France, Germany, Italy, and Spain: Go Where the Money Is

September 11, 2017

If you are desperate and need money, what do you do? Do you rob senior citizens at money machines? Do you do some MBA fancy math and craft a Madoff? Do you get a job at KFC? Forget that last option.

The answer to the question is tax Amazon, Facebook, and Google if you are a bureaucrat laboring in France, Germany, Italy, and Spain. Local tax revenues don’t pull the wagon. Creating conditions for high value wealth creation is too much work. If I understand “France, Germany, Italy, Spain Seek Tax on Digital Giants’ Revenues,” do the bank robber’s play: Go where the money is.

The real news outfit Reuters states:

France, Germany, Italy and Spain want digital multinationals like Amazon and Google to be taxed in Europe based on their revenues, rather than only profits as now, their finance ministers said in a joint letter.

Group think is wonderfully reassuring, particularly when there is not mechanism to determine what should be taxed by a national authority. Just tax gross revenue is a nifty way to collect money using the “close enough for horse shoes” approach.

Worth monitoring because other countries will be and then deciding how to tap into the Amazon, Facebook, and Google money rivers.

Stephen E Arnold, September 11, 2017

PayPal and eBay Used to Smuggle Funds, According to FBI

September 4, 2017

Online is an exciting place. Now, eBay and PayPal appear to have unwittingly hosted the transfer of terrorist funding, we learn from an article at The Next Web titled, “FBI Says ISIS Smuggled Funds to US Using eBay and PayPal.” Citing reporting by The Wall Street Journal, writer Rachel Kaser reveals:

An FBI affidavit alleges that the Islamic State used everyone’s favorite digital auction house to transfer cash to one of its US-based agents. The agent was disguising himself as a printer salesman — he’d pretend to sell a printer, only to receive payment from IS via eBay and PayPal. Supposedly, it was all part of a network operated by the late Siful Sujan, who was at one point a director of ISIS’s computer operations. The FBI document claims he’s just one of a network of agents stretching from the UK to Bangladesh. It doesn’t say whether they all used eBay to fund their schemes. The suspect in this case apparently used the money he received from the printer sales to buy a laptop, a cellphone, and a VPN.

An eBay spokesperson emphasized their company’s “zero tolerance” for criminal activity on their platform. The company is cooperating with authorities, and the alleged transferor of terrorist funds is awaiting trial.

Cynthia Murrell, September 4, 2017

 

 

The Tech Unicorn Ploy

August 28, 2017

This should not come as much of a surprise— Business Insider reports, “Nearly Half of Tech ‘Unicorns’ Rely on Tricky Math to Land Imaginary Valuations.” So dubbed because they were once rare, “unicorn” startups are ones that have achieved valuations of at least a billion dollars. That is “billion” with a “b.” According to a pair of business professors (from the UBC Sauder School of Business and the Stanford  Graduate School of Business), there are now more than 200 such “rare” prospects globally. Why the apparent boom in unicorn birth rates? Citing a recent study put out by the above-mentioned professors, reporter Alex Morrell writes:

Many of [these startups] are using creative financing maneuvers to conjure imaginary valuation figures that don’t hold up to scrutiny, according to the UBC/GSB study, which examined 116 unicorns. It turns out, when you adjust the valuations to account for guarantees provided to preferred shareholders that dilute the value of common shares, nearly half of unicorns lose their coveted $1 billion status.

The article links to an interview with Will Gornall, the professor from UBC Sauder, that explains how he and co-researcher Ilya Strebulaev re-evaluated purported unicorns to discount the influence of such preferred-shareholder guarantees. They found nearly half sported fake horns, with 11% having been valued at more than twice their fair values. The article continues:

Here’s how it works: In later funding rounds, startups will negotiate a higher share price, but as part of the bargain they guarantee their investors certain protections — such as earning a minimum return on their money or guaranteeing they’ll be paid out in full before all other shareholders. ‘Specifically, we found that 53 per cent of unicorns gave their most recent investors either a return guarantee in IPO (14%), the ability to block IPOs that did not return most of their investment (20%), seniority over all other investors (31%), or other important terms,’ Gornall said. Even though this sort of thing has become normal, valuations haven’t caught up to the fact that providing additional protections to senior shareholders lessens the value of common shareholders. Treating the shares equally can significantly inflate the overall value of the company.

Overvaluation can, of course, help a startup attract funding, talent, and customers. For employees, however, such tactics can end up devaluing their compensation packages. Both workers and investors should be wary of over-valuation trickery.

Cynthia Murrell, August 28, 2017

Online Ad Fraud? You Must Be Joking

July 25, 2017

Years ago a New York conference organizer who specialized in early morning breakfast meetings asked me, “Will you do an exposé about online advertising fraud?” My response to this question was, “No.”

Why did I drag my feet? Three reasons:

In the research for my first Google book “The Google Legacy,” which is now out of print but I sell pre-publication versions 13 years after I wrote it, I realized that online ads were easy to manipulate. Here’s one example. Write a script which visits a page and clicks on an ad. The poor advertiser’s account can be consumed in a nonce. No one paid much attention to this “feature,” and I had zero desire to get involved with ad types. Who wanted hassles when I was still working? Not me.

Second, explaining the who, what, why, and how involved imparting technical information to decidedly non tech type people. Sorry, that’s not for me. Leave that work to those who have the patience and personality to deal with jazzed Madison Avenue types.

Third, none of my contacts wanted to reveal that click fraud was a problem. The approach was similar to the memorable statement, “Android fragmentation? There’s no Android fragmentation.” Yeah, right.

Now there are some brave souls stepping forward in what may become a darned interesting interpersonal, intercompany, and legal battle. This possible dust up is one which I will watch far from the fray.,

To get a sense of what’s about the become either “real” or “fake” news, navigate to “Online Ad Fraud Is a Widespread Problem, Google and Other Big Ad Platforms Admit.” Now the “big” online ad platforms boil down to a two horse race. I suppose the smaller folks like the vendors of annoying weird links, annoying pop ups, and looped videos with raucous sound tracks may be keeping some secrets under a rock, there are people who just want to see those online ad accounts depleted by a software robot. Click, click, click, and the pre paid ad accounts goes down, down, down.

The write up points out:

Google-run tests found evidence of fake ad spaces sold on Google and Oath-owned programmatic ad platforms, as well as well as on PubMatic and AppNexus.

The point, I think, is that the vendors of online ads want to “prove” and “remove doubt” that online ads work. One should keep in mind that almost everything online is an ad. Amazon, for example, is one giant Sears catalog with manufacturers and sellers desperate for positive reviews and placement on the first page of Amazon’s result pages. Do you every look at page 14 when searching for cufflinks which hide USB drives?

The write up focuses on spoofing, offering:

The method is used to trick ad buyers into purchasing advertising space on websites that don’t exist, or that the sellers don’t have access to. Because of the speed and volume of advertising online when bought programmatically, it’s virtually impossible to check if an ad ran where sellers say it was supposed to run.

As long ago as 2003, i noticed that there are many ways and many reasons for fiddling with online ads.

Perhaps Facebook and Google, among others, will share their knowledge, concerns, and ideas. The thrill of losing ad revenue should make for some interesting PR and, possibly, legal activity.

Stephen E Arnold, July 25, 2017

Google: Making Search Better. But What Does Better Mean?

July 17, 2017

I read a darned interesting (no, not remarkable, just interesting) article called “The Google Exec in Charge of Designing Search: ‘There’s Always This Internal Debate about How Much Functionality Should We Add‘”. At first, I thought this was an Onion write up, but I was wrong. The article is a serious expression of the “real” Google. Now the “old” and now “unreal” Google is not applicable. That’s why I thought the write up was like the content I present in HonkinNews.

Here are the points I noted:

First, the write up points out that Google’s core business is its search engine. This surprised me because I thought the firm’s core business was selling ads. I know the “search” system is the honey which attracts the bees (95 percent or so in Europe, for example), but the “search” system is not about finding relevant and objective information. Sure, that happens for some queries, but for most queries, the searches are easy to cache and deliver with matching ads. Examples range from the weather to the latest in the dust ups and make ups between pop stars and starlets.

Second, the source of the write up is an “expert” in “design for search.” I am not sure what “design” means. I am old fashioned and prefer the trusty calculations of precision and recall, the stale bread of Boolean queries, and unfiltered content.

image

I prefer to do my own censoring, thank you. I noted this statement:

The whole goal is to try to organize information and deliver it to you. That’s the problem we’re trying to solve. The design has to accommodate multiple people, multiple expectations, and multiple situations. When you’re looking for whatever answer you want, how do we give you the right answer in a way that you’re like ‘oh yeah, that thing?

No, the “whole goal” consists of sub goals designed to deliver the following, based on my research for the three books in my Google Trilogy (alas, no longer in print but I can provide pre publication copies for those who want to buy a set):

  1. Minimize computational demands on the query matching system via caching frequent queries, partitioning indexes to get around the federation of disparate content like Google Scholar, videos indexed in Google Video, and the gusher of stuff emanating from Google Blogs
  2. With clicks on traditional desktops falling and small screen video queries from smart software or humans (imagine!), Google has to find a way to make ads out of everything. Thus, the need to keep revenue ticking upwards while driving costs down becomes a fairly significant sub goal. Some, like myself, say, “Hey, that’s the actual goal.” Others who enjoy watching billions flood into solving death, keeping Glass alive, and building a new puffy office part would disagree. That’s okay. I think I am right.
  3. Maintain the PR and marketing offensive that makes Google the innovation leader in finding information. The methods involve generating mumbo jumbo that disconnects precision and recall from what Google generates: Results that are often off point or some type of content marketing. (I know content marketing works because the Wall Street Journal told me it does. I assume that’s why Google pays some people to write really rah rah articles about Google. As I said in this week’s HonkinNews, “One must be able to tell the difference between a saint who helps people and a billionaire who rides flying car things.)

The write up identifies the experience “things” which Google is incorporating into its search results. Some of these are content objects like tweets. Others are pages which look like mini reports which cobble together “facts” to make it easy for a person to “know” the answer to the question he, she, or a software module had not yet asked. (Predictive results are part of the pervasive search movement in which Google wants to be a player who gets the biggest payday and the most media love.)

I noted this statement which is worthy of one of the New Age types I bumped into when I lived in Berkeley:

When asked if there are any similarities between the design for Search and the design for Google’s new offices in Mountain View and London, Ouilhet pointed to the fact that both are becoming “more open and more flexible.” He said they were also both becoming more “inclusive between people that belong to Google and people that don’t belong to Google.”

Net net: Google has yet to find Act 2 to its Yahoo/Overture/GoTo inspired business model. Setting up more VC operations, incubators, and buying companies in easy to reach places like Bengaluru, Karnataka, and smart software offices in cheery Edmonton, Alberta are not yet delivering on Act 2. If the European Union has anything to say about Google’s search business, we will have to wait for more action from that Google watcher Margrethe Vestager.

Stephen E Arnold, July 17, 2017

PS. For information about the Google Trilogy, write benkent2020 at yahoo dot com and put Google Trilogy in the Subject field.

Booz Allen Hamilton Under Scrutiny

July 5, 2017

Consulting firm Booz Allen Hamilton is facing an inquiry by the U.S Department of Justice for irregularities in billing inappropriately its clientele mostly comprising of government agencies.

As reported by Washington Times in a news piece titled Booz Allen Hamilton Under Federal Investigation over Billing Irregularities, Contractor Says, the reporter says:

Booz Allen was notified of the probe earlier this month and is working to resolve the matter with federal investigators, the company said in a Securities and Exchange Commission filing Thursday afternoon.

This is not the first time that the consulting firm dubbed as world’s most profitable spy organization has come under fire. In October 2016, an employee of the company was apprehended by federal authorities in possession of classified information. This was the second time an employee of the largest intelligence and defense contractor was arrested on charges of spying and selling classified information.

The investigation pertaining to irregularities in billing in ongoing.

Vishal Ingole, July 5, 2017

IBM Bans Remote Work

June 22, 2017

The tech blog SiliconBeat reveals a startling development in tech-related employment in, “IBM: So Much for Working from Home.” Thousands of professionals who have built their lives around their remote-work arrangements are now being required to come into the office. For many, the shift would mean packing up and moving closer to one of the company’s locations. As writer Rex Crum puts it:

That’s right. Find your way to an office cubicle, or hit the bricks. The Wall Street Journal reported that IBM began instituting the new you-can’t-work-from-home policy this week, and that the company is ‘quietly dismantling’ the program that has been in place for decades. The Journal said the retrenchment on its employees working remotely was being done so that IBM could ‘improve collaboration and accelerate the pace of work.’ It also happens to be taking place not long after IBM reported its 20th-straight quarter of declining year-over-year revenue. Legendary all-time investor Warren Buffett also said this month that Berkshire Hathaway has cut its holdings in IBM by one-third from the 81 million shares the company owned earlier this year.

But will herding all their talent into their buildings really solve IBM’s financial woes? Not according to this Forbes article. Crum recalls that Yahoo made the same move in 2013, when Marissa Mayer put a stop to remote work at that company. (How has that been going?) Will more organizations follow?

Cynthia Murrell, June 22, 2017

HPE IDOL Released with Natural Language Processing Capabilities Aimed at Enterprise-Level Tasks

June 16, 2017

The article titled Hewlett Packard Enterprise Enriches HPE IDOL Machine Learning Engine With Natural Language Processing on SDTimes discusses the enhancements to HPE IDOL. The challenges to creating an effective interactive experience based on Big Data for enterprise-class inquiries are related to the sheer complexity of the inquiries. Additional issues arise around context, specificity, and source validation. The article examines the new and improved model,

HPE Natural Language Question Answering deciphers the intent of a question and provides an answer or initates an action drawing from an organization’s own structured and unstructured data assets, in addition to available public data sources to provide actionable, trusted answers and business critical responses… HPE IDOL Natural Language Question Answering is a core feature of the new HPE IDOL 11.2 software release that features four key capabilities for natural language processing for the enterprise.

These capabilities are the IDOL Answer Bank (with pre-set reference questions), Fact Bank (with structured and unstructured data extraction abilities), Passage Extract (for text-based summaries), and Answer Server (for question analysis and integration of the other 3 areas). The goal is natural conversations between people and computers, an “information exchange”. The four capabilities work together to deliver a complex answer with the utmost accuracy and relevance.

Chelsea Kerwin, June 16, 2017

Google and Hate Speech: None of This I Know It When I See It

June 7, 2017

I read “YouTube Clarifies “Hate Speech” Definition and Which Videos Won’t Be Monetized.” I don’t know much about defining abstractions because I live in rural Kentucky. Our governor just recommended prayer patrols to curb violence in Louisville, home of the Derby and lots of murders on weekends.

Google has nailed down the abstraction “hate speech.” According to the write up, Google’s definition is:

[content which] “promotes discrimination or disparages or humiliates an individual or group of people on the basis of the individual’s or group’s race, ethnicity, or ethnic origin, nationality, religion, disability, age, veteran status, sexual orientation, gender identity, or other characteristic associated with systematic discrimination or marginalization.”

And

“inappropriate use of family entertainment characters,” which means content showing kid-friendly characters in “violent, sexual, vile, or otherwise inappropriate behavior,” no matter if the content is satirical or a parody. The final category is somewhat broad: “incendiary and demeaning content” means that anything “gratuitously” demeaning or shameful toward an individual or group is prohibited.”

And

“controversial issues or sensitive events,” which YouTube defines as “video content that features or focuses on sensitive topics or events including, but not limited to, war, political conflicts, terrorism or extremism, death and tragedies, sexual abuse, even if graphic imagery is not shown… For example, videos about recent tragedies, even if presented for news or documentary purposes, may not be eligible for advertising given the subject matter.”

This is good to know for three reasons:

  1. Google can define abstractions. No disambiguation subroutines are required.
  2. Google could run ads against this type of content and make money, but Google will not do that. (Did Google run ads against these types of content in the past? Nah, “do not evil” shuts the door on that question.)
  3. Facebook can process Google’s definitions and craft even more functional guidelines. (Me too is the basic process for innovation or becoming a publisher with editorial guidelines.)

Next up for Google to define are “love,” “truth,” justice,” and “salary data.”

Stephen E Arnold, June 7, 2017

Wall Street Can Learn from Google

May 30, 2017

Ruth Porat, CFO, Alphabet tells Economic Club of New York that Wall Street should have an open culture like Google which has helped the company to keep profit levels high and investors happy.

CNBC in its news piece titled Ruth Porat Suggests Financial Crisis Could’ve Been Avoided If Wall Street Acted More Like Google said:

Ruth Porat, the former veteran Morgan Stanley executive who’s now chief financial officer of Alphabet, suggested Monday that the financial crisis could have been prevented — or at least made less severe — if Wall Street had operated with the same transparency as Google’s parent company.

Google has no employee stock option at present. According to Porat, this eliminates the possibility of employees rigging the financial numbers or engaging in financial engineering. For Google, its greatest threat is the pace of innovation.

The company has a weekly meet TGIF wherein executives are asked tough questions by employees on any aspect of the company. Porat feels it is this tool that has helped Alphabet maintain transparency and Wall Street has something to learn from it.

Vishal Ingole, May 30, 2017

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