Bitcoin Is Already Having a Bad Year

Bitcoin is already having a bad year.

For the first time since 2015, the cryptocurrency began a new year by tumbling, extending its slide from a record $19,511 reached on Dec. 18.

The virtual coin traded at $13,440 as of 3:55 p.m. in New York, down 6.1 percent from Friday, according to data compiled by Bloomberg. That’s also a fall from the $14,156 it hit Sunday, according to, which tracks daily prices.

Bitcoin got off to a much stronger start last year, and then kept that momentum going, eventually creating a global frenzy for cryptocurrencies. In a sign of its phenomenal price gain in 2017, it rose 3.6 percent on the first day of 2017 to $998, data from show. It ended the year up more than 1,300 percent.

That rally drew a growing number of competitors and last month brought bitcoin to Wall Street in the form of futures contracts. It reached the Dec. 18 peak hours after CME Group Inc. debuted its derivatives agreements, which some traders said would encourage short position-taking.

Blockchain Takes a Shot at Redefining the Sports Betting Experience

In 2018, hundreds of sports betting sites and apps allow bettors to gamble discretely from just about anywhere through their smartphones. This convenience has attracted more users to participate in the action.

Traditional payment services like banks and digital wallets have been wary of supporting online gambling, leaving room for specialized payments gateways to facilitate bankroll funding and payouts. There’s also no shortage of handicapper sites and services that offer paid analyses to less savvy gamblers.

Unfortunately, the involvement of these parties brings enhanced risk of fraud and failure. Gambling payment gateways are constantly under threat from cyber-criminals. Handicappers also don’t quite produce the wins that they promise to bettors. As such, there are opportunities for blockchain – a technology that promotes shared trust – to address these issues.

Several blockchain efforts have set their sights on bettors’ needs. For example, emerging digital currency Electroneum envisions its token to be used by online gambling services. BlitzPredict provides bettors trustworthy insights through its aggregation service. Platforms like HEROcoin even aim to decentralize sports betting.

Success of these efforts could all help create better betting experiences. Here are three ways how these blockchain services can accomplish that goal.

1 – Easier Funding and Payouts

Payments using blockchain can be completed quicker compared to traditional means. Tokens do not have to be routed through different financial institutions and clearing houses. Winnings can either be readily credited to the user’s bankroll or to a token wallet. Since tokens are now fungible assets, bettors also have the option to transfer tokens to exchanges and trade them for other crypto or fiat currencies.

However, crypto tokens aren’t without their quirks. For instance, it can be hard to tell how much a bet made in Bitcoin is actually worth in fiat currency. For ordinary people, it’s easier to discern the value of “$50” compared to “0.003 BTC.” Interestingly, Electroneum addresses this by limiting its token to two decimal places just like fiat currencies. This way, users could have an easier time estimating or converting mentally making use of crypto tokens for gambling more bettor friendly.

2 – Trustworthy Insights

Blockchain startup BlitzPredict aims to provide insights by aggregating sportsbooks and prediction markets much like a stock market ticker. This helps bettors determine which sportsbook provides them with the best possible outcomes for a given bet. The platform also enables bettors to use blockchain smart contracts to automatically place bets when certain conditions are met.

Alternatively, bettors can subscribe to handicapper services that could supposedly point them to better odds. However, the credibility of many of these so-called sports “experts” have been called to question. Many offer tips and promise sure wins for a fee even if they don’t have the credentials to back their “expertise” or the data to support their picks.

In order to promote quality insights, BlitzPredict also allows analytics enthusiasts to share their prediction models to other users. High-performing models are rewarded with the platform’s own token which could then be used to place bets using the platform. Such a rewards mechanism encourages bettors to make data-driven decisions rather than settle for hunches or bad advice.

3 – Transparent Betting

Sportsbooks are often set up so that the house always wins. Even the reputable ones will have to make money by taking a cut from transactions. Without aggregation and advanced analytics, bettors are not only likely to lose in the long term, but they may also have to absorb the cost of these cuts and fees for all the transactions they conduct.

Platforms such as HEROcoin challenge this system by offering decentralized peer-to-peer betting. Through smart contracts, bettors are free to define the conditions of wagers. Blockchain’s transparency lets users trace the flow of money and the terms.

Fair Wagers

Sports betting is still a growing market and the expansion of betting to other segments such as esports is bringing in new participants. In esports alone, studies predict that more than $23 billion will be wagered by 2020. New services should strive to create easier and more positive experiences for the benefit of these new bettors joining the scene.

Fortunately, blockchain startups are already bringing transparency and trust into such activities. The use of crypto tokens could help address the lengthy and costly funding and payout processes. Better analytics and aggregation could also aid discerning bettors in making effective picks. Smart contracts can provide secure mechanisms for parties to enter and execute wagers.

How to Watch the 2018 New Year’s Countdown and Ball Drop for Free

It’s New Year’s Eve 2017, and people are saying, “Out with the old and in with the new.” If you’re one of the millions who cut the cord on their cable television this past year, you might find yourself unable to watch the 2018 countdown. But you don’t need cable to watch the ball drop in New York City or to see Mariah Carey make her ‘New Year’s Rockin’ Eve’ comeback on ABC. That’s because 2017 was finally the year streaming television arrived. Here’s how to live stream the New Year’s Eve countdown and ball drop for free — for auld lang syne.

DirecTV Now

You can watch Ryan Seacrest host ‘New Year’s Rockin’ Eve’ — and a whole lot more — using DirecTV Now‘s free seven-day free trial. The service costs $35 per month for a package of at least 60 live channels after the trial ends, but that stretch can get you in on should help you through the holiday and more. DirecTV Now’s basic-level plan packs local affiliates for CBS, FOX, and NBC. But before you sign up, check your local channel availability here, because not every market includes every station.

Hulu with Live TV

FOX’s New Year’s Eve coverage is hosted by Steve Harvey this year, and you can catch it on Hulu with Live TV which also offers CBS and NBC. The service also packs a big on-demand library, which could be good if you get bored of all that confetti and kissing and you just want to binge, instead. Like DirecTV Now, Hulu with Live TV is free for a week, but it runs $39 per month after the trial is up. One nice thing about Hulu’s offering is that it has an option to add on a cloud DVR service, which might be a smart long-run investment if you want to keep the service for 2018 and beyond.

Sling TV

Depending upon which television channel you want to ring in the new year with, Sling TV might be the choice for you. The service also offers a seven-day free preview as well as Univision and FOX, but you can only get those channels in select markets and on its higher-tiered “Blue” plan, which costs $25 per month after the trial. If you want to watch CNN’s Anderson Cooper count it down, Sling’s lower tiered “Orange” plan costs just $20 per month, and offers the cable news giant, but it doesn’t have the local networks. But while Sling TV Blue does have the NFL Network, so it might be a worthwhile investment, if you’re going to watch all the games on Sunday before the festivities begin.

PlayStation Vue

If you’ve got a PlayStation 4 under your TV, PlayStation Vue might be a good choice for you. The live streaming television service offers a five-day free trial and starts at $39 per month after the promotional period ends. The base plan caters to popular live programming (other packages focus on sports and movies), so that’s probably a safe bet for streaming New Year’s programming. But like the others, channels vary by zip code, so check their availability before you sign up.

YouTube TV

Google’s YouTube TV isn’t just a portal to its popular video-hosting website. It is also a live streaming television service that offers a seven-day free trial with 40 channels and cloud DVR capability for $35 per month (once the promotion ends). YouTube TV includes all the major networks, including CBS, FOX, and NBC — where host Carson Daly does his yearly thing — but the catch the service only available in select markets (though, there are quite a few).

Here Are 3 Things That Perpetuate Dishonesty, and 3 Ways to Thwart It

It’s a dog-eat-dog world out there. In the race to make it to the top, some values often get dropped along the way. Among these stands out one; namely, honesty.

Car salesmen. Stock investors. Overzealous entrepreneurs. We all know the cliches, and we’ve all heard the stories of scams and cover-ups.

But what is it that drives people to cross boundaries to the point of deceiving customers, employees, and the world at large? Additionally, knowing all the risks associated, why would anyone resort to fraud or cheating to succeed in business?

The answer is that people don’t think too much. We’d prefer to remain blind and be able to follow temptations. But do a bit of investigation, and you’ll quickly learn how to re-frame your mind to stay on the straight path of honesty. Below are a few points to get your gears turning.

1. We think honesty slows us down.

Come on, when was the last time anyone actually read all the terms and conditions? This world runs on a fast pace, and people simply don’t have patience to go through the motions of every task. When we can cut corners, we will.

But when you’re running a company, your decisions have a ripple effect on the market you’re serving. According to an October 2014 study by Cohn & Wolfe, a global communications and public relations firm, honesty is the number one thing consumers want from brands.

So if you don’t want your startup to become a statistic of the 90 percent that fail, on average, make sure to stick to the truth when it comes to your brand. It’ll set you up for success in the long run!

2.  We think we won’t get caught.

It’s midnight on a desolate rural road — who will see you run through a red light? Similarly, who would notice if you slipped an extra unlisted ingredient into a product, or told a customer half the truth, being that they wouldn’t be shrewd enough to pick up on it anyway?

These moral quandaries can be paralleled to the famous riddle: “If a tree falls in a forest where no one is around, does it make a sound?” Perhaps it makes a sound, perhaps it doesn’t, depending on who you ask.

But the tree fell, that’s for sure.

We’re beyond kindergarten. We shouldn’t be living our lives in fear of punishment from legal authorities; and conversely, in celebration of victories acquired through dishonest means. That’s a pretty juvenile mindset, and no corporation can stand on the feet of those tenets for long.

Maybe you won’t get caught at first. But repeat dishonest practices will ultimately stain your reputation, because people aren’t stupid and eventually things come to light. All it takes is one small suspicion and you’re doomed. At best, you lose a customer; at worst, you’ll wind up in jail, like Martha Stewart did in 2004.

3.  It’s the norm.

It’s the sad truth, According to a University of Massachusetts study led by psychologist Robert S. Feldman, 60% of people lied at least once during a 10-minute conversation and told an average of two to three lies.

However, just because everyone else is doing it doesn’t mean it’s right. Everyone can hold themselves up to higher standards — it just takes a conscious awareness, and a lot of effort to train oneself to be honest.

Honesty is (indeed) the best policy.

But refreshingly, it’s also quite common to find businesses that run according to the principle of honesty as the best policy.

Companies all over the world are starting to not just recognize the values of honesty, but live by them. “In our business, honesty and transparency is the oxygen of our existence,” states Mati Cohen of Pesach in Vallarta, a holiday hotel program.

This echoes of the founding principles of Buffer, a social media company that embraces the coined term ‘radical transparency’; all its salaries are public and there are no secrets amongst employees, which eliminates much of the animosity that is ever-present in many workplaces.

Tirath Kamdar, co-founder and CEO of jewelry and watch company TrueFacet, says that his company runs by these standards. “The alarmingly opaque nature of the luxury watch and jewelry market motivated us to create TrueFacet. Our goal is to bring transparency back to consumers. We set the standard for jewelry and watches at market value, allowing customers to obtain these products for the most fair price. This is why our customers return time and again.”

Developing Honesty.

Nurturing this character trait requires hard work and patience. Make it a point to recognize how often you utter even little white lies, and correct yourself when you slip.

Because, after all, honesty is the best policy.

***Liba Rimler contributed to this article

3 New Year’s resolutions for the cloud in 2018

I’m one of those people who takes time at the new year to define personal objectives for the forthcoming year, some of which I actually achieve. Enterprise IT should be doing the same thing for cloud computing.

Here are my three suggestions for IT’s cloud resolutions for 2018.

2018 cloud resolution No. 1:
Look at your cloud security approach and technology

When I find issues with enterprise cloud deployments in my consulting work, it’s most often around security. Clients often leave aspects of their cloud deployments unprotected or underprotected, and things that should be encrypted are not, while things that should not be encrypted are.  

While I’m not recommending that you gut your cloud security and replace it with what’s cool and new, I am recommending that you take some time to walk through the security solution architecture and ask yourself about where you can improve. Moreover, consider all the security technology in place, what needs to be updated?   What should be replaced?

2018 cloud resolution No. 2:
Look at your cloud training plan

There are two categories of cloud training:

  • Provider training that’s focused on a specific provider such as Amazon Web Services, Microsoft, or Google.
  • General training that provides a good overview of how to make cloud work in enterprises, and all that is involved with that.

You should have a mix of both, as well as some paths for your staff defined to get the skills of a cloud architect, cloud developer, cloud operations specialist, and cloud devops specialist, just to name a few roles. There should be training paths through both vendor and nonvendor  courses to get your staff members the skills they need to perform their duties (which of course must be clearly defined). 

2018 cloud resolution No. 3:
Evaluate your databases

Databases are sticky, and once enterprises have used a specific database, they are not likely to change it. Indeed, what many enterprises have done is just rehost their data on public clouds using the same database they used on premises.

Today we have many options in the cloud, including SQL and non-SQL databases. While there are native databases in public clouds such as AWS’s RedShift and DynamoDB, there are many other options from databases providers that support the public cloud and traditional platforms. Are you using the optimal solution?  

These are just a few suggestions; I suspect that you can name more. Whatever they are, pick a few and follow up. Have a great new year!

SoftBank succeeds in bid buy Uber shares

(Reuters) – A consortium led by SoftBank Group Corp (9984.T) successfully bought a large number of shares of Uber Technologies Inc [UBER.UL] in a deal that values the ride-services firm at $48 billion, Uber said on Thursday, handing a victory to new Chief Executive Dara Khosrowshahi.

The price is a roughly 30 percent discount to Uber’s most recent valuation of $68 billion. The deal will trigger a number of changes in the way the board oversees the company, which is dealing with federal criminal probes, a high-stakes lawsuit and an overhaul of its workplace culture.

SoftBank and the rest of consortium, which includes Dragoneer Investment Group, will own approximately 17.5 percent of Uber, a person familiar with the matter said. That stake includes both a secondary share purchase from earlier investors and employees, as well as a $1.25 billion investment of fresh funding.

The $1.25 billion investment will made at the older, higher valuation, the person said. Uber said the deal will close early next year.

SoftBank required a minimum threshold of a 14 percent stake of the company to proceed with the deal. SoftBank itself will keep a 15 percent stake, while the rest of the consortium will own approximately 3 percent, according to a second person familiar with the matter.

The investment is seen as a sign of support from the influential investors for Khosrowshahi, who took the job in August and has helped negotiate the deal. Uber is losing more than $1 billion each quarter, and a new cash infusion is critical.

Uber will use the investment “to support our technology investments, fuel our growth, and strengthen our corporate governance,” a spokesperson, who declined to be named, said.

The Wall Street Journal first reported on Thursday that the tender deal would be successful, citing unnamed sources. (

When the deal completed, the company will make governance changes, including expanding Uber’s board from 11 to 17 members including four independent directors, limiting some early shareholders’ voting power and cutting the control wielded by former chief executive Travis Kalanick.

FILE PHOTO – The Uber logo is seen on a screen in Singapore August 4, 2017. REUTERS/Thomas White/File Picture

“The stockholders did the smart thing. The price is less important than locking in the governance changes and securing the support of the world’s most powerful technology investor,” said Erik Gordon an entrepreneurship expert at the University of Michigan’s Ross School of Business.

“If the stockholders hadn’t taken the price, the value of the company would have been battered by a return to stockholder infighting and the possibility of Kalanick’s return,” he said.

Rajeev Misra, chief executive of SoftBank’s Vision Fund, a $98 billion tech investment vehicle, will join the Uber board. A second representative from SoftBank will join the board as part of the terms of the deal, a source familiar with the deal told Reuters.

Misra said in a statement that SoftBank has “tremendous confidence in Uber’s leadership and employees.”

Uber board members made their final concessions to pave the way for the SoftBank deal in early November. The company is also planning an initial public offering in 2019.

Some initial investors in the consortium, including General Atlantic, dropped out over disagreement about the price offered to shareholders, according to a person with knowledge of the matter.

SoftBank founder Masayoshi Son has taken a keen interest in ride-hailing companies around the world, and already has sizeable stakes in China’s Didi, Brazil-based 99, India’s Ola and Singapore Grab, all of which have competed with Uber.

The investment comes after a year of troubles for Uber, including a lawsuit by Alphabet Inc’s (GOOGL.O) self-driving car unit Waymo that alleges trade-secrets theft and federal investigations that span possible bribery of foreign officials in Asian countries and the use of software to evade regulators.

Over the past year, a former employee’s charges of endemic sexual harassment led to an internal review, London said it is stripping Uber of its license and Uber revealed it had covered up a major hack.

In June, Kalanick was forced to step down, although he remains on the board and is still one of the largest stakeholders.

Reporting by Heather Somerville and Liana B. Baker in San Francisco. Additional reporting by by Laharee Chatterjee in Bengaluru. Writing by Peter Henderson; Editing by Anil D’Silva, Richard Chang and Susan Thomas

Why Amazon Alexa Is Such a Hit This Holiday Season

Amazon customers purchased one billion items from small businesses this holiday season, according to a new report by Amazon released today. It was also the best-selling season for Alexa-enabled devices, amassing tens of millions of items sold. The company is on a roll, but the question you might be asking, especially if you know there are many competitors and options available, is what accounts for all of the success? 

For starters, you should know that I’m a big fan of the Alexa bot because, to be honest, it just works. Other bots, and this includes the Assistant bot on the Google Home speaker and on many smartphones, does work fine for most queries, but it’s still playing catch-up with Alexa, which now supports tens of thousands of “skills” (extension to the device such as trivia games and the ability to read a kid’s book) and smart home products. I use Alexa to control my garage doors, lights, and thermostat in my home.

Another big selling point is that Alexa tends to understand what I’m asking. On the new Echo speaker, the one that is a bit more plump and sounds better than the original Echo, you can talk from across the room and ask about musical artists, the weather, or even ask weird questions and you’ll probably get a pretty good answer. It works better than most speakers at hearing when there is background noise.

Over the holiday, a house-full of people at various parties and family events were taken by the bot, even though it actually came out in the summer of 2018. My son even figured out that you can make Alexa howl like a wolf.

Alexa quickly becomes a member of the household. The Google Assistant bot and Microsoft Cortana don’t seem to have as much personality. (It’s easy to forget the bots are just algorithms that process voice-activated requests.) Siri just doesn’t provide as much functionality. And, there’s no speaker that can sit on a kitchen counter. Everyone in my house keeps saying Alexa even though there’s a Google Home speaker in the same room.

Amazon also has a one-two punch. I use the bot to order products as well, and it’s easy to ask about USB cables, camera cards, and printer paper. Sometimes, the bot just offers to reorder a previous item, which is just brilliant because it’s so easy and smooth. I can order paper for a printer in about ten seconds, On my phone or a laptop, it takes much longer. Of course, this is not lost on Amazon, which wants you to use Alexa for just about anything and everything under the sun, including all of your household and work purchases.

Add to this the small business angle and you have a trifecta or ingenuity.

I recently purchased a few textbooks, and the provider was a small company that specializes in a certain category of books for my daughter needs next semester. What an amazing opportunity for that reseller, since they offered the best price on the books and were so easy to find using the Alexa bot. I know there are hundreds and hundreds of other sites, but what Amazon is doing is streamlining the entire shopping experience. You order by voice using a credit card on file. The bot knows your address and you know it will arrive in two days without any headaches. I’ve only had one Amazon order not arrive on time in the last few years and that was due to a major snowstorm.

What are the lessons here? Ironically, they are the same as always. Make things as easy as possible for customers. Make sure the product works, even if it is from across the room. Keep improving your products and services. Add some ingenuity and some fun. That recipe is working for Amazon and countless small companies who sell products on Amazon.

A good question to ask as we roll into 2018: Are you doing all of those things?

Edward Snowden’s New App Turns A Smartphone Into a Security System

Edward Snowden, who blew the whistle on NSA surveillance of U.S. citizens, knows a thing or two about spying. He’s now released an app, Haven, that makes it easier to defend yourself against the most aggressive kinds.

Haven, now in public beta, turns any Android smartphone into a sensitive security system. It’s primarily intended to be installed on a secondary phone — say, last year’s model — which then takes photos and records sound of any activity in a room where it’s placed. Haven will then send alerts of any intrusion to a user’s primary phone over encrypted channels.

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The announcement for the app says it’s designed “for investigative journalists, human rights defenders,” and others who might be targeted by powerful enemies. According to The Verge, Snowden was encouraged to develop the app by a lawyer who fought to bring down Chadian dictator Hissene Habre.

One commonly cited use case for Haven is protecting laptops holding sensitive information, which can be relatively easily compromised if someone gains physical access. Snowden, who lives in Russia because he faces espionage charges in the United States, has adopted extensive personal security measures himself, and reportedly doesn’t even carry a smartphone anymore.

Jennifer Warren Positions For 2018: Remaining A 'Realistic Optimist' In Energy

2017 was another interesting year for energy, as evidenced by the recent extension of OPEC production cuts, the challenges created by changes in political policy, technology, and the economy – the list goes on.

The question that’s on everyone’s mind is: What lies ahead for this sector in 2018?

Jennifer Warren has written about the energy industry on Seeking Alpha since 2013. Her areas of expertise include energy trends – their economic and geopolitical implications – and resource sustainability issues. Other interests include shale oil and natural gas, climate change, green and efficient infrastructure, China, India, and the energy-water nexus.

Jennifer recently shared her thoughts with Senior Editor Michelle Carini on what to expect in 2018:

MC: What are your thoughts about the outcome of the most recent OPEC meeting, where an agreement was reached to extend oil production cuts through the end of 2018?

JW: It isn’t that surprising that OPEC wishes to maintain price stability by continuing to hold approximately 1.8 million barrels per day off the market. If prices fall too low from another market share push, all producers suffer; for OPEC, this would lead to further austerity for national budgets and political unrest. It’s really the only course of action until there is greater certainty of demand’s ability to absorb any potential oversupply.

OPEC is playing its role of managing the oil market. With Nigeria and Libya now agreeing to production quotas as well, any supply or demand-side shocks or geopolitical events will increase volatility, owing to less slack. Historically, from 1982-2014, OPEC policy was one of “official production quotas with member allocations.” That ceded to the market share quest from 2015-16. And now, 2017 and 2018 are back to the traditional policy. Of course, for the Kingdom, the Saudi Aramco listing matters too.

The Wall Street Journal recently reported that:

Organization of the Petroleum Exporting Countries said its crude production fell by about 133,500 barrels a day in November to 32.45 million barrels a day.

According to OPEC, they produced 30.32 million b/din 2014; 31.5 in 2015; and 32.47 in 2016 (averaged, as Q4 was 33.14).

Russia needs prices to be higher, so they have agreed to curtail as well. They are correct in placing a caveat of reassessing in June. If prices continue to rise, U.S. producers might (will likely) increase production and further alter exports and imports.

MC: A number of analysts are predicting that the price of oil will retain its strength going forward, at least through the first half of 2018. Do you agree or disagree?

JW: Generally, I agree that price strength appears to be the trend given the outlook for decent global demand and attempts to tighten supply. Any unexpected shocks on the demand side would soften that position. However, “[U.S.] production is expected to grow by 610,000 barrels day this year and 1.05 million barrels a day in 2018-an increase of 180,000 barrels a day,” according to OPEC. The U.S. Energy Information Administration projects total U.S. crude oil production averaging 9.2 million b/d for 2017 and 10.0 million b/d in 2018. In an October projection, EIA said production will average 9.4 million b/d in the second half of 2017, which was 340,000 b/d more than in the first half of 2017.

Still, geopolitical threats and their potential to add to volatility and supply outages should not be underestimated. The discord between Qatar and the OPEC core countries continues. The Saudi Arabia-Iran battle is as heated as ever. In Venezuela there were only 39 working oil rigs, according to Baker Hughes, the lowest level since 2003. Much of Venezuela’s crude is sent to U.S. Gulf Coast refineries. Mexico and Canada might benefit from Venezuela’s production declines, and therefore export losses.

In the U.S., I have heard whispers from a source in the oil patch that oil production growth will be at a measured pace. Each U.S. firm is responding to market forces, a much different animal than being quota-bound.

MC: The Trump administration has largely been successful in terms of its energy goals, as evidenced by the approval of the Keystone pipeline, an increase in new areas for energy exploration, the removal of certain rules limiting fracking, etc. What are your thoughts on the effects of President Trump’s actions so far in the energy sector?

JW: I think these some of these acts are more symbolic than economically impactful in the longer term. While I’m not an expert on the environmental impacts of some of the regulatory rollbacks, I cannot imagine they are positive (a chart of the proposals can be found here). U.S. oil and gas production is tethered to the market forces of price and global supply and demand. The increase of horizontal drilling and advances in completions has been under way for a decade now. Just because a firm can drill on new lands does not mean it will. I think energy policy is better served using dollars on developing new advances in energy, next generation energy sources, and producing and consuming energy cleaner and more efficiently.

I’m not so sure what revoking the Clean Power Plan will really accomplish. Natural gas is taking share from coal, as are renewables. The economy and those affected need help in adjusting to this new reality and moving forward into new ventures. Many states are still planning for the day when increasing carbon emissions will be costly.

Our policy of late takes two steps forward, one step back. It appears short-sighted and non-strategic. The net result limits change, which is sure to happen. It seems as if other countries have more progressive energy policies than we do. But market forces, competition and public perception have had a greater influence on our energy outlook than policy, fortunately. I want to hear how we are planning for the next five years, the next 20 years.

Oil and gas firms realize that carbon and other emissions are a consideration going forward. For example, The American Petroleum Institute announced a voluntary program to cut methane emissions from oil and gas operations. Oil companies want to boost their images and the clean energy profile of gas for buyers seeking lower carbon sources of electricity. This action was taken despite the administration’s attempt to roll back methane regulations. The initiative includes Exxon Mobil’s (NYSE:XOM) XTO Energy, Royal Dutch Shell (NYSE:RDS.A)(NYSE:RDS.B), Occidental Petroleum (NYSE:OXY), Pioneer Natural Resources (NYSE:PXD), and 22 others.

I am optimistic that our private sector will find ways to address challenges in spite of policy. Large institutional investors are pushing firms to do better in terms of carbon emissions. By the U.S. leaving the Paris Agreement, a wellspring of momentum has been created for countries, businesses and other stakeholders to double down on the risks posed by climate change, emissions increases, or whatever name one wishes to call it. There is a commitment to carbon pricing across the Americas, including in Canada, Mexico, and numerous Central and South American countries. The U.S. government is being benched on this issue, but U.S. cities, states and businesses are carrying the torch.

French President Macron, in conjunction with the United Nations and World Bank, recently held a summit in Paris where influential investors waged their gambit. He called upon the private sector to do their part in reducing greenhouse gas emissions as part of the “One Planet Summit”:

  • French insurer AXA is pulling $2.8 billion from the coal industry, shedding all investment in oil sands, and no longer insures new projects in either sector.
  • Dutch lender ING is cutting its exposure to coal power to zero by 2025.
  • The World Bank said it would no longer finance upstream oil and gas after 2019 and will institute a shadow price of carbon in their calculations going forward.

Businesses are concerned with capital markets and policy uncertainty. Landing on the side of sustainability is becoming more of the norm. As the British Royal Navy ship captain Lord Cutler Beckett in “Pirates Of The Caribbean” famously says: “It’s just good business.”

The governor of Colorado announced an electric vehicle partnership of eight states at the Summit. Also launched at the Summit was another movement impacting $26 trillion in investment. The Climate Action 100+ is a five-year initiative led by investors to engage with the world’s largest corporate greenhouse gas emitters to improve governance on climate change, curb emissions, and strengthen climate-related financial disclosures. We risk brain drain on this issue as the government has reduced funding. Our researchers are looking to France.

As an investor, one cannot ignore what happens to the value of a stock when demand for that stock wanes. It is something to monitor. There is a tension between global energy policies and economic fundamentals (and, by implication, activity in energy) that is weighing on energy now more than ever. This is a fact, and the actions taken by various stakeholders are real. Also a fact is that oil, related liquids and gas are going to be a large part of the globe’s energy budget for some number of decades. However, I don’t know how this all shakes out in practice — i.e., what kind of decreases occur in demand, its pacing and replacement sources.

MC: Earlier this year, you wrote that “the Permian Basin will keep growing production over the next several years.” Do you still believe this to be true for 2018 and beyond?

JW: Yes, many of the intervals and areas in the Basin offer lower cost production. In 2015, Permian shale leader Pioneer Natural Resources’ production was approximately 200,000 bpdoe. By year-end 2017, it’s closing in at 300,000. They are projecting 1 million bpdoe by 2026. That’s considerable growth from the largest Permian producer.

Source: Pioneer, Nov. 20, 2017

Add to that the other top Permian producers — Occidental Petroleum, Chevron (NYSE:CVX), Exxon Mobil, Apache (NYSE:APA), Encana (NYSE:ECA), and Energen (NYSE:EGN) — and the growth in the Permian is set to increase. This includes smaller firms, like RSP Permian (NYSE:RSPP) and Parsley (NYSE:PE), as well.

Source: EIA

According to the EIA, “the most significant production growth in the second half of 2017 will be in the Permian region. Production is forecast to grow to 2.6 million b/d in the second half of 2017, a 260,000 b/d increase from the first half of 2017.” If, as stated above, U.S. production grows 340,000 b/d more in the second half of 2017, the Permian accounts for 75% of it.

This is a matter of lower cost production at given price points, whether it’s $50, $55 or $60.

MC: What’s your long-term outlook on energy as a whole for 2018?

JW: I’m a realistic optimist. Global economic activity appears to have tailwinds. The U.S. oil and gas export story is gaining steam. Ironically, our ability to participate in global markets in energy might be something that helps us diplomatically, while we “reassess” the Paris Agreement. As an energy nation, we have everything to gain with our resource abundance. Importantly, countries that are the wealthiest leverage their human capital alongside resource abundance. I think we are doing this in oil and gas, renewables, and new energy forms. The cleaner the oil and gas industry and its consuming counterparts becomes, the better.

Oil and gas feed into the global economy in wide-ranging and diverse ways. In the conventional engine vs. electric vehicle (EV) debate, the EV is said to be better in terms of net emissions right now when a cradle-to-grave analysis is considered. There are many factors about EV adoption, however, which will impact some portion of oil demand’s trajectory. There could even be a better liquid fuel alternative further in the future.

Energy investing should be representative of the trends that energy supply and consumption are taking. There are many paths to travel. The hard part is deciding when the long term has arrived and which players to bank on. In my observations of late, financial markets are not great at revealing this. Research supports this. This is why the rise of passive investing is upon us, but active management of a portfolio has a place as well. I ascribe to both, being diversified by investment approach and investments.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

At Google, Eric Schmidt Wrote the Book on Adult Supervision

Eric Schmidt wound up at Google by compromise. In 1998, co-founders Larry Page and Sergey Brin had made a promise to the two venture-capital firms that funded them—they would hire an experienced CEO to manage the company once it began to take off. But two years later they were hedging, insisting they could scale Google to a global power by themselves. VC John Doerr convinced them to keep interviewing potential leaders. None clicked until they met Schmidt, who not only had been a skilled executive at Sun Microsystems and CEO of Novell, but was a respected computer scientist. Best of all, he’d been to Burning Man!

The rest is history. In 2001, Schmidt became Google’s CEO, keeping the job for a decade of incredible growth and mindboggling impact. He then remained a key part of leadership as its executive chair, even as the corporation restructured itself in 2015 to a holding company named Alphabet, with Google its largest and most profitable division. As of Thursday night, that’s history, too—Alphabet announced that Schmidt, 62, will step down from the chair post next month, 17 years older and almost $14 billion richer than when he joined the firm. He will retain a board seat and employee status as a “technical consultant.” Google says his compensation ($1.25 million, plus bonuses as of 2016) will remain unchanged.

Schmidt’s departure from the executive chair role ends Silicon Valley’s most successful execution—ever—of the dilemma that Google’s funders were coping with in the firm’s early days. How do you bring in an authoritative leader without dimming the brilliance of the callow founders who made the company valuable in the first place? Though Schmidt won deserved plaudits for his tenure as CEO, his most impressive feat was a delicate balancing act of being both the boss of Google’s freewheeling founders—supplying so-called “adult supervision”—and enthusiastically assuming the role of their student as well. All too aware of how similar situations wound up in continual boardroom spats between a hoodied founder and a khakied executive, Schmidt determined early on that exercising authority over Page and Brin would lead to disaster. He never missed an opportunity to ostentatiously proclaim the genius of his younger colleagues. (When I questioned him once about using that word, he ​replied, “I wasn’t using it deliberately, but now that you’ve pointed it out, it is what I believe.”) And he didn’t let his own ego lead him to put his mark on the firm just because he could. “My opinion is that the culture of companies is set very early,” he told me in 2004, “It would have been foolish for me to try to change them much, because it wouldn’t have worked, and it would’ve been bad. It’s sort of a given that this is how the company works now. If you changed it you’d lose all of its great things.”

So he didn’t change it. Instead, he governed Google as part of a troika along with Page and Brin. In part it was a brilliant act of realpolitik—he knew that neither geeky co-founder was much interested in areas like customer relations, lobbying, external communications, and other pedestrian but critical tasks of building a corporate powerhouse. But he also sincerely believed that Page’s and Brin’s technical instincts should be heeded, often above his own. “One of the things that is remarkable to Boomers is that we’re no longer completely in charge, because we’ve been in charge for our whole lives,” he told me once, “and I’ve learned to respect it.”

A good example of this give and take came over the issue of whether Google should create its own internet browser, which Page and Brin began urging in 2001. Schmidt considered the browser wars of the 1990s (where Microsoft used market power to vanquish rival Netscape) to be one of the defining experiences of his career. He urged them to hold off, fearing Microsoft’s wrath. Eventually, the founders convinced him that Google was in a position to create a superior product no matter what Microsoft did. So in 2008, Google introduced Chrome with the CEO’s blessing. “One of the rules about the new generation is they don’t fight the old guys’ wars,” Schmidt told me at the time. Indeed, the Chrome browser—the project led by a young executive named Sundar Pichai, now Google’s CEO—is now the world’s most popular, and a pillar of the company’s power.

After a decade as CEO, not long after Google’s 2010 retreat from China, Schmidt turned over the CEO role to Page, who has run Google and then Alphabet more as the undisputed decider than as one of a ruling troika. But because Page assiduously avoids press interviews—and pretty much any other encounters that require him to suffer fools—it fell to Schmidt to globetrot and argue Google’s case as its de facto “ambassador.” More recently, he’s been doing less of that. He was active in Hillary Clinton’s presidential campaign (not exactly an asset in Trumpland), and has been a strident voice for technology reform in the Defense Department. He is is former head and still a backer of the New America Foundation, a liberal DC think tank (where his influence is not as deftly employed as it was at Google—the foundation recently booted out a team whose research was critical of Alphabet’s power, eroding its credibility). And as NPR listeners know from sponsor soundbites before their favorite shows, Schmidt oversees a philanthropic foundation.

According to a source, Schmidt and Page have been discussing his resignation as chair for months, leading to his formal resignation on Monday, as reported to the SEC. “In recent years, I’ve been spending a lot of my time on science and technology issues, and philanthropy, and I plan to expand that work,” Schmidt said in a statement Thursday. (Because Schmidt has been connected with women outside his marriage, some have wondered whether his departure is a #metoo kind of thing, but the fact that Alphabet is keeping him both as an employee and board member suggests not.)

It’s somewhat ironic that Schmidt is taking a reduced role at Alphabet as the company fights antitrust charges in the US and Europe that are reminiscent of those brought against his old nemesis, Microsoft. But that’s weird proof of his legacy. Sixteen years ago he took the reigns of a company with a few hundred employees and a minimal bottom line, and helped grow it to a behemoth with a market cap of nearly three quarters of a trillion dollars—and an impact so outsized that regulators feel it must be curbed.

Whatever his next act is, it won’t top that. “For me personally, this is it—this is the Super Bowl,” he once told me of his Google role. And he’s got a $14 billion ring to prove it.

Steven Levy’s book on Google, In the Plex, was published in 2011.

raceAhead: Surviving Difficult Conversations at the Holidays

Let’s talk briefly about talking.

We’re well into the season of reunions and get-togethers, sometimes merry, sometimes forced. It can be dicey. Unspoken worries can surface beneath the small talk; turmoil at work, the health of older relatives, the prospects for children, grown yet stalled. For some, it’s a cruel benchmark. This time of year, it can feel like a constant b-roll of your so-called life is running in the background, reminding you of what you don’t have, who you are not. Without loving care, ancient slights can begin to itch.

And that’s in a good year. Things feel particularly fraught these days. Political tensions are high, rhetoric is rough, and families are now coming together with two separate, and often opposing sets of facts.

Two things crossed my path recently that I hope will provide some inspiration as you face your own difficult conversations across the holiday punch bowl.

The first is this touching short video of an extraordinary conversation between NBA legends Magic Johnson and Isiah Thomas that aired on NBA TV on Tuesday night. It was an opportunity for the two men to end a long-standing rift, which included Johnson’s successful attempt to bar Thomas from the 1992 U.S. Olympic team.

It was a quiet, elegant, and public exchange that ended with a moment of grace. “You are my brother. Let me apologize if I hurt you, that we haven’t been together and God is good to bring us back together,” said a quavery-voiced Johnson to Thomas, who dissolved into tears.

Once you’ve stopped ugly crying at your desk, then head over to the always excellent BrainPickings for inspiration number two.

In this essay, Maria Popover prepares us for a season of talking past one another with this gentle primer in the elements of effective dialogue – “not the ping-pong of opinions and co-reactivity that passes for dialogue today, but a commitment to mutual contemplation of viewpoints and considered response,” she says. “[T]he dearth of this commitment in our present culture is the reason why we continue to find ourselves sundered by confrontation and paralyzed by the divisiveness of ‘us vs. them’ narratives.”

She elevates several exemplars, Ursula K. Le Guin, along with James Baldwin and Margaret Mead, but settles on physicist David Bohm, whose collected essays, On Dialogue, offer unique insights into what keeps humans from hearing each other. They were written mostly in the 1970s, but feel eerily relevant now:

In spite of this worldwide system of linkages, there is, at this very moment, a general feeling that communication is breaking down everywhere, on an unparalleled scale… What appears [in the media] is generally at best a collection of trivial and almost unrelated fragments, while at worst, it can often be a really harmful source of confusion and misinformation.

What is required, he says, is communication in the service of creating something new, rather than a passionate defense of one’s own, even unexamined, ideas.

For example, consider a dialogue. In such a dialogue, when one person says something, the other person does not in general respond with exactly the same meaning as that seen by the first person. Rather, the meanings are only similar and not identical. Thus, when the second person replies, the first person sees a difference between what he meant to say and what the other person understood. On considering this difference, he may then be able to see something new, which is relevant both to his own views and to those of the other person. And so it can go back and forth, with the continual emergence of a new content that is common to both participants.

Of course, this only works if people feel free to listen to each other, “without prejudice, and without trying to influence each other,” he says, a hard habit to break for many. Dialogue is not always going to be possible – a freeing idea all its own – but if the point of a conversation is not to win, but to create, then better outcomes become more likely. (As always, if you are in a vulnerable place, then you are not under any obligation to have any conversations you’re not ready for.)

But if you can’t be Bohm this season, try to be Magic. Sometimes a humble declaration of truth and love is all you need to restore a relationship gone fallow and move past the b-roll and back into the present. “And just to sit across from you and relive those moments of fun, excellence, working hard, dreaming big,” he said to Thomas. “Who sits up at 19 or 21 dreaming of stuff we wanted to do and now we are here doing it.”

Happy winter solstice. It all gets brighter from here.

On Point

Lawmakers to Microsoft: Ban arbitration on race discrimination cases, too
Microsoft announced this week that it would no longer force employees to address sexual harassment or gender discrimination cases through private arbitration. Members of the Congressional Black Caucus wrote to Microsoft yesterday extend their policy to other forms of discrimination and harassment, including race, gender expression and identification and religion. “While we commend Microsoft for steps it has taken to prevent workplace discrimination, more can be done,” said the letter to CEO Satya Nadella. Critics of arbitration say the lack of transparency in the process shields predators and the company from public scrutiny, providing cover for problematic behaviors. Some 60 million Americans are estimated to address claims in private arbitration.
USA Today
Oakland cops are more racist when tired, stressed, or hungry
A new study by researcher and Masters degree candidate Meghan Hunt found that at times when police officers are likely stressed, they’re more likely to stop, search, and handcuff black people at higher rates than they do other races. “Working to Close the Gap: How Stress and Fatigue Impact Racial Disparities in Traffic Stops by Oakland Police,” reviews 10,624 traffic stops in Oakland, from January-October 2016, and was (laudably) published by Oakland Police Department (OPD) Office of the Inspector General. To be fair, the OPD begin their ten-hour shifts disproportionately targeting black people. By the end of the first hour of their shifts, 52% of traffic stops are black people, who comprise just 28% of the Oakland population. But if they skip their 30-minute mid-shift break, by hour six, the number of stops jump to 66%.
The Bold Italic
Companies are using Facebook to filter out older workers from seeing employment ads
And it may very well be illegal. A new investigation from ProPublica and The New York Times has found that companies including Amazon, Verizon, Target, Goldman Sachs, and others have been placing job recruitment ads limited to particular age groups, a practice which may be in violation of federal discrimination law. They’re not the only ones. ProPublica bought age-specific ads on Google and LinkedIn, though LinkedIn changed its system after being contacted by the reporters. Others have made changes as well. “We recently audited our recruiting ads on Facebook and discovered some had targeting that was inconsistent with our approach of searching for any candidate over the age of 18,” said an Amazon spokesperson. “We have corrected those ads.” But it remains a gray area for some.
China opens an epic library that is a monument to reading
The interior atrium is extraordinary, complete with a central mirrored glowing orb that functions as focal point and auditorium, and terraced bookshelves that have the undulating beauty of a topographic map. The Tianjin Binhai Library is a 33,700 square meter book-lover’s dream, and based on this film, everyone in it is brilliant, attractive, and engaged. The three-year project was a collaboration between Dutch architectural firm MVRDV and the Tianjin Urban Planning and Design Institute. Though many of the books are housed in other buildings – in fact, some of the upper shelves have printed aluminum panes that only appear to be books, the building attracts some 15,000 visitors per weekend.

The Woke Leader

The two Romare Beardens
The artist Romare Bearden is famous and beloved for his sweeping works depicting black life, particularly his oils and collage. But what many don’t know that his emergence as a force in black art was by design. Bearden was a founding member of Spiral, a self-proclaimed “group of Negro artists,” who had formed a New York-based alliance to create a platform for artmaking within the context of the Civil Rights Movement. It was 1963. This alliance marks two distinct periods in Bearden’s work, which are captured in two separate exhibits. “Soul of a Nation: Art in the Age of Black Power,” recently at the Tate Modern, and currently on tour. But his earlier work, created in painterly isolation, reflected broader themes of the 1950s, including abstraction and color theory. The Neuberger Museum in Purchase, NY curated an exhibit of this work, called “Romare Bearden: Abstraction.” While it closes tomorrow (sorry) the work is beautifully explained in this terrific review.
The Nation
More On West and Coates
Ismail Muhammed has the best take to date on the dust-up between Cornel West and Ta-Nehisi Coates, and one that is worth considering seriously. It begins with a fundamental truth. “It’s not an overstatement to say that, if you are a young writer who interrogates American race relations and white supremacy, Cornel West is the foundation upon which you stand.” This is true for anyone who is new to the conversation, by the way. But age will not spare you the sting of being attacked by the elder statesman whose work “is part of the canon that teaches younger writers how to think and write about race.” It’s part of what makes West’s critique, which was either a misunderstanding of Coates’ latest work or a “willful misreading” of it, so upsetting. Muhammed’s analysis also offers an excellent foundation in the thinking of both writers, if you’re late to the game.
For women of color who want to be the boss
Forbes contributor and ColorComm founder Lauren Wesley Wilson has five pieces of advice for women of color determined to move up the corporate ladder. She’s had some practice. ColorComm was formed to advance women of color in marketing, advertising, and communications, a sector where white men are overwhelmingly found in executive positions. All are terrific, but two got my attention. First, don’t wait for someone else to nominate you for industry awards, and second, mentor down, not up. “Finding younger mentors enables fresh thinking, new ideas and gives insight into the type of people you’ll likely manage in the future,” she says. Brilliant. It also changes the mentor-mentee dynamic from one of status to one of expertise. Everyone has a contribution to make.

Amazon Is Shuttering Its Music Storage Service

If you’re using Amazon Music Storage to keep your digital music stored in the cloud for playing on a variety of devices, you’ll need to move on to something else.

Amazon has quietly announced that it has removed the ability for free subscription planholders to upload digital music files to its Amazon Music Storage service through its PC and Mac apps. Music that’s already stored in the digital locker can be played until January 2019. At that point, the service will be inaccessible to users on the free tier.

Those have the paid subscription can continue to upload files, but will be limited to 250 songs after their subscription period is over. Those tracks will only be available for one year after the subscription expires and then Amazon will remove them from its service.

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Amazon Music Storage has been available for years as a way for users to upload and access digital music files through the tech giant’s cloud servers. The free plan limited users to 250 uploaded songs. The paid plan allowed users to upload up to 250,000 songs. Once those tracks were uploaded, users could download them to other devices. They could also stream them over the Web to a variety of products.

In a support page listing, Amazon didn’t say why it’s decided to shutter the service. The company still operates its music streaming service, called Amazon Music Unlimited, that lets users stream millions of songs to computers, mobile devices, and other hardware. Amazon Music Unlimited ranges from $3.99 to $14.99 a month, depending on the number of places users want to stream content.

The 17 Most-read WIRED Stories of 2017

What were WIRED readers interested in during the past year? Well, they seem to be no more interested in Donald Trump than in bananas, which they care about less than Apple. They cared a great deal, too, about hackers and about the great reckoning that the tech industry faced in 2017—reckoning with the responsibilities that come with power and reckoning with gender dynamics that have remained little discussed for too long. They also were interested in ways to live forever, but also in how we think through the inevitability of death. And no one wanted to burn their eyes during the solar eclipse.

Here are the seventeen most read stories of the year, arranged chronologically. Look back to get a sense of this intense, crazy, and inventive year. And, of course, for daily dispatches of the best of WIRED, sign up for our newsletter.

A Russian Slot Machine Hack Is Costing Casinos Big Time

Digging through slot machine source code helped a St. Petersburg-based syndicate make off with millions.

—Brendan Koerner, February 6

Humans Made the Banana Perfect—But Soon, It’ll Be Gone

The history of coffee gives us surprising insight into the future of the banana.

—Rob Dunn, March 14

What Does ‘Covfefe’ Mean? The Internet Will Define That For You.

When President Trump tweeted a fake word, the rest of the world defined it for him.

—Angela Watercutter, May 31

What’s Wrong with Apple’s New Headquarters

The architecture and design of the years-in-the-making Apple Park are brilliant. How it fits into the world around it? Not so much.

—Adam Rogers, June 8

Forget the Blood of Teens. Metformin Promises to Extend Life for a Nickel a Pill

The more researchers learn about metformin, the more it seems like a medieval wonder drug that could boost longevity in the 21st century.

—Sam Apple, July 1


James Damore’s Google Memo Gets Science All Wrong

Damore’s analysis of the science cited his memo is at best politically naive, and at worst dangerous.

—Megan Molteni, Adam Rogers August 15

How to Watch the Total Solar Eclipse Without Glasses

Sure, you could buy solar glasses. Or you could save your money and make a DIY pinhole.

—Rhett Allain, August 21

The Day I Found Out My Life Was Hanging by a Thread

Startup CEO Matt Bencke, 45, thought he’d thrown out his back. Then he went to the ER and received the most sobering news of his life.

—Matt Bencke August 24

Why Men Don’t Believe the Data on Gender Bias in Science

In this opinion column, a physics professor explains why male scientists devalue research that identifies gender bias in the field.

—Alison Coil, August 25

The Equifax Breach: Here’s How to Protect Yourself

Don’t panic, but start watching your credit report and financial accounts very closely.

—Lily Hay Newman, September 7

Meet the iPhone X, Apple’s New High-End Handset

All the details on Apple’s newest iPhones, including the much-anticipated iPhone X.

—David Pierce, September 12

‘I Forgot My PIN’: An Epic Tale of Losing $30,000 in Bitcoin

Veteran tech journalist Mark Frauenfelder tries everything, including hypnosis, to recover a small fortune from a locked bitcoin device.

—Mark Frauenfelder, October 29

Apple’s iPhone X: The First Field Report

Yeah, it’s gorgeous. But the most impressive thing about it is what happens next.

—Steven Levy, November 1

Google’s Artificial-Intelligence Wizard Unveils a New Twist on Neural Networks

Google’s Geoff Hinton helped catalyze the current AI boom—and says he knows how to make machines smarter at understanding the world.

—Tom Simonite, November 1

Elon Musk Reveals Tesla’s Electric Semitruck

Everything we learned about the big battery, specs, and range of Elon Musk’s most electrifying gamble yet.

—Alex Davies, November 16

What Does Tesla’s Automated Truck Mean for Truckers?

Well, that kind of depends on what you mean by “trucker.”

—Aarian Marshall, November 17

The Mirai Botnet Was Part of a College Student Minecraft Scheme

The DDoS attack that crippled the internet last fall wasn’t the work of a nation-state. It was three college kids working a Minecraft hustle.

—Garrett Graff, December 13

Researchers Made Google's Image Recognition AI Mistake a Rifle For a Helicopter

Tech giants love to tout how good their computers are at identifying what’s depicted in a photograph. In 2015, deep learning algorithms designed by Google, Microsoft, and China’s Baidu superseded humans at the task, at least initially. This week, Facebook announced that its facial-recognition technology is now smart enough to identify a photo of you, even if you’re not tagged in it.

But algorithms, unlike humans, are susceptible to a specific type of problem called an “adversarial example.” These are specially designed optical illusions that fool computers into doing things like mistake a picture of a panda for one of a gibbon. They can be images, sounds, or paragraphs of text. Think of them as hallucinations for algorithms.

While a panda-gibbon mix-up may seem low stakes, an adversarial example could thwart the AI system that controls a self-driving car, for instance, causing it to mistake a stop sign for a speed limit one. They’ve already been used to beat other kinds of algorithms, like spam filters.

Those adversarial examples are also much easier to create than was previously understood, according to research released Wednesday from MIT’s Computer Science and Artificial Intelligence Laboratory. And not just under controlled conditions; the team reliably fooled Google’s Cloud Vision API, a machine learning algorithm used in the real word today.

Previous adversarial examples have largely been designed in “white box” settings, where computer scientists have access to the underlying mechanics that power an algorithm. In these scenarios, researchers learn how the computer system was trained, information that helps them figure out how to trick it. These kinds of adversarial examples are considered less threatening, because they don’t closely resemble the real world, where an attacker wouldn’t have access to a proprietary algorithm.

For example, in November another team at MIT (with many of the same researchers) published a study demonstrating how Google’s InceptionV3 image classifier could be duped into thinking that a 3-D-printed turtle was a rifle. In fact, researchers could manipulate the AI into thinking the turtle was any object they wanted. While the study demonstrated that adversarial examples can be 3-D objects, it was conducted under white-box conditions. The researchers had access to how the image classifier worked.

But in this latest study, the MIT researchers did their work under “black box” conditions, without that level of insight into the target algorithm. They designed a way to quickly generate black-box adversarial examples that are capable of fooling different algorithms, including Google’s Cloud Vision API. In Google’s case, the MIT researchers targeted the part of the system of that assigns names to objects, like labeling a photo of a kitten “cat.”

What it looks like when MIT’s system attacks Google’s algorithm.


Despite the strict black box conditions, the researchers successfully tricked Google’s algorithm. For example, they fooled it into believing a photo of a row of machine guns was instead a picture of a helicopter, merely by slightly tweaking the pixels in the photo. To the human eye, the two images look identical. The indiscernible difference only fools the machine.

The researchers didn’t just tweak the photos randomly. They targeted the AI system using a standard method. Each time they tried to fool the AI, they analyzed their results, and then intelligently inched toward an image that could trick a computer into thinking a gun (or any other object) is something it isn’t.

The researchers randomly generated their labels; in the rifle example, the classifier “helicopter” could just as easily have been “antelope.” They wanted to prove that their system worked, no matter what labels were chosen. “We can do this given anything. There’s no bias, we didn’t choose what was easy,” says Anil Athalye, a PhD student at MIT and one of the lead authors of the paper. Google declined to comment in time for publication.

What Google’s algorithm originally “saw.”


What the algorithm “saw” after MIT’s researchers turned the image into an adversarial example.


MIT’s latest work demonstrates that attackers could potentially create adversarial examples that can trip up commercial AI systems. Google is generally considered to have one of the best security teams in the world, but one of its most futuristic products is subject to hallucinations. These kinds of attacks could one day be used to, say, dupe a luggage-scanning algorithm into thinking an explosive is a teddy bear, or a facial-recognition system into thinking the wrong person committed a crime.

It’s at least, though, a concern Google is working on; the company has published research on the issue, and even held an adversarial example competition. Last year, researchers from Google, Pennsylvania State University, and the US Army documented the first functional black box attack on a deep learning system, but this fresh research from MIT uses a faster, new method for creating adversarial examples.

These algorithms are being entrusted to tasks like filtering out hateful content on social platforms, steering driverless cars, and maybe one day scanning luggage for weapons and explosives. That’s a tremendous responsibility, given that don’t yet fully understand why adversarial examples cause deep learning algorithms to go haywire.

There are some hypotheses, but nothing conclusive, Athalye told me. Researchers have essentially created artificially intelligent systems that “think” in different ways than humans do, and no one is quite sure how they work. “I can show you two images that look exactly the same to you,” Athalye says. “And yet the classifier thinks one is a cat and one is a guacamole with 99.99 percent probability.”