April 6 – 13, 2013

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This week’s headline story: Bitcoin – A Wild, Unregulated Digital Currency

bitcoin-600x400A new kind of currency gained national attention this week when it was discovered that the Winklevoss twins, who you may remember as the Olympic rowers who claim to be the legal owners of Facebook, own around $11 million of the stuff. Bitcoin is a digital currency that is not managed by any government or central authority. It was created by a group of hackers in 2009 and is managed by a system of servers called bitcoin miners that track bitcoin transactions, and produce and sell 25 new bitcoins every 10 minutes. Yes, people pay real cash for bitcoins. One bitcoin goes for around $120. They are likely to go up in value in 2017, when bitcoin miners are programed to reduce production by 50 percent.

Because they are unregulated, bitcoins provide individuals with the ability to perform all kinds of transactions “off the books.” As many as 70,000 bitcoin transactions can occur in any given day. As you might guess, a good percentage of those transactions are for illegal goods or gains. However, bitcoin advocates are quick to point out that many, many perfectly legal transactions occur in bitcoin every day. The Winklevos twins and others like them believe that bitcoins represent the first true global currency. Other financial analysts call bitcoins a Ponzi scheme and a bubble waiting to burst leaving investors broke. Serious investors are beginning to invest in bitcoins on the chance that the currency might just take off and make a fortune for early investors.

and elsewhere in Tech News.

  • New technologies from AT&T and Japan’s NTT dramatically increase the distance that data can travel through long distance fiber-optic connections. The new breakthrough will help telecom companies cope with the anticipated surge in data use—projected at 30 to 40 percent a year, by increasing the throughput of undersea fiber optic cables.
    AT&T Researchers Set a Long-Haul Data Record [Tech Review]
  • Facebook CEO Mark Zuckerberg and other Silicon Valley leaders have teamed up to form a political-focused group named Fwd.us (pronounced “forward us”). Forward Us is committed to reform U.S. immigration policy so that talented, skilled immigrants are provided a path to citizenship. It also calls for higher standards and accountability in schools and increased focus on learning about science, technology, engineering and math. The end goal is to address the shortage of science, technology and engineering professionals in the U.S. to allow the country to advance economically.
    Facebook CEO Zuckerberg Gets Political [NewsFactor]
  • An online survey of around 3,000 respondents by VitalSmarts found that 78 percent of users believe online incivility is rising, and 2 in 5 users have blocked, unsubscribed or unfriended someone over an argument conducted via social media.The firm recommends keeping an eye on the use of offensive words, pausing to keep emotions in check, pointing out areas of agreement before noting the disagreements, and taking emotional conversations offline.
    Rising Rudeness in Social Media, Study Finds [NewsFactor]
  • Verizon and other wireless carriers have altered their privacy policies to begin selling member location data anonymously. The huge data sets show where people live, work, and play and should yield some valuable information for businesses, city planners, health professionals, and others. The move also provides carriers with a new sources of revenue.
    How Wireless Carriers Are Monetizing Your Movements [TechnologyReview]

and in Information Security news this week…

  • The latest security patch from Microsoft has caused some Windows 7 PCs to crash and not recover. “We’ve determined that the update, when paired with certain third-party software , can cause system errors,” said Dustin Childs, group manager of Response Communications for Microsoft Trustworthy Computing. Microsoft advises that Windows 7 users uninstall the update to revert to the pre-patch state.
    Windows Security Patch Killing Some PCs [NewsFactor]

and in Tech Industry news…

  • The PC market is down 13.9 percent compared with the year-ago, the steepest decline ever in a single quarter. Some analysts are blaming the decline on Microsoft’s new Windows 8 which some say not only failed to stimulate the market, but actually may have effectively killed it.
    Did Win 8 Kill the PC Market? Worst Quarterly Drop Ever [NewsFactor]
  • Google Glass is coming! The head-mounted computer will be released within a month and will cost $1500.
    Google Glass Shipping Within a Month — for $1,500 [NewsFactor]
  • Facebook has begun charging its users to send messages to individuals outside their friends list. It now costs $1 per message to send a message to a non-friend’s inbox. In the UK Facebook charges $15 per message to message celebrities. The new policy is intended to reduce spam, while making Facebook some money.
    Spam Attack? Facebook’s $1 Message Charge Expands [NewsFactor]
  • LinkedIn, the social network for professionals, has purchased mobile newsreader app Pulse. The acquisition indicates LinkedIn’s aspirations to become the go-to resource for industry-specific news on mobile devices.
    LinkedIn’s Mobile Strategy Gets a Pulse [Ecommerce Times]

and finally….

  • Google has created new policies that allows its members to decide what happens to their data when they die. Google members can choose whether to delete their data after three, six, nine or 12 months of account inactivity. Alternatively, users can designate a digital next-of-kin to receive their data. The new policies provide users with privacy after death, and also address the immense amount of data that is accumulating online.
    How Long To Let a Digital Life Linger? Google Lets You Pick [NewsFactor]

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Big Data and the Internet of Things

A new buzz word is emerging as a mainstream topic for corporate executives. Actually, it’s two words: BIG DATA. The concept of Big Data emerged from the vast and exponentially-growing amount of data generated by social media, mobile devices, apps, and all the other digital tools wielded by the global population every day. Corporations and others are driven to collect all of that data and analyze it to gain useful insights that can be used to make better business decisions. Companies like Google, Facebook, AT&T, and many others have gotten good at collecting the data. Developing software to analyze the massive amount of data being collected is the primary challenge of the Big Data industry.

In coming years that challenge will become much more complex. Today, the average Internet user owns two Internet connected devices: typically a smart phone and computer. Over the next couple years, that number is expected to jump to seven, more than tripling the amount of devices on the Internet. The bulk of new Internet devices will represent things rather than people – thermostats, security systems, televisions, electric meters, cars, refrigerators and other appliances. These devices will increase the amount of Big Data by adding information like the temperature in every home at every moment, the energy usage of each residence and business, eating habits, laundry habits, water usage, waste production, and more. Add this information up and the Internet becomes a source of real-time information about the state of the entire planet at any given moment in time.

IBM researchers view the Internet as becoming a “global electronic nervous system, with trillions of individual sensors monitoring the status of everything of interest to humans.” IBM wants to stream all of those exabytes of data to its cloud-based cluster supercomputers to extract the “ultimate value from the data using Analytics software modeled on the human mind.”

You’ll be hearing a lot more about Big Data in coming months and years, as the world awakens to the potential of IBM’s vision. Many companies are working on developing analytics software that can tackle Big Data for all industries including health care, transportation and energy. Last week, Big Data company Splunk Inc, made an impressive debut on Nasdaq where it doubled its $17 initial public offering price. This marked Wall Street’s awakening to the value of Big Data, and alerted the media to a new industry focus. Big Data could provide many benefits beyond improving corporate profit margins and padding investment broker’s wallets. If managed properly, Big Data could also provide valuable insight for improving life on Earth. Managing Big Data in a secure and ethical manner, with concern for consumer privacy, may end up being the biggest challenge of all.

Say Hello to generic Top-Level Domains (gTLDs)

The Internet Corporation for Assigned Names and Numbers (ICANN) is the non-profit, non-governmental organization that brought us the current Internet domain name system. ICANN brought us top level domain names featuring .com, .org, .net, .gov, and recently .xxx. Until this week, the list of possible top-level domains has remained rather short and certainly finite. Thursday, ICANN began accepting applications for generic top-level domains, or gTLDs, which provide the opportunity for a limitless amount of top-level domains. For a mere $185,000 a business can license a new gTLD for 10 years, with a $10,000 per year fee. For example, Coke can license .coke, to support URLs such as www.buy.coke. The new gTLDs also support non-Latin language scripts like Arabic and Chinese. ICANN believes that the new system will solve the current shortage of useful URLs. The new system is likely to open a pandora’s box of new domains, and over time .com could become a relic of the past.

Not everyone is thrilled with the new system. The U.S. government is worried that gTLDs will make it difficult to detect and track online fraud. It fears that the new names will create consumer confusion which scamsters can then take advantage of. Businesses will have to spend a lot more money protecting their brands across many more TLDs. The new names will be costly to businesses in other ways as well. Companies like Google will have to modify its algorithms to accommodate the changes caused by new TLDs. There is also fear that the gTLDs will wrest control of the Internet and Web away from the U.S. and provide businesses and foreign governments with more influence over how it is managed.

National Strategy for Trusted Identities in Cyberspace

Debate continues around the White House’s National Strategy for Trusted Identities in Cyberspace. The strategy calls for a unified system in which Internet users can enroll, in order to positively identify themselves to others on the Internet. While supporters of the plan say that it will simplify and secure online financial transactions, detractors caution that it will put users at higher risk since it essentially places all of the user’s security credentials in a one basket. Privacy advocates also worry that the system will allow government, law enforcement agencies, and businesses to more easily track a user’s online activities.

Addressable Ads

On the Web, businesses place small text files on your computer, called cookies, that assist in tracking your Web browsing activities. The information gathered with cookies is used to personalize your browsing experience. This includes displaying advertisements that are targeted at your interests.

Now cable TV and satellite providers want to try a similar technique called Addressable Ads. By monitoring the shows you watch on TV, the providers are able to learn a lot about your interests and tastes. Using this information they will soon begin sending commercials to your television specifically selected for you. So, for instance, at 9:30PM, in the middle of a broadcast hockey game, rather than showing all viewers the same commercial targeted at males aged 18 to 35, each viewer would see a commercial targeted at his or her unique interests. In an Addressable Ads pilot in Baltimore, Comcast discovered that viewers were 32 percent less likely to turn away from Addressable Ads.

While Addressable Ads provide more interesting commercials for viewers,they also cause concern for those who care about privacy. The customer viewing information gathered by cable and satellite providers is typically shared with data aggregation companies, which in turn can pass it on to advertisers. Unlike Web cookies, Addressable Ads are able to associate customer names, addresses, and other information with the data collected. This becomes even more worrisome as television, Internet and phone continue to converge. Cellular providers have the ability of placing ads on phones based on the current location of the device. When all of these technologies are combined, marketers will know about your every habit. They will be able to combine knowledge of your interests, your location, your activity, the time of day, and other factors to provide you with the perfect ad. Current privacy legislation is ill equipped to protect us from such an implementation of technology.

Facebook Challenges Google

Competition between Google and Facebook is likely to ramp up this week. Facebook is expected to announce its own email service at the Web 2.0 Summit on Monday. A facebook.com email service would compete directly with gmail.com. Facebook is also challenging Google in the online advertising space. Facebook increased its share of the online ad market in the third quarter up from 18 percent to 23 percent. This week Google blocked Facebook and other Web services from freely accessing its user’s information. Also, an email from Google to its employees was leaked indicating a generous holiday bonus for Google employees plus a ten percent across the board raise in 2011. With 23,000 employees making an average salary of $100,000, the raises will cost Google $233 million annually. Analysts speculate that Google is sweetening the pot in order to keep employees from jumping ship to Facebook.

Tracking Web Fingerprints

The Electronic Frontier Foundation has discovered a new way for Web hosts to track user’s movements around the Internet without using cookies or IP addresses. Each web page request that arrives at a server contains detailed information about the user’s computer such as browser type and version, and the plugins that are installed. That information can be compiled to create a unique fingerprint for most computers. Computer fingerprints can be used to compile information about a user’s interests and habits which are valuable commodities for Internet advertisers.

Google Takes On China

Google shocked the world this week by announcing that it would rather shut down its China operations than comply with China’s censorship laws. The announcement was applauded by human rights organizations around the world, with bouquets of flowers being laid across Google’s sign at the entrance to its large Beijing headquarters. Meanwhile Google investors are stunned speechless by the prospect of Google snubbing the country with the 2nd largest, and most rapidly growing economy.

Google’s decision was prompted by a cyber attack on Google servers last month that originated in China. Google’s investigation of the attack shows that it was not the only target. Twenty other large businesses and government agencies were also hacked. In each case, the attackers were seeking information related to human rights activists with a history of attacking China and its practices. While it is not possible to prove the attack was government sponsored, investigators believe that the level of sophistication involved point to government sources.

China has responded to the allegation by downplaying the incident and reiterating that all businesses in Chine are bound to uphold China laws. As it appears China will not budge on its censorship requirements for Internet companies, everyone is waiting to see if Google will stay true to its word and close its China operations. Meanwhile the US government intends to make a formal demand of China to investigate the incident and report back its findings.

Yahoo!, who has previously found its own Chinese operations caught between China’s censorship and human rights groups, was also a target in the recent attack. Yahoo! released a statement supporting Google’s stance against China. The statement stirred up contempt from Yahoo’s China partner, Alibaba, who called Yahoo’s response reckless. Yahoo owns a 40 percent share of the giant Chinese online company that runs Yahoo! China. Meanwhile, Microsoft, who was also hacked, is downplaying the incident stating that it has no plans to change its business strategy in China. Microsoft has partnered with the Chinese government to crack down on software pirating in China. To criticize China might destroy the progress Microsoft has made in its efforts.

The hackers were able to infiltrate the corporate networks utilizing a security hole in Internet Explorer. The method of the attack was recently made public and is already being used by hackers in more recent attacks. Security experts are cautioning INternet users from using Internet Explorer, although Microsoft says that Vista and Windows 7 users should be safe if they run IE in Safe Mode. Microsoft is scrambling to create a patch for the vulnerability. Meanwhile Google announced that it is adding HTTPS encryption to all gmail services to help protect user’s privacy.

So, like a soap opera on a global scale, we will have to wait to see how this story plays out…

  • Will Google really pull out of China?
  • Will other companies follow Google’s lead?
  • How will China respond to U.S. demands for an investigation?
  • Will Yahoo and Alibaba kiss and make up?
  • Will Microsoft patch Internet Explorer before many others are hacked?

Tune in next week to find out!

Don’t be evil?

Image by Kaldari - licensed under Creative Commons Attribution 2.0 License
Image by Kaldari

Google, the company with the motto “Don’t be evil,” has apparently flip-flopped its view on behavioral advertising. Just last year Google said it had no plans to engage in behavioral advertising and admonished companies that did. Now Google has announced a new service it calls “Internet-based” advertising. Internet-based avoids the controversial term behavioral, but is none the less the same. Google will use the information it gathers about Google users in order to present targeted ads on all Google owned services as well as on the millions of Web sites that use Google’s AdSense.

Google’s move to behavioral advertising is considered an invasion of privacy by some. It illustrates how Google is drawing extensive information about users from across Web sites to create detailed consumer profiles. This is the same type of activity that landed the Web advertising company, DoubleClick, in hot water in 2002. DoubleClick ended up paying $1.8 million to settle a law suite charging the company with invasion of privacy. Besides the hefty fine, DoubleClick had to agree to stop collecting private information on users across Web sites on which DoubleClick advertised. Google purchased DoubleClick in 2007. Now we know why.

Google is fighting off criticism of its targeted advertising by citing the fact that users are provided with a method for opting out of the program. Users can also edit their profiles to control what kinds of ads are served to them.

Privacy groups are up in arms about Google’s decision. The Center for Digital Democracy (CDD) is calling on Google to change the service to “opt in” rather than “opt out” in order to insure that users involved are well informed. The Electronic Privacy Information Center says that Google’s new direction is a “privacy disaster” and is calling on the U.S. Federal Trade Commission to stop Google.

Google isn’t the only company collecting tons of user data in hopes of profiting from it. Cell phone companies have also begun selling location information and activity information gathered from the handsets of their subscribers. This information is valuable for analyzing trends both on an individual level and on a community level. Software available from citysense.com uses the location of cell phones in San Francisco to show population densities at any given moment around the city. Using the software you could find the most popular club, or the quietest restaurant. Businesses and governments use similar software to track individual’s around the city in order to build user profiles, and track social trends.

User information from social networks is also being harvested for marketing purposes. Twitter is seen by advertisers as a gold mine of up-to-the-second information that can be used to measure the pulse of public sentiment. With millions of users answering the question “What are you doing” several times a day, Twitter is the perfect tool for gaining insight on social and cultural trends.

Google’s move to behavioral marketing has prompted a reaction from congress. Representative Rick Boucher and two other congressmen are working to revive portions of the Consumer Privacy Protection of Act, an effort to protect consumer privacy online that was defeated in 2002. The Bill requires online companies to notify consumers when information is being collected about their online activities. It also allows consumers to opt-out once notified.

Two trends are likely to make online consumer privacy a headline topic in coming months. First is the growing trend of consumers to lead transparent online lifestyles, providing personal information about themselves through social networks, and spending increasing amounts of time online through mobile wireless connections. Second, is a troubled economy pressuring companies to test the limits of public and governmental tolerance, in order to profit from the data collected from online activity. Consumers should be aware that all of their online activities are being monitored, analyzed, stored, and sold by those that provide Internet services and content. Only government regulation and public sentiment will keep that information from being widely distributed and monetized.