PassW0rd – 18th May 2016

Speaker A: Hello and welcome to Password on Resonance 104.4 FM with me, Peter Warren, the technology programme with an eye on the future. In today’s show, we go European and look at the legislation that’s coming from Brussels and Strasbourg and the trends that are beginning to emerge among the high-tech startups to move around the continent to take advantage of low rents, high-speed broadband, and access to culture and ideas. And finally, We look into the emergence of the intelligent agent, the algorithm on your phone that is going to be the next battleground for privacy experts, technology multinationals, and consumers. But first, this week decision makers in the EU are legislating on the creation of new surveillance powers for Europol designed to prevent terror attacks like those in Paris and Brussels and force intelligence sharing between EU member states. We spoke to two of London’s MEPs, Claude Morais, the head of the European Parliament Committee on Civil Liberties, Justice and Home Affairs, and Mary Honeyball, who sits on the Parliament’s Legal Affairs Committee and who is an ardent privacy campaigner. First, here’s Mary Honeyball on why she thinks enhanced European surveillance powers are necessary.

Speaker B: Well, I think it’s inevitable that Europol and the police forces across the EU and indeed the whole of Europe will come together to obviously discuss the terrorist attacks and really discuss and think very carefully and hard about what to do. And increased surveillance, I think, is inevitable.

Speaker C: I don’t—

Speaker B: as long as it’s done carefully and as long as the police are aware of the issues that people have privacy and people do have rights in these matters. As long as the police don’t overstep the mark, I think it’s a very good way of dealing with terrorism. In fact, I think it’s probably the only way of dealing with terrorism because the terrorists are radicalized by international forces, by ISIS and such like. And it’s therefore difficult to know what’s going on, and you then have a real shock when an attack actually happens. And I think the only way you can combat that is really by surveillance, or the police can combat it, is by surveillance. So I think as long as it’s done in as reasonable a way as possible and the general public’s privacy and human rights are respected, I think it’s the way forward.

Speaker A: That was Mary Honeyball MEP on why she thinks that surveillance is better for all of us. Her colleague Claude Morais is the chair of the committee that is recommending the initiative and paradoxically is also an ardent privacy campaigner. According to Morais, the incidents in Paris and Brussels are forcing better intelligence sharing and the EU will put in place stringent monitoring of that activity that is more transparent than that used in many member states.

Speaker D: What is happening with Europol is that the thesis that intelligence sharing between member states is not as good as it could be is certainly being accepted, and that falls into the category of police forces and intelligence agencies within member states of the European Union to some extent not sharing intelligence as they should, and that differs of course in each member state. There’s a different situation in each member state, as you can imagine. And then intelligence sharing across and between member states. Now again, there’s a lot of clichés and a lot of generalities about this, and we saw this in the discussion about Belgium and France. In fact, there are good intelligence agencies within the European Union, but there are real problems with the sharing of basic police intelligence, and this is now widely acknowledged, and as it’s acknowledged, the trust for an agency like Europol, which performs very well for its size of budget, is seen now to be something that is value for money and is essential in the fight against terrorism in the EU. The other issue in terms of intelligence sharing is that the— again, this is a proven situation— the European Commission is taking enforcement action against member states for not implementing key intelligence-sharing agreements. A very good example of that would be the Prüm Convention, where you have basic intelligence sharing of, for example, vehicle licensing data, more controversially DNA data, but some basic data like license— vehicle license data not being shared adequately. And for this reason, there is an emerging view that the member states, the Council that is, while asking the European Union to perform well in legislating on issues like PNR is not sufficiently looking at its own record in implementing anti-terrorist intergovernmental agreements and agreements that would improve intelligence sharing, like the implementation of the Prüm Convention.

Speaker E: Is the idea then that Europol becomes a clearinghouse for information, so in the event of people trying to find information about particular groups or an individual, that they will be able to to find that information from Europol or maybe even be alerted about a particular trend by you?

Speaker D: I think your point about being alerted is probably more accurate than being a complete clearinghouse. I think it would be disingenuous of people like me who have some role in overseeing Europol and trying to build accountability for Europol to say that it would be a complete clearinghouse. I don’t think Europol has the size and resources to act as a full clearinghouse for the EU and all of the activity and normative ability of tracking not just so-called foreign fighters but all the other intelligence requirements of anti-terrorism, and not just, by the way, in relation to so-called jihadist cult-like terrorism but other types of potential terrorism related to other forms of terror activity, which Europol have been extremely good in tracking, coming from, for example, the extreme right and from other extreme groups. So I think It is about Europol becoming more of a resource than it ever was. To be a complete clearinghouse is obviously an ambition of Europol, but it is certainly not there yet.

Speaker A: That was Claude Morais, MEP, Chair of the European Parliament Committee on Civil Liberties, Justice and Home Affairs, on why Europe now needs surveillance. Now, just as the Queen has announced that broadband provision is to be uniform across the UK, Something Maury Rumney of Keysight argued for in this programme some months ago, many people are arguing that broadband is the key to letting people start up high-tech businesses anywhere in Europe. It’s something that has already seen Berlin spring up as a centre for security and privacy, with many people claiming it is a startup centre to rival London. And Berlin now has a rival in nearby Leipzig, where electronic recycling initiatives are springing up, drawn by the low cost of housing, access to culture and talent. Here’s Martin Järnet of BINI on why Leipzig. Apologies for the poor sound quality in the echoing hall.

Speaker F: We are an international team and in our team we decided between Milan, London, Amsterdam, Copenhagen, Munich, Berlin, Hamburg, Oldenburg, Leipzig. And the finalists were Berlin or Leipzig. That was a bit of a longer discussion, but Leipzig was quite the clear winner actually. It’s the perfect place to run your startup when you’re bootstrapping because really places are cheap. There’s a lot going on. There’s a lot of advertisement, but also, yeah, well, you have this creative scene and a lot of support. And on the other hand, when you’re then growing, people love to stay here. The city is now growing with 2,000 people a month. So it’s really a lot of people moving in, and on the other hand, they don’t find a job after studies, or it’s quite hard. So when you’re an employer, this is actually a place where people are really easy to convince to stay here or to come here. So I think it’s a good place for now, and it’s a really good place in the future also.

Speaker C: So what is the plan? What is your business plan for business?

Speaker F: So we build a system that makes better recycling possible. We collect old electronic devices and save them from a sad future, which they have at the moment. At the moment, they usually get illegally exported. Exported and then informally recycled, which is just a very euphemistic term for burning it in the open air, destroying health and environment. And we would like to make use of better processes. And by being the interface collecting old devices, we can decide whether they go into export or whether they stay here for proper treatment. So that’s what we do. It’s not only about recycling but also about reuse. And now we develop the best ways to engage people in doing the right thing and then doing the logistics afterwards to really take good care of the devices.

Speaker C: So that’s your startup plan. How do you plan to grow and evolve?

Speaker F: So at the moment we are raising capital. We start with €500,000 this year. This year for £500,000. And then in the next year we will have another investment round. And after the first investment round, we grow from 5 people, which we are at the moment, to 10 people for this year. And then the next years, well, it’s always hard to predict, but there’s the chance to grow further. And so at the moment we start with this one use case for one market. When the use case works, then we go into other markets and do what we want, but also we learn a lot on the way. And so, I mean, everybody who wants to learn a lot in a short time, I think, should consider either starting something themselves, even if it fails, or join a team that is already on the learning path.

Speaker A: That was Martin Jernot of Binny, and here is Marylou Valenti on why the accelerators in Leipzig are such a draw.

Speaker C: So, what’s your name, Marylou?

Speaker G: So, my name is Marylou Valente. Why did you come to Lightspeak from London? So, I came from London to Lightspeak mainly because our startup is based in Germany, but also because Lightspeak has a much affordable and much more relaxed lifestyle, I would say. London life is a bit more hectic, stressful, so you tend to forget, you know, the nice things and the simple things about life. And, you know, here in Leipzig, you can cherish those simple moments, and you have more time to enjoy those simple moments. And everything is more in reach. There are things going on like every day here in Latvia, kind of same thing as London at a different scale. There are less people, so everything can be reached more easily than London.

Speaker C: And what about your startup?

Speaker G: What help have you had to make it? And we have some light ticket. So actually being based here at the HHL Accelerator, it’s an amazing support because they actually provide all the professionals that we need in order to raise funds, to develop the business in the right direction. So it’s actually a great support that helps us to focus on the most important things that we need to prioritize. Yeah, because when you are in a startup, you can do everything, you know, and it gets quite— you get distracted by many different things. So it’s actually great to have someone that, you know, makes you realize what the importance things are and what you should focus your attention on. So you actually get a business mentor that comes with the space? Exactly. It is a mentor and actually it depends on your needs. So you actually raise any concerns that you have and they will provide the professionals according to your needs. So for instance, if you need help in sales, they will provide you a professional professionals that have a lot of experience in this field. And it’s the same, you know, if you need some design help, we provide people from that— from a design background.

Speaker A: Super.

Speaker B: And tell me about the product of your startup.

Speaker G: So our product is basically we are trying to provide an electronic waste infrastructure. So this is an infrastructure that is easily reachable by the user. So anyone can actually be able to do the right thing with their electronic waste. So you don’t need to go to the recycling center 100 kilometers away from where you live to be able to recycle your electronic device. So we want to provide an infrastructure of recycling bins for electronic waste. And basically our idea is to create a circular economy for this growing electronic waste. So anytime you use one of our bins, one of our beanies, you will— you can be sure that that device will be either reused or recycled. And who pays? So our business model is mainly based on— it’s not based on selling the waste we collect, but actually we found out another revenue stream which comes from electronic stores and electronic producers. So actually those actors, they are legally obliged to take back electronic waste. And there is a quota that Germany needs to reach of 45%. So they need— so Germany as a nation, it needs to collect 45% of what they put out in the market. So we actually tried to tap into this opportunity by basically using our bins to these electronics producers because, as I said, they are legally bound to take back those electronic devices. And we make it easy for them to— so we provide to them a service that deals with the whole collection part and the recycling.

Speaker C: And they pay for that?

Speaker H: Yes.

Speaker G: So they actually— we provide— We ask them a service fee of around €250 per month, and that will cover the cost of the installation of the bins and the disposal of the waste collected.

Speaker A: That was Marylou Valenti on the attractions of Leipzig. But there is still a big reason for London being seen as Europe’s startup capital. At Davos, There was much talk about the fourth generation of the internet, and at the heart of that is the intelligent agent that sits on your smartphone. Here’s Geraldine McBride of MyWave, who has now set up her European headquarters in London on the new technology that many are predicting will start to run our lives for us.

Speaker C: There are a lot of people there, probably more than 200 people there over the last couple of days, a mixture of some very large British brands and technology companies from many parts of the world, both the US and the UK. And it was, it was, you know, it’s been a very successful conference.

Speaker E: Why, why do you think there is such a sudden interest in intelligence agents?

Speaker C: Well, it has, and I’ll tell you why I think it is. I think the world is moving to another inflection point in the use of technology. And the issue is that the average human being can cope with about 9 apps, and it’s actually a scientifically proven fact. So if you actually look at it, there’s a lot of app fatigue out there with consumers, and most of their personal data is siloed over all these apps and it still requires me to go and do an awful lot of work. So, even going to a comparison website or going to any website, I still have to keep entering my date multiple times. It never remembers me. I have to remember all these passwords and it’s just plain annoying. So, I did my talk yesterday on the 4th Industrial Revolution and what we’re seeing now is this new neural network of sensors, of intelligent agents that are coming across the world that are actually just making things happen automatically for people. So you say to your intelligent agent, book me a train, get me that air ticket, find me the nearest restaurant. Different intelligent agents are doing different things. And so it’s creating frictionless commerce. And if you look at the intelligent agent, if you’ve got really smart ones that are working for you, they’re like the new brains or the new neural networks that are coming out across the world. They’re replacing the browser, they’re replacing search, and they’re replacing apps.

Speaker E: Well, that was going to be my next question, which is obviously this is an arms race. And as an arms race, it’s down to who gets the most intelligent app. But also, you’re going to have to get one that actually you’re sure it’s looking after your interests.

Speaker C: You’ve got to make sure who is your intelligent agent working for. So let’s think about those levels of intelligent agents. There’s a lot happening now with Facebook’s M, with Google’s intelligent agent, Amazon has Echo. The problem is that those intelligent agents aren’t actually working for you. They are taking a lot of that data and you don’t know where any of that data is going about you. So those intelligent agents are actually working on behalf of Facebook and on behalf of Google in order to turn you into a product so they can sell you more things. In fact, in the end it drives more advertising. So that’s one form of intelligent agent. Then the other reason why so many brands were at the Intelligent Assistant Conference is that they are terrified of being disintermediated. So imagine if you were a big airline or imagine if you were even a retailer. And suddenly your customer relationship and your customer data is actually being sucked into one of the Google, Amazon, or Facebook intelligent agents. You’ve now suddenly been disintermediated and you are now a supplier or a spoke in their massive digital ecosystem. And you’ve just completely lost your competitive advantage in the world. And this is the disadvantage of the new neural networks coming out. So most of the brands that my company is working with at the moment, and the reason why I’m actually up here in the UK is that the big brands that understand this are actually working with us to white label our technology and bring out intelligent agents that serve their customers, but enable them to flip the model, share the data they know about the customers back with them, so the consumer is in control of that data. And more importantly, the enterprise brand is not just intermediated, but in fact can become a master of their own digital universe through these intelligent agents. So it’s replacing ultimately the website, which is actually pretty dumb and static,. And in fact, rather than having 15 apps to have recipe planning, have food delivery, and do my shopping, the intelligent agent can manage all of that. And it’s centered on me and what my dietary preferences are, as an example, the type of coffee that I like, because a good intelligent agent will always remember you and what you like. And that’s exactly what we do. So this was some of the things that I was talking about and what we were showing at this conference.

Speaker E: But there’s also, there is a conflict here, isn’t it? And that conflict is, as you’ve just pointed out, the brands are very, very conscious that they might lose data. But the other thing is, it’s your data too as the customer, and you want to make sure that you get the best possible deal. So you don’t necessarily want to have an intelligent agent that is just going, for example, to Virgin or British Airways. You want it to be able to go across a whole range of those different airlines, if for example you wanted to book an airline ticket, and get you the best deal.

Speaker B: You’re spot on.

Speaker C: So for example, we’re bringing an intelligent agent to the UK that’s already live in New Zealand that does that for power. So I’ll give you an example of one that’s already alive that we, that we do. So imagine now in the UK, there’s a lot written about energy, £1.5 billion of savings that consumers can’t get because power companies make it so damn hard to switch between power companies, and the price comparison sites have not solved that. And so what we have is we have Frank, our intelligent agent, that will read your power bill with your permission, will act on your behalf, and automatically switch you to the best plan, best price at no charge to you. And so what that enables you to do is always be on the best plan, best price with the intelligent agent working on your behalf to always make sure you’re on the best deal for energy.. And that’s actually starting to happen on insurance, it’s happening in mortgages, a lot of different areas. And this is the power now of an intelligent agent when you’re really starting to bring it to the power of the consumer. And the data belongs to the consumer, you’re absolutely right. So it’s controlled by the consumer. But you’re sharing it with brands in order to get savings or in order to get better service.

Speaker A: Geraldine McBride of MyWave. Obviously, Such technology will be incredibly powerful, but according to Sebastian Reeves of Nuance, a company that has been at the forefront of voice recognition for a number of years, the debate on whether the systems will work for you or for large companies is only just beginning.

Speaker H: Well, if you have a mobile phone these days from any of the major phone manufacturers, you probably already do have a virtual assistant. Hugely penetrated market in terms of smartphones nowadays. Most people already have access to this, and many of them are using them.

Speaker E: So why do I need it though? Surely I can just talk to a person. Isn’t that a simpler way of doing this?

Speaker H: Well, it depends if it’s a company you’re trying to do business with, or you’re trying to use your phone. Talking to a person isn’t really one of the options. So it’s solving a few problems, I guess. In the case of your device, it’s making a complex piece of computer equipment, which is the thing in your pocket these days, easier to use. So easy to use is a key thing we’re looking for. If it’s contacting a business, traditionally we’ve done that over the phone. If you can get a person, or a business can afford to answer every call with a person, businesses find it very hard to do that. And the reasons for that are many, but usually because peaks in demand. Businesses have to try and find ways of offering self-service options. That makes it feel a bit like that’s something we do to consumers, but the reality, if you look at consumer behavior today as well, it’s more and more something consumers choose as well, because it’s just more convenient. It’s easy. It’s available all day long. So it’s a mechanism for self-service. Lots of businesses are using virtual assistants either on the phone or in a website.

Speaker E: Some people are predicting now that these virtual assistants will become unique, that they will be something that is answerable to you.

Speaker H: Genuinely, it’s a really interesting subject to say, well, who does the virtual assistant represent? Whose is the virtual assistant? If your bank launches a virtual assistant, it works for your bank. Your smartphone manufacturer launches a virtual assistant, it really works for them. If you’re going to a web search to search for terms online, who does that answer to? And it’s important because at the end of the day we’re all very much aware of where data is owned, who owns that data, and how is that data being used. So again, we trust our bank. So from a banking standpoint, there are very stringent rules about how the data when you interact with your bank is used. When you go to Google and you type something into a Google box, we already know that that is being used for the purpose of advertising. So it is going to be a really important subject that we all have to be aware of. How is my data being used? Is it on my behalf or somebody else’s behalf?

Speaker E: This is a fascinating issue, isn’t it? Because particularly bearing in mind the new European legislation that’s come in, which essentially says that you have to be very, very careful about how you use that data and how long you keep it for.

Speaker D: Before.

Speaker E: That must be preoccupying people at the moment.

Speaker H: Oh, certainly. I mean, every organization, every company we do business with, and we supply these kinds of services and solutions to companies, is of course extremely sensitive to those topics. So also, where is that data kept in the world? As you say, ensuring that any personally identifying information is managed very stringently. A virtual assistant, however, I’d say an intelligent virtual assistant is an extension of the world in which we live. Those are common topics whether or not you’re using this specific technology. Any kind of technology that takes personal information from a consumer or a customer has to be aware and comply with those regulations. So this is not different. It doesn’t add anything new in that regard, but it is certainly part of, I think, the way consumers need to think or need to be aware in terms of when they’re using these and other products and services.

Speaker E: I mean, one of the things that people have been talking about is that this virtual assistant might store data and have some permissions from you to use that data in particular scenarios. Is it— do you think that that is going to happen?

Speaker H: I think it very much will happen to a great extent because of context. If we think about as a user, if you really want easy-to-use services, and we’d like to get to the end state where services are generally very natural, very conversational. We need to use a lot of context to make those conversations happen in a very simple way. The more we know you, your preferences, the more we can focus on the things that are going to naturally appeal to you in terms of the likelihood of you wanting a specific answer to a specific question.

Speaker A: That was Sebastian Reeves of Nuance. On the intelligent agent on your phone. As regular listeners to Password will know, technological developments are now frequently outstripping the ability of legislators to be able to deal with them, and we predict an ongoing battle for Claude Moirez, the EU, and the public over who the technology is working for. And we’ll bring more on that later, but unfortunately we’ve run out of time. Password is brought to you by Future Intelligence and the Cybersecurity Research Institute. And to find out more on these issues, please visit our websites. Thanks for listening and goodbye.