Disintermediation: an Amazon parable

New York TImes Technology ran a story yesterday about the publishing industry that is brimming with implications for almost everyone in the Internet economy.  It is about Amazon and what marketing people call “disintermediation”.  Not the simple kind that was the currency of the dot.com boom;  we are looking here at a much more advanced case:

SEATTLE — Amazon.com has taught readers that they do not need bookstores. Now it is encouraging writers to cast aside their publishers.

Amazon will publish 122 books this fall in an array of genres, in both physical and e-book form. It is a striking acceleration of the retailer’s fledging publishing program that will place Amazon squarely in competition with the New York houses that are also its most prominent suppliers.

It has set up a flagship line run by a publishing veteran, Laurence Kirshbaum, to bring out brand-name fiction and nonfiction…

Publishers say Amazon is aggressively wooing some of their top authors. And the company is gnawing away at the services that publishers, critics and agents used to provide…

Of course, as far as Amazon executives are concerned, there is nothing to get excited about:

“It’s always the end of the world,” said Russell Grandinetti, one of Amazon’s top executives. “You could set your watch on it arriving.”

But despite the sarcasm, shivers of disintermediation are going down the spines of many people in the publishing industry:

“Everyone’s afraid of Amazon,” said Richard Curtis, a longtime agent who is also an e-book publisher. “If you’re a bookstore, Amazon has been in competition with you for some time. If you’re a publisher, one day you wake up and Amazon is competing with you too. And if you’re an agent, Amazon may be stealing your lunch because it is offering authors the opportunity to publish directly and cut you out. ” [Read whole story here.]

If disintermediation is something you haven't thought about much, you might start with a look at wikipedia:

In economics, disintermediation is the removal of intermediaries in a supply chain: “cutting out the middleman”. Instead of going through traditional distribution channels, which had some type of intermediate (such as a distributor, wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet. One important factor is a drop in the cost of servicing customers directly.

Note that the “removal” normally proceeds by “inserting” someone or something new into transactions.  We could call the elimination of bookstores “first degree disintermediation” - the much-seen phenomenon of replacement of the existing distribution channel.   But it seems intuitively right to call the elimination of publishers “second degree disintermediation” - replacement of the mechanisms of production, including everything from product development through physical manufacturing and marketing, by the entities now predominating in distribution.  

The parable here is one of first degree disintermediation “spontaneously” giving rise to second degree disintermediation, since publishers have progressively less opportunity to succeed in the mass market without Amazon as time goes on.  Of course nothing ensures that Amazon's execution will cause it to succeed in a venture quite different from its current core competency.  But clearly the economic intrinsics stack the deck in its favor. Even without displacing its new competitors it may well skim off the most obvious and profitable projects, with the inevitable result of underfunding what remains.

I know.  You're asking what all this has to do with identityblog.

In my view, one of the main problems of reusable identities is that in systems like SAML, WS-Federation and Live ID, the “identity provider” has astonishing visibility onto the user's relationship with the relying parties (e.g. the services who reuse the identity information they provide).  Not only does the identity provider know what consumers are visiting what services; it knows the frequency and patterns of those visits.   If we simply ignore this issue and pretend it isn't there, it will become an Achilles Heel.

Let me fabricate an example so I can be more concrete.  Suppose we arrive at a point where some retailer decides to advise consumers to use their Facebook credentials to log in to its web site.  And let's suppose the retailer is super successful.  With Facebook's redirection-based single sign-on system, Facebook would be able to compile a complete profile of the retailer's customers and their log-on patterns.  Combine this with the intelligence from “Like” buttons or advertising beacons and Facebook (or equivalent) could actually mine the profiles of users almost as effectively as the retailer itself.  This knowledge represents significant leakage of the retailer's core intellectual property – its relationships with its customers.

All of this is a recipe for disintermediation of the exact kind being practiced by Amazon, and at some point in the process, I predict it will give rise to cases of spine-tingling that extend much more broadly than to a single industry like publishing. 

By the time this becomes obvious as an issue we can also predict there will be broader understanding of ”second degree disintermediation” among marketers.  This will, in my view, bring about considerable rethinking of some current paradigms about the self-evident value of unlimited integration into social networks.  Paradoxically disintermediation is actually a by-product of the privacy problems of social networks.  But here it is not simply the privacy of end users that is compromised, but that of all parties to transactions. 

This problem of disintermediation is one of the phenomena leading me to conclude that minimal disclosure technologies like U-Prove and Idemix will be absolutely essential to a durable system of reusable identities.  With these technologies, the ability of the identity provider to disintermediate is broken, since it has no visibility onto the transactions carried out by individual users and cannot insert itself into the relationship between the other parties in the system. 

Importantly, while disintermediation becomes impossible, it is still possible to meter the use of credentials by users without any infringement of privacy, and therefore to build a viable business model.

I hope to write more about this more going forward, and show concretely how this can work.

A social network or the name police – but not both

It seems a number of people take the use of ”real names” on the Internet as something we should all just accept without further thought.  But a recent piece by Gartner Distinguished Analyst Bob Blakley shows very clearly why at least a bit of thought is actually called for – at least amongst those of us building the infrastructure for cyberspace: 

… Google is currently trying to enforce a “common name” policy in Google+. The gist of the policy is that “your Google+ name must be “THE” name by which you are commonly known”.

This policy is insane. I really mean insane; the policy is simply completely divorced from the reality of how names really work AND the reality of how humans really work, and it’s also completely at odds with what Google is trying to achieve with G+.  (my emphasis – Kim)

The root of the problem is that Google suffers from the common – but false – belief that names are uniquely and inherently associated with people. I’ve already explained why this belief is false elsewhere, but for the sake of coherence, I’ll summarize here.

There isn’t a one-to-one correspondence between people and names. Multiple people share the same name (George Bush, for example, or even me: George Robert Blakley III), and individual people have multiple names (George Eliot, George Sand, George Orwell, or Boy George – or even me, George Robert “Bob” Blakley III). And people use different names in different contexts; King George VI was “Bertie” to family and close friends.

THERE IS NO SUCH THING AS A “REAL” NAME.

A name is not an attribute of a person; it is an identifier of a person, chosen arbitrarily and changeable at will. In England, I can draw up a deed poll in my living room and change my name at any time I choose, without the intervention or assistance of any authority. In California, I apparently don’t even need to write anything down: I can change my name simply by having people call me by the new name on the street.

COMMON NAMES ARE NOT SINGULAR OR UNIQUE.

Richard Garriott is COMMONLY known as “Richard Garriott” in some contexts (check Wikipedia), and COMMONLY known as Lord British in other contexts (go to a computer gaming convention). Bob Wills and Elvis are both “The King”.

Despite these complexities, Google wants to intervene in your choice of name. They want veto power over what you can call yourself.

Reversing the presumption that I choose what to be called happens – in the real world – only in circumstances which diminish the dignity of the individual. We choose the names of infants, prisoners, and pets. Imposing a name on someone is repression; free men and women choose their names for themselves.

But the Google+ common name policy isn’t even consistently repressive; it sometimes vetoes names which ARE “common” in the sense Google intends (Violet Blue is an example), it sometimes accepts plausible names based on clearly fraudulent evidence, and it even “verifies” fraudulent names.

Google+’s naming policy isn’t failing because it’s poorly implemented, or because Google’s enforcement team is stupid. It’s failing because what they’re trying to do is (1) impossible, and (2) antisocial.

(2) is critical. Mike Neuenschwander has famously observed that social software is being designed by the world’s least sociable people, and Google+ seems to be a case in point. Google wants to be in the “social” business. But they’re not behaving sociably. They’re acting like prison wardens. No one will voluntarily sign up to be a prisoner. Every day Google persists in their insane attempt to tell people what they can and can’t call themselves, Google+ as a brand becomes less sociable and less valuable. The policy is already being described as racist and sexist; it’s also clearly dangerous to some disadvantaged groups.

If you want to be the host of a social network, you’ve got to create a social space. Creating a social space means making people comfortable. That’s hard, because people don’t fit in any set of little boxes you want to create – especially when it comes to names. But that’s table stakes for social – people are complicated; deal with it. Facebook has an advantage here; despite its own idiotic real-names policy and its continual assaults on privacy, the company has real (i.e. human) sociability in its DNA – it was created by college geeks who wanted to get dates; Google+ wasn’t, and it shows.

If Google’s intention in moving into social networking is to sell ads, Google+’s common names policy gives them a lock on the North American suburban middle-aged conservative white male demographic. w00t.

The Google+ common name policy is insane. It creates an antisocial space in what is supposed to be a social network. It is at odds with basic human social behavior; its implementation is NECESSARILY arbitrary and infuriating, and it is actively damaging the Google+ brand and indeed the broader Google brand.

The problem is not flawed execution; it is that the policy itself is fundamentally unsound, unworkable, and unfixable.

Google can be a social network operator, or they can be the name police. They can’t be both. They need to decide – soon. If I were Google, I’d scrap the policy – immediately – and let people decide for themselves what they will be called.

 [Read the whole piece.  BTW,  Mike Neuenschwander has hit the nail on the head yet again.]

24 year old student lights match: Europe versus Facebook

If you are interested in social networks, don't miss the slick video about Max Schrems’ David and Goliath struggle with Facebook over the way they are treating his personal information.  Click on the red “CC” in the lower right-hand corner to see the English subtitles.

Max is a 24 year old law student from Vienna with a flair for the interview and plenty of smarts about both technology and legal issues.  In Europe there is a requirement that entities with data about individuals make it available to them if they request it.  That's how Max ended up with a personalized CD from Facebook that he printed out on a stack of paper more than a thousand pages thick (see image below). Analysing it, he came to the conclusion that Facebook is engineered to break many of the requirements of European data protection.  He argues that the record Facebook provided him finds them to be in flagrante delicto.  

The logical next step was a series of 22 lucid and well-reasoned complaints that he submitted to the Irish Data Protection Commissioner (Facebook states that European users have a relationship with the Irish Facebook subsidiary).  This was followed by another perfectly executed move:  setting up a web site called Europe versus Facebook that does everything right in terms using web technology to mount a campaign against a commercial enterprise that depends on its public relations to succeed.

Europe versus Facebook, which seems eventually to have become an organization, then opened its own YouTube channel.  As part of the documentation, they publicised the procedure Max used to get his personal CD.  Somehow this recipe found its way to reddit  where it ended up on a couple of top ten lists.  So many people applied for their own CDs that Facebook had to send out an email indicating it was unable to comply with the requirement that it provide the information within a 40 day period.

If that seems to be enough, it's not all.  As Max studied what had been revealed to him, he noticed that important information was missing and asked for the rest of it.  The response ratchets the battle up one more notch: 

Dear Mr. Schrems:

We refer to our previous correspondence and in particular your subject access request dated July 11, 2011 (the Request).

To date, we have disclosed all personal data to which you are entitled pursuant to Section 4 of the Irish Data Protection Acts 1988 and 2003 (the Acts).

Please note that certain categories of personal data are exempted from subject access requests.
Pursuant to Section 4(9) of the Acts, personal data which is impossible to furnish or which can only be furnished after disproportionate effort is exempt from the scope of a subject access request. We have not furnished personal data which cannot be extracted from our platform in the absence of is proportionate effort.

Section 4(12) of the Acts carves out an exception to subject access requests where the disclosures in response would adversely affect trade secrets or intellectual property. We have not provided any information to you which is a trade secret or intellectual property of Facebook Ireland Limited or its licensors.

Please be aware that we have complied with your subject access request, and that we are not required to comply with any future similar requests, unless, in our opinion, a reasonable period of time has elapsed.

Thanks for contacting Facebook,
Facebook User Operations Data Access Request Team

What a spotlight

This throws intense light on some amazingly important issues. 

For example, as I wrote here (and Max describes here), Facebook's “Like” button collects information every time an Internet user views a page containing the button, and a Facebook cookie associates that page with all the other pages with “Like” buttons visited by the user in the last 3 months. 

If you use Facebook, records of all these visits are linked, through cookies, to your Facebook profile – even if you never click the “like” button.  These long lists of pages visited, tied in Facebook's systems to your “Real Name identity”, were not included on Max's CD. 

Is Facebook prepared to argue that it need not reveal this stored information about your personal data because doing so would adversely affect its “intellectual property”? 

It will be absolutely amazing to watch how this issue plays out, and see just what someone with Max's media talent is able to do with the answers once they become public. 

The result may well impact the whole industry for a long time to come.

Meanwhile, students of these matters would do well to look at Max's many complaints:

no

date

topic

status

files

01

18-AUG-2011

Pokes.
Pokes are kept even after the user “removes” them.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

02

18-AUG-2011

Shadow Profiles.
Facebook is collecting data about people without their knowledge. This information is used to substitute existing profiles and to create profiles of non-users.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

03

18-AUG-2011

Tagging.
Tags are used without the specific consent of the user. Users have to “untag” themselves (opt-out).
Info: Facebook announced changes.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

04

18-AUG-2011

Synchronizing.
Facebook is gathering personal data e.g. via its iPhone-App or the “friend finder”. This data is used by Facebook without the consent of the data subjects.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

05

18-AUG-2011

Deleted Postings.
Postings that have been deleted showed up in the set of data that was received from Facebook.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

06

18-AUG-2011

Postings on other Users’ Pages.
Users cannot see the settings under which content is distributed that they post on other’s pages.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

07

18-AUG-2011

Messages.
Messages (incl. Chat-Messages) are stored by Facebook even after the user “deleted” them. This means that all direct communication on Facebook can never be deleted.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

08

18-AUG-2011

Privacy Policy and Consent.
The privacy policy is vague, unclear and contradictory. If European and Irish standards are applied, the consent to the privacy policy is not valid.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

09

18-AUG-2011

Face Recognition.
The new face recognition feature is an inproportionate violation of the users right to privacy. Proper information and an unambiguous consent of the users is missing.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

10

18-AUG-2011

Access Request.
Access Requests have not been answered fully. Many categories of information are missing.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

11

18-AUG-2011

Deleted Tags.
Tags that were “removed” by the user, are only deactivated but saved by Facebook.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

12

18-AUG-2011

Data Security.
In its terms, Facebook says that it does not guarantee any level of data security.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

13

18-AUG-2011

Applications.
Applications of “friends” can access data of the user. There is no guarantee that these applications are following European privacy standards.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

14

18-AUG-2011

Deleted Friends.
All removed friends are stored by Facebook.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

15

18-AUG-2011

Excessive processing of Data.
Facebook is hosting enormous amounts of personal data and it is processing all data for its own purposes.
It seems Facebook is a prime example of illegal “excessive processing”.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

16

18-AUG-2011

Opt-Out.
Facebook is running an opt-out system instead of an opt-in system, which is required by European law.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

 

24-AUG-2011

Letter from the Irish DPC.

 

Letter (PDF)

 

15-SEPT-2011

Letter to the Irish DPC concerning the new privacy policy and new settings on Facebook.

 

Letter (PDF)

17

19-SEPT-2011

Like Button.
The Like Button is creating extended user data that can be used to track users all over the internet. There is no legitimate purpose for the creation of the data. Users have not consented to the use.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

18

19-SEPT-2011

Obligations as Processor.
Facebook has certain obligations as a provider of a “cloud service” (e.g. not using third party data for its own purposes or only processing data when instructed to do so by the user).

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

19

19-SEPT-2011

Picture Privacy Settings.
The privacy settings only regulate who can see the link to a picture. The picture itself is “public” on the internet. This makes it easy to circumvent the settings.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

20

19-SEPT-2011

Deleted Pictures.
Facebook is only deleting the link to pictures. The pictures are still public on the internet for a certain period of time (more than 32 hours).

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

21

19-SEPT-2011

Groups.
Users can be added to groups without their consent. Users may end up in groups that lead other to false impressions about a person.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)

22

19-SEPT-2011

New Policies.
The policies are changed very frequently, users do not get properly informed, they are not asked to consent to new policies.

Filed with the Irish DPC

Complaint (PDF)
Attachments (ZIP)