Addressing the social challenges of accelerating automation

May 29, 2018 · Guest post from Robert Whitby-Smith, partner at Albion Capital

Screen shot 2018 05 29 at 17.28.42

The relentless pace of automation will increase in 2018. The exponential growth of computing power combined with innovations in machine learning, natural landscape processing using recurrent neural networks; augmented and virtual reality and additive manufacturing will lead to ever-increasing digitisation. Whilst automation and technological innovation offer the best chance of solving the big societal issues including demographic change, access to healthcare, climate change and resource scarcity – we must be mindful of the social impact.

What challenges will these changes present for society?

The increasing digitisation of our lives presents many challenges, including the impact on employment, cybersecurity and privacy.

Employment – Machines are able to learn complex tasks quickly and are getting faster. In 1997, the world chess champion was defeated by an IBM supercomputer. In 2018, Google’s AlphaZero taught itself how to play chess from scratch in four hours before beating the leading chess computer. Recent developments in natural language processing and machine vision suggest machines are likely to match, and may soon surpass, humans at both image and speech recognition. This will enable algorithms to displace a high proportion of labour – with some estimates rising as high as 90%.

There have been tech revolutions before, but nothing like this. In previous tech revolutions, machines have been tools. In the information revolution, machines are becoming workers. In 2011, Marc Andreesen, a leading US VC, wrote in the Wall Street Journal that "software is eating the world" and "the spread of computers and the internet will put jobs in two categories: people who tell computers what to do, and people who are told by computers what to do". Encouragingly, society is considering its response to this.

Cybersecurity issues are regularly front page news. Too many of us have been victims of phishing scams, identity theft, data loss or the temporary shutdown of their employer. However, the impact severity will increase as automation expands. While having your online bank account raided can be costly, losing control of the acceleration, brakes or steering of your connected car could be fatal. As industries including defence, food logistics and nuclear power production become increasingly digitised, the risk of a rogue state (perhaps North Korea) causing a catastrophe increases. Cybersecurity firms will face significantly higher demand in the years ahead.

Privacy is an increasingly serious issue. Big data companies know what you buy, which websites you visit, which articles you read, your location, who your friends are and how you interact, how many hours you spend playing video games, and which bills and taxes you pay (or don’t). Facebook’s admissions that personally identifiable information on up to 87m of its users was released to Cambridge Analytica and that the Russian government sent Pro-Trump Facebook adverts to 126 million Americans during the last election campaign is deeply disturbing.

Barring a popular revolt, we are entering an age where an individual’s actions will be judged by opaque algorithms and recorded in perpetuity. In 2017, China introduced the voluntary "Social Credit Scheme" which becomes compulsory from 2020. A citizen’s rating is calculated using an algorithm designed by Alibaba and the Chinese government to assess your qualities as a citizen. It is openly stated that what you and your friends say about the government, the economy and how you behave online will impact your eligibility for a job, a mortgage and the schools your children are accepted at. Perhaps this will include identifying "re-education" needs.

In summary, the direction of travel has been evident for some time. In 1964, US President Lyndon Johnson said "automation can be the ally of our prosperity if we will just look ahead, if we will understand what is to come and set our course wisely, after proper planning for the future". At the time of writing, software businesses represent seven of the largest eight companies in the world by market capitalisation (Alibaba, Alphabet/Google, Amazon, Apple, Facebook, Microsoft and Tencent) and the pace of automation is accelerating. There has never been a more exciting time to be investing in automation and innovation, but we need to be mindful of the social impact.

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Robert Whitby-Smith, Partner at Albion Capital

Robert has over 13 years’ of venture capital experience, and currently sits on the board of a variety of b2b software businesses including: Convertr, Elateral, OmPrompt, PSE and was a director of Atego (Nasdaq: PTC) and Grapeshot (NYSE: ORCL) among others. Prior to Albion, Robert worked in corporate finance for KPMG, Credit Suisse First Boston and ING Barings. Robert has a history degree and is a Chartered Accountant and a member of the Chartered Institute of Securities and Investment.

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