Facebook's hidden data haul troubles German cartel regulator

BONN, Germany (Reuters) – That the personal data of tens of millions of Facebook (FB.O) users fell into the wrong hands is troubling politicians, but Germany’s top competition regulator is questioning the sheer volume of information that the social network harvests.

Andreas Mundt, president of Germany’s Federal Cartel Office, is pictured during an interview with Reuters in Bonn, Germany April 17, 2018. REUTERS/Wolfgang Rattay

Andreas Mundt, president of the Federal Cartel Office, is awaiting Facebook’s response to his findings, published in December, that it abuses its market dominance by gathering data on people without their proper consent.

That includes tracking visitors to websites with an embedded Facebook ‘like’ or share button – and pages where it observes people even though there is no obvious sign the social network is present.

Mundt’s inquiry has gained new relevance since revelations that the data of 87 million Facebook users, gathered via an online personality quiz, was passed to Cambridge Analytica, a consultancy that advised Donald Trump’s presidential campaign.

“For Facebook to collect data when I as a user am on Facebook, that’s clear. The user knows this and has to expect it,” Mundt told Reuters in an interview.

“What is problematic is the collection of data in places and moments where the user can’t realistically expect that data is collected by Facebook.”

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CEO Mark Zuckerberg, in testimony before the U.S. Congress, said Facebook tracked people whether they have accounts or not – something the firm said was “fundamental to how the internet works”.

Facebook tracks an estimated 28.6 percent of web traffic across 59.5 percent of internet sites, making it the world’s fifth most prevalent behind several Google (GOOGL.O) properties, according to WhoTracks.me.

NOT POPULAR, BUT DOMINANT

Mundt’s case rests on his analysis that Facebook has a market share of social media in Germany of over 90 percent – he sees its only direct competitor as Google+ – making it dominant in anti-trust terms and not, as Facebook argues, merely popular.

“If Facebook has a dominant market position, then the consent that the user gives for his data to be used is no longer voluntary,” said Mundt, 57, a jurist who has headed the cartel office since 2013.

“That’s because he has no alternative – he has to use Facebook if he wants to use a social network.”

Facebook, which has more than 2 billion users worldwide, describes Mundt’s view as “inaccurate” but has said it will cooperate with the investigation, which would not result in fines but could lead to some practices being banned.

It is due to submit its response to Mundt’s findings soon. This will then lead to a dialogue on whether Facebook should change its practices voluntarily or, possibly, be ordered to do so.

Separately, the data protection commissioner for Hamburg, the city-state where Facebook has its German office, has launched a non-compliance procedure after being dissatisfied by the firm’s explanation over the Cambridge Analytica leak.

The scrutiny from German regulators enjoys the backing of lawmakers, reflecting broader hostility toward anything resembling surveillance that goes back to Germany’s history of Nazi and Communist rule in the 20th century.

Mundt pushed back against suggestions that, in taking on the case, he was encroaching on the domain of data protection authorities. He said there was a solid precedent in Germany for inappropriate terms of use to be treated as an anti-trust issue.

“The competitive connection is particularly strong from our point of view, because data are intrinsic to the business model,” he said.

“The entire business model relies ultimately on access to data and the reach of these platforms,” he said. “With the Facebook probe we are doing pioneering work – but in no way is this an experiment.”

Reporting by Douglas Busvine; Editing by Keith Weir

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After Uber's Fatal Crash, Self-Driving Cars Should Aim Lower

More than a month after a self-driving Uber struck and killed a pedestrian crossing the street in Arizona, it’s still not clear what sort of failure might explain the crash—or how to prevent it happening again. While the National Transportation Safety Board investigates, Uber’s engineers are sitting on their hands, their cars are parked.

The crash and its inconclusive aftermath reflect poorly on a newborn industry predicated on the idea that letting computers take the wheel can save lives, ease congestion, and make travel more pleasant. An industry dashing toward adulthood—Google sister company Waymo plans to launch a robo-taxi service this year, General Motors is aiming for 2019—and now, suddenly, on the verge of being rejected by a public that hasn’t even experienced it yet.

In other words, AV makers are clearing the technological hurdles and tripping over the psychological ones. And it’s important to recognize there are lots of stakeholders here. If these vehicles are to proliferate and change the world for the better, they’ll need support: from the public, politicians, and from regulators.

In defending their technology, the self-driving promoters always resort to the same set of facts. Every year, 40,000 people die on American roads. Worldwide, it’s about 1.25 million. Millions more are left with serious injuries. Robot drivers, who don’t get tired, distracted, or drunk, could stop the bleeding.

It’s a compelling and worthy objective, but one that’s almost impossible for regular drivers to relate to. Road deaths are a problem for society, not for the vast majority of people who aren’t personally affected. Driving is such a quotidian and often necessary task, it’s easy to ignore the risk that comes with every moment behind the wheel. At the same time, crashes are so common, they become background noise—and they get tuned out. Moreover, putting a serious dent in road death numbers would take decades, since robots could have to gradually replace more than a billion vehicles worldwide.

Knocked onto its heels by the Uber crash and the death of a Tesla driver using Autopilot a week later, the robo-car industry needs a win—and a new playbook.

“Trying to boil the oceans, and solve the complete problem all at once, has a high failure rate,” says Timothy Carone, a business professor at Notre Dame and author of Future Automation—Changes to Lives and Businesses. “One key reason that project leaders lose stakeholder support is because they don’t see the benefits clearly.”

Rather than promising to save millions, the developers in Silicon Valley, Detroit, and elsewhere should offer immediate, tangible proof of their value. And no, Waymo, launching a real-deal robo-taxi service doesn’t cut it. “All they’ve proven is that a car can drive itself around Phoenix,” says Carone. “So what? They haven’t demonstrated the value.”

Community Service

Even if Waymo’s service does make roads safer, the problem is that people are no good at recognizing the upsides of things that don’t happen. If it wants to win over a population rattled by Uber’s crash—which surely hurt the reputation of this technology as a whole—it should offer not just a high-tech taxi, but a solution to a discrete, noticeable problem. Take teenage drunk driving: Why not offer a free service for people aged 16 to 25, between 10 pm and 2 am? You’re giving parents peace of mind, knowing their kids have an easy, convenient, way to get home if they’ve been drinking. And maybe collecting some positive statistics in the process.

Here’s another idea for Waymo, Uber, Cruise, and everyone else working on computer driving: Start a shuttle service for people in suburban towns, taking them home from the local train station. It’s an easy to way to solve the last mile issue, especially for people who don’t have cars—and will make the people in neighboring towns eager to have the tech, too.

“If the goal is specific, targeted, and it resonates with your customers or important stakeholders, then they buy into it,” says Stephanos Zenios at Stanford’s Center for Entrepreneurial studies, who teaches successful launch techniques at a “Startup Garage” MBA course. “It has to solve a real problem that someone has, and which is a pain for them.”

The small, driverless, pod-like shuttles which companies like May Mobility are trialing are a sensible solution to mobility in downtown cores. They can pootle around at a safe 25 mph. But to a car driver, used to speed, and flexibility to choose a route, they’re hardly irresistable. What if they made their services more attractive by negotiating with cities to use bus and HOV lanes to save riders time? The results don’t have to be glorious—just tangible and relatable. If commuters save 20, even 10 minutes a day because they get to make part of their trip in an autonomous shuttle, they’re likely to think better of the tech—and vote for the politicians and regulators who support it.

Rocket Science

Carone cites the the SpaceX Falcon rocket program as an example of where this step-by-step tactic has worked to build support. Elon Musk’s company now has launched 53 Falcon rockets, with 51 full mission successes (including one Falcon 9 Heavy), one partial failure, and one total loss of spacecraft.

It has booked more than 100 future launches, signaling that confidence in its tech is strong. That’s because each launch slowly but surely demonstrated the benefits of the SpaceX approach to improve the cost and reliability of access to space. When failures did happen, there were previous successes to confirming the benefits of the approach.

Uber has also seen the benefits of a phased approach in its core business, ridesharing. The app started in 2009 as a way for people to book rides in fancy black cars. It evolved into a peer-to-peer service, a useful alternative to lacking public transit and expensive, hard-to-find taxis. Over the years, it added special features for large groups, kids, people with pets, and riders in wheelchairs. And so when London threatened to withdraw Uber’s licence to operate in the city, more than 850,000 people signed a petition to keep the company around. That’s the kind of support Uber could use now, for its autonomous driving program.

Same goes for Tesla, and other automakers offering semi-autonomous systems that take over the driving task, with human supervision. Last month, a Model X driver using Autopilot hit a highway barrier and died. In response, Tesla wrote a blog post that said, “If you are driving a Tesla equipped with Autopilot hardware, you are 3.7 times less likely to be involved in a fatal accident.” It added that there is one automotive fatality every 86 million miles across all vehicles. In cars with Autopilot, it claims, that plunges to one every 320 million miles.

Those are impressive numbers, sure, but they’re also hard to comprehend. Hardly anyone drives a million miles in their life, so the difference between 86 million and 320 million feels academic. But if Tesla could break down the stats, and told you hey, on this road you drive everyday, cars with Autopilot crashed, say, 20 percent less often than those without, the tech seems a lot more relevant—and more worth the extra $5,000.

Even if it won’t save your life, it could keep you out of a fender bender that makes you miss that meeting and sees your insurance premium skyrocket. “If you do that, it provides policy makers with information and data that says we’re going in the right direction and we’ve saved 50 or 100 lives this year,” Carone says.

Writing in the journal Nature Human Behavior, researchers from UC Irvine say “as with airplane crashes, the more disproportionate—and disproportionately sensational—the coverage that autonomous vehicle accidents receive, the more exaggerated people will perceive the risk and dangers of these cars in comparison to those of traditional human-driven ones.” You don’t win those people back with lofty promises of crash-free roads and millions of lives saved. You do it by making their lives better, one helpful ride at a time.


Driving on My Own

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Is Apple’s iPhone X a Disappointment or Not?

This is Fortune’s latest weekly roundup of the biggest Apple news. Here’s last week’s roundup.

Apple has a bit of a problem with its iPhone. And its silence on the topic is making matters worse.

Over the last several days, analysts have said that Apple’s iPhone X, as well as its broader iPhone division, are suffering from lower-than-expected sales. One analyst went so far as to say that the iPhone X is “dead.”

Those reports, however, followed a study from Counterpoint Research that suggested Apple’s iPhone X captured more profits in the fourth quarter than any other handsets. What’s more, all iPhone models combined to generate 90% of the smartphone market’s profits.

So, is the iPhone, and more specifically the iPhone X, in trouble? The only one who knows is Apple. And at least so far, it’s not talking.

Alas, there’s nothing left to do but talk about that and all the other Apple news from the past week. Read on for more:

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  1. In a note to investors this week, Mirabaud Securities analyst Neil Campling said that “the iPhone X is dead” and Apple will have no choice but to “discontinue” the handset this year. He cited a report from Apple manufacturing partner Taiwan Semiconductor (TSMC) that suggested its iPhone inventory is “at record highs.” Speaking to CNBC on Friday, Campling said the iPhone X’s problem is that it’s “too expensive.”
  2. In notes to investors on Thursday, both Bank of America Merrill Lynch and J.P. Morgan analysts said Apple’s iPhone sales are slumping and could have been below the Street’s expectations during the last quarter. The analysts based their findings on TSMC’s acknowledgment this week that second-quarter revenue will range between $7.8 billion to $7.9 billion. Analysts had expected second-quarter sales of $8.8 billion. While TSMC didn’t cite Apple by name, the company, which derives a large portion of its revenue from the iPhone, said the mobile market is suffering from “weak demand.”
  3. All of that apparent bad news came after Counterpoint Research revealed this week that Apple’s iPhone X captured 35% of the smartphone market’s profits during the fourth quarter. Apple’s iPhones collectively captured 90% of smartphone profits during the period. Even if the iPhone’s sales are off, in other words, no other company can generate a profit like Apple.
  4. Apple will release three new iPhones this year, including one that will cost just $550, KGI Securities analyst Ming-Chi Kuo said this week. The analyst, who has a strong track record of predicting Apple’s plans, said that the cheapest iPhone to be released this year will come with a 6.1-inch LCD screen. It’ll also have a design similar to that of the current iPhone X, which costs $999. Kuo added that the cheap iPhone could have a dual-SIM feature that would help users easily connect to international carrier networks.
  5. Earlier this year, Apple acquired a news startup called Texture that allowed users to access up to 200 magazines for just $9.99 a month. Bloomberg reported this week that Apple will launch a similar service built on the Texture platform later this year. The subscription service would be built into Apple News and allow users to subscribe to the media outlets they want to read. Apple and the media outlets would ostensibly share in the monthly revenue stream.

One more thing…Former FBI Director James Comey wrote in his book A Higher Loyalty that was released this week that both Apple and Google “drove me crazy” over their stance on encryption and privacy. He added that the companies and others in Silicon Valley “don’t see the darkness” that the FBI sees.

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Uber CEO and transport boss had second meeting over London license battle

LONDON (Reuters) – London’s Transport Commissioner Mike Brown met Uber [UBER.UL]boss Dara Khosrowshahi in January, a freedom of information request revealed, as the Silicon Valley app fights to keep its cars on the streets of its most important European market.

FILE PHOTO – Dara Khosrowshahi, Chief Executive Officer of Uber Technologies, attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 23, 2018. REUTERS/Denis Balibouse/File Picture

Uber is battling a decision by the city’s transport regulator last September to strip it of its license after it was deemed unfit to run a taxi service, a ruling Uber is appealing.

Since then Uber has made a series of changes to its business model, responding to requests from regulators, including the introduction of 24/7 telephone support and the proactive reporting of serious incidents to London’s police.

Khosrowshahi flew to London in October for discussions with Brown after which Uber promised to make things right in the British capital city.

The pair had a second meeting in London in January, according to a response to a freedom of information request from Reuters.

“The Commissioner met with Dara Khosrowshahi on 3 October 2017 and 15 January 2018, both meetings took place in London,” Transport for London (TfL) said.

A TfL spokesman declined to provide an immediate comment on what was discussed at the meeting. Uber declined to comment.

Reuters had asked for a list of every meeting which had taken place between Uber and TfL’s private hire team and/or Brown since Sept. 22 but TfL declined to release such details.

“We are not obliged to supply the remainder of the information requested in relation to meetings as it … relates to information where disclosure would be likely to prejudice the exercise by any public authority of its functions ..,” it said.

A court hearing over Uber’s appeal is due this month before the substance of the appeal is heard in June.

Reporting by Costas Pitas; editing by Stephen Addison

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