aperture | Digest #28 — Cybercrime and the geopolitical split of tech
Dear Friends,
Vacation season is definitely upon us! If you’re on holiday, we hope you’re having a great time. If you’re about to depart, have a blast! May the content in this newsletter entertain you whether you’re by the beach, in the mountains or staycationing.
Content we’ve loved
Here is some of the content we’ve most enjoyed over the last two weeks.
Ownership of the internet is coming into focus. Two editions ago, we highlighted an interesting article from David Galbraith looking at the hegemony of the internet. In the article, David demonstrates how the infrastructure of the new economy is controlled by US and China (and to a lesser extent by Russia). As you can see in the map below, the US platforms dominate across North America, Europe, Middle East, Australia, and parts of Africa, whereas China has primacy in China and increasingly across the rest of South East Asia. But, the picture is far from static — as evidenced by the fact that there have been interesting developments since it was published. For example, in India — which as David points out — is one of the major battlegrounds for the China vs US platforms, the government has banned TikTok. This is interesting in part because it demonstrates how India is increasingly moving in favour of US platforms, but also because it has brought much greater discussion about the rise of TikTok. Ben Thompson wrote a fantastic piece on the issues with TikTok, a Chinese video platform that is gaining massive traction across the globe. The article discusses why TikTok is doing so well — basically, like Facebook, it relies on amateurs to provide the content, but unlike Facebook, does not face the constraint of only showing content from a person’s connections allowing it to surface only the best content — but also the broader context. In short, the battle is on for the internet and Ben Thompson says it is an ideological as much as economic battle and TikTok is a major offensive from the Chinese which comes at a time when US platforms have been losing ground globally and affects the US directly, leading Ben Thompson — normally a stalwart defender of free markets — to call for intervention. Another interesting development in the last week has been the decision from Google to invest $4.5 billion into Jio, highlighting that the internet is more than just China vs US and that is increasingly fragmenting into a US internet, a Chinese internet, a Russian internet, an Indian internet and a European internet — where Europe is a developing economy in this regard. Again, Ben Thompson has a great take on this, where he discusses the rise of Jio and how, unlike in Europe, this gives India its own stake in the internet — a means to control and extract revenues from it — as well as providing a mature infrastructure on which for others (mainly US companies) to operate.
Cybercrime in the age of COVID-19 (and the battle for hegemony). Related to the discussion above is the topic of cybercrime since 1) as the economy moves online, so does crime 2) the giant platforms become more of a concentration point for attacks (see last week’s attack on Twitter) and 3) the crime is being perpetrated by groups who are often state-backed, as looks likely to have been the case with the attacks on the pharmaceutical companies working to develop a vaccine for COVID-19. But, against the general rise of cybercrime, the pandemic has increased temporarily widened the vector for attack. In our last 4x4 virtual salon, which covered the topic of cybercrime (replay here), Paddy McGuiness, former UK Deputy National Security Advisor, made the point — referring to this Verizon data — that the sudden switch to remote work has left networks more vulnerable because it has introduced insecure endpoints, while there has also been an increase in phishing as anxious employees, eager for news and updates, become more likely to fall for email scams. Since internal actors, wittingly and unwittingly, are becoming more central to emerging threats — and the magnitude of the attacks continues to rise — firms need to take a holistic approach; a point made in this very good, accessible article from Bain. Although from a while ago, we finish this section with the story of the Ukrainian power grid hack, which has a bit of everything — phishing, malware, quasi-governmental players, etc.
11 notes series. “For a certain kind of business traveler, the sight of a little Nespresso pod in a drawer by the minibar has become as familiar as a Gideon Bible”. This line is taken from last week’s Guardian Long Read on Nespresso, the “Swiss Apple”, a business that generates $11bn a year! A good complement to the Guardian article in this piece from Nicolas Colin. It has more than 11 notes — 42 in fact — but otherwise would fit well into the fantastic 11 notes series, the latest of which is on Warner Music, but also includes deep dives on Lego, Y Combinator, McKinsey and, our particular favourites, on Amazon, Goldman Sachs and Berkshire Hathaway. Each one would make a great poolside read!
Anything else?
William H Janeway, author of the must-read “Doing Capitalism in the Innovation Economy”, wrote a very interesting piece on the state of globalization, full of links to other great articles, which sets out a number of areas where the US must do better if it is to compete effectively with China.
Also on the topic on globalization, Javier Solana, writing in Project Syndicate, is not ready to give up on it and argues that we must continue to harness the power of international trade to raise living standards, but curb its excess so that it can’t be perceived as a zero-sum game.
For people interested in marketing, this is great essay from Tom Roach on the false dichotomy between long-term, brand-building, marketing activities and shorter-term sales activation activities. The key is get them working together
This is a good article from Christopher Mims on the transformation of retail outlets into fulfilment centers.
We enjoyed this article from Sahil Lavingia on recalibrating to just success as opposed to blow-out success.
Marc Rubinstein’s newsletter looking at bank results and what they tell us about the state of the economy is really good.
Guest recommendations: we ask each podcast guest now to recommend the best book they’ve read, best article from the last 12 months, favourite brand, an influencer and productivity hack. Here is it for Gary Pisano, Professor at Harvard Business School.
From our community
Please let us know if you’d like us to include anything from you in this section going forward…
Mike O’Sullivan, author of The Levelling who had a star turn on our 4x4 virtual salon on wealth management, also produces a newsletter.
This academic article (temporarily free to download) co-authored by our former guest on the Structural Shifts podcast, professor Markus Menz, presents an analysis of all firms in the S&P 1500 index between 2000 and 2018 and offers unique insights into the emergence of the Chief Digital Officer role.
Amidst the geopolitical fragmentation of the tech world, former Structural shifts guest Andy Yen from ProtonMail (the alternative to Gmail) announced they have decided to keep fighting for Hong Kong by keeping their ProtonVPN servers there.
Award-winning and regulated FX hedging technology company, Assure Hedge secured this week £9m funding for finance facility.
Another interesting article from John Hagel was released this week, about the future of work, named “From the Gig Economy to the Guild Economy”.
Xtremepush CEO Tommy Kearns wrote a very good piece on “How banks can deliver a better CX”, the single most important point of differentiation in the market right now for banks.
A few things from us
We produced a write-up of our last 4x4 Virtual Salon on “Cybercrime and Fraud in the age of COVID-19” which you can access here.
The next one will be on “Digital Era Banking Systems” next month, so please look out for that.
Our latest podcast is with Gary Pisano, Professor at Harvard Business School and author a brilliant book on innovation called “Creative Construction”. You can access the podcast here.
If you’re enjoying our series on “Debunking Bank IT Myths”, you can access all the cartoons issued to date here.
That’s all for this week. Please get in touch if you have any comments on the newsletter, any recommendations for podcast guests or anything else.
We are a boutique strategy firm working with digital age companies helping them to develop and scale networked business models and we hope you enjoyed this read.
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Warm greetings,
aperture team
