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February 26, 2005

Will the Real ****** Please Stand Up

Andy Grove, the founder and ex-chairman of Intel Corporation entitled his best selling book Only the Paranoid Survive.  In this book, written at the moment when Intel had achieved a dominant and seemingly unassailable position as a chip maker, Grove looked back at various junctures when the company he co-founded had to overcome challenges that might have proved fatal to Intel.  Grove called these critical milestones "Strategic Inflection Points", or points where the underlying basics have shifted tectonically; thus moments where radical action and change become a matter of survival.

Grove, of course, is taking liberty with the word paranoia, which technically describes a state of mental disease in which decisions about the real world can hardly be trusted to lead to any positive outcomes. But, of course, we all know what he really means: in a competitive world, you let your guard down at your own peril. Grove's great, if often ruthless business triumphs evolved into a business strategy that has forced Intel to constantly innovate and its main competitors into a perpetual catch up role, has been one of the driving force for the third industrial revolution, the now present Information Age.  What many, including most economists and lawmakers, have not understood is that in this Information Age, the universal currency has shifted from gold, to paper and now to "information" or better, to "intellectual property".

Last week the Supreme Court heard a case that deals with the rights of traditional real property wherein the city of New London Connecticut has tried to appropriate private residences not for the right of way of a highway, which eminent domain is usually reserved for, but for the purpose of turning them over to corporate commercial developers. What this means is that after more than 200 years in this country we still haven't figured out where private property rights begin and end.  At the end of March, the same court will hear a case --Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd-- which will have a major impact on the course of intellectual property rights in this country. Ever since the 1984 Sony Betamax ruling, a balance has been set in the fair use of intellectual property.  First in Sony Betamax, and again in the upcoming Grokster, Big Media has tried to outlaw the manufacturing and importation of electronic devices that could be used to copy the content they develop and distribute under license to the public. In Grokster, 28 large media corporations have brought suit against a company that provides peer-to-peer sharing technology that is widely used to exchange files across the Internet.  According to the Electronic Freedom Foundation "the case raises a question of critical importance at the border between copyright and innovation: When should the distributor of a multi-purpose tool be held liable for the infringements that may be committed by end-users of the tool?"

But the question of who owns information or intellectual property is far from the much simpler issues the Court is coping with in these cases: What's happened, to use Grove's terminology, it that we have come to a much graver "inflection point" in the Information Age.  How we work out these issues of content rights will define us as a civilization going forward and will greatly impact the course of our most dynamic industries.  As the Choicepoint scandal that broke into the public arena last week illustrates, there is a vast "content" business that is outside the bounds of traditional media. It is an information industry that thrives on the collection and manipulation of personal information.  At its unfettered extremes, it promises the world of Big Brother on one side, and the complete breakdown of electronic commerce on the other as the public quixotically tries on an individual level to staunch the hemorrhage of personal data.

As we learned from the Choicepoint debacle, anybody clever enough can buy the personal information trail that we now leave wherever we go and whatever we do.  Did you agree, in a hint to help you retrieve your password, to supply the name of your grammar school, your first pet's name, your favorite movie star, etc.?  How about the list of all the movies you have ever rented or bought from Blockbuster, Netflix or Amazon?  What about comments you made in a chat room or message board 10 years ago?  How about your mother's maiden name?  Never mind your social security number and date and place of birth;  how about that shopping slip at Safeway or the purchases you've made with your credit or debit card? 

Many people have just recently chosen to use Google's desktop offering to manage the data stored on their home personal computers, including, say their Quicken (complete financials) Contact and Calendar files containing information on personal and business contacts and meetings.  Others use Google's email service to manage their communications.  Google, the ultimate databank, of course, has promised to be the company that does no evil.  So what's to worry, you can always jump into your SUV and head for the hills.  Of course, along the way onboard computers monitor your speed and how many times you tap the brakes, GPS devices, your precise location and EZPass feeds location information to still other databases. We've begun to see a movement to embed remote readable RFID devices under the skin loaded with vital medical information.  There are seemingly no end and no limits.  After all, the Information Age has brought us infinite data storage capabilities and the cheap computing power that makes processing that information a piece of cake.

Identity theft occurs when someone substitutes themselves for another.  If I know all  your vital numbers and perhaps can answer some very personal questions and am smart enough to understand the safeguards that are being put into place, I can exploit your assets and credit leverage, even your security profile. It turns out that Choicepoint for one, there are other companies,  like LexisNexis, another large company also in this space, is in the business of selling that information to what they, and only they, consider to be legitimate commercial and government interests.  The FBI and CIA are big customers, as are media organizations, law firms, collection agencies, etc.

The answer on one side to security breaches is to put up another security layer. In the case of personal identity theft there are already calls for biometric databases, indelible markers like DNA, iris patterns, fingerprints, etc.; as if those schemes can't be circumvented as well.  Should we follow that path, individuals will no doubt find themselves in the almost impossible position of trying to prove they are actually themselves.  For, surely mistakes will be made or basic marker records will be purposely altered by the next group of ever savvier perpetrators. 

Highly unlikely, you say, well take the case of SAIC, the San Diego-based major government contractor that is often entrusted with the safeguarding of the government's most vital secrets. SAIC has hired over the years many leading government officials from the defense and intelligence communities with the highest security clearances.  In an ironic, thoroughly embarrassing and perhaps highly threatening incident, SAIC has had to admit that it's very own computers containing the personal data of its 45,000 present as well as former employees--including ex heads of the CIA and DIA-- were physically heisted from a company facility.  One can only imagine what a group of sophisticated operators could do with the data collected from the SAIC break in!  Surely, this incident makes the Choicepoint caper look like a shoplifting incident.

But SAIC could handle its break-in and limit press coverage.  There was no public announcement.  As for Choicepoint, they were required by a California statute to inform the victims of their mistake. Once again, we are relying on our lawmakers to come up with regulations regarding the management, distribution and commerce of personal data in an age when information is currency. By the way, these are the same lawmakers who have just spent billions fortifying their zone on Capitol Hill against truck bombs but who are unable to muster the political will to restrict the passage of basically unguarded toxic materials on train tracks that run less than a half mile from the Hill for fear of upsetting the transportation lobby.

 

Posted by dymaxion at 12:29 PM


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