Tag Archives: markets

Markets in Internet Domains

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ISOC, which owns the .org Internet domain, wants to sell the address to a company called Ethos, which wants to go into a for-profit business managing Internet domains or Internet addresses. ICANN has to approve the sale before it can go through.

The free market competition that would result from the sale and others like it is supposed to knell the end of the Internet. The Wall Street Journal‘s Editorial Board likes the idea.

They’re both wrong, and they’re both being hysterical about it.

ICANN, and ISOC, come to that, have done a fine job of managing the domains within their purview. I’m not sure that’s a thing needing fixing, so I’m spring-loaded against the sale of any their domains to Ethos or any other organization.

Competition? Of course. Let Ethos generate its own domain or suite of domains to compete with the .org domain. Let Ethos and other private enterprises create their own domains or suites of them to compete with the existing ICANN-overseen domains like .com, .edu, .[whatevs].

Simply passing a domain from one manager to another does nothing for competition; that’s just a game of Two-Card Monte.

In Which Illinois Got It Right

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Back in 2008, Illinois passed a law barring companies from collecting customers’ personal biometric information without their prior permission. Companies in Illinois also were required to develop a policy, and make it readily available, that laid out how those biometric data would be stored and when they would be destroyed.

Facebook was accused of violating that law when it decided to use its facial recognition technology to analyze users’ photos in order to create and store “face templates.” Users’ faces are plainly biometric data in this context, the data were taken by Facebook without the owners’/users’ permission, and in 2015, folks sued Facebook over its misbehavior.

Now comes a reckoning of sorts.

Facebook has agreed to settle a $550 million lawsuit brought on behalf of millions of Illinois users who claim the social network’s automated tagging feature powered by facial recognition technology violates their biometric privacy rights.

Good law, and mostly good outcome.

But maybe the class action group shouldn’t have settled. Settlements only bind the parties to the suit and are only as good as the promises of those parties. Facebook has a long history of finding ways to weasel-word around the terms of its settlements, violating their spirit if not their letter.  Court judgments, though, are permanent, binding on all parties to the suit, and binding also on everyone else within the court’s jurisdiction.

We’ll see on this one, but Illinois got this one right with its law.

A Good Start

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But it’s only a start. The Trump administration is working with companies including Microsoft, Dell, and AT&T to develop 5G software in an attempt to break Huawei’s current dominance of the 5G market and to supplant it.

The plan would build on efforts by some US telecom and technology companies to agree on common engineering standards that would allow 5G software developers to run code atop machines that come from nearly any hardware manufacturer.

Software isn’t the only source or solution, though; we need to push hardware development, too. It’s too easy to bury malware in hardware’s ROM/PROM/EPROM chips; Huawei’s hardware will need to be excised as well.

Foolish Risks

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Great Britain has decided to let the People’s Republic of China’s Huawei—which by PRC law must cooperate with the PRC government whenever that government requires it—to play a role in Britain’s development and deployment of its 5G telecommunications network.

Great Britain says Huawei role will be limited, but in a computer network, such limits lie somewhere between chimera and pipe dream.

The Brits say that Huawei, and “high risk vendors” generally, would be excluded from the network “core.”

The Brits say they are

taking steps that would allow it “to mitigate the potential risk posed by the supply chain and to combat the range of threats, whether cybercriminals, or state-sponsored attacks.”

And that

high-risk vendors would be subject to a 35% cap on access to even non-sensitive parts of the network.

Thirty-five per cent. That’s a broad penetration of a network’s “non-sensitive parts,” a network’s periphery.

This is foolish.

Mitigating risks is not the same as preventing them. This isn’t a matter of the Internet going down for a bit, and our not being able to post our blog articles or do a Bing search for this or that. It’s not a matter of losing a cable connection so we can’t watch TV for a few minutes or an hour, nor is it a matter of a temporary drop of cell phone access.  This is a matter of national security, and the difference between mitigation and prevention is critical.

It takes only a single opening in a network’s outlying accesses to enable a nefarious entity to insert malware into the network. Once inserted, that malware can proliferate on its own, even penetrate the core, and then that malware is positioned to allow the entity to engage in cybercrime, cyberespionage, cyber-triggered sabotage of other infrastructure.

Even were the core adequately protected, malware in the periphery still can render the core impotent by isolating it from the periphery—much as biological damage can isolate a body’s core, its brain, from the body.

Ultrafast Trading Costs

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British regulators have studied the “tax” imposed on ordinary traders by ultrafast traders. The latter use high speed computers and powerful algorithms to

“latency arbitrage,” in which ultrafast traders seek to react to fresh, market-moving information more quickly than others can.

The latency is the ultrafast traders’ ability to act on slightly out-of-date prices that are inaccessible to the bulk of us traders because we don’t have those fancy computers running those algorithms. The “tax” metaphor is the difference between those (very—a matter of microseconds) slightly dated prices and the prices available to us in more real time.

The “tax” amounts to some $5 billion gained globally by the ultrafast compared to the rest of us. That seems like a large number, but put it in perspective.

The value of the aggregated global stock markets was around $86 trillion in 2019. The “tax” from the ultrafast’s computing/time advantage amounts to a bit under 0.006%.

That’s not to say the artificial arbitrage shouldn’t be addressed, but it does suggest that the urgency isn’t great. We have time figure out how to level this tiny bump in the playing field without moving, for purely noneconomic reasons, to restrict some traders to the advantage of others.