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Consumers Pump the Brakes on Autonomous Vehicle Adoption

MD Staff

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Consumers’ appetite for self-driving vehicles lags the automotive industry’s pace of investment in advanced vehicle technology, according to the “2019 Deloitte Global Automotive Consumer Study.”

Consumer trust in autonomous vehicles (AVs) appears to be stalling. In the U.S., 50 percent of survey respondents do not believe AVs will be safe, nearly the same as last year’s 47 percent. That is drastically different from consumer sentiment in 2017, when 74 percent voiced concerns about these vehicles’ safety. Other markets saw similar plateauing, with the share of consumers in China, Japan and South Korea who believe AVs will not be safe decreasing modestly; and Indian and German consumers both showing slight increases in their distrust.

“Autonomous vehicles have begun to enter the real world in pilot testing and have consequently encountered real world challenges,” said Craig Giffi, vice chairman, Deloitte LLP, and U.S. automotive sector leader.

“A series of high-profile incidents may have contributed to the plateau in consumer trust in this year’s study, but there will likely be a longer-term trend toward gradual acceptance,” says Giffi. “Even so, consumers have a much higher bar for acceptance of fully-autonomous vehicles than for driver assistance safety technology. Along with today’s consumer skepticism, the industry needs to thoughtfully factor into its plans the long capital investment cycle that will be required to bring flawless autonomous vehicle technology into the mainstream. This includes elusive business models for generating ROI and it’s all combined with the likely increase in regulatory oversight that is on the horizon.”

Deciding factors in choosing advanced mobility options
Consumers now have more choices than ever before with regards to mobility, whether they are choosing a car to buy or lease or simply deciding how to get from point A to B. The plethora of choices brings an array of new decisions for consumers:

Ride-hailing irregularities: In 2017, 23 percent of U.S. consumers used ride-hailing at least once a week, and another 22 percent used it occasionally. Fast forward to the latest study, and the percentage of regular users cuts in half to 12 percent, while the proportion of occasional users increases twofold to 46 percent. Occasional ride-hailers follow a similar path in India and China, though both countries saw substantial growth in the volume of occasional ride-hailers, growing from 85 to 90 percent in India between 2017 and 2019; and 75 to 83 percent in China over the same period.

A generational divide: Younger consumers are more likely to question whether vehicle ownership is a necessity than older generations. Japan leads the pack, where 60 percent of Generations Y/Z say ride hailing makes them question whether they need to own a vehicle, followed by 53 percent for Gen X and 45 percent of Baby Boomers. In the U.S., the number is 46 percent for U.S. Gen Y/Z consumers, down 20 percentage points from 64 percent in 2017.

Convenience over savings: The majority (56 percent) of Americans are not interested in ridesharing services — such as professional micro-buses and other similar multi-rider options — and 47 percent of German consumers prefer to use their vehicles daily. Using multiple modes of transportation in one trip is largely an occasional undertaking in the U.S., where 39 percent of U.S. consumers report they never combine different modes in a single trip.

Along with new transportation options, connectivity has unlocked an array of new choices for consumers purchasing vehicles, many of whom are divided:

Top priorities: Interest in connected features such as traffic congestion tracking and road-safety alerts is universally high, with 75 percent and 71 percent of U.S. consumers seeking these features, respectively. This strongly aligns with what 43 percent of U.S. consumers say is the most important aspect of mobility: getting to their destination in the least amount of time.

Costs and benefits of connectivity: Less than half of surveyed U.S. consumers (47 percent) are sold on the idea of connectivity, but opinions vary globally. Twice as many people in China (79 percent) and India (76 percent) agree that increased connectivity will lead to substantial benefits than in Japan (36 percent) and Germany (35 percent).

Pros and cons of data collection and privacy: Connected-vehicle sensors can track everything from powertrain performance and operational statistics to geolocation information and occupant wellness. Roughly two-thirds (63 percent) of U.S. consumers are concerned about biometric data being captured via a connected vehicle and shared with external parties; 40 percent of people in China and Japan say the same.

Reluctance to pay more for options: Once consumers are sold on a feature, they are not necessarily sold on the price. One-third (33 percent) of U.S. consumers would be unwilling to pay more for a connected vehicle, and a slightly larger portion (42 percent) would only pay up to $500 more for this functionality. German consumers feel similarly, with 40 percent willing to pay €600 more (approximately US$680). While a higher share of Japanese consumers (72 percent) are willing to pay extra, their upper limit was only ¥50,000 (approximately US$450).

“Connected, electrified, and autonomous vehicles offer tremendous value for society, but consumers will be slow to adopt these advanced technologies at scale until there is clear and undisputed improvement in safety, cost, convenience, and superior customer experience from a trusted brand,” said Joe Vitale, Deloitte Touche Tohmatsu Limited and global automotive sector leader.

Who are consumers rooting for?
As consumers look ahead to the automotive future, they may not always associate emerging technology with traditional car manufacturers. In the U.S., the number of consumers who said they trust traditional original equipment manufacturers (OEMs) to bring AV technology to market continues to slip, falling from 47 percent in 2018 to 39 percent in 2019. Even in Germany, where trust in OEMs has traditionally been fairly solid, this proportion has dropped rapidly from 51 percent in 2017 to 33 percent in 2019.

With an ongoing lack of trust in the private sector, consumers are looking to governments to increase regulation. An overwhelming percentage of consumers in most countries indicated they wanted “significant oversight,” including 56 percent of U.S. consumers.

Hybrid electric vehicles still struggle for attention
People around the globe now see electrified powertrains as viable options, but electric vehicles (EVs) still face some bumps in the road ahead. In the U.S., 29 percent would prefer a nontraditional powertrain, up from 20 percent last year — including hybrid, battery or other alternative — for their next vehicle. A low fuel price environment coupled with relaxed emissions standards and fewer available rebates will likely keep EV adoption rates contained in the U.S. market.

Interest in Asian countries is far higher than that of the U.S. China is in the lead, where 65 percent of people surveyed would prefer an alternative powertrain in their next vehicle, followed by Japan (59 percent), Korea (43 percent) and India (39 percent).

Adoption of EVs will likely play out differently in other regions. Stronger policies to address pollution concerns and foreign oil reliance in China may encourage faster EV adoption, while European countries including Norway, Britain, France, and the Netherlands have announced plans to ban the sale of conventional gas- and diesel-fueled vehicles over the next two to three decades. While both regions may be poised for increased EV adoption, change will not be immediate. This is because traditional vehicles currently make up the bulk of cars on the road, and these cars boast a life expectancy of more than 10 years. In North America, adoption is likely to lag due to a low fuel-price environment, relaxed-emissions standards and a tighter tax-rebate policy.

About the Global Automotive Consumer Study
Deloitte recently surveyed over 25,000 consumers in September and October 2018 across 20 countries around the world to explore consumer preferences regarding a variety of critical issues impacting the automotive sector. The overall goal of the study is to answer important questions that can help companies prioritize and better position their business strategies and investments.

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US Blacklist of Chinese Surveillance Companies Creates Supply Chain Confusion

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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.

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After Google’s new set of community standards: What next?

Sisir Devkota

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After weeks of Google’s community standard guidelines made headlines, the Digital Industry Group Inc. (Australia based NGO) rejected proposals from the regulating body based in the southern hemisphere. The group claimed that regulating “fake news” would make the Australian Competition and Consumer Commission a moral police institution. In late August, Google itself forbade its employees from indulging in the dissemination of inadequate information or one that involved internal debates. From the outset, the picture is a bit confusing. After the events in Australia, Google’s latest act of disciplinary intrusion seems all but galvanizing from certain interests or interest groups.

A year earlier, Google was shaken by claims of protecting top-level executives from sexual crimes; the issue took a serious turn and almost deteriorated company operations. If anything but Google’s development from the horror of 2018 clearly suggests a desperate need from the hierarchy to curb actions that could potentially damage the interests of several stakeholders. There is no comprehensive evidence to suggest that Google had a view on how the regulations were proposed in Australia. After all, until proven otherwise, all whistleblowing social media posts and comments are at one point of time, “fake”. Although the global giant has decided to discontinue all forms of unjustifiable freedom inside its premises; however, it does profit by providing the platform for activism and all forms of censure. The Digital Industry Group wants the freedom to encourage digital creative contents, but Google’s need to publish a community guideline looks more of a defensive shield against uncertainties.

On its statement, the disciplinary clause, significantly mentions about the actions that will be taken against staffs providing information that goes around Google’s internal message boards. In 2017, female employees inside the Google office were subjected to discrimination based on the “gender-ness” of working positions. Kevin Kernekee, an ex-employee, who was fired in 2018, confirmed that staff bullying was at the core of such messaging platforms. Growing incidents inside Google and its recent community stance are but only fuelling assumptions about the ghost that is surrounding the internet giant’s reputation. Consequently, from the consumer’s point of view, an instable organization of such global stature is an alarm.

The dissidents at Google are not to be blamed entirely. As many would argue, the very foundation of the company was based on the values of expression at work. The nature of access stipulated into Google’s interface is another example of what it stands for, at least in the eyes of consumers. Stakeholders would not wish for an internal turmoil; it would be against the enormous amount of trust invested into the workings of the company. If google can backtrack from its core values upon higher forces, consumers cannot expect anything different. Google is not merely a search engine; for almost half of the internet users, it is almost everything.

“Be responsible, Be helpful, Be thoughtful”. These phrases are the opening remarks from the newly engineered community guideline. As it claims in the document, three principles govern the core values at Google. Upon closer inspection, it also sounds as if the values are only based on what it expects from the people working for the company. A global company that can resort to disciplining its staff via written texts can also trim the rights of its far-reaching consumer groups. It might only be the beginning but the tail is on fire.

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How to Design Responsible Technology

MD Staff

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Biased algorithms and noninclusive data sets are contributing to a growing ‘techlash’ around the world. Today, the World Economic Forum, the international organisation for public-private cooperation has released a new approach to help governments and businesses counter these growing societal risks.

The Responsible Use of Technology report provides a step-by-step framework for companies and governments to pin point where and how they can integrate ethics and human rights-based approaches into innovation. Key questions and actions guide organizations through each phase of a technology’s development process and highlight what can be done and when to help organizations mitigate unethical practices. Notably, the framework can be applied on technology in the ‘final’ use and application phase, empowering users to play an active role in advocating for policies, laws and regulations that address societal risks.

The guide was co-designed by industry leaders from civil society, international organizations and businesses including BSR, the Markkula Centre for Applied Ethics, the United Nation’s Office of the High Commissioner for Human Rights, Microsoft, Uber, Salesforce, IDEO, Deloitte, Omidyar Network and Workday. The team examined national technology strategies, international business programmes and ethical task forces from around the world, combining lessons learned with local expertise to develop a guide that would be inclusive across different cultures.

“Numerous government and large technology companies around the world have announced strategies for managing emerging technologies,” said Pablo Quintanilla, Fellow at the World Economic Forum, and Director in the Office of Innovation, Salesforce. “This project presents an opportunity for companies, national governments, civil society organizations, and consumers to teach and to learn from each other how to better build and deploy ethically-sound technology. Having an inclusive vision requires collaboration across all global stakeholders.”

“We need to apply ethics and human rights-based approaches to every phase in the lifecycle of technology – from design and development by technology companies through to the end use and application by companies across a range of industries,” said Hannah Darnton, Programme Manager, BSR. “Through this paper, we hope to advance the conversation of distributed responsibility and appropriate action across the whole value chain of actors.”

“Here, we can draw from lessons learned from companies’ efforts to implement ‘privacy and security by design,” said Sabrina Ross, Global Head of Marketplace Policy, Uber. “Operationalizing responsible design requires leveraging a shared framework and building it into the right parts of each company’s process, culture and commitments. At Uber, we’ve baked five principles into our product development process so that our marketplace design remains consistent with and accountable to these principles.”

This report is part of the World Economic Forum’s Responsible Development, Deployment and Use of Technology project. It is the first in a series tackling the topic of technology governance. It will help inform the key themes at the Forum’s Global Technology Governance Summit in San Francisco in April 2020. The project team will work across industries to produce a more detailed suite of implementation tools for organizations to help companies promote and train their own ‘ethical champions’. The steering committee now in place will codesign the next steps with the project team, building on the input already received from global stakeholders in Africa, Asia, Europe, North America and South America.

About the Centre for the Fourth Industrial Revolution Network

The Centre for the Fourth Industrial Revolution Network brings together more than 100 governments, businesses, start-ups, international organizations, members of civil society and world-renown experts to co-design and pilot innovative approaches to the policy and governance of technology. Teams in Colombia, China, India, Israel, Japan, UAE and US are creating human-centred and agile policies to be piloted by policy-makers and legislators, shaping the future of emerging technology in ways that maximize their benefits and minimize their risks. More than 40 projects are in progress across six areas: artificial intelligence, autonomous mobility, blockchain, data policy, drones and the internet of things.

The Network helped Rwanda write the world’s first agile aviation regulation for drones and is scaling this up throughout Africa and Asia. It also developed actionable governance toolkits for corporate executives on blockchain and artificial intelligence, co-designed the first-ever Industrial IoT (IIoT) Safety and Security Protocol and created a personal data policy framework with the UAE.

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