Dynamite attached to a box with the FTC's logo.
Illustration: CreepyCube/iStock/Getty Images Plus; Protocol

The eve of 'algorithmic destruction'?

Protocol Enterprise

Hello and welcome to Protocol Enterprise! Today: The FTC’s new tactic for dealing with deceptive data practices, Google Cloud joins the inflation parade, and where the latest enterprise tech startup funding is landing.

Spin up

It’s Pi Day! Instead of sending everyone pies, AWS chose instead to disclose a few new stats about S3, which launched 16 years ago today: AWS customers now store more than 200 trillion objects on the company’s flagship service.

Put down the algorithm, and slowly back away

The Federal Trade Commission has struggled over the years to find ways to combat deceptive digital data practices using its limited set of enforcement options. Now, it’s landed on one that could have a big impact on tech companies: algorithmic destruction.

In a March 4 settlement order, the agency demanded that WW International — formerly known as Weight Watchers — destroy the algorithms or AI models it built using personal information collected through its Kurbo healthy eating app from kids as young as 8 without parental permission. The agency also fined the company $1.5 million and ordered it to delete the illegally harvested data.

  • When it comes to today’s data-centric business models, algorithmic systems and the data used to build and train them are intellectual property, products that are core to how many companies operate and generate revenue.
  • While in the past the FTC has required companies to disgorge ill-gotten monetary gains obtained through deceptive practices, forcing them to delete algorithmic systems built with illegally obtained data could become a more routine approach, one that modernizes FTC enforcement to directly affect how companies do business.
  • The FTC first used the approach in 2019, amid scandalous headlines that exposed Facebook’s privacy vulnerabilities and brought down political data and campaign consultancy Cambridge Analytica.
  • The agency called on Cambridge Analytica to destroy the data it had gathered about Facebook users through deceptive means along with “information or work product, including any algorithms or equations” built using that data.

Technically speaking, the term “algorithm” can cover any piece of code that can make a software application do a set of actions, said Krishna Gade, founder and CEO of AI monitoring software company Fiddler.

  • When it comes to AI specifically, the term usually refers to an AI model or machine-learning model, he said.
  • It hasn’t always been clear that the FTC might use algorithmic disgorgement more regularly: “Cambridge Analytica was a good decision, but I wasn’t certain that that was going to become a pattern,” Pam Dixon, executive director of World Privacy Forum, said regarding the requirement for the company to delete its algorithmic models.
  • Now, Dixon said, algorithmic disgorgement will likely become a standard enforcement mechanism, just like monetary fines.
  • “This is definitely now to be expected whenever it is applicable or the right decision,” she said.

FTC Commissioner Rebecca Slaughter has been a vocal supporter of algorithmic destruction as a way to penalize companies for unfair and deceptive data practices.

  • In a Yale Journal of Law and Technology article published last year, she and FTC lawyers Janice Kopec and Mohamad Batal highlighted it as a tool the FTC could use to foster economic and algorithmic justice.
  • “The premise is simple: when companies collect data illegally, they should not be able to profit from either the data or any algorithm developed using it,” they wrote.
  • “The authority to seek this type of remedy comes from the Commission’s power to order relief reasonably tailored to the violation of the law. This innovative enforcement approach should send a clear message to companies engaging in illicit data collection in order to train AI models: Not worth it.”

The fact that algorithmic disgorgement was used by the FTC in relation to one of the country’s only existing federal privacy laws could be a sign that it will be used again, legal and policy experts said.

  • “This means that for any organization that has collected data illegally under COPPA that data is at risk and the models built on top of it are at risk for disgorgement,” Hutson said.
  • The use of COPPA could be a foundational precedent paving the way for the FTC to require destruction of algorithmic models under future legislation, such as a would-be comprehensive federal privacy law. “It stands to reason it would be leveraged in any other arena where the FTC has enforcement authority under legislation,” Hutson said.
  • Application of algorithmic disgorgement in the COPPA context is “a clear jurisdiction and trigger of enforcement through a law that exists and explicitly protects kids’ data, [so] if there was a corollary law for everyone it would allow the FTC to enforce in this way for companies that are not just gathering kids’ data,” said Ben Winters, a counsel for the Electronic Privacy Information Center.
  • He added, “It shows it would be really great if we had a privacy law for everybody, in addition to kids.”

— Kate Kaye (email | twitter)

A MESSAGE FROM DATAIKU

Dataiku is the only AI platform that connects data and doers, enabling anyone to transform data into real business results — from the mundane to the moonshot. Because AI can do so much, but there's no soul in the machine, only in front of it. Without you, it's just data.

Learn more

Google Cloud hikes some prices

Google Cloud put customers on notice Monday that a series of price hikes for its infrastructure services will take effect Oct. 1. The cloud provider is adding new data replication fees and network egress charges and, in some cases — for coldline storage operations, for example — is doubling its prices.

Sachin Gupta, vice president and general manager of Google Cloud Infrastructure, tied the changes to the cloud provider’s infrastructure investments in the last several years. Google Cloud has struggled to reach a break-even point over the last few years as it attempts to catch AWS and Microsoft.

“They are also designed to better align with how other leading cloud providers charge for similar products, so customers can more easily compare services between leading cloud providers,” Gupta wrote in a blog post today.

New fees for default data replication are among the new storage charges for Google Cloud services that previously were free. Google Cloud will also start charging network egress fees for reading data in a cloud storage bucket in a multiregion from a Google Cloud service in a region on the same continent.

Customers who sign or renew a commit contract with a fixed or floating discount before Oct. 1 will not be impacted by the price changes until they renew, according to Google Cloud.

— Donna Goodison (email | twitter)

Upcoming at Protocol

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Financial corner

Cybersecurity startup Axonius was valued at $2.6 billion after raising $200 million.

Menlo Microsystems raised $150 million for its electromechanical switch technology.

Data software company Atlan is worth $452 million after raising $50 million in funding from Salesforce and Sequoia.

Blink raised $26 million to help enterprises simplify their cloud operations.

— Aisha Counts (email | twitter)

Around the enterprise

Microsoft said its quantum computing researchers achieved a new milestone by creating the right conditions to allow its qubit design to function, but there’s still a long road ahead.

In the real world, Microsoft Teams is 5 years old. ZDNet’s Mary Jo Foley took a look at what might come next for the biggest beneficiary of global pandemic lockdown orders in Microsoft’s arsenal.

MediaTek will spin off its Bluetooth chip unit later this year in an attempt to raise funds and pare down its focus.

If you’ve ever used a PDP-11, hopefully you are about to enjoy a well deserved retirement. Ars Technica unpacked the history of one of the most influential enterprise tech machines ever created, which paved the way for countless breakthroughs in the 1970s and 80s we now take for granted.

A MESSAGE FROM DATAIKU

Dataiku is the only AI platform that connects data and doers, enabling anyone to transform data into real business results — from the mundane to the moonshot. Because AI can do so much, but there's no soul in the machine, only in front of it. Without you, it's just data.

Learn more

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