Over the last few years, India has travelled the path of rapid digitalization. Not only has the current crisis failed to stop this process, on the contrary, it has served to accelerate it in many areas and make some trends more evident.
Government efforts, active work of India’s business and joint steps undertaken by India’s public bodies and private entrepreneurs who are equally cognizant of the digital transformation’s significance, difficulties and prospects for India’s economy and society as a whole have advanced the process of shaping India’s new digital realities.
In 2015, India’s Prime Minister Narendra Modi announced the launch of the Digital India campaign spanning a series of key government initiatives such as increasing the people’s digital literacy, developing infrastructure and creating an e-government. The most significant achievements include completing and putting into operation the Aadhar digital identification system; a single taxation system covering all Indian states that previously had individual taxation rules; and the Reserve Bank of India, jointly with the association of Indian banks, developing and introducing an instant payment system similar to that created by Russia’s Central bank.
Nandan Nilekani, a well-known Indian entrepreneur and public figure, leads the committee on deepening digital payments at the Reserve Bank of India. An engineer by training, together with Narayana Murthy and several other entrepreneurs, Nilekani co-founded Infosys, one of India’s most famous and successful companies working in software development and IT consulting. In 2009, Nilekani left Infosys and wrote several books about India’s development and the way he sees its future: Imagining India: The Idea of a Renewed Nation (2009); Rebooting India: Realizing a Billion Aspirations (2015). He also headed the Unique Identification Authority of India, the government body that developed Aadhar, a digital biometric identification system, and introduced it throughout the country; Aadhar has already been mentioned; its importance for India is hard to overestimate. Digitalization has already resulted in tectonic shifts within a very short time-span, no more than 5-7 years, in such areas as India’s e-payments and financial technologies, e-commerce, telemedicine and entertainment. The spread of digital technologies has great significance and potential in such areas as agriculture, education, increasing energy efficiency, regulating employment and the labour market, transportation, logistics and further development of e-government.
Yet, none of that would have been possible had government initiatives not been backed up by the ambitions and strategic approach of another Indian entrepreneur, Mukesh Ambani, who swiftly provided Indians with cheap Internet and accessible smartphones. As he advanced his digital business initiatives, Ambani called upon Narendra Modi’s government to achieve maximum localisation of Indian data in India and spoke about the need to fight a new type of colonialism, the country’s informational enslavement by global corporations, so-called data colonisation. He devoted all his resources to developing a new sovereign digital platform; back in 2016-2017, Ambani already said that data are the new oil and smart data are the new fuel of India’s economy.
Following the sectoral liberalisation at the turn of the 20th-21st century, India created a telecommunication services market characterised by high competition among players (both Indian and international companies) that came to the promising area via partnerships with national bodies holding the requisite licences. By around 2010, most companies working in India saw that their revenues coming from traditional services might potentially drop, so they planned to transition to selling data. None of the many telecommunication companies on India’s market have, however, succeeded in the attempt. The failure stems from several factors, including the policies of the regulator (which decided to change the rules of the game and check the terms and conditions of previously issued licences at a crucial time for the sector) and appearance of a new player with the requisite resources, who was willing to spend them on achieving his large-scale goals. That player was Mukesh Ambani and his company called Jio. The history of Ambani’s family business is an integral and characteristic part of India’s economy, and the development track of his companies, including Jio, is regularly discussed in business media and is the subject of several business cases in the world’s leading schools.
Dhirubhai Ambani, the father of Mukesh Ambani and Anil Ambani, launched his business empire in 1957 with a small Bombay-based company importing synthetic fibers and exporting spices. In 1977, following its successful IPO, Dhirubhai Ambani’s Reliance Group became synonymous with business success and guaranteed financial investment for many Indians. The company did not confine itself to the textile business and became a diversified holding that also worked in exploring and developing hydrocarbons, in oil processing, petrochemicals, as well as energy, finances, trade and other areas. In fewer than 30 years, Reliance Group became a fixture of Fortune Global 500 and India’s biggest private company, rivalling such famous family holdings as Tata, Birla, Godrej, Mahindra. Dhirubhai Ambani died in 2002, leaving his sons a multibillion fortune. The brothers Anil and Mukesh engaged in a series of high-profile and unrestrained quarrels that resulted in Reliance Group’s assets being split in 2006. The telecommunication company Mukesh Ambani formed in 2002 had to be transferred, among others, to Anil, but Mukesh had the powerful oil processing business left under his control. His company was now called Reliance Industries. Its assets included the famous high-tech complex in Jamnagar (Gujarat State) processing up to 1.4 million barrels of oil a day. 2010 marked an important stage in this story, when the brothers agreed on revising the terms and timeframe for the non-compete agreements, and subsequently, Mukesh had a chance to announce openly his intentions to embark on a qualitatively new approach to the telecommunication business.
It took Mukesh Ambani about six years to create a new company named Jio (Hindi for “live”). It was officially launched in September 2016. Back then, its telecommunication rivals realised that their already difficult situation would become far worse following the emergence of a powerful new player, but hardly anyone could imagine the cardinal and radical changes in store for the sector. India’s normally very active anti-monopoly agency, as well as other supervisory bodies, were prepared to close their eyes to many controversial points, since Ambani’s goals of swiftly spreading accessible Internet coincided with the course for digitalization steered by the government, while his statements that Indians’ data must be kept in India were very appealing for India’s political leadership. As of today, there are only two big players left in India’s telecommunication sector besides Jio, and these two are in a deep financial crisis. India’s government had to bail out both these companies by allowing large-scale foreign investment and by permitting all players to raise the prices for their services slightly, which had, over the last few years, fallen to an unprecedented low (between 2013 and 2017, the cost of 1 GB of data in India fell by 95%).
Today, Reliance Jio is part of the Jio Platforms holding company formed in 2019 as part of Reliance Industries. Mukesh Ambani’s two elder children hold top managerial positions in the family business. His son Akash, a graduate of Brown University, is in charge of strategy in Reliance Jio, while his daughter Isha, who graduated from Yale University, is on the board of directors in Reliance Jio and Reliance Retail.
The infrastructure and entire digital ecosystem of Reliance Jio was created and put into operation in under 2–3 years. The estimated costs of creating Reliance Jio vary between USD 20 and 45 bn., which is approximately the amount of Reliance Industries’ debt increase over the period of creating Jio. At the time of the company’s IPO in 2016, two-thirds of India’s population of over 1.3 bn. had no Internet access. The company set the goals of deploying an efficient 4G network throughout India, including its remotest areas, while securing a large tech margin for future improvements, and of providing its clients with cheap smartphones and access to various contents and services through its own apps. In the first few months of its operations, while the equipment and all systems were being checked, cheap mobile devices under Jio’s own brand were literally handed out to customers free of charge. Later, minimal tariffs were introduced that immediately made India the leader in mobile operator accessibility for both voice services (phone calls were essentially free) and high-speed data transfer. Once sales took off, the company endeavoured to achieve 100 million new clients in the first 100 days, and did not slack off later: in the first two years, Jio had 250 million subscribers, and today it has 388 million. The company plans to reach 500 million users by 2021.
Jio has a large number of apps and services that have quickly become fixtures in the lives of Indians. They include JioTV, JioCinema, JioSaavn (a music service), JioMoney, JioCloud, JioFiber (broadband Internet access service). Jio rather efficiently provided digital functions to the conglomerate’s commercial line: Reliance Retail, which is also the leader in its segment in India. JioMeet, a video call service, is the latest addition to this extensive range of services. Reliance Jio’s contribution to increasing India’s per capita GDP is estimated at 5.65% in 2018.
Internet access is, indeed, changing India’s image and lifestyle before our very eyes. Largely owing to the decisive actions of the Indian businessman Mukesh Ambani, India has, in just a few years, made a qualitative leap in many digitalization-related areas while avoiding many intermediary stages that other countries spent years on. Only Indonesia outstrips India in its digitalization pace. In 2018, only China exceeded India’s number of digital consumers (560 million users). A survey McKinsey conducted in 2019 showed that the pace of data consumption per user in India grew twice as fast as in the US and China, increasing by 152% annually. Various estimates put an Indian user’s average data consumption at up to 9.8 GB of mobile Internet a month (this indicator is 5.5 GB in China, 8–8.5 GB in South Korea, and the 2019 figure in Russia is about the same). The number of Internet users in India was expected to grow by about 40% by 2023, to 750–800 million people, and the number of smartphones is expected to double, reaching 650–700 million (as of 2018, India had 1.2 bn. mobile subscribers). We can be sufficiently confident that new conditions arising from the pandemic will speed up these trends significantly.
The development prospects of India’s digital economy and primarily its consumer segment stimulated an explosive growth of entrepreneurship that also relies on the traditionally strong stratum of Indian IT specialists. In 2017, Indian developers participated in creating over 100 000 apps for the App Store alone, while the total number of such apps is far higher, given that Indian specialists mostly create apps for Android. In the entrepreneurs’ major league, 30 Indian digital high tech companies are unicorns (their capitalisation is over USD 1 bn., and they are still owned by their founders). In 2017, there were ten such companies. The crucial thing is that would-be unicorns in India are also quite numerous: in 2019, there were over 50 potential future champions.
There have always been many difficulties in working on the Indian market. Suffice it to say that, today, the majority of new Internet users in India do not speak English and need interfaces and content in regional languages. The country has 22 such principal languages. WhatsApp, for instance, supports 11 of them. Still, international investors bank on Indian tech companies, which is greatly helped by government bodies constantly working to stimulate the sector’s investment appeal. Companies working in e-commerce, digital payment services, and tourism have long been the leaders in attracting investment among India’s tech startups. A telling recent example of the international capital race for digital India was the USA’s Walmart acquiring Flipkart, one of India’s many digital e-commerce platforms, in May 2018. Walmart had long tried to gain access to India’s offline market, all to no avail, and it finally came to India by buying 77% of Flipkart for USD 16 bn.
Several investment funds of Russian origin are among those making big investments in India. They continue actively selecting new projects for investment and for strategy adjustment, as do other investors.
Companies that appear not to have any tangible assets, not to make any money, and to accrue debt abound not only in developed countries but now in India as well and still continue to increase their investment potential, thus greatly befuddling traditionally-minded financiers. Yet, analysts increasingly have to admit that high-tech digital companies have unique sets of their clients’ big data, which allows these companies to increase their market share and make correct managerial decisions while constantly improving the functions or services they provide.
Big data is becoming more and more important for governments as well. The quality of analytical materials, development of AI technologies and efficiency of modelling processes depend directly on data volume used as learning material; it can be used, among other things, to manage processes and resources in smart homes and cities efficiently. This is the purpose of Smart Cities, one of India’s government programmes. By late 2020, Jio planned to present commercial solutions for the Internet of Things. The company’s technical capabilities make this possible. While the Indian government is only preparing to make the decision on deploying 5G, Mukesh Ambani says that he has already built a new infrastructure capable of working with 6G and he is now striving to make India one of the principal beneficiaries of the 4th industrial revolution. Jio has no rivals in India in its capacity for collecting up-to-date data of Indian consumers and it plans to improve its technologies for their most prompt and precise processing and further use, while simultaneously developing cloud computing, smart devices, blockchain, augmented reality and more.
The current crisis arising from the pandemic is both shaping new consumer habits and bolstering demand for qualitative changes in approaches to the future economic development of many countries. This is also important for Russia, where, despite all the efforts to diversify its economy, there still remains the threat linked to dependency on commodity exports and the high energy intensity of other Russian exports. And it is also important for India, where 80% of its economy depends on imports of coal, oil and gas.
It was previously announced that 20% in Reliance Industries’ petrochemical business would be sold to Saudi Aramco, Saudi Arabia’s oil giant, for USD 15 bn. With oil prices falling to record lows, however, in March the deal fell through.
Instead of the Saudi Aramco deal, Jio Platforms finalised three different sales: 9.99% was sold to Facebook for USD 5.7 bn., 2.32% of Jio Platforms is now owned by the Vista Equity Partners investment fund (the stock is worth USD 1.5 bn.), and an additional 1.15% of the company’s stock was purchased by investors at Silver Lake Partners for USD 747 m. Mukesh Ambani still holds 86.54% of the company. Other deals with other investors are likely to follow, which will allow the Indian businessman finally to pay off Reliance Industries’ debt (about USD 8 bn.) by March 2021, without losing control of Jio Platforms, just as he planned.
In their official statements concerning the deals, all the participants, including Mukesh Ambani and Mark Zuckerberg, emphasize their confidence in the promising Indian market and in Jio Platforms’ potential. In full accord with the expectations of the Indian government and regular Indian citizens, they say that the new collaboration does not entail data exchange between partner companies. Jio, Facebook, Vista and Silver Lake also say they intend to use their technologies for the benefit of India’s small and medium-sized businesses by connecting such entrepreneurs more actively to e-commerce platforms. They are talking street trade and the so-called kiranas, typical Indian “neighbourhood” grocery stores; they will be able to find a more efficient digital way to meet their customers’ demand. Facebook-owned WhatsApp, which is very popular in India, is expected to play an important role in this process. If talks with the regulator concerning granting WhatsApp payment-making functions are successful, then, by pooling efforts with JioMart, the company will be able to expand both sellers and buyers’ capabilities significantly and compete with India’s most widespread fintech service PayTM, whose investors include Alibaba Group (the Chinese company owns 40% in PayTM).
India, with its 300 million users, is Facebook’s biggest market. WhatsApp has over 400 million users in India. As for the two other investors in JioPlatforms, Vista Equity Partners is noted for its major presence in India’s tech sector: its Indian companies have over 13,000 employees, while its co-founder Brian Sheth is a native of Gujarat, like Mukesh Ambani and Narendra Modi. Like Vista, Silver Lake is based in Silicon Valley and has already invested over USD 40 bn. in tech companies such as Airbnb, Alibaba, Ant Financial owned by Alphabet Verily and Waymo, and also Dell Technologies and Twitter.
Observers with a lively imagination have long since noticed that the company’s name, Jio, is a mirror image of the word “oil.” It is not known for certain whether this is by its founder’s design, but the events of the last few months and transactions around Jio Platforms confirm that, instead of demand for oil, the world is demonstrating a growing demand for innovations. Consequently, compared to other countries, India has every chance of becoming part of the process and a big-time winner. Russia’s business cooperation with India needs, like never before, to have its current realities supplemented in new formats, be it financial technologies, information security, artificial intelligence, sustainable energy infrastructure, advanced materials or other innovative areas.
From our partner RIAC
U.S. Sanctions Push Huawei to Re-Invent Itself and Look Far into the Future
There is no doubt that the return of Huawei’s CFO Meng Wanzhou to Beijing marks a historic event for the entire country that made every Chinese person incredibly proud, especially bearing in mind its timing, as the National Day celebrations took place on October 1.
“Where there is a five-star red flag, there is a beacon of faith. If faith has a color, it must be China red,” Ms. Meng said to the cheering crowd at Shenzhen airport after returning home from Canada. She also added that “All the frustration and difficulties, gratitude and emotion, steadfastness and responsibility will transform into momentum for moving us forward, into courage for our all-out fight.”
Regardless of how encouraging the Chinese tech giant heiress’s words may sound, the fact remains that the company remains a target of U.S. prosecution and sanctions—something that is not about to change anytime soon.
When the Sanctions Bite
It was former U.S. President Donald Trump who in May 2019 signed an order that allowed the then-Commerce Secretary Wilbur Ross to halt any transactions concerning information or communications technology “posing an unacceptable risk” to the country’s national security. As a result, the same month, Huawei and its non-U.S. affiliates were added to the Bureau of Industry and Security Entity List, which meant that any American companies wishing to sell or transfer technology to the company would have to obtain a licence issued by the BIS.
In May 2020, the U.S. Department of Commerce decided to expand the FPDP Rule by restricting the Chinese tech giant from acquiring foreign-made semiconductors produced or developed from certain U.S. technology or software and went even further in August the same year by issuing the Final Rule that prohibits the re-export, export from abroad or transfer (in-country) of (i) certain “foreign-produced items” controlled under the amended footnote 1 to the Entity List (“New Footnote 1”) when there is (ii) “knowledge” of certain circumstances, the scope of which were also expanded.
Moreover, the decision also removed the Temporary General License (“TGL”) previously authorizing certain transactions with Huawei and added thirty-eight additional affiliates of the Chinese company to the Entity List.
In these particular circumstances, despite the initial predictions made by Bloomberg early in 2020 that Trump’s decision to blacklist Huawei fails to stop its growth, the current reality seems to be slightly changing for once—and briefly—the world’s largest smartphone vendor.
The impact of the U.S. sanctions has already resulted in a drop in sales in the smartphone business by more than 47% in the first half of 2021, and the total revenue fell by almost 30% if we compare it with the same period in 2020. As is estimated by rotating Chairman Eric Xu, the company’s revenue concerning its smartphone sales will drop by at least $30-40 billion this year.
For the record, Huawei’s smartphone sales accounted for $50 billion in revenue last year. The company has generated $49.57 billion in revenue in total so far, which is said to be the most significant drop in its history.
In Search of Alternative Income Streams
Despite finding itself in dire straits, the company is in constant search for new sources of income with a recent decision to charge patent royalties from other smartphone makers for the use of its 5G technologies, with a “per unit royalty cap” at $2.50 for every multimode mobile device capable of connections to 5G and previous generations of mobile networks. Huawei’s price is lower than the one charged by Nokia ($3.58 per device) and Ericsson ($2.50-$5 per device).
Notably, according to data from the intellectual property research organization GreyB, Huawei has 3,007 declared 5G patent families and over 130,000 5G active patents worldwide, making the Chinese company the largest patent holder globally.
Jason Ding, who is head of Huawei’s intellectual property rights department, informed early this year that the company would collect about $1.2-$1.3 billion in revenue from patent licensing between 2019 and 2021. But royalties will not be the only revenue source for the company.
Investing in the Future: Cloud Services and Smart Cars
Apart from digitizing native companies in sectors like coal mining and port operations that increased its revenue by 23% last year and 18% in the first part of 2021, Huawei looks far into the future, slowly steering away from its dependency on foreign chip supplies by setting its sight on cloud services and software for smart cars.
Seizing an opportunity to improve the currently not-so-perfect cloud service environment, the Chinese tech giant is swiftly moving to have its share in the sector by creating new cloud services targeting companies and government departments. For this purpose, it plans to inject $100 million over three years’ period into SMEs to expand on Huawei Cloud.
As of today, Huawei’s cloud business is said to grow by 116% in the first quarter of 2021, with a 20% share of a $6 billion market in China, as Canalys reports.
“Huawei Cloud’s results have been boosted by Internet customers and government projects, as well as key wins in the automotive sector. It is a growing part of Huawei’s overall business,” said a chief analyst at the company, Matthew Ball. He also added that although 90% of this business is based in China, Huawei Cloud has a more substantial footprint in Latin America and Europe, the Middle East and Africa as compared with Alibaba Cloud and Tencent Cloud.
Another area where Huawei is trying its luck is electric and autonomous vehicles, where the company is planning to invest $1 billion alone this year. Although the company has repeatedly made it clear that it is unwilling to build cars, Huawei wants to “help the car connect” and “make it more intelligent,” as its official noted.
While during the 2021 Shanghai Auto Show, Huawei and Arcfox Polar Fox released a brand new Polar Fox Alpha S Huawei Hi and China’s GAC revealed a plan to roll out a car with the Chinese tech company after 2024, Huawei is already selling the Cyrus SF5, a smart Chinese car from Chongqing Xiaokang, equipped with Huawei DriveONE electric drive system, from its experience store for the first time in the company’s history. What’s more, the car is also on sale online.
R&D and International Talent as Crucial Ingredients to Become Tech Pioneer
There is a visible emphasis put on investing in high-quality research and development to innovate both in Huawei and China as a whole.
According to the company’s data, the Chinese technology giant invested $19.3 billion in R&D in 2019, which accounted for 13.9% of its total business revenue and $22 billion last year, which was around 16% of its revenue. Interestingly, if Huawei was treated as a provincial administrative region, its R&D expenditure would rank seventh nationwide.
As reported by China’s National Bureau of Statistics, the total R&D spending in China last year was 2.44 trillion yuan, up 10.6% year-on-year growth, and 2.21 trillion yuan in 2019, with 12.3% year-on-year growth.
As far as activities are concerned, the most were spent on experimental development in 2020 (2.02 trillion yuan, which is 82.7% of total spending), applied research (275.72 billion yuan, which gives 11.3%) and basic research (146.7 billion yuan, accounting for 6%). While the most money was spent by enterprises (1.87 trillion yuan, which gives up 10.4% year-on-year), governmental research institutions spent 340.88 billion yuan (up 10.6% year-on-year), and universities and colleges spent 188.25 billion yuan (up 4.8% year-on-year).
As far as industries go, it is also worth mentioning that high-tech manufacturing spending accounted for 464.91 billion yuan, with equipment manufacturing standing at 913.03 billion yuan. The state science and tech spending accounted for 1.01 trillion yuan, which is 0.06 trillion yuan less than in 2019.
As Huawei raises the budget for overseas R&D, the company also plans to invest human resources by attracting the brightest foreign minds into its business, which is in some way a by-product of the Trump-era visa limitations imposed on Chinese students.
So far, concentrating on bringing Chinese talent educated abroad, Huawei is determined to broader its talent pool by “tall noses,” as the mainland Chinese sometimes refer to people of non-Chinese origin.
“Now we need to focus on bringing in talent with ‘tall noses’ and allocate a bigger budget for our overseas research centres,” said the company’s founder Ren Zhengfei in a speech made in August. “We need to turn Huawei’s research center in North America into a talent recruitment hub,” Ren added.
While Huawei wants to scout for those who have experience working in the U.S. and Europe, it wants to meet the salary standards comparable to the U.S. market to make their offer attractive enough.
What seems to be extraordinary and crucial by looking at China through Huawei lens is that it is, to the detriment of its critics, indeed opening to the outside world by aiming at replenishing all facets of its business.
“We need to further liberate our thoughts and open our arms to welcome the best talent in the world,” to quote Ren, in an attempt to help the company become more assimilated in overseas markets as a global enterprise “in three to five years”.
The Chinese tech giant aims to attract international talent to its new 1.6 million square meter research campus in Qingpu, Shanghai, which will house 30,000 to 40,000 research staff primarily concerned with developing handset and IoT chips. The Google-like campus is said to be completed in 2023.
The best sign of Huawei’s slow embrace of the “start-up” mentality, as the company’s head of research and development in the UK, Henk Koopmans, put it, is the acquiring of the Center for Integrated Photonics based in Ipswich (UK) in 2012, which has recently developed a laser on a chip that can direct light into a fibre-optic cable.
This breakthrough discovery, in creating an alternative to the mainstream silicon-based semiconductors, provides Huawei with its product based on Indium Phosphide technology to create a situation where the company no longer needs to rely on the U.S. know-how.
As for high-profile foreign recruitments, Huawei has recently managed to hire a renowned French mathematician Laurent Lafforgue, a winner of the 2002 Fields Medal, dubbed as the Nobel Prize of mathematics, who will work at the company’s research center in Paris, and appointed the former head of BBC news programmes Gavin Allen as its “executive editor in chief” to improve its messaging strategy in the West.
According to Huawei’s annual report published in 2020, the Shenzhen-based company had 197,000 employees worldwide, including employees from 162 different countries and regions. Moreover, it increased its headcount by 3,000 people between the end of 2019 and 2020, with 53.4% of its employees in the R&D sector.
The main objective of the developments mentioned above is to “lead the world” in both 5G and 6G to dominate global standards of the future.
“We will not only lead the world in 5G, more importantly, we will aim to lead the world in wider domains,” said Huawei’s Ren Zhengfei in August. “We research 6G as a precaution, to seize the patent front, to make sure that when 6G one day really comes into use, we will not depend on others,” Ren added.
Discussing the potential uses of 6G technology, Huawei’s CEO told his employees that it “might be able to detect and sense” beyond higher data transmission capabilities in the current technologies, with a potential to be utilized in healthcare and surveillance.
Does the U.S. Strategy Towards Huawei Work?
As we can see, the Chinese tech giant has not only proved to be resilient through the years of being threatened by the harmful U.S. sanctions, but it also has made significant steps to become independent and, therefore, entirely out of Washington’s punishment reach.
Although under the intense pressure from the Republicans the U.S. Commerce Secretary Gina Raimondo promised that the Biden administration will take further steps against Huawei if need be, it seems that there is nothing much that the U.S. can do to stop the Chinese company from moving ahead without any U.S. permission to develop in the sectors of the future, while still making a crucial contribution to the existing ones.
At the same time, continuing with the Trump-era policies aimed at Huawei is not only hurting American companies but, according to a report from the National Foundation for American Policy published in August 2021, it also “might deal a significant blow to innovation and scientific research” in the country.
“Restricting Huawei from doing business in the U.S. will not make the U.S. more secure or stronger; instead, this will only serve to limit the U.S. to inferior yet more expensive alternatives, leaving the U.S. lagging behind in 5G deployment, and eventually harming the interests of U.S. companies and consumers,” Huawei said in, what now appears to be, prophetic statement to CNBC in 2019.
On that note, perhaps instead of making meaningless promises to the Republicans that the Biden administration “wouldn’t be soft” on the Chinese tech giant, Raimondo would make the U.S. better off by engaging with Huawei, or at least rethinking the current policies, which visibly are not bringing the desired results, yet effectively working to undermine the U.S. national interest in the long run.
From our partner RIAC
The so-called privacy on the Internet
At the beginning of last June, 8.4 billion stolen passwords were made public around the world. This large collection – made available to everyone – is named “RockYou2021” and is stored in a text file measuring 100 GB.
On October 4, WhatsApp, Facebook and Instagram were blocked and hence all sensitive data was logically copied upon the initiative of skilled hackers, of whom our planet can boast anonymous categories of them with superior and exceptional abilities that care little about prime numbers.
At the same time, when we connect with thousands of multilingual copy-and-paste websites, they come up come up with a pathetic piece of software that begins with the phrase “We care about your privacy”. And in Italy where “amore” (love) has always rhymed with “cuore” (heart), some people think that users – while reading this – take out their handkerchiefs to wipe away the tears of emotion because there is someone who lovingly thinks of them, not realising that, instead, it is tears of laughter.
Others say that there are laws to protect the few naive and gullible users, but they forget a proverb and a key to political thinking. The proverb is: “every law has its loophole” and the key is: “laws are a superstructure”.
Hence many people are curious to know whether the advertising of the Internet giants respects confidentiality – commonly known with the barbarism privacy – and whether the establishment protects them from the many bad hackers.
It is in the interest of the advertising by Internet giants (the establishment) to use each user’s privacy, such as monitoring the chat history (primarily WhatsApp) or the content of calls, because the methods and means to do so exist. Just watch excellent US series, starting with the gripping Mr. Robot and other series, to understand that fresh and young minds are enough to do so. Imagine what scruples the Internet giants may have in the face of ethical values such as confidentiality and secrecy.
The risk-benefit ratio of the Internet approach is high, as what is at stake is not Kantian ethics (the superstructure) – which is worth very little – but profits in any currency, whether real or in bitcoins (the structure).
There are many ways in which the Internet giants, and private hackers, can control users’ privacy, which are really beyond many web users’ cognition.
It is natural that most of our privacy is exposed by ourselves to third parties. We all know that there is a word on the Internet called “search”. Basically, for most people who are particularly active on the Internet it is very easy – for one who is interested in the matter – to discover the forms in which privacy oxymoronically manifests itself all out in the open.
Most of the time people do not know how much privacy they expose in a search or in simple surfing. We think it is impossible for ordinary third parties to know who are those who investigate web surfers. I am referring to both decent people and criminals. Before being discovered, however, even a criminal has a right to privacy.
The Internet giants and independent hackers have data and systems that we mere humans cannot even imagine. The Internet giants help the police to catch intruders, saboteurs or other criminals, and can often provide very comprehensive information on suspects, including last address, area of activity and so on. As usual, the problem is a moral – therefore negligible – one: intruders, saboteurs or other criminals previously used to be ordinary citizens. Therefore, as they are monitored, so are we. This is logic not inference.
As noted above, the data of the Internet giants and private hackers is more abundant and vast than many ordinary people may think.
When the Internet giants carry out data analysis and optimise advertising, the connection by third parties has huge commercial value (the structure). Hence the motivation and skills of the Internet giants and hackers in data connection are astonishing.
The vast majority of the Internet users, in fact, have not a deep understanding of all this and may think that an Internet giant does not know about a user or another when they connect to a web page or when they send top secret documents to their counterparts. At the same time, the scarcely skilful people – albeit aware that they are being taken for a ride by stories about privacy protection – reappraise the old systems: personal meetings in unthinkable places; delivery by systems reminiscent of old 1950s-1980s movies. In practice, the cunning incompetent people reverse one of the first absurd statements of the digital age: ‘With the Internet, books will disappear’. It did not take long to realise that a book in pdf format is unreadable and its use is only for finding strings in it, i.e. sentences or words.
The above mentioned Internet giants often use the same set of advertising and management platforms for different products, whether they are deployed on the households’ Internet or in the dangerous and ruinous deep web, which is the part of the iceberg below sea level.
If the leader of an Internet giant wants to maximise the data value, he/she asks to check all the “clicked” components of the product, so as to obtain the accuracy of tags – i.e. the sequence of characters with which the elements of a file are marked for further processing – in view of getting the maximum advertising revenue (the structure).
At the same time, the mobile Internet (i.e. the one that can be accessed by smartphones, which used to be ridiculously called mobile phones) provides more possibilities to locate people, obviously more accurately than the fixed one at home. Hence those who do not want people to know that they are at home, and go elsewhere with their smartphones, communicate their wandering location, believing they are invisible.
In fact, if we think about it, home desktop computers often provide inaccurate data to those who spy on us to find out our tastes and preferences. For example, it happened that some background data showed that 3,000 users, with an average age of 30-40, seemed to be suddenly getting younger. Hence the Internet giant was initially surprised, but shortly afterwards realised that many children were using their parents’ computers.
To remedy this, the Internet giants – in close liaison with the telephone industry – have gone beyond the primitive and very common scenario of family desktop computers and Internet café shared workstations for young adults, and made parents and grandparents equip their underage children with smartphones. In this way, an Internet giant has a perfect framework for monitoring, controlling and diversifying tastes for narrower age groups, thus obtaining higher profits (the structure) to the detriment of privacy (the superstructure). The telephone industry is grateful for this, as its profits simultaneously rise, thanks to buyers who barely know how to use 5% of the functionalities of the aforementioned device.
Many people have not even clear understanding in their minds as to the data connection. For example, if the product/desire/curiosity A and the product/desire/curiosity B are used at the same time, and A and B belong to the same Internet giant, it is actually very easy for it to establish a data connection mechanism to share any of the user’s desires through specific characteristic information.
Such a system is used to recommend a product/desire/curiosity or use the same advertisement that the user personalises without realising it. Many people think they are being clever by having separate accounts for different purposes. Apparently it looks that way, but in reality it is easy for the Internet giants to know the relationship existing between these accounts and put one and one together.
The smartphone is an even better container for the Internet giant and the hacker to collect unique identifying information from that “device”, such as that user’s number, phone book and other data. In fact, while the user is not sufficiently security-conscious, many software installations (i.e. apps) already collect various pieces of information by default.
In turn, the identifying information from that device (the smartphone) is used by various software located in remote servers. If the product/taste/desire belongs to the same Internet giant or if the same third-party data company provides technical support, it is actually very easy to obtain the users’ data through them.
Moreover, when the apps are installed, the phone numbers of the naive unfortunate users have been collected on the remote server without their knowledge. This is because when most people install apps, the privacy authorization step by default is simply ignored.
It is annoying for users to read all those long pages and therefore, in the future, the Internet giant will say that it is their and not its fault if it spies on their privacy, because they authorised it to do so! Provided that it is true that if they refuse, it “morally” does as they have chosen. Probably the naive people still think so.
John McAfee’s suicide: The Internet and conspiracy theories
According to rumours, the suicide of tax evader, bitcoin supporter and antivirus software pioneer John McAfee (1945-2021) – a British naturalised US citizen – has prompted both grief and new conspiracy theories.
After his evading taxes and dribbling the US authorities for many years, a Spanish court ordered – in the first instance – McAfee’s extradition a few hours before he was found dead. If he had been extradited, the 75-year-old man would have faced life imprisonment in the United States of America.
Former National Security Agency employee and whistleblower Edward Snowden criticised the global influence of US law enforcement agencies and warned that McAfee’s untimely end may not be the only one. He wrote on Twitter: “Europe should not extradite those accused of non-violent crimes to such an unfair justice system – and to such a cruel prison system – to the point that those accused in a judicial prosecution in the United States would rather die than be subjected to it”.
The founder of Cardano – an open source project linked to cryptocurrencies that aims to create a public blockchain platform (a digital ledger whose entries are grouped into ‘blocks’, concatenated in chronological order, and whose integrity is guaranteed by the use of cryptography) for the management of computer protocols that facilitate, check or enforce the negotiation or performance of a contract, sometimes enabling the partial or total exclusion of a contractual clause (smart contract) – Charles Hoskinson, praised McAfee for his contribution to computer science, calling him “one of the most mysterious and interesting people in the history of cryptocurrency and computing”. “He is also a deeply troubled person” – Hoskinson added – pointing to McAfee’s well-documented personal trauma from his substance abuse problems.
“The reason for the suicide seems to be obvious: McAfee was 75 years old and extradition to the United States of America was likely. If found guilty, he would have faced over 30 years in prison and it is certain that he would also have been incarcerated […] He seemed rather determined to choose to end his life in a Spanish prison instead of a US one.”
Bitcoin influencer and podcaster Anthony Pompliano recalls that McAfee was “kind, funny and very smart”.
“I once had the opportunity to spend a day with the legendary McAfee on a boat in the Bahamas. I will always remember that day. I have great respect for one of the most unique people in the world.”
Kim Dotcom – a German entrepreneur and computer scientist with Finnish citizenship – is an Internet entrepreneur who is fighting extradition charges from New Zealand over his file-sharing network Megaupload. He regrets that McAfee’s drug abuse robbed him of his potential. He said: ‘He was a pioneer in data security. I always thought it was too difficult for him to be around other people. He should have avoided drugs and instead concentrate on using his ingenuity all the time. When he was lucid, he was dedicated to everyone’s freedom”.
Although McAfee’s legal representative in Spain told Reuters that McAfee committed suicide, preferring to hang himself rather than face life in prison, predictably the Internet is full of conspiracy theories claiming that McAfee did not die by his own hand.
Shortly after McAfee’s official Instragram account shared the image of the letter ‘Q’, controversies and allegations were raised, igniting the imagination of QAnon conspiracy theorists, according to whom there is a hypothetical secret plot organised by an alleged Deep State (which can be identified in some hidden powers) that would act against the former President of the United States of America, Donald Trump, and his supporters.
Business Insider reported that QAnon influencers on Telegram have hundreds of thousands of followers and are sharing posts suspecting suicide stories.
McAfee’s tweets have been republished since the day he died, and one of them dates back to December 2019, when McAfee claimed that the government had threatened to assassinate him. Hence there are many who do not believe any version of his suicide.
Other conspiracy theorists followed a June 2019 post in which he claimed to have a data treasure trove of 31 TB and more, containing evidence of government corruption.
Every eccentric millionaire who argues with the government claims to have evidence of corruption, and if tragedy befalls them, everything will be made public. In the end, tragedy falls on many of them, but the evidence is never released to the media, unlike we often see in US movies.
It is worth recalling that McAfee was no stranger to bold and strange statements, including a promise that if the price of Bitcoin did not exceed one million US dollars by 2021, he would devour his supporters on national television.
In the last weeks of his life, McAfee’s tweets in prison had also become increasingly sombre. In May 2021, he revealed he had discussed suicide with a cellmate: “Today a person who is facing a difficult situation has asked me if I know a painless method of suicide. I have little experience in this field and I am not very forthcoming. Surprisingly, the tone of the discussion then slipped into how to spend the time”. It is worth noting that the businessman had no particular reason for the suicide. The fact is that the Spanish court’s decision on extradition was not final. Hence McAfee could have subsequently tried to appeal that decision. It is alarming in this story that even last autumn McAfee stated he would not commit suicide under any circumstances.
Javier Villalba, a Spanish lawyer for McAfee, told Reuters he believed that McAfee could simply not tolerate being locked up in a prison: “This is the result of a cruel system. There is no reason for this elderly person to be in prison for so long.”
Conspiracy theories are flourishing in the United States. Probably fewer people believe in the “moon conspiracy”, which is – after all – a matter of national pride. The rest of the stories are similar: vaccinations and HIV – a conspiracy of pharmaceutical companies; global warming – a conspiracy of climatologists; Kennedy’s assassination by the special services – the said special services even staged the 9/11 attacks and school massacres, etc.
The story of Bill Gates implanting microchips in COVID-19 vaccines to track us has also sold well: according to the latest polls, 44% of the Republican Party’s members believe it.
The problem is that such views – sometimes naive, sometimes strange and sometimes wild – often have consequences. Some people think 5G towers are really spreading the coronavirus and go and burn them down. Others refuse to vaccinate their children, and so massively that the WHO included it for the first time in its list of threats to human health. With the advent of the COVID-19 vaccine, this could become an even bigger problem.
It is vain to think that conspiracy theories are about someone else, and not the smartest people, and certainly not about you and your environment. A 2018 poll showed that 67% of Russians believed in a secret “world government” (in 2014 it was 45%), and 68% of them have higher education.
Conspiracy theories are not a consistent story to be believed or disbelieved. Rather, it is a multitude of interpretations of individual facts, each of which can occupy any place on a scale ranging from pure absurdity to scientific evidence. Some might consider the enslavement of humanity by aliens incredible, but oppose vaccination – or vice versa.
Between scientific facts and explicit conspiracy theories, there is a large grey area, within which for each of us there is a completely logical explanation of the world, which to someone else will seem like a conspiracy theory.
Our image of the world is influenced by rather old settings of the brain and psyche. It is influenced by archaic settings of the brain and psyche: detection of apparent and insubstantial intentions; fear of uncertainty; generations of stories and distrust of strangers.
When the subject is confronted with stress due to external circumstances, thinking runs the risk of becoming more conspiratorial, and hence developing the above mentioned four characteristics.
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