Technology of the Week – Markets, Auctions and the Gig Economy
7
October
2016
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An auction can be defined as a process of procurement through competitive bidding that involves: (many) buyers and/or sellers, an auction method and an auctioneer. While there are a variety of types, the creation of the Internet and mass adoption of computers gave rise to electronic auctions and markets. This enabled transactions at an unprecedented scale, speed and global reach. Consequently, demand could be pooled in a manner that made it feasible for suppliers to offer niche products (long tail phenomenon).
In this post we focus on two auction types, reversed and set-price auction. These are illustrated through two examples: Upwork and TaskRabbit.
Upwork is a platform whose services include developers, designers, writers… It is mainly individuals-to-enterprise and freelancers have to submit bids of how much they would charge for a project. From a buyer’s perspective, a project is posted and the platform shortlists suitable freelancers. The firm then selects some and invites them to submit bids. Two pricing policies exist:
Buyers can choose among three types of packages: free, Pro and Enterprise (differential pricing through versioning).
Freelancers pay a percentage of their salary to the platform, which decreases with the total amount a specific client has paid to the freelancer.
Upwork is an example of reverse auction: sellers place bids for the prices at which they’re willing to offer their service. It addresses shortcomings of this type of auction incentivizing freelancers to deliver high quality by enabling seller ratings and having programs such as a Top Rated and Top Started programs. In addition, charging freelancers a reduced fee as a client relation progresses, encourages long-term relations and hence quality.
TaskRabbit is a two-sided market focused on services revolving around chores such as cleaning, errands… It is mainly used among private individuals, freelancers set their hourly wage and receive requests from interested buyers. From a buyer’s perspective, a job is posted and the platform assigns three suitable freelancers, of which the buyer selects one. Sellers go through a background check and interview procedure before becoming a freelancer. Then, their profile is matched to potential buyers. Revenue is generated by charging buyers 30% of the freelancer’s salary as service fee.
TaskRabbit is an example of a set-price auction, in which sellers set a price that the buyer either accepts or rejects. Although this system is similar to regular (offline) auctions, the bidding process is more streamlined, time efficient, and offers more transparency.
It should also be noted that both of our examples present information asymmetry. Buyers face uncertainty for example with regard to seller’s reliability before entering a deal (adverse selection), and they may not be able to assess the quality of, and actual time spent on, the project/task (moral hazard). This can be overcome through signaling (action by an informed party that reveals information), e.g. rating the quality of a freelancer’s work upon completion; and through screening (attempt by an uninformed party to filter information), e.g. looking at freelancers’ portfolios and ratings.
Li, T. (2016). Information Strategy – Lecture 3 [PowerPoing slides].
Apple – Deloitte Partnership
2
October
2016
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Last week, on September 28th, Apple and Deloitte announced their new partnership. Now, you may ask yourself what a company best known for its consultancy and audit services has to do with Apple. With IT and technology-enabled business strategy playing an increasing role in today’s organizations, Deloitte established the Technology Infrastructure Transformation practice within Deloitte Consulting. The aim of this branch is to “increase agility and scalability, lower risk and improve service quality” of clients’ operations by leveraging technology (1). That’s where iOS comes into play.
The partnership is meant to bring together Apple’s engineering and design capabilities with Deloitte’s strategy and implementation expertise. Concretely, Deloitte set up a dedicated Apple practice consisting of over 5,000 advisors to help businesses improve their operations by designing and implementing solutions for their iOS devices (2, 3).
In addition, the two firms are collaborating in creating a new offering in Deloitte Consulting, namely the EnterpriseNext. Its goal is to enable clients to exploit mobile opportunities along three pillars (2):
Discover – EnterpriseNext offers value maps for iOS that will show clients where high impact mobile opportunities lie, as well as how to align those opportunities and prioritize them.
Define – iOS workshops to quickly transform prototypes into custom solutions.
Implement – in-house development teams to create native apps that easily integrate with clients’ existing technologies, such as ERP and CRM systems.
Despite being the first of its kind, this partnership should not be a big surprise. First of all, Apple has entered several enterprise-focused partnerships with other companies such as IBM, Cisco and SAP over the past months (4). Second, Deloitte has already transformed more than 50 organizations with iOS devices and developed hundreds of apps for clients (4). Third, Deloitte itself is one of the largest corporate iOS users, with employees currently making use of over 120,000 iPhones (that’s a considerable amount taking into account that the firm has 244,000 employees) (4).
Overall, with a slowdown of product sales in the consumer market and the launch of the iPad Pro series, expanding the Apple ecosystem into the corporate world appears to be a wise move.
When your home knows too much – Smart Homes & Hackers
26
September
2016
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IoT and smart homes
You are probably familiar with terms such as the Internet of Things (IoT) and smart homes (as well as all sorts of “smart” things like smart cities, smart energy, smart cars…). Before going further into the topic though, let us define what these buzzwords actually mean.
The International Telecommunication Union defines the Internet of Things as “a global infrastructure for the information society, enabling advanced services by interconnecting (physical and virtual) things based on existing and evolving interoperable information and communication technologies“(ITU, 2015). In other words, we refer to (interconnected) devices that sense, report and act on real-world data (Digital Trends, 2014). Smart homes apply this concept of IoT to our homes and connect a wide range of ordinary appliances and devices such as your lights, coffee machine, toilet, window blinds, etc., to the Internet and to one another. This connectivity also enables the remote controlling of these appliances.
The video below illustrates what such a smart home (perhaps your future home?) could look like.
Pretty cool, right? After all, who wouldn’t want to be able to check whether their home is locked without having to get back out of bed or wake up to a simulated sunrise and fresh coffee awaiting in the kitchen?
How hackable are smart homes?
While the video is not a very accurate representation of what our days look like (yet), the extent and speed at which we are approaching ever “smarter” lives should not be underestimated. For instance, there are currently over 10 billion connected IoT devices (Philips Hue lights anyone?), and SmartThings (Samsung’s IoT platform) already offers over 500 SmartApps for users’ homes while its Android app has been downloaded over 100,000 times (Business Insider, 2016)(University of Michigan News, 2016). Given this scale and prominence, one would assume that these devices are quite safe. But are they? It turns out that in addition to a hefty price tag, the resulting convenience of smart homes may cost us dearly in terms of privacy, safety and control over what is supposed to be our home.
I’m sure we can all think of horror scenarios in which our homes become our enemy, however, these scenes aren’t as far fetched as one would think (and hope!). Although the entertainment industry certainly has a flair for the dramatic, there have been many vulnerability exploitations in IoT devices over the past years. Examples include the online life streaming of over 70,000 private security cameras or hacks on home security systems that would enable thieves to disable your alarm, break in, and re-enable it after the theft (Network World, 2015)(Network World, 2014). Last year, the DefCon (one of the world’s largest hacking conferences) even hosted its first IoT Village, in which IoT devices, in this case a Samsung smart fridge, are hacked (IOT Village, 2015)(Pen Test Partners, 2015). You may think, “It’s just a fridge, so what?”. Well, the thing with IoT devices is that they are interconnected, hence, while it is certainly possible to mess with your shopping list, these hacks were able to, amongst others, get the owner’s Gmail credentials (ConsumerAffairs, 2015).
In addition, cyber security researchers from the University of Michigan performed what is considered the first system-wide security study on connected homes. Specifically, they tested Samsung’s popular SmartThings platform and were able to turn on the house’s fire alarm, add an additional code for the entrance door (essentially a secret spare key), set up an automatic text message to the hacker as soon as the door code is changed, and turn off the so-called “vacation mode”, which control lights, blinds and so on, for owners that are away (University of Michigan News, 2016).
Main issues
While there are many underlying issues leading to the vulnerabilities in smart home devices and the technical details behind them are out of the scope of this post, we can identify several key points:
Wi-Fi: if hackers can gain access to the network to which the devices are connected, they can easily attack the respective devices (TechRadar, 2016).
Overprivilege: the researchers from the University of Michigan found that over 40% of the SmartThings apps were granted more access than the apps actually requested – by default, the platform grants full device access (University of Michigan News, 2016).
Manufacturers: manufacturers have not invested enough in security, which is costly and very difficult for consumers to assess (Network World, 2015).
Lack of standards: security standards for the IoT are still being designed (Network World, 2015).
Default passwords: last but certainly not least, in many cases hacks occur because users do not change the default usernames and passwords. For example, such as in the private surveillance camera case mentioned above (Network World, 2015).
Summing up…
There are many appealing applications that in an ideal scenario may (considerably) aid our daily lives. Nonetheless, it is simply reality that in the end, anything connected to a network is hackable. The key is to make hacking these devices so difficult and/or expensive that it is not worth the time and effort, while always being aware of what we are potentially risking by opting for a little bit more convenience. Furthermore, as security standards are established, more vulnerabilities are exposed and consumer awareness increases, smart homes may become a viable reality.
To what extent would you be willing to compromise your privacy and safety for the added convenience of a smart home? And what do you think are the implications this has for the growing trend of smart cities?
For some additional examples and short videos feel free to visit CNN’s Your Hackable House: http://money.cnn.com/interactive/technology/hackable-house/
