Innovation Files has moved! For ITIF's quick takes, quips, and commentary on the latest in tech policy, go to itif.org

IT Matters

Technology policy insights

Three Big Things ‘Back to the Future’ Got Right (Thanks to Government)

Today is the day that Michael J. Fox’s iconic character Marty McFly landed in a future that Hollywood imagined almost 30 years ago in Back to the Future II. It turns out that many of the amazing things McFly saw in the movie have indeed come to pass—from 3D video to wearable technology.

But in celebrating our technological advancements, it is important to remember that none of these innovations happened by chance. They are the product of an enormous amount of investment in research and development—much of it seeded by the federal government. Since today also is the day that the White House is releasing the third iteration of its national “Strategy for American Innovation,” here are three prime examples:

Tablets and Other Smart Devices

The tablet computing props in Back to the Future II accurately predicted the miniaturization of electronic devices in recent years. The parallels between the movie and modern society’s use of tablets seem uncanny: from the way Marty’s nemesis Biff paid a taxi fare with his thumb print to the way policemen in the movie used a tablet computer to check the identity

Read the rest

Solving the Transatlantic Data Conundrum

From the Snowden revelations to the collapse of the Safe Harbor, transatlantic data sharing has gotten significantly more complicated over the past few years. The primary problem is that the underlying policies supporting the digital economy are showing their age, and this framework is sorely in need of updating to match today’s globally-connected economy. Without modernizing these policies, U.S. tech companies stand to lose more than $35 billion and digital free trade will suffer as countries erect restrictions on cross-border data flows.

We need a renewed transatlantic dialogue on solutions to these problems. ITIF has proposed many ideas to solve this issue including:

Read the rest

Bridging the Infrastructure Divides

In an era of inflated political passions, where is the pragmatic center when it comes to comparatively dull issues like infrastructure? That was a key question up for discussion last week at an event where I had the pleasure of speaking as a panelist. Hosted by the Carnegie Endowment for International Peace, and supported generously by Bernard L. Schwartz, the event focused on job creation and infrastructure policy, featuring speakers such as Vice President Joe Biden, Senators Chris Coons and Mark Warner, and a host of other policy leaders and experts.

The central theme of the event was the critical need for increased public and private investment in infrastructure, including not just traditional physical infrastructure, but also new digital-physical hybrid infrastructure, such as smart highways and bridges. In addition, the event sought to identify effective policies that might have a reasonable chance of bipartisan support.

One issue that repeatedly came up was how it can be possible, given the major infrastructure challenges facing America, that there is not more support for infrastructure funding. Some argued it is time to make infrastructure “sexy.” Others said we need to make it

Read the rest

Yes, Piracy Costs Content Creators a Fistful of Dollars

A month ago, I examined the academic literature surrounding what turns out to be a very tricky question for empirical researchers to answer—does digital theft of music and film have a measurable negative impact on profits for content creators? Methodologies addressing the question are fraught with complications, and while the majority of papers surveyed in a recent review of the literature (Hardy et al.) find that online piracy is not, in fact, a victimless crime, some past studies remain inconclusive. The literature is sometimes inconclusive because it is very difficult to prove that content being stolen has a negative impact on revenue in an era in which almost all digital content is stolen to some degree. However, research of late has been clearer in identifying significant causal impacts of piracy on profits and content creation in the music and film industries. As academics hone in on the question, results are beginning to coalesce around exactly the answer you would expect—online piracy has a negative impact on revenue and content creation in both music and film.

(First, I should note that as literature reviews go, Hardy et al. actually

Read the rest

Assessing the Costs of a More “Closed” Internet

I had the pleasure of moderating a panel at a very interesting and informative OECD workshop this week in Washington, DC, on how to better measure the benefits of the open Internet and the costs of restricting access to it. This is a critical question, because a growing number of governments around the world are blocking Internet flows or prohibiting access to certain content. There needs to be a stronger case for how, why, and to what extent these policies stunt economic growth and inhibit social progress. Yet marshaling such an argument requires not only better data and analysis but also the right conceptual framework.

People often use the terms “open” and “closed” Internet without defining them. Here, fully “open” means everyone is free to share and access any information they wish, and more “closed” means governments or other third parties are blocking or prohibiting vast troves of information. A draft background document that the OECD distributed to panel participants was helpful in that it rightly acknowledged that the Internet is not fully “open,” nor should it be. As ITIF has argued, the Internet is not fully open anywhere,

Read the rest

When Should We Hit the Panic Button on Privacy Concerns?

ITIF‘s latest report—“The Privacy Panic Cycle: A Guide to Public Fears About New Technologies”—analyzes the stages of public fear that accompany new technologies. Fear begins to take hold when privacy advocates make outsized claims about the privacy risks associated with new technologies. Those claims then filter through the news media to policymakers and the public, causing frenzies of consternation before cooler heads prevail, people come to understand and appreciate innovative new products and services, and everyone moves on. This phenomenon has occurred many times—from the portable Kodak Camera in 1888 to the  commercial drones of today. And yet, even though the privacy claims made about technology routinely fail to materialize, the cycle continues to repeat itself with many new technologies.

PPC

The privacy panic cycle breaks down into four stages:

  1. In the “Trusting Beginnings” stage, the technology has not been widely deployed and privacy concerns are minimal. This stage ends when privacy fundamentalists, a term coined by the noted privacy researcher Alan Westin, begin raising the alarm creating a “Point of Panic.”
  2. In the “Rising Panic” stage, the media, policymakers, and others join the privacy fundamentalists in exacerbating
Read the rest

The True Damages of Online Piracy? It’s Hard to Measure

It doesn’t take a rocket scientist to realize that online piracy is detrimental to content creators, including in the film and music industries. However, academics studying the effects appear to be behind the curve. A few studies, brandished by illegal content providers to perpetuate the myth that content theft is a ‘victimless crime,’ claim to show that illegal downloads actually contribute to industry profits.

In theory, pirates are additional viewers who could purchase merchandise or generate word-of-mouth advertising that could get others to legally view the content. If the good outweighs the bad, then piracy might actually be helping the content industry. Leaving aside the issue of morality of theft, given the scale of online piracy, it’s hard to imagine the good truly outweighing the bad. Yet there are data-driven studies by real academics insisting that digital piracy is a boon for content creators.

However, a new meta-analysis of literature examining the effects of online-piracy, Friends or Foe? A Meta-Analysis of the Link Between “Online Piracy” and Sales of Cultural Goods by Wojciech Hardy, Michal Krawczyk, and Joanna Tyrowicz, shows that these papers finding that digital piracy does not have

Read the rest

Don’t Blame ICT for Manufacturing Offshoring

During the 2000s, globalization took millions of jobs from the United States. Some have been quick to associate this job loss with the technology that ostensibly made it possible, chiefly the adoption of ICT that allowed for global connectivity. So, would the United States have been better off if it had simply never invested in ICT in the first place?

There are those who would love to somehow put the technology introduced by the ICT revolution back in the box. But a new study shows that doing so would have detrimental impact on the economy. Yes, in some cases ICT investment introduced the tools which allowed companies to outsource jobs. But, as new paper, Does ICT Investment Spur or Hamper Offshoring?, finds, the same ICT investment enabled productivity gains that kept companies at home.

Of course, it is difficult empirically to determine whether ICT investments increase the likeliness of offshoring, as causality is difficult to determine. To address this problem, authors Luigi Benfratello, Tiziano Razzolini, and Alessandro Sembenelli examined small and medium-sized Italian manufacturing firms with varying access to local broadband facilities, a random variable that was used

Read the rest

Will Super Intelligent Computers Become an Existential Threat to Humanity?

As ITIF Vice President Daniel Castro explained at the outset of a recent ITIF event on the future of artificial intelligence (AI), we have seen significant advancement in AI in the past few years, from Google’s self-driving cars to IBM’s Watson to Apple’s Siri. At the same time, several prominent tech leaders—including Elon Musk, Bill Gates, and Stephen Hawking—have expressed concern that these advances in AI will lead to supremely intelligent machines that could pose a threat to humanity. Should policymakers actually be worried, or are their concerns hyperbole?

There was general agreement among the speakers that AI has the potential to greatly improve society, including helping to alleviate poverty and cure disease. Manuela Veloso, a professor of computer science at Carnegie Mellon University, explained that most technologies present certain risks but they are outweighed by the benefits. She advocated for additional research funding to build protections into future AI.

Some panelists expressed greater concerns over the dangers, especially if the research community does not work to address them in the near term. Nate Soares, executive director of the Machine Intelligence Research Institute, explained that artificial

Read the rest

PWC Report Confuses the “Stealing Economy” With the “Sharing Economy”

PricewaterhouseCoopers recently released a report that attempts to provide a “holistic view” of the so-called sharing economy, including how it is unfolding “across both business and consumer landscapes.” While an exact definition of the “sharing economy” can be hard to pin down, it generally refers to the concept of using information technology to allow consumers to rent or borrow goods, especially those that are underutilized, rather than buy and own them. Undoubtedly, the sharing economy is an important and innovative approach to commerce, especially having given rise to wildly popular services such as Airbnb and Lyft. More broadly, the sharing economy can boost economic welfare by allowing the economy to more efficiently utilize goods and services.

Given all this, we certainly need thorough analysis of the sharing economy to fully grasp its potential. Yet PwC’s report errs badly in at least one important respect: It conflates unlawful sharing of digital media with legitimate peer-to-peer activities.

With regards to the challenges of the sharing economy in digital media, PwC writes:

“The ambiguity of the sharing economy is particularly evident in entertainment and media, where consumers are open to ‘sharing’

Read the rest