably, and that trading them is “akin to gambling”. Read (FT $)
Banks are avoiding to commit to Facebook’s Libra, “for fear of antagonising regulators and cannibalising their own digital currency projects.” Read (FT $)
That’s it for this week’s edition. As always, thanks for reading and please forward this to anyone who you think might be interested, it would be much appreciated.