Faster than light?
Information travels at the speed of light. It takes 1 millisecond for information to travel ~300 kilometers. The distance between Chicago and New York averages down to about 1300 km, which implies a travel time of almost 5 milliseconds if one is using a futuristic, fast as light, mobile. However, one could also fly to Washington DC, which in absolute distances should be a shorter trip (1120 km). The path to Washington is not optimized, which results in an information transfer time of about 7 milliseconds.
On September the 18th 2013 at 2PM something peculiar happened. People were about to receive the latest news from the Feds (Federal Reserve) concerning the interest rates. Would they rise, drop or stay the same? News like this can have a big impact on the world economy. When interest rates drop, it is a sign that the government wants to stimulate the economy. It is not strange to find that such news is usually followed by a rise in stock market levels and gold prices. The same thing occurred when the Feds announced that they would support the boost of the American economy and lower the interest rates.
All the news agents that are allowed by the Fed to cover the story and bring out the news at 2PM are located in one room. This lockup room is located in Washington DC, heart of many news agencies. Stocks are traded at the New York Stock Exchange, located in New York. A lot of futures and options (gold alike) are traded in Chicago. The ground distance between Washington and New York covers a little less than 400 km. For the news to reach New York, it would take about two milliseconds due to the cables not being optimized properly. So when the news is released in Washington DC, it takes 2 milliseconds to reach New York, and another 5 milliseconds (7 in total) to reach Chicago where futures are traded.
However, when the news was released at 14 PM precisely, stocks in New York, and gold in Chicago immediately (within 1 millisecond) rose. This is physically impossible, unless the news was already present in New York and Chicago. This leads us to believe that multiple things could have happened. First, it could be possible that someone, somewhere in the lockup room pushed a button on a small device, allowing a so called low-latency trading algorithm computer to receive this signal and interpret it. These low-latency computers would then place orders on gold and stocks. Another possibility is that there were some leaks. People that already knew the outcome. These leaks could have told computers to place orders at 14:00:00.000 precisely.
Whatever happened, fact remains that some people made a lot of money by beating the market using IT. Or they have found a way to outrun light.
http://www.cnbc.com/id/101056168
http://www.nanex.net/aqck2/4436.html
In other news, Hibernian Atlantic is building an underwater fiber optic cable, that will connect London to New York directly. Of course, such cables are already in place. This new cable however will have an optimized route, which in turns makes the cable slightly shorter than the other cables, resulting in a 5 millisecond faster information transmission time from New York to London. This will greatly benefit the end users, since it will allows them to place orders 5 milliseconds faster than the competition. These end users are very large funds who use Algorithmic IT systems to place orders based on variables like time, price and quantity (or Fed data concerning interest rates). The data is fed to these computers directly, and these computers make the decisions to buy or sell based on the data that is fed. When this data arrives 5 milliseconds earlier, they can make a decision 5 milliseconds faster than a competitor, placing them in front of the buy and sell queue.
In 2006 one third of all stock trades were done by automated programs. I wonder how much of all the stock trades are done by automated processes in 2013?
Is Facebook both platform provider and platform sponsor?
Yesterday’s guest lecture by Professor Marshall van Alstyne was all about platforms and different models to make business with them, by having control over some crucial part of the platform. As Prof. van Alstyne discussed, in order for someone to make money, either the side of platform providers (in control of the hardware and operating system bundle that consist the platform) or platform sponsors (designers of application and owners of IP rights), should be owned by one entity.
One of the biggest out there is Facebook, offering advertisers a marketing platform that has well over 1 billion users on it. It also offers developers the possibility to connect applications to it, giving them access to a huge user base. Facebook then benefits from the added content that comes with these applications. When it comes to the question of platform providers and platform sponsors in this case, I believe Facebook is both.
Facebook as platform provider:
Facebook definitely provides the main platform (excluding applications that users log onto with their Facebook login), and is the main point of contact with the users of the social network, having access to user data and being able to capitalize on that by offering targeted advertising. The power of the company as platform provider keeps growing, as it owns its own data centers and is also starting to threaten traditional hardware suppliers in the process!
In June Facebook opened its latest datacenter in Luleå, Sweden. The company designed the datacenter itself, without traditional hardware suppliers like Dell or HP. Not only that, the new data center is also “the most energy-efficient computing facility ever built”, being nearly three times cleaner than an average data center, taking advantage of the cold Nordic weather. The bad news for hardware providers is not only that they won’t have Facebook as a customer: Facebook also published the hardware blueprints of the data-center, putting a lot of pressure on the hardware suppliers by setting the example of the “data center of tomorrow”. This means companies can copy the design of Facebook’s greener data center and go around traditional companies like HP who build datacenters and rent storage clouds as their business.
Facebook as platform sponsor:
The platform sponsor determines who may participate in the network and design products and services for it. Facebook definitely has the upper hand in contracts with companies like Zynga who create games for the large mass of Facebook users.
It could thus be concluded that Facebook has a very strong position as it controls most aspects of a huge platform: Unless heaps of users start abandoning the social network, it can focus on making the best contracts with good developers. And cash in the growing amounts of ad revenue.
Eisenmann, T., Parker, G., and Van Alstyne, M.W. 2009. Opening Platforms: How, When and Why? in Platforms, Markets and Innovation, Gawer, A. (ed.), Northampton, MA: Edward Elgar, pp. 131-162.
Will Android partners have to compete with Google?
After having last weeks lecture about the openness of platforms and the roles of platform sponsors and providers, the following news caught my eye. Rather than solely supplying the Android operating system to smartphone platform suppliers like Samsung, HTC, and LG, Google had launched its own smartphone: the Nexus. In cooperation with HTC, Google launched its first smartphone Nexus One in 2010. After the acquisition of Motorola Mobility in 2011, Google has acquired many patents and knowledge in the field of telephone technology, and has now brought another smartphone, Moto X, to the U.S. market.
It seems similar to Microsoft with the purchase of Nokia’s Devices and Services division. Microsoft is now a Windows Phone 8 OS supplier and at the same time a dominant handset manufacturer. More than 80% of Windows Phone sales come from Nokia.
Nexus and Moto X may not a particular threat in terms of market share yet, but what happens if one these devices becomes a multi-million seller? Google would then be competing with its own providers of the Android system, such as Samsung, HTC and LG. At the moment Samsung may not have to worry with the launch of the Galaxy S4, but should HTC, and LG feel threatened?
It will be a challenge for Google to maintain good relationships with its manufacturers, while trying to grow its hardware business. Google must consider how to leverage its dominance without provoking a damaging response from end users, its smartphone platform providers, regulators, and antitrust authorities .
References:
Eismann et al., 2008, Opening platform: how why and when?
Rijerman, D. 2011, Google koopt Motorola Mobility voor 12,5 miljard dollar, Accessed via <http://tweakers.net/nieuws/76172/google-koopt-motorola-mobility-voor-12-komma-5-miljard-dollar-update-2.html>
Spence, E. 2013, Will Android Partners Be Happy To Compete With Google And Motorola, Accessed via: <http://www.forbes.com/sites/ewanspence/2013/10/12/will-android-partners-be-happy-to-compete-with-google-and-motorola-in-2014/>
Using Big Data to Create Smart Cities
The world is experiencing a period of extreme urbanization. About one in two people lives in cities already, by 2050 it is estimated that 75% of the world’s population will. Not surprisingly, this urbanization is putting significant strain on city infrastructure which, in many cases, was built for populations a fraction of their current size. This creates a need for more efficient, smarter cities.
So what is a smart city?
BusinessDictionary.com defines a smart city as a developed urban area that creates sustainable economic development and high quality of life by excelling in multiple key areas: economy, mobility, environment, people, living, and government. Excelling in these key areas can be done so through strong human capital, social capital, and/or ICT infrastructure.
Or, in other words, how do you fancy living in a city with which you can interact? A city that acts more like a living organism, a city that can respond to your needs.
Using big data to create a smart city
Our cities, like each one of us, are immersed in huge amounts of data: it comes from buses and trains, water pipes and gas lines, hospitals and buildings. Technology has given us the ability to collect and analyse this information. Even more, the ability to do it in real time. Using advanced analytics solutions, big data can reveal insights that make it easier to understand and to act at every level of city administration. When cities give the right information to the right people at the right time, they make better decisions and measure the ongoing impact of their decisions.
A smart city can be created using both top-down and bottom-up approaches. Top-down approach means that governments or city councils create platforms to collect data, analyse data and make decisions using it. The government/city council also decide which data is available publicly and which is not (e.g. Rio Control Room implemented by IBM). Bottom up approach means that citizens create and/or use apps to upload various information and make it public for the convenience of others. The government/city council then cannot control data flows (e.g. Egg application is compiling data about air quality by selling cheap sensors which people put outside their homes where they collect readings of green gases, nitrogen oxide and carbon monoxide; the data is sent to the internet where it is integrated on a map to show pollution levels around the world).
However, like with so many other things, the best option seems to always be in between. Would not it be great, if governments would create platforms where the data is publicly available and citizens can constantly update it? Getting citizens involved in the process of improving cities is crucial, thinks Andrew Hudson-Smith, director of the Centre for Advanced Spatial Analysis at University College, London. He and his team have created a city dashboard as part of plans to make London smarter. Like Rio’s control room, the dashboard collates data such as pollution, weather and river levels. But it also looks at what is trending on Twitter and how happy the city is. But more importantly, there is also a version available on the web and because of that the public has the same information as the policy-makers and that has the potential to be incredibly powerful. “A lot of the big firms are looking at the control room model, but it is backward thinking. Why put the technology in one room when you can put it in the hands of everyone?” he asks.
“At the end, it is going to be smart citizens that make smart cities”, says Dan Hill, chief executive of research firm Fabrica.
http://www.businessdictionary.com/definition/smart-city.html#ixzz2hVhEoLMU
http://www.bbc.co.uk/news/technology-22538561
http://www.ssgkc.com/strategic-initiatives/smart-city/
http://cities.media.mit.edu/about/cities
http://www.economist.com/blogs/babbage/2013/09/building-clever-cities
Who is responsible for content on the Internet?
Who is responsible for content on the Internet? This question has been bothering the legal sector for several years now.
One case that is often quoted in this discussion took place in 2010, when three executives of Google were sued due to privacy violations. The reason for this was that a video of youth bullying a kid with Down syndrome was posted onto Google Video. The instant Google received complaints about the video (a few hours later), they deleted it from their website. However, the prosecutors claimed that Google should have never allowed the video on its website. The executives faced a 6-month conviction and large fines. In the end the executives got acquitted.
Last Thursday, a similar, albeit less severe, case, occurred in Estonia. A news site there frequently received offensive comments of readers on its website. An Estonian judge held the news site responsible for the content displayed and fined them.
In appeal of this case in the European Court of justice seven European judges ruled that Internet news websites are responsible for the content posted by readers in the comment section. From now on these website can be held legally responsible if offensive comments are placed on their site.
This development on responsibility for Internet content sounds troubling. In a world where Internet is open to contributions from everyone it seems difficult to hold someone responsible for the content. On one hand, websites should moderate the content they run on their pages, either written by themselves or by their contributors. But on the other hand, it seems almost impossible for certain large website to moderate all content posted on their pages.
What do you think about these two cases of responsibility for Internet content?
http://mashable.com/2010/02/24/google-italy-executives-guilty/
http://geetarchurchy.wordpress.com/2010/02/24/who-is-responsible-for-internet-content/
http://www.nu.nl/internet/3599708/europees-hof-stelt-website-verantwoordelijk-reacties.html
YouTube the new Television Channel?
Every one of you probably occasionally watches a music video, a movie trailer, or another video on YouTube. There are a lot of people who watch YouTube quite often and subscribe to channels so they get updates whenever a new video is uploaded by the owner of the channel.
Nowadays a growing number of people is able to make a living of owning a YouTube channel. For a lot of people it is a whole new concept to hear about people actually making a living out of creating YouTube videos. Of course they don’t make the money by copy and pasting music videos; they can only earn the money by uploading original content.
It seems more and more that YouTube will take over the old fashioned television business. There is a growing number of people becoming very active on YouTube, and it brings forth new idols and new ideas. People like to be able to choose exactly what and who they will watch and YouTube (and other likewise mediums) provide this option.
About two weeks ago one of the largest creators, producers and distributors of television brands in the world announced they are going into a partnership with a Multi-Channel network. This partnership is meant for making their position on YouTube stronger.
This investment could mean that the television world is seeing the opportunities and treats of the internet and therewith YouTube. Movement towards YouTube means that viewers are able to have more direct contact with the creator of the video and make watching more interactive, also there are more opportunities to gain information and data about the viewers. This data could provide interesting opportunities for perhaps the advertising business.
Maybe in a few years traditional broadcasting companies will make the big shift towards YouTube and other likewise mediums instead of using the one direction television channels.
Will Pay Per Gaze be the future CPC?
As already mentioned in various blogs on this site, the new Google Glasses are creating a lot of new opportunities. Having talked about the supporting opportunities in our daily life it also seems to open new opportunities for Google to their advertisement business model. Let me introduce to you: “Pay-per-gaze Advertising”, where Google has already assured themselves with the patent.
How does it work?
Let begin with the function that advertising firms on Google will no more pay per click, but per gaze. When a customer wears his Google Glasses, the Glasses will keep track of the eyes of the customer. Monitoring where the customer really looks at with google advertisements, Google will charge the advertising firms.
More opportunities
A addition to this will be monitoring the customers eyes when they look at advertisements in real life, such as billboards and magazines. With this data Google will be able to create valuable information for much different companies and sell this to them.
Another addition to the former is that they expect the data capture can get even more detailed information, adding a sensor that keeps track of the dilation of the customers pupil they assume the glasses will be able to judge the effectiveness of an advertisement. The patent Google has, states: “For example, if the advertiser desires to generate a shocking advertisement to get noticed or a thought-provoking advertisement, then the inferred emotional state information and/or the gazing duration may be valuable metrics to determine the success of the campaign with real-world consumers,”.
What do you guys think of this new opportunity for Google to collect advertisment money based on more detailed data? Will it be the future CPC?
Sources:
http://www.theverge.com/2013/8/18/4633558/google-patents-pay-per-gaze-eye-tracking-ads
http://www.mdgadvertising.com/blog/will-pay-per-gaze-give-a-whole-new-look-to-digital-advertising/
The “Industrial Internet” by G.E.
G.E. (General Electric), one of the world’s biggest makers of equipment for power generation, aviation, health care, and oil and gas extraction, is planning to change the products they produce. The company wants to move to the ‘Industrial Internet’. This involves producing products that combine industrial equipment, Internet-linked sensors and software to monitor the performance and analyze big streams of data. They already announced about 24 products that will have these sensors incorporated.
G.E. states that the “Industrial Internet” is “the convergence of big iron with big data to create brilliant machines”. It increases efficiency, minimizes waste and makes the people operating them make smarter decisions (G.E., 2013).
G.E. wants to fully switch to the “Industrial Internet” by next year. The company is very enthusiastic about collecting data about the performance of the products and analyze this data to get an idea about the possible flaws and try to respond by improving the products.
However, not only the way that products are produced changes. It also affects jobs of people currently working at G.E. Since, the manufacturing is being automatized, people fear of their job. G.E. announced that the workers would be retrained to learn how to interact with the machines.
In the future “the scope and kinds of jobs will change, and they will require lots more math and science skill”, as stated by Mr. Ruh (2013) the vice president of global software at G.E.
Implementation of the “Industrial Internet” by G.E. is a very good example of the value of information changes the ways in which businesses are operating. G.E. has been one of the biggest promoters of the “Industrial Internet”. The company is aware that collecting data about the performance of their products is necessary to be “ahead of the game”. Constantly improving their products and therefore being ahead of the competition. The production part of G.E. has changed and also “the ways of working” for their employees. They will be more skilled, through retraining. In the future the will have different kinds of employees, who will be more focused on dealing with and analyzing big data.
Sources
Google Introduces Shared Endorsements
When visiting Google’s homepage recently, you will probably have noticed a blue bar at the top of your screen, stating: “Hi there. Our new Terms of Service update how we display your information in content & ads.”
This change in terms of service allows the company to include personal information like users’ names, photos and comments in advertisements that are shown across the Web, based on posts, ratings and reviews they have made on one of Google’s services, like Google Plus or Youtube.
These so-called shared endorsements will be coupled with a specific advertisement of a product or service a person has commented, rated or reviewed on and are publicly visible. This means that the next time you see an advertisement on a Google-related service, it will come together with someone’s face and name, someone you may or may not be familiar with.
Shared endorsements will only be used for people over 18 and can be opted out of being included, since one may be skeptical about his or her face and name being used in ads without explicit permission. Despite this skepticism, Google defended its new ads function by saying: “Feedback from people you know can save you time and improve results for you and your friends across all Google services.”
Google is not the first to introduce this form of advertising. Facebook has already been working with this for some time. The difference between the two is that when Facebook unrolled the new policy, it did not give its users the option to opt out of the endorsement. This has caused the company to settle a class-action lawsuit claiming it had not adequately notified users about how it was using endorsements. As a reaction to this, Facebook tried to impose a new privacy policy that would have given the company clearer rights to use social advertisements without a user’s explicit permission. However, various privacy groups complained and the Federal Trade Commission began an inquiry into the changes, prompting Facebook to suspend the process.
Google itself is also under the supervision of the F.T.C. for a previous privacy violation and therefore introduces its change in terms of service in a slightly more nuanced way than Facebook did, namely by notifying users of the change with banners on Google’s home page, in search results and in Google Plus notifications.
Shared endorsements illustrate the latest example of the never-ending push for online companies and platforms to collate in one place all personal information people share online and use it to personalize a user’s online experience.
What do you think of this new way of advertising? Do you agree with Google stating that feedback from people you know can save you time and improve results for you and your friends, or do you rather feel like your privacy is being violated with the use of shared endorsements?
Sources:
-http://www.businessweek.com/articles/2013-10-11/google-plans-to-include-users-faces-in-ads
-http://www.mercurynews.com/business/ci_24289547/google-add-user-recommendations-advertising
-http://www.nytimes.com/2013/10/12/technology/google-sets-plan-to-sell-users-endorsements.html?pagewanted=1&_r=0&ref=technology
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