Category: Web/Tech

eSports update

In case you’ve been sleeping:

Tournament prize pools now rival those for some of the biggest events in traditional sports, and global audiences for some big gaming events have surpassed 100 million viewers, driven largely by esports’ exploding popularity in Asia.

The lion’s share of esports revenue comes from corporate sponsorships, according to industry analysis firm Newzoo, with ticket sales, merchandising and broadcasting rights bringing in additional revenue. Newzoo estimates that esports will generate $345 million in revenue in North America this year, in addition to more than half a billion dollars in revenue overseas.

You will note that total is much less than for major league football or baseball, which exceed $10 billion each.  Still, “more service for less gdp” is a common theme in the internet economy.  Consider this:

The 2017 League of Legends world championship, held in Beijing, drew a peak of over 106 million viewers, over 98 percent of whom watched from within China, according to industry analyst Esports Charts. That’s roughly on par with the audience for the 2018 Super Bowl.

In other words, the nation without the traditional “locked in” major sport franchises is choosing to jump to eSports.  And:

This year’s total DOTA 2 championship audience was roughly the same size as the total number tuning into the Kentucky Derby, and considerably larger than the peak Wimbledon, Daytona 500, U.S. Open or Tour de France audiences.

All of a sudden, more and more of the world is “stuff I never really heard of before.”

Here is more from Christopher Ingraham at Wonkblog.

What should I ask Eric Schmidt?

I will be doing a Conversation with Eric, in San Francisco, September 19.  It is not an open event, but you can apply to attend.  It is sponsored by Village Global, which is connected with Ben Casnocha and Erik Torenberg.

In case you have been living under a rock, here is the opening bit of Wikipedia on Eric:

Eric Emerson Schmidt (born April 27, 1955) is an American businessman and software engineer. He is known for being the Executive Chairman of Google from 2001 to 2015[ and Alphabet Inc. from 2015 to 2017.

Not everyone knows that Eric is the son of Wilson Schmidt, a well-known economist at Virginia Tech and Johns Hopkins, who wrote on currency matters and also worked with Jim Buchanan.

So what should I ask Eric?

Is Facebook causing anti-refugee attacks in Germany?

Here is the key result, as summarized by the NYT:

Wherever per-person Facebook use rose to one standard deviation above the national average, attacks on refugees increased by about 50 percent.

Here is the underlying Müller and Schwarz paper.  They consider 3,335 attacks over a two-year period in Germany.  But I say no, their conclusion has not been demonstrated.  Where to start?

Here is one picture showing a key correlation:

It is difficult to see if there is causation in the correlationThat looks pretty strong, doesn’t it?  Nein!  That is not how propaganda works, as an extensive literature in sociology and political psychology will indicate.  That is how it looks when you measure what is essentially the same variable — or its effects — two different ways.  For instance, that very big spike in the middle of the distribution?  As Ben Thompson has pointed out, it represents the New Year’s harassment attacks in Cologne.  Maybe that caused both Facebook activity and other attacks to spike at the same time?  Will you mock me if I resort to the “blog comment cliche” that correlation does not show causation?

To continue with the excellent Ben Thompson (he is worth paying for!), the identification method used in the paper is suspect, and he focuses on this quotation from the authors:

In our setting, the share of a municipality’s population that use the AfD Facebook page is an intuitive proxy for right-wing social media use; however, it is also correlated with differences in a host of observable municipality characteristics — most importantly the prevalence of right-wing ideology. We thus attempt to isolate the local component of social media usage that is uncorrelated with right-wing ideology by drawing on the number of users on the “Nutella Germany” page. With over 32 million likes, Nutella has one of the most popular Facebook pages in Germany and therefore provides a measure of general Facebook media use at the municipality level. While municipalities with high Nutella usage are more exposed to social media, they are not more likely to harbor right-wing attitudes.

The whole result rests on assumptions about Nutella?  What if you used likes for Zwetschgenkuchen?  Has a robustness test been done?  Was a simple correlation not good or not illustrative enough?  I’ll stick with the simple hypothesis that some municipalities have both more Facebook usage, due to high AfD membership, and also more attacks on refugees, and furthermore both of those variables rise in tense times.  AfD is the German party with the strongest presence on Facebook, I am sorry to say.

You will note by the way that within Germany the Nutella page has only verifiable 21,915 individual interactions, including likes (32 million is the global number of Nutella likes…die Deutschen are not that nutty), and that is distributed across 4,466 municipal areas.  (If you are confused, see p.12 in the paper, which I find difficult to follow and I suspect that represents the confusion of the authors.)  That should make you more worried yet about the Nutella identification strategy.  They never tell us what they would have without Nutella, a better tasting sandwich I would say.

I also would note the broader literature on propaganda once again.  Consider the research of Markus Prior: “…evidence for a causal link between more partisan messages and changing attitudes or behaviors is mixed at best.”  These Facebook results are simply far outside of what we normally suppose to be true about human responsiveness — so maybe the company is undercharging for its ads!

Ben adds:

I am bothered by the paper’s robustness section in two ways: first, every single robustness test confirmed the results. To me that does not suggest that the initial result must be correct; it suggests that the researchers didn’t push their data hard enough. There is always a test that fails, and that is a good thing: it shows the boundaries of what you have learned. Second, there were no robustness tests applied to one of the more compelling pieces of evidence, that Internet and Facebook outages were correlated with a reduction in violence against refugees. This is particularly unfortunate because in some ways this evidence works against the filter bubble narrative: after all, the idea is the filter bubbles change your reality over time, not that they suddenly inspire you to action out of the blue.

The authors do present natural experiments from Facebook and internet outages.  They find that “…for a given level of anti-refugee sentiment, there are fewer attacks in municipalities with high Facebook usage during an internet outage than in municipalities with low Facebook usage without an outage.” (p.28).  Again I find that confusing, but I note also that “internet outages themselves…do not have a consistent negative effect on the number of anti-refugee sentiments.”  That is the simple story, and it appears to exonerate Facebook.  pp.28-30 then present a number of interaction effects and variable multiplications, but I am not sure what to conclude from the whole mess.  I’m still expecting internet outages to lower the number of attacks, but they don’t.

Even if internet or Facebook outages do have a predictive effect on attacks in some manner, it likely shows that Facebook is a communications medium used to organize gatherings and attacks (as the telephone once might have been), not, as the authors repeatedly suggest, that Facebook is somehow generating and whipping up and controlling racist sentiment over time.  Again, compare such a possibility to the broader literature.  There is good evidence that anti-semitic violence across German regions is fairly persistent, with pogroms during the Black Death predicting synagogue attacks during the Nazi time.  And we are supposed to believe that racist feelings dwindle into passivity simply because the thugs cannot access Facebook for a few days or maybe a week?  By the way, in their approach if there is an internet outrage, mobile devices do not in Germany pick up the slack.

I’d also like to revisit the NYT sentence, cited above, and repeated many times on Twitter:

Wherever per-person Facebook use rose to one standard deviation above the national average, attacks on refugees increased by about 50 percent.

That sounds horrible, but it is actually a claim about variation across municipalities, not a claim about the absolute importance of the internet.  The authors also reported a very different and perhaps more relevant claim to the Times:

…this effect drove one-tenth of all anti-refugee violence.

I would have started the paper with that sentence, and then tried to estimate its robustness, without relying on Nutella.

As it stands right now, you shouldn’t be latching on to the reported results from this paper.

The decline of private ownership in America

That is the topic of my latest Bloomberg column,.  After a discussion of Spotify, Netflix, Kindle, and Uber, I move to the more general point:

Each of these changes is beneficial, yet I worry that Americans are, slowly but surely, losing their connection to the idea of private ownership. The nation was based on the notion that property ownership gives individuals a stake in the system. It set Americans apart from feudal peasants, taught us how property rights and incentives operate, and was a kind of training for future entrepreneurship. Do we not, as parents, often give our children pets or other valuable possessions to teach them basic lessons of life and stewardship?

We’re hardly at a point where American property has been abolished, but I am still nervous that we are finding ownership to be so inconvenient. The notion of “possessive individualism” is sometimes mocked, but in fact it is a significant source of autonomy and initiative.

And as software continues to “eat the world,” we often have fewer ownership rights when it comes to revisions, upgrades, and repairs.  The piece closes with this:

Does that sound like something our largely agrarian Founding Fathers might have been happy about? The libertarian political theorist might tell you that arrangement is simply freedom of contract in action. But the more commonsensical, broad libertarian intuitions of the American public encapsulate a more brutish and direct sense that some things we simply own and hold the rights to.

Those are intuitions which are growing increasingly disconnected from reality, and no one knows what lies on the other side of this social experiment.

Do read the whole thing.

The Pioneer project: finding “the lost Einsteins”

Silicon Valley has created a model for identifying and nurturing high-potential young companies…Pioneer… hopes to do much the same thing for high-potential people.

The group, which is being announced on Thursday, plans to use the internet-era tools of global communication and crowdsourcing to solicit and help select promising candidates in a variety of fields, along with evaluations by experts. Its goal is to put more science and less happenstance into the process of talent discovery — and reach more people, wherever they are in the world.

“We’re trying to build a kind of search engine for finding great people with talent, ambition and potential,” said Daniel Gross, 27, the group’s founder…

Selecting “pioneers” will begin with a monthlong online tournament. Candidates will submit their project ideas. Each week, the projects will be updated. The candidates will vote on each other’s projects, points will be awarded and there will be leader board. Subject experts will also vote, with their votes counting somewhat more than the candidates’.

That is from Steve Lohr at The New York Times, with much more at the link.  Here is the account from Daniel Gross at Pioneer.  I am pleased and honored to be an (informal) advisor to this project.

Why does tech have so many political problems?

These are originally derived from written notes, a basis for comments by somebody else, from a closed session on tech.  I have added my own edits:

  1. Most tech leaders aren’t especially personable. Instead, they’re quirky introverts. Or worse.
  2. Most tech leaders don’t care much about the usual policy issues. They care about AI, self-driving cars, and space travel, none of which translate into positive political influence.
  3. Tech leaders are idealistic and don’t intuitively understand the grubby workings of WDC.
  4. People who could be “managers” in tech policy areas (for instance, they understand tech, are good at coalition building, etc.) will probably be pulled into a more lucrative area of tech. Therefore ther is an acute talent shortage in tech policy areas.
  5. The Robespierrean social justice terror blowing through Silicon Valley occupies most of tech leaders’ “political” mental energy. It is hard to find time to focus on more concrete policy issues.
  6. Of the policy issues that people in tech do care about—climate, gay/trans rights, abortion, Trump—they’re misaligned with Republican Party, to say the least. This same Republican party currently rules.
  7. While accusations of deliberate bias against Republicans are overstated, the tech rank-and-file is quite anti-Republican, and increasingly so. This limits the political degrees of freedom of tech leaders. (See the responses to Elon Musk’s Republican donation.)
  8. Several of the big tech companies are de facto monopolies or semi-monopolies. They must spend a lot of their political capital denying this or otherwise minimizing its import.
  9. The media increasingly hates tech. (In part because tech is such a threat, in part because of a deeper C.P. Snow-style cultural mismatch.)
  10. Not only does tech hate Trump… but Trump hates tech.
  11. By nature, tech leaders are disagreeable iconoclasts (with individualistic and believe it or not sometimes megalomaniacal tendencies). That makes them bad at uniting as a coalition.
  12. Major tech companies have meaningful presences in just a few states, which undermines their political influence. Of states where they have a presence — CA, WA, MA, NY — Democrats usually take them for granted, Republicans write them off.  Might Austin, TX someday help here?
  13. US tech companies are increasingly unpopular among governments around the world. For instance, Facebook/WhatsApp struggles in India. Or Google and the EU. Or Visa and Russia. This distracts the companies from focusing on US and that makes them more isolated.
  14. The issues that are challenging for tech companies aren’t arcane questions directly in and of the tech industry (such as copyright mechanics for the music industry or procurement rules for defense). They’re broader and they also encounter very large coalitions coming from other directions: immigration laws, free speech issues on platforms, data privacy questions, and worker classification on marketplaces.
  15. Blockchain may well make the world “crazier” in the next five years. So tech will be seen as driving even more disruption.
  16. The industry is so successful that it’s not very popular among the rest of U.S. companies and it lacks allies. (90%+ of S&P 500 market cap appreciation this year has been driven by tech.) Many other parts of corporate America see tech as a major threat.
  17. Maybe it is hard to find prominent examples of the great good that big tech is doing. Instagram TV. iPhone X. Amazon Echo Dot. Microsoft Surface Pro. Are you impressed? Are these companies golden geese or have they simply appropriated all the gold?

Good advice from Patrick Collison

Here is the whole post, here is one excerpt:

If you’re 10–20: These are prime years!

  • Go deep on things. Become an expert.
  • In particular, try to go deep on multiple things. (To varying degrees, I tried to go deep on languages, programming, writing, physics, math. Some of those stuck more than others.) One of the main things you should try to achieve by age 20 is some sense for which kinds of things you enjoy doing. This probably won’t change a lot throughout your life and so you should try to discover the shape of that space as quickly as you can.
  • Don’t stress out too much about how valuable the things you’re going deep on are… but don’t ignore it either. It should be a factor you weigh but not by itself dispositive.
  • To the extent that you enjoy working hard, do. Subject to that constraint, it’s not clear that the returns to effort ever diminish substantially. If you’re lucky enough to enjoy it a lot, be grateful and take full advantage!
  • Make friends over the internet with people who are great at things you’re interested in. The internet is one of the biggest advantages you have over prior generations. Leverage it.
  • Aim to read a lot.
  • If you think something is important but people older than you don’t hold it in high regard, there’s a decent chance that you’re right and they’re wrong. Status lags by a generation or more.
  • Above all else, don’t make the mistake of judging your success based on your current peer group. By all means make friends but being weird as a teenager is generally good.

What Price Fame?

A NEW GENERATION of celebrities is selling out concerts, starring in commercials, and amassing huge Instagramfollowings. But none of them exist—corporeally, anyway. In recent years, and starting in Japan, technology and social media have spawned a digital demimonde of computer-generated stars, ranging from fake musicians and models to company mascots who appear as holograms (like Betty Crocker, with AI). When they’re not entertaining you, they’re trying to convince you of their humanity, and even the more cartoonish among them have fleshed-out personalities. In a way, it’s the purest expression of celebrity, which has always been an elaborate illusion. CGI starlets, though, “are much easier to control,” says Ryan Detert, CEO of the branding firm Influential. Except when they misbehave.

There is more of interest, from Miranda Katz at Wired, via the excellent Samir Varma.

Dan Wang on how technology grows

It is a short essay, here are a few scattered bits:

The real output of the US manufacturing sector is at a lower level than before the 2008 recession; that means that there has not been real growth in US manufacturing for an entire decade. (In fact, this measure may be too rosy—the ITIF has put forward an argument that manufacturing output measures are skewed by excessive quality adjustments in computer speeds. Take away computers, which fewer and fewer people are buying these days, and US real output in manufacturing would be meaningfully lower.) Manufacturing employment peaked in 1979 at nearly 20 million workers; it fell to 17 million in 2000, 14 million in 2008, and stands at 12 million today. The US population has grown by 40% since 1979, while the number of manufacturing workers has nearly halved.

And:

I think we should try to hold on to process knowledge.

Japan’s Ise Grand Shrine is an extraordinary example in that genre. Every 20 years, caretakers completely tear down the shrine and build it anew. The wooden shrine has been rebuilt again and again for 1,200 years. Locals want to make sure that they don’t ever forget the production knowledge that goes into constructing the shrine. There’s a very clear sense that the older generation wants to teach the building techniques to the younger generation: “I will leave these duties to you next time.”

And:

There’s an entertaining line in the Brad Setser piece I linked to earlier. He tells us that one of the reasons that the US has such a high surplus in the services trade is that Americans have a low propensity to travel abroad. I don’t view that as a great way to earn a trade surplus.

There is much more at the link.

Solve for the Hilfiger hoodies equilibrium

This week, Tommy Hilfiger introduced Tommy Jeans XPLORE , a new line of clothes and accessories that all come bugged with “smart chip technology,” which tracks how often you wear them and where you go with them on.

There’s even an exclusive game, sort of like Pokémon Go, that you can use to earn rewards like gift cards and concert tickets.

“It’s all of your must-have Tommy Jeans favorites with smart chip technology,” the brand’s website reads…

The company said in its announcement for the line that it hopes the chipped clothes and game will help create a “micro-community of brand ambassadors.” In essence, they’re rewarding you for wearing the products more often.

Here is the story, and for the pointer I thank the excellent Samir Varma.

Cafeteria protectionism

When Facebook moves into its new offices in Mountain View this fall, a signature Silicon Valley perk will be missing — there won’t be a corporate cafeteria with free food for about 2,000 employees.

In an unusual move, the city barred companies from fully subsidizing meals inside the offices, which are part of the Village at San Antonio Center project, in an effort to promote nearby retailers. The project-specific requirement passed in 2014, attracting little notice because the offices were years away from opening.

It came in response to local restaurants that said Google, the city’s biggest employer, was hurting their businesses by providing free meals, according to John McAlister, a Mountain View councilman.

Here is the story, via Anecdotal.  I spent two days once eating the food at Menlo Park Facebook, and thought it was quite good.

Higher education update occasionally we innovate

Income-share agreements:

To pay for his professional flight degree at Purdue University in Indiana, Andrew Hoyler had two choices. He could rely on loans and scholarships. Or he could cover some of the cost with an “income-share agreement” (ISA), a contract with Purdue to pay it a percentage of his earnings for a fixed period after graduation.

And:

Around a third of graduate education in America is now online, according to Richard Garrett of Eduventures, a consultancy. Many universities take a do-it-yourself approach, but the better-known ones tend to go into partnership with the OPMs. 2U, a ten-year-old startup, led the way, and has been followed into the business by, among others, Pearson, an educational publisher, and Coursera (which started off as a provider of MOOCs). Coursera joined up with UoI to create its online MBA programme.

Both are from The Economist.

Surveillance sentences to ponder

One of the surveillance industry’s recent — and much publicised — success stories took place at a pop concert in eastern China. While Jacky Cheung, a Hong Kong pop star (rebranded a “fugitive trapper” by the Chinese media) crooned, cameras were automatically sweeping the audience.  Facial-recognition technology picked out four men accused of crimes — including a ticket scalper and a greengrocer accused of a Rmb110,000 potato scam in 2015. “Smiling as he approached his idol, he did not realise he had already been spotted,” Jiaxing police gloated in a social-media post.

And:

Some of China’s leading facial-recognition players, for example, are now moving into gait recognition. Hanwang Technology was an early entrant in the field: it was forced to rethink its fingerprint-recognition technology when the Sars epidemic of 2005 left people in China terrified of physical contact.  “We can see the human figure and his gait, so if his cap is pulled down [we] can still recognise him,” explains Liu Changping, president of the Beijing-based company. The Chinese authorities already have a decent video database to build on, he adds: “If [someone] was put in prison before, there’s video of him walking around.”

That is from Louis Lucas and Emily Feng from the FT, interesting throughout.

My Conversation with Vitalik Buterin

Obviously his talents in crypto and programming are well-known, but he is also a first-rate thinker on both economics and what you broadly might call sociology.  You could take away the crypto contributions altogether, and he still would be one of the very smartest people I have met.  Here is the audio and transcript.  The CWT team summarized it as follows:

Tyler sat down with Vitalik to discuss the many things he’s thinking about and working on, including the nascent field of cryptoeconomics, the best analogy for understanding the blockchain, his desire for more social science fiction, why belief in progress is our most useful delusion, best places to visit in time and space, how he picks up languages, why centralization’s not all bad, the best ways to value crypto assets, whether P = NP, and much more.

Here is one excerpt:

COWEN: If you could go back into the distant past for a year, a time and place of your choosing, you have the linguistic skills and immunity against disease to the extent you need it, maybe some money in your pocket, where would you pick to satisfy your own curiosity?

BUTERIN: Where would I pick? To do what? To spend a year there, or . . . ?

COWEN: Spend a year as a “tourist.” You could pick ancient Athens or preconquest Mexico or medieval Russia. It’s a kind of social science fiction, right?

BUTERIN: Yeah, totally. Let’s see. Possibly first year of World War II — obviously, one of those areas that’s close to it but still reasonably safe from it…

Basically, experience more of what human behavior and what collective human behavior would look like once you pushed humans further into extremes, and people aren’t as comfortable as they are today.

I started the whole dialogue with this:

I went back and I reread all of the papers on your home page. I found it quite striking that there were two very important economics results, one based on menu costs associated with the name of Greg Mankiw. Another is a paper on the indeterminacy of monetary equilibrium associated with Fischer Black.

These are famous papers. On your own, you appear to rediscover these results without knowing about the papers at all. So how would you describe how you teach yourself economics?

Highly recommended, whether or not you understand blockchain.  Oh, and there is this:

COWEN: If you had to explain blockchain to a very smart person from 40 years ago, who knew computers but had no idea of crypto, what would be the best short explanation you could give them, basically, for what you do?

BUTERIN: Sure. One of the analogies I keep going back to is this idea of a “world computer.” The idea, basically, is that a blockchain, as a whole, functions like a computer. It has a hard drive, and on that hard drive, it stores what all the accounts are.

It stores what the code of all the smart contracts is, what the memory of all these smart contracts is. It accepts incoming instructions — and these incoming instructions are signed transactions sent by a bunch of different users — and processes them according to a set of rules.