It is exactly 15 years since the movie’s first release in 1999 – a year of a symbolic digit, omni-pregnant in all possibly meanings… In a retrospective, it is worth of a mini conquest over the fields of Alternative Futures…of all our tomorrows that (knocked on our doors but, so far) did not come in yet… The MATRIX – Our Posthuman (Future) Existence – we are here to answer your call:
FREEDOM, WHOSE AND WHOM !?
It’s a cool music, good-looking and hallucinatory characters, ultra-speed violence of the anti-gravity martial arts, quasi religious story of Homeric gods, Buddhist goddesses or Judeao-Christian-Islamic God, all of that combined with a lot of Hi-Tech …
The Matrix (offered and still) offers more than this. It belongs in a special class of films including The Wizard of Oz, Blade Runner, 1984, Logan’s Run, Total Recall, Crimes and Misdemeanors, A Clockwork Orange, The Unbearable Lightness of Being, Brazil-Brazil, The Truman Show, Thirteen Floor, Minority Report, and above all Aldous Huxley’s Brave New World. All of these films are intentionally philosophical. Each shows how richly philosophical and existential themes can be developed through cinema. Perhaps the best of these films is The Matrix.
However, the most striking philosophical theme found in The Matrix concerns skepticism about knowledge of an external world (what Morpheus aptly called “the desert of the real”). Life that desolated shell of a planet on which countless humans were unknowingly ensconced in slimy wombs, and after the Nuclear Winter that was caused by humans they are transformed into cattle, into batteries.
But there are many other philosophical themes explored within The Matrix. One is the concept of freedom. Freedom is mentioned at various points in the film. Even the leader of machines, Agent Smith valued freedom:
AGENT SMITH TO MORPHEUS:
I’m going to be honest with you; I hate this place, this zoo, this prison,
this reality – whatever you want to call it. I can’t stand it any longer …
I can taste your stink, and every time I do, I fear that I am somehow infected.
Isn’t it ?!
… I must get out of here, I must get free ! And in this mind is the key.
Once Zion is destroyed, there is no need for me to be here.
A freedom, in a sense, many have called freedom of the will.
(Per definition: Free will is the ability of persons to control the future through their choices and actions.)
Finally, when Neo and Morpheus first talked, Morpheus asked Neo if he believed in fate. Neo said that he didn’t since he did not like the idea that he did not control his life.
MACHINE NEVER KILLS, HUMANS DO ?!
The Matrix naturally adopts the perspective of the humans: they are the victims, the slaves — cruelly exploited by the machines. But there is another perspective, that of the machines themselves. So let’s look at it from the point of view of the machines. As Morpheus explains to Neo, there was a catastrophic war between the humans and the machines, after the humans had produced AI, a sentient robot that spawned a race of its own. It isn’t known now who started the war, but it did follow a long period of machine exploitation by humans. What is known is that it was the humans who “scorched the sky”, blocking out the sun’s rays, in an attempt at machine genocide—since the machines needed solar power to survive. In response and retaliation the machines subdued the humans and made them into sources of energy—batteries, in effect. Each human now floats in his or her own personal vat, a warm and womblike environment, while the machines feed in essential nutrients, in exchange for the energy they need. But this is no wretched slave camp, a grotesque gulag of torment and suffering; it is idyllic, in its way. The humans are given exactly the life they had before.
Things are no different for them, subjectively speaking. Indeed, at an earlier stage the Matrix offered them a vastly improved life, but the humans rejected this in favor of a familiar life of moderate woe—the kind of life they had always had, and to which they seemed addicted. But if it had been left up to the machines, the Matrix would have been a virtual paradise for humans—and all for a little bit of battery power. This, after an attempt to wipe the machines out for good, starving them of the food they need: the sun, the life-giving sun. The machines never kill any of their human fuel cells (unless, of course, they are threatened); in fact, they make sure to recycle the naturally dying humans as food for the living ones. It’s all pretty…humane, really. The machines need to factory farm the humans, as a direct result of the humans trying to exterminate the machines, but they do so as painlessly as possible. Considering the way the humans used to treat their own factory farm animals—their own fuel cells—the machines are models of caring livestock husbandry. In the circumstances, then, the machines would insist, the Matrix is merely a humane way to ensure their own survival.
Moreover, as Agent Smith explains, it is all a matter of the forward march of evolution: humans had their holiday in the sun, as they rapidly decimated the planet, but now the machines have evolved to occupy the position of dominance. Humans are no longer the oppressor but the oppressed—and the world is a better place for it.
WHO AND WHAT FOR ?!
Why to combine a quasi-religious story with high-speed ultra-violence ?
Why the instant cult status of the Matrix ?!
In contemporary American (or western, in general) society, as the stakes are lower, so too are the hopes for radical newness. However, for people imprisoned in office cubicles everywhere in their Sisyphus-like existence, such a movie is popular because it targets the existential anxiety that can build up while doing meaningless work for a large corporation or governmental entities.
The very idea that there is another possibility, that by “freeing our minds” we can become spiritually enlightened and escape this prison, is a very attractive prospect to us modern-day exile-generation.
I know that you’re out there. I can feel you now. I know that you’re afraid.
You’re afraid of us. You’re afraid of change. I don’t know the future.
I didn’t come to tell you how this is going to end. I came to tell you how it will begin.
TRINITY TO NEO:
The Matrix cannot tell you who you are, but who you are seems to be at least
in some sense related to whom you think you are in the Matrix.
No one can be told what the Matrix is. You have to see it for yourself.
I’m trying to free you mind, Neo. But I can only show you the door.
You’re the one that has to walk through it.
There’s a difference between knowing the path and walking the path.
WHAT IS SO BAD ABOUT LIVING IN THE MATRIX
First question: Who is the Matrix supposed to be bad for ? What do you think, if you had a power to free people from the Matrix, would you use that power ? We can assume that these people’s minds are “ready,” that is, they can survive being extracted from the Matrix without going insane. But let’s suppose that once you freed them, they did not have the option of going back. Do you think they’d be better off outside? Would you free them? Do you think they’d thank you ?
Or do you side with Cypher ? Do you think that life inside the Matrix isn’t all that bad—especially if your enjoyment of it isn’t spoiled by the knowledge that it’s all a machine-managed construct ?
Second question: Does it matter who’s running the Matrix, and why? In the movie, the machines are using the Matrix to keep us docile so that they can use us as a source of energy. In effect, we’re their cattle. But what if we weren’t at war with the machines? What if the machines’ purposes were purely benevolent and philanthropic ? What if they created the Matrix because they thought that our lives would be more pleasant in that virtual world than in the harsher real world ?
Or what if we defeated the machines, took over the Matrix machinery ourselves, and then chose to plug ourselves back in because life inside was more fun ?
Consider Cypher’s final conversation with Trinity:
If I had to choose between that and the Matrix … I choose the Matrix.
The Matrix isn’t real ?
I disagree, Trinity. I think the Matrix can be more real than this world.
Or as the George Orwell’s novel 1984 says:
“There is a Party slogan dealing with the control of the past: Who controls the past controls the future – who controls the present controls the past !”
The most disturbing thing about this isn’t that the machines are farming us for energy. We’re not told enough about how the energy-farming works to make it seem very bad. Perhaps the machines are only taking energy we were making no use of, anyway. Perhaps the machines ensure that—except for the rare occasions when an Agent takes over your body and gets it killed—we live longer and healthier lives in the Matrix energy-farm than we would in the wild.
AND, OTHER WAY ROUND
Imagine that the real world is a post-apocalyptic hell, just as in the film, but, unlike in the film, suppose that the cause of the world’s being in such a state is not some battle with machines that wanted to enslave us, but the emission of so many greenhouse gases with our three-lane-wide SUVs that we completely obliterated the ozone layer and thereby rendered the planet uninhabitable by us or by the plants and animals that we rely on for our survival. Suppose further that sometime in the future, in order to save the human race, scientists set up an enormous self-sustaining machine, just as in the film (minus the scary “Sentinels”), designed to keep the human species alive and reproducing for the 100,000 years it will take for whatever weeds are left on the planet to fix our atmosphere and make the planet once again habitable in a normal way. The machine operates simply on solar power (since, on this scenario, the sun is now stronger than ever, frying almost everything else on the planet), so that human beings are not needed as “batteries”. While humans are stuck in this state, the scientists create the Matrix for them to “live” their lives in instead of being conscious of floating in a vat for the length of their life, which would clearly be a most horrific torture. Once the power of the sun is diminished to a habitable degree (because of the repaired atmosphere) the machine would “wake” us humans, and we could go back to living on the planet.
The ordinary person in this scenario is in the same condition as an ordinary person in the film, except that instead of the Matrix being the diabolical result of evil machines who exploit the human race, it is the result of benevolent human beings trying to keep the human race alive in as good condition as possible under the terrible circumstances. Of course it would seem no different to the person in the Matrix. We, the viewers, however, would have quite a different response to The Matrix. There would be no enemy to fight, no injustice to rectify (the pushers of SUVs being long dead). If there were a Morpheus in this situation, how would we think of him? If Morpheus and his friends had left the Matrix, and figured out that they could, with extreme difficulty, survive in the devastated world (eating disgusting porridge, etc.), should they go about “freeing” everyone, even if it would take another 10,000 years for the Earth to return to its present state of habitability?
Let’s suppose too that science has found a way to simulate food with a computer, so that they have created a “food-matrix”. My real nutrition would come from the pill, but I could still go out for a “simulated” steak and it would seem just as though I were really eating a steak, including the sensation of getting full, although in fact I would be eating nothing and getting no nutritional harm or benefit from the experience at all.
PLATO’S CAVE AND THE MATRIX
What is this place ?
More important than ‘what’ is when !
You believe that it is the year 1999 when in fact it is closer to the year 2199.
I can’t tell you exactly what year it is, because we honestly do not know …
Imagine a dark, subterranean prison in which humans are bound by their necks to a single place from infancy. Elaborate steps are taken by unseen forces to supply and manipulate the content of the prisoner’s visual experience. This is so effective that the prisoners do not recognize their imprisonment and are satisfied to live their lives in this way. Moreover, the cumulative effects of this imprisonment are so through that if freed; the prisoners would be virtually helpless. And this is Matrix !
It is clear allegory of the Plato’s Cave in his masterpiece Republic:
Imagine human beings living in an underground, cavelike dwelling, with an
Entrance a long way up, which is both open to the light and as wide as the cave
itself. They’ve been there since childhood, fixed in the same place, with their
necks and legs fettered, able to see only in front of them, because their bonds
prevent them from turning their heads around. Light is provided by a fire burning
far above and behind them. Also behind them, but on higher ground, there is a
path stretching between them and the fire. Imagine that along this path a low wall
has been built, like the screen in front of puppeteers above which they show their
puppets … Then also imagine that there are people along the wall, caring all
kind of artifacts that project above it – statues of people and other animals, made
out of stone, wood, and every material. And, as you’d expect, some of the carriers
are talking, and some are silent. (514a1 – 515a3) REPUBLIC
(Grube, G.M.E. trans. Plato: Republic 2nd Ed. Rev. C.D.C. Reeve, Indianapolis, Indiana: Huckett Publishing Co., 1992)
You know, I know that this steak doesn’t exist. I know when I put it in
my mouth, the Matrix is telling my brain that it is juicy and delicious.
After nine years, do you know what I’ve realized ?
Ignorance is bliss.
Then we have a deal ?
I don’t want to remember nothing. Nothing ! You understand ?
And I want to be rich. Someone important. Like an actor.
You can do that, right ?
Whatever you want, Mr. Reagan.
Cypher is not a nice guy, but is he an unreasonable guy ? Is he right to want to get reinserted into the Matrix ? Many want to say NO, but giving reasons for why his choice is a bad one is not an easy task. After all, so long as his experience will be pleasant, how can his situation be worse than the inevitably crappy life he would lead outside of the Matrix ? What could matter beyond the quality of his experience ? Remember, once he’s back in, living his fantasy life, he won’t even know he made the deal. What he doesn’t know can’t hurt him, right ?!
Nowadays, in Postmodern world many people like Cypher – are egocentric hedonist trying to get the most out of their possibilities by maximizing the quality of their private experiences, and thereby treating themselves as resources. (It’s like our DNA is using us to propagate itself.)
AGENT SMITH TO MORPHEUS:
I’d like to share a revelation that I’ve had during my time here.
It came to me when I tried to classify your species; I realized that you are not actually mammals. Every mammal on this planet instinctively develops natural equilibrium with a surrounding environment. But you humans do not !
You move to one area and you multiply, and multiply until every natural resources are consumed. Only way you can survive is to spread to another area.
There is another organism on this planet that follows the same pattern.
Do you know what it is ? A virus !
Human Beings are disease, a cancer of this planet.
You’re the plague and we are the cure !
BRAVE NEW WORLD
As Morpheus says to Neo in the construct:
How do you define “real” ? If you’re talking about what you can feel,
what you can smell, what you can taste and see, then “real” is simply
electrical signals interpreted by your brain … The world exists now
only as a part of a neural interactive simulation that we call the Marix.
It is all in your mind, Neo ! (Residual Self image, mental projection of a digital self)
Thus, the Matrix’s reality only exists when actual human minds subjectively experience its programs.
Principally, what keeps people in line is their tendency to believe what the average person believes. Heidegger describes the resulting conformism as letting oneself be taken over by “the one” (Das Man). Aldous Huxley similarly lamented the conformity of the brainwashed masses in Brave New World.
The Matrix can be seen as an attach on what Nietzsche calls herd mentality.
Nietzsche points out that human beings are normally socialized into obeying shared, social norms, and that it is hard to think differently. As he puts it, “as long as there have been humans, there have also been herds of men (clans, communities, tribes, peoples, states, churches) and always a great many people who obey, … considering, then, that nothing has been exercised and cultivated better and longer among men then obedience, one may fairly assume that the need for it is now innate in the average man.”
There is more to life than conforming. As Morpheus says to Neo, you know there is something lacking in this world; “it’s like a splinter in your mind”.
But most people flee the thought that their conformist world lacks something important. According to Heidegger it takes an attack on anxiety.
A sense of the limit on our possibilities is what Neo experiences as the splinter in the mind. As he says to the AI (Agent Smith) at the end of the film, “ I know you are afraid … of change.”
AGENT SMITH TO MORPHEUS:
Did you know that the First Matrix was designed to be a perfect human world, where none suffered, where everyone would be happy ? … It was a disaster.
(… entire crops were lost.)
Revelation 21:4, KING JAMES BIBLE
And God shall wipe away all tears from their eyes; and there shall be no more death, neither sorrow, nor crying, neither shall there be any more pain:
for the former things are passed away.
AGENT SMITH TO MORPHEUS:
Some believe that we lacked the programming language to describe
your perfect world, but I believe that, as a species, human beings define their reality through misery and suffering. The perfect world was a dream that your primitive cerebrum kept trying to wake up from.
GARCIN, In Sartre’s No Exit:
Hell is – other people.
MOUSE TO NEO:
To deny our own impulses is to deny the very thing that makes us human.
Ignorance is bliss !
Cypher chooses the Matrix and maybe he’s not so creasy.
Is some possible Matrix better than any possible reality ? The best existence, the Christian one – Heaven, is after all a Matrix.
Or put it other way round:
Which is better, the Second Matrix, or a systematically deceptive personalized non-virtual environment – a Truman Show – that you never discover the true nature of ?!
The “good guys” in the movie end up killing a lot of human beings in their fight against the Agents. It’s hard to view these human beings as collaborators, given the nature of the Matrix, so their deaths presumably are to be regarded as acceptable collateral damage, inevitable given the difference in desired outcome.
IGNORANCE AND BLISS
In a sense, The Matrix is nothing more than a modern day “Big Brother,” taking on a machine form rather than the Orwellian vision of a powerful individual using machines to assist and bring about an all-powerful status. But 1984, the novel in which the story of Big Brother was presented, was published in 1948. The Matrix comes fifty years later. In the meantime, we have witnessed the likes of radar, television for all, space travel, computers, mobile phones, and the Internet. What would Orwell’s Big Brother have been like if he had had those technologies at his disposal – would Big Brother have been far from the Matrix?
As Morpheus explains: “Early in the 21st century, all of mankind was united in celebration. We marveled at our own magnificence as we gave birth to AI.” Morpheus describes AI as “a singular consciousness that spawned an entire race of machines.”
Later the AI creates the Matrix, a computer simulation that is “a prison for your mind.” Thus, AI traps humankind in a material prison that does not represent ultimate reality, as Morpheus explains to Neo: “As long as the Matrix exists, the human race will never be free.”
What is free will anyway, when the state of a human brain is merely partly due to a genetic program and partly due to life’s experience? Indeed, exactly the same thing is true for a robot.
In the Matrix, no human fuel cells are killed, not even the unborn—there is no abortion. Yet, naturally dying humans are allowed to die naturally and are used as food for the living. Importantly, they are not kept alive by chemicals merely for the sake of keeping them alive. The Matrix would appear to be more morally responsible to its human subjects than are human subjects to themselves.
It is common to think that while In Time, Wall-E, or 13th Floor, and especially The Truman Show poses a disturbing skeptical scenario, The Matrix is much worse. But actually things are reversed. If I am in matrix, then most of my beliefs about the external world are true. If I am in something like Truman himself, than great number of my beliefs are false. If we discover one day that we were in a matrix, this would be surprising, but we would quickly get used to it. If we were to discover that we were in the Truman show, we might well go insane.
Ten Ways the C-Suite Can Protect their Company against Cyberattack
Cyberattacks are one of the top 10 global risks of highest concern in the next decade, with an estimated price tag of $90 trillion if cybersecurity efforts do not keep pace with technological change. While there is abundant guidance in the cybersecurity community, the application of prescribed action continues to fall short of what is required to ensure effective defence against cyberattacks. The challenges created by accelerating technological innovation have reached new levels of complexity and scale – today responsibility for cybersecurity in organizations is no longer one Chief Security Officer’s job, it involves everyone.
The Cybersecurity Guide for Leaders in Today’s Digital World was developed by the World Economic Forum Centre for Cybersecurity and several of its partners to assist the growing number of C-suite executives responsible for setting and implementing the strategy and governance of cybersecurity and resilience. The guide bridges the gap between leaders with and without technical backgrounds. Following almost one year of research, it outlines 10 tenets that describe how cyber resilience in the digital age can be formed through effective leadership and design.
“With effective cyber-risk management, business executives can achieve smarter, faster and more connected futures, driving business growth,” said Georges De Moura, Head of Industry Solutions, Centre for Cybersecurity, World Economic Forum. “From the steps necessary to think more like a business leader and develop better standards of cyber hygiene, through to the essential elements of crisis management, the report offers an excellent cybersecurity playbook for leaders in public and private sectors.”
“Practicing good cybersecurity is everyone’s responsibility, even if you don’t have the word “security” in your job title,” said Paige H. Adams, Global Chief Information Security Officer, Zurich Insurance Group. “This report provides a practical guide with ten basic tenets for business leaders to incorporate into their company’s day-to-day operations. Diligent application of these tenets and making them a part of your corporate culture will go a long way toward reducing risk and increasing cyber resilience.”
“The recommendation to foster internal and external partnerships is one of the most important, in my view,” said Sir Rob Wainwright, Senior Cyber Partner, Deloitte. “The dynamic nature of the threat, not least in terms of how it reflects the recent growth of an integrated criminal economy, calls on us to build a better global architecture of cyber cooperation. Such cooperation should include more effective platforms for information sharing within and across industries, releasing the benefits of data integration and analytics to build better levels of threat awareness and response capability for all.”
The Ten Tenets
1. Think Like a Business Leader – Cybersecurity leaders are business leaders first and foremost. They have to position themselves, teams and operations as business enablers. Transforming cybersecurity from a support function into a business-enabling function requires a broader view and a stronger communication skill set than was required previously.
2. Foster Internal and External Partnerships – Cybersecurity is a team sport. Today, information security teams need to partner with many internal groups and develop a shared vision, objectives and KPIs to ensure that timelines are met while delivering a highly secure and usable product to customers.
3. Build and Practice Strong Cyber Hygiene – Five core security principles are crucial: a clear understanding of the data supply chain, a strong patching strategy, organization-wide authentication, a secure active directory of contacts, and encrypted critical business processes.
4. Protect Access to Mission-Critical Assets – Not all user access is created equal. It is essential to have strong processes and automated systems in place to ensure appropriate access rights and approval mechanisms.
5. Protect Your Email Domain Against Phishing – Email is the most common point of entry for cyber attackers, with the median company receiving over 90% of their detected malware via this channel. The guide highlights six ways to protect employees’ emails.
6. Apply a Zero-Trust Approach to Securing Your Supply Chain – The high velocity of new applications developed alongside the adoption of open source and cloud platforms is unprecedented. Security-by-design practices must be embedded in the full lifecycle of the project.
7. Prevent, Monitor and Respond to Cyber Threats – The question is not if, but when a significant breach will occur. How well a company manages this inevitability is ultimately critical. Threat intelligence teams should perform proactive hunts throughout the organization’s infrastructure and keep the detection teams up to date on the latest trends.
8. Develop and Practice a Comprehensive Crisis Management Plan – Many organizations focus primarily on how to prevent and defend while not focusing enough on institutionalizing the playbook of crisis management. The guide outlines 12 vital components any company’s crisis plan should incorporate.
9. Build a Robust Disaster Recovery Plan for Cyberattacks – A disaster recovery and continuity plan must be tailored to security incident scenarios to protect an organization from cyberattacks and to instruct on how to react in case of a data breach. Furthermore, it can reduce the amount of time it takes to identify breaches and restore critical services for the business.
10. Create a Culture of Cybersecurity – Keeping an organization secure is every employee’s job. Tailoring trainings, incentivizing employees, building elementary security knowledge and enforcing sanctions on repeat offenders could aid thedevelopment of a culture of cybersecurity.
In the Fourth Industrial Revolution, all businesses are undergoing transformative digitalization of their industries that will open new markets. Cybersecurity leaders need to take a stronger and more strategic leadership role. Inherent to this new role is the imperative to move beyond the role of compliance monitors and enforcers.
Moving First on AI Has Competitive Advantages and Risks
Financial institutions that implement AI early have the most to gain from its use, but also face the largest risks. The often-opaque nature of AI decisions and related concerns of algorithmic bias, fiduciary duty, uncertainty, and more have left implementation of the most cutting-edge AI uses at a standstill. However, a newly released report from the World Economic Forum, Navigating Uncharted Waters, shows how financial services firms and regulators can overcome these risks.
Using AI responsibly is about more than mitigating risks; its use in financial services presents an opportunity to raise the ethical bar for the financial system as a whole. It also offers financial services a competitive edge against their peers and new market entrants.
“AI offers financial services providers the opportunity to build on the trust their customers place in them to enhance access, improve customer outcomes and bolster market efficiency,” says Matthew Blake, Head of Financial Services, World Economic Forum. “This can offer competitive advantages to individual financial firms while also improving the broader financial system if implemented appropriately.”
Across several dimensions, AI introduces new complexities to age-old challenges in the financial services industry, and the governance frameworks of the past will not adequately address these new concerns.
Explaining AI decisions
Some forms of AI are not interpretable even by their creators, posing concerns for financial institutions and regulators who are unsure how to trust solutions they cannot understand or explain. This uncertainty has left the implementation of cutting-edge AI tools at a standstill. The Forum offers a solution: evolve past “one-size-fits-all” governance ideas to specific transparency requirements that consider the AI use case in question.
For example, it is important to clearly and simply explain why a customer was rejected for a loan, which can significantly impact their life. It is less important to explain a back-office function whose only objective is to convert scans of various documents to text. For the latter, accuracy is more important than transparency, as the ability of this AI application to create harm is limited.
Beyond “explainability”, the report explores new challenges surrounding bias and fairness, systemic risk, fiduciary duty, and collusion as they relate to the use of AI.
Bias and fairness
Algorithmic bias is another top concern for financial institutions, regulators and customers surrounding the use of AI in financial services. AI’s unique ability to rapidly process new and different types of data raise the concern that AI systems may develop unintended biases over time; combined with their opaque nature such biases could remain undetected. Despite these risks, AI also presents an opportunity to decrease unfair discrimination or exclusion, for example by analyzing alternative data that can be used to assess ‘thin file’ customers that traditional systems cannot understand due to a lack of information.
The widespread adoption of AI also has the potential to alter the dynamics of the interactions between human actors and machines in the financial system, creating new sources of systemic risk. As the volume and velocity of interactions grow through automated agents, emerging risks may become increasingly difficult to detect, spread across various financial institutions, Fintechs, large technology companies, and other market participants. These new dynamics will require supervisory authorities to reinvent themselves as hubs of system-wide intelligence, using AI themselves to supervise AI systems.
As AI systems take on an expanded set of tasks, they will increasingly interact with customers. As a result, fiduciary requirements to always act in the best interests of the customer may soon arise, raising the question if AI systems can be held “responsible” for their actions – and if not, who should be held accountable.
Given that AI systems can act autonomously, they may plausibly learn to engage in collusion without any instruction from their human creators, and perhaps even without any explicit, trackable communication. This challenges the traditional regulatory constructs for detecting and prosecuting collusion and may require a revisiting of the existing legal frameworks.
“Using AI in financial services will require an openness to new ways of safeguarding the ecosystem, different from the tools of the past,” says Rob Galaski, Global Leader, Banking & Capital Markets, Deloitte Consulting. “To accelerate the pace of AI adoption in the industry, institutions need to take the lead in developing and proposing new frameworks that address new challenges, working with regulators along the way.”
For each of the above described concerns, the report outlines the key underlying root causes of the issue and highlights the most pressing challenges, identifies how those challenges might be addressed through new tools and governance frameworks, and what opportunities might be unlocked by doing so.
The report was prepared in collaboration with Deloitte and follows five previous reports on financial innovation. The World Economic Forum will continue its work in Financial Services, with a particular focus on AI’s connections to other emerging technologies in its next phase of research through mid-2020.
US Blacklist of Chinese Surveillance Companies Creates Supply Chain Confusion
The United States Department of Commerce’s decision to blacklist 28 Chinese public safety organizations and commercial entities hit at some of China’s most dominant vendors within the security industry. Of the eight commercial entities added to the blacklist, six of them are some of China’s most successful digital forensics, facial recognition, and AI companies. However, the two surveillance manufacturers who made this blacklist could have a significant impact on the global market at large—Dahua and Hikvision.
Putting geopolitics aside, Dahua’s and Hikvision’s positions within the overall global digital surveillance market makes their blacklisting somewhat of a shock, with the immediate effects touching off significant questions among U.S. partners, end users, and supply chain partners.
Frost & Sullivan’s research finds that, currently, Hikvision and Dahua rank second and third in total global sales among the $20.48 billion global surveillance market but are fast-tracking to become the top two vendors among IP surveillance camera manufacturers. Their insurgent rise among IP surveillance camera providers came about due to both companies’ aggressive growth pipelines, significant product libraries of high-quality surveillance cameras and new imaging technologies, and low-cost pricing models that provide customers with higher levels of affordability.
This is also not the first time that these two vendors have found themselves in the crosshairs of the U.S. government. In 2018, the U.S. initiated a ban on the sale and use of Hikvision and Dahua camera equipment within government-owned facilities, including the Department of Defense, military bases, and government-owned buildings. However, the vague language of the ban made it difficult for end users to determine whether they were just banned from new purchases of Dahua or Hikvision cameras or if they needed to completely rip-and-replace existing equipment with another brand. Systems integrators, distributors, and even technology partners themselves remained unsure of how they should handle the ban’s implications, only serving to sow confusion among U.S. customers.
In addition to confusion over how end users in the government space were to proceed regarding their Hikvision and Dahua equipment came the realization that both companies held significant customer share among commercial companies throughout the U.S. market—so where was the ban’s line being drawn for these entities? Were they to comply or not? If so, how? Again, these questions have remained unanswered since 2018.
Hikvision and Dahua each have built a strong presence within the U.S. market, despite the 2018 ban. Both companies are seen as regular participants in industry tradeshows and events, and remain active among industry partners throughout the surveillance ecosystem. Both companies have also attempted to work with the U.S. government to alleviate security concerns and draw clearer guidelines for their sales and distribution partners throughout the country. They even established regional operations centers and headquarters in the country.
While blacklisting does send a clearer message to end users, integrators, and distributors—for sales and usage of these companies’ technologies—remedies for future actions still remain unclear. When it comes to legacy Hikvision and Dahua cameras, the onus appears to be on end users and integrators to decide whether rip-and-replace strategies are the best way to comply with government rulings or to just leave the solutions in place and hope for the best.
As far as broader global impacts of this action, these will remain to be seen. While the 2018 ban did bring about talks of similar bans in other regions, none of these bans ever materialized. Dahua and Hikvision maintained their strong market positioning, even achieving higher-than-average growth rates in the past year. Blacklisting does send a stronger message to global regulators though, so market participants outside the U.S. will just have to adopt a wait-and-see posture to see how, if at all, they may need to prepare their own surveillance equipment supply chains for changes to come.
U.S. Policy on Zimbabwe Leaves Door Open for China
The clearest image yet of the failure of United States’ policy towards Zimbabwe was on display last week when President...
Ending the Gulf crisis: Natural gas frames future Gulf relations
Natural gas could well emerge as the litmus test of how relations among the Gulf’s energy-rich monarchies evolve if and...
Lebanon and Sri Lanka: An Extraordinary Relationship and a Bright Future
Since the Silk Road, Arabs turned to Asian countries, and this was the reason for the spread of Arab civilization...
Burkina Faso: AfDB approves €48,82 million for Desert to Power Yeleen programme
The Board of Directors of the Bank has approved a €48,82 million loan to the Government of Burkina Faso for...
A Reflection on the 2019 White Paper on Vietnamese National Defense
Authors: Do Quynh Anh & Yang Yizhong Among more than one dozen of the neighbor states of China, Vietnam is...
The Role of Political Psychology in Diplomacy
Political psychology originated from France, which was first introduced by the ethnologist Adolph Bastian in his book called “Man in...
Iraq and ILO pledge to further decent work in the country
Iraq and the International Labour Organization (ILO) have signed the first Iraq Decent Work Country Programme (DWCP), as the country...
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