Microsoft Bans Chipped Xbox Users

The BBC just ran an article on Microsoft banning an estimated 600,000 Xbox users from its online gaming service Xbox Live for running “chipped” systems: systems that have had their hardware modified in some way. While some chipped systems allow for the use of pirated software, they have a variety of purposes. It’s unclear what fraction of these systems are actually engaged in piracy.

While the “moral” aspect of the move may seem clear, the economic implications are somewhat more cloudy. What is clear is that Microsoft has kicked off a large number of paying users of its Xbox live system, indicating a substantial hit to a continuous, monthly income stream. This represents millions in financial harm to Microsoft. It also represents a substantial public relations fiasco with Xbox live users.

The benefits to Microsoft are much less clear. First and foremost, the banning of users from Xbox live does nothing to prevent users of “pirate systems” from actually pirating Xbox games. It only keeps them from playing the games online, on Xbox live. This suggests that lost income from Xbox live subscriptions will not be made up by legitimate game sales. Also, as discussed above, it is unclear as to the actual fraction of Xboxes that were put to infringing use. This means a number of Xbox live account holders may not have been pirating in the first place.

It seems strange that Microsoft would trade a guaranteed, multimillion dollar income stream for an uncertain drop in piracy and certain anger from its customers.

 

ACTA: An Outrage

An excellent example of regulatory capture came up just recently. If you’re not aware, there are ongoing negotiations in Korea over an international copyright treaty known as ACTA (The Anti-Counterfeiting Trade Agreement). ACTA is allegedly an international treaty about preventing counterfeit products, and the Obama administration has defended the treaty’s terms as State Secrets. This treaty will be binding on member states that sign it, serving as a kind of meta-legislation. Thus, while United States consumers and likely Congressmen as well, may not know anything about this treaty, they will be bound to its terms.

Here is the shameful part. While American consumers are claimed to have no right to comment or even view the proposed terms, Techdirt claims that U.S. negotiators “have met with entertainment industry representatives multiple times, and there are indications that those representatives have contributed language and ideas to the treaty.” The language of the treaty itself, which has been recently leaked, appears to confirm these suspicions. EFF notes that the treaty allows for ISP’s to take safe harbor from copyright infringement ONLY IF they enact vicious “three strikes” policies that would kick people off of the internet if they violated copyright.

This is troubling for a number of reasons. First, the ACTA treaty represents an intention to bypass the American voter and the American legislature itself in order to force a legal obligation upon citizens. That the current administration is blocking debate on this treaty by claiming it is a state secret is shameful. The hallmark of American lawmaking has always been the freedom to openly debate the merits of the law. The First Amendment itself protects Americans from government restriction of speech. Branding the treaty as a state secret, the administration has hobbled debate on an important issue of American freedoms and enforced a vacuum of knowledge.

The second troubling aspect of ACTA is that it imposes an inexplicably harsh punishment for violation of copyright laws. As we know, the internet is ever-evolving, and always taking a greater role in the lives of people across the word. The internet functions as bank, as telephone, as stationery, as soap-box, and retailer of the world. Thus, its role as a necessity of modern life is unquestionable. Also, copyright violations are usually decided by civil, not criminal lawsuits. Currently, the outright ban of internet access is debated even in criminal cases, which require a much stronger burden of proof. Such bans, even when they are approved, are reserved for the most heinous of criminals, such as child molesters.

Under the ACTA treaty, the Electronic Frontier foundation notes that “ISPs would be required to automatically terminate a customer upon a rightsholders’ repeat allegation of copyright infringement at a particular IP address.” If we recall, the courts are split as to whether internet access should even be banned for heinous criminals. Even when courts conclude that internet access should be banned for an individual, they require that the person be convicted of a crime with evidence that establishes guilt beyond a reasonable doubt. By contrast, ACTA endorses banning internet access when you are merely alleged to infringe a copyright. No proof, whatsoever, is required.

Time to call your congressman.

 

One Journalist’s Capture and Escape from the Taliban

I just had the chance to read over New York Times Journalist David Rohde’s account of his capture, detainment, and eventual escape from Taliban forces in and around Afghanistan and Pakistan. His story is impressive and informative, and if you haven’t read it yet, you should definitely give it a chance. One interesting aspect of his story concerns the ability of his captors to hold numerous, conflicting viewpoints at the same time. In an instance of cognitive dissonance, they hated America because they claimed American attacks killed civilians, yet used suicide bombing tactics that were guaranteed to harm civilians themselves. It’s an interesting, and sad read. Definitely worth your time if you haven’t seen it yet.

Verizon’s Smart Move: Go Open Platform

If you haven’t seen the ads yet, Verizon is bringing out a number of new phones sporting Google’s Android operating system. It’s about time that Verizon brought strong smart phones to the table, and it’s interesting that they’ve picked an open operating system as their new flag-bearer. Traditionally, cellular companies, including AT&T and Verizon, have tried to capture the market for cellular applications, ringtones, etc by using closed operating systems.

AT&T has had numerous network issues with the iPhone’s increased data usage compared to other phones. If Verizon’s network can handle the increased usage of the Android phones, I’ll bet that the draw of an open, portable and moddable smartphone will provide more than enough customers, data usage, and therefore income to make up for the lost application market.  It’s a smart move on Verizon’s part.

Entrenchment: An Introduction

Entrenchment is a fascinating phenomenon, even if it is a fairly simple one. It’s related to the idea expressed in The Tipping Point, namely: those who have access to great amounts of power, money, or influence have an easier time getting more of it because they can leverage their existing resources to great benefit. Entrenchment can be considered the flip-side scenario to the Tipping Point scenario: those who already have great influence are reluctant to give in to even a small erosion of this power.

Keep that turf!

Entrenchment can be found in a number of scenarios. For example, entrenchment often occurs when a market captures a governmental agency or congressional bloc. These groups will often institute a number of barriers to entry to eliminate competition for control of that group. Entrenchment scenarios can also occur as various institutions fight for control of regulatory power. For example, the FCC and FTC often bicker regarding to what extent each may regulate action on the internet. The most egregious, and interesting entrenchment scenarios occur when a well-funded group fights to keep a responsibility/market that represents a large source of funding, even when it may be outdated, uneconomical or morally harmful.

To some degree,  especially in government, entrenchment is understandable. A regulating body is incentivized to expand its power because this often results in greater prestige, more funding,  better equipment, and more comprehensive training for employees. Unfortunately, entrenchment makes it unduly expensive for society to change its practices or embrace new technologies. As a case in point, Apple’s iPods are locked into proprietary software (iTunes) and vice versa. This means that anyone who wants to use iPods with a different piece of software are locked out due to Apple’s hardware / software entrenchment. Entrenchment practices create micro-market monopolies that encourage monopolistic practices in those markets. Entrenchment practices also create significant barriers to entry into existing markets by increasing transaction costs.

In the coming posts, I’ll be describing a number of interesting entrenchment scenarios, as well as their impact on society at large. Stay tuned.

Button, Button

There have been a number of previews for the movie “The Box” as of late. The basic premise of the movie is that by pressing a simple button, a person would be rewarded, for example, ten million dollars. However, as a catch, the pressing of the button will kill a stranger that the button pusher doesn’t know.

The premise sounded familiar to me, and finally I realized that I had heard a similar story on the radio, years ago. Turns out it has existed in a number of forms, starting as a short story (“Button, Button”) by Richard Matheson, then being reincarnated as a Twilight Zone episode and also as a radio drama.

The moral dilemma posed by the story is interesting, and it raises a fundamental question: what incentive would it take to abandon your moral code, if there were no societal consequences for breaking it? All of the stories try to confront this issue, but ultimately come short because they fight the hypothetical itself. Each of these stories, for the most part, ends with horrific consequences for those who give in to the button’s siren call.

While these stories finish with morally satisfying results, I think their candy-coated endings do a disservice to the thought experiment of “Button, Button.” The movies show us that society generally accepts the use of lethal force to prevent an attempted murder. War shows that the extension of this tenet to whole nations is also, to an extent, accepted by society. Milgram’s Experiment indicates that, if individuals believe they have yielded authority for their actions, they are much more likely to engage in lethal behavior. Under the pure hypothetical of “Button, Button,” society itself imposes no cost at all for the action of pressing the button. Thus, the moral consequences on the button pusher are purely internalized: the moral quandary becomes a deeply personal one. We are then confronted with the unknowable: how many people would actually push the button, and for what reasons? For greed? To bring their family financial security? Other reasons?

I’m not sure that “The Box” will do a good job of exploring these issues, but it’s from the director of Donnie Darko, so I’m expecting it to be at least both confusing and cathartic. In the meantime, I guess I’ll just keep browsing the psychology journals.

Sustainable Practices: The Antithesis of Consumer Culture

Recently, there has been a resurgence of environmentalist language in American culture. These days, it’s politically and economically untenable to be a company without a plan for looking green. Everything from new greenhouse standards to shopping bag ordinances have been proposed to turn today’s America into a sustainable America.  Many businesses have jumped into the fray as well, offering “green” products and services. While I laud these efforts, I can’t help but wonder how much of the greening of America’s economy has been brand overhaul instead of deep-seated change, and whether American consumers would be ready for the significant consequences of a perfectly sustainable America.

The trouble is, creating a sustainable community often runs counter to modern business models and consumer expectations. Most businesses today are modeled on markets of consumables: products that have to be repurchased. A business thrives on creating a new product, generating demand for that product, and mass-producing the product at a profit. Thus, devices like the iPhone, Prius, Legos and others thrive on consumer demand, and generate profit by transforming non-renewable resources into consumer products. Businesses, thus, are highly incentivized to promote patterns of conspicuous consumption among consumers. These practices create more jobs and increase economic output.

Consumers, in turn, have come to expect a consistent rise in standard of living, and reduction in prices. Across the globe, consumerism is so intertwined with culture that keeping up with the latest technological fad has become a form of social currency. This is not to say that new products fail to increase quality of life, but rather that consumers are unwilling to part with their patterns of conspicuous consumption.

Americans consumers are perfectly willing to buy more sustainable products, but this highlights the problem at hand. For example, the purchase of an iPhone, in an idealized world, could hypothetically reduce paper use if consumers read, for example, magazines on the iPhone. However, iPhones are a supplement to modern living, and not a replacement for it. Nobody cancels magazine subscriptions when they buy an iPhone, nobody stops buying paper books when they purchase an Amazon Kindle, and nobody sells their truck when they buy a Prius. On the contrary, these products, which could be more sustainable if used in place of current consumption, are used in addition to current consumption patterns, thereby increasing overall resource use.

There are a number of ways to increase sustainability locally, but in today’s world, the only way to increase sustainability globally is to reduce consumption. A reduction in consumption brings with it, almost by definition, a reduction in economic output, and thereby a reduction in standard of living. While new technologies may help to some degree with these problems, they will never solve them. If we as a people want to move towards a sustainable culture, it means significant , painful change in the way we live and act as consumers.

Dirt Bikes more Carbon Friendly than the iPhone?

One Must Fall

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I just ran across an article by Apple that said iPhones have a lifetime carbon footprint of 121 pounds of CO2. (Apple). Also, it turns out that iPhones are made with a number of toxic chemicals including BFR’s and PVC’s. (Greenpeace). Consumers use cell phones for an average of 18 months before switching to a new one, but given that the iPhone is a killer app, let’s extend the life expectancy to a nice round 2 years. This means the iPhone’s footprint is about 60 pounds of CO2 per year.

In the other corner, we have the much-maligned dirt bike. Dirt bikes have a product life of about 15 years. (Berkeley – Table 1). They also are held to emissions standards of 25g CO2 / km = 0.0887 lb CO2 / mile. (EPA). Also, the life-cycle carbon costs for a motorcycle (production, insurance, etc, but not actual driving) are 332 pounds of CO2 (22 pounds per year). (Berkeley – Table 11, Adding all fixed costs but not vehicle operation). With these considerations in mind, the average dirt bike rider, riding about 300 miles per year (20 trips at 15 miles / trip), nets only 49 pounds of CO2 per year. A smaller impact than that of the iPhone.

Interesting.

Starting with a Bang

Not quite as dramatic as this

The great wonderers of the past have predicted the end of the world in countless ways. Nostradamus and the Bible predicted the world’s dramatic end as a series of catastrophic events. Brilliant authors like George Orwell and Aldous Huxley predicted the world’s end in a much more banal, much more horrifying manner.

We here at Flatiron Philosophers don’t rightly know how the world is going to end, but we hope, at least, to shed some light on the human condition before we part ways with it. Without further ado, here we are. Hope you enjoy the show.