Anti-competitive Artificial Intelligence (AI) – [FT.com]

Yesterday’s FT provides a fascinating article (available here) on the role algorithms may increasingly plan in price-rigging and collusion. While previously humans have colluded to fix prices, today’s algorithms which seek profit maximization may end up colluding in a way which is hard to detect and difficult to stop. Indeed a recent OECD report states:

“Finding ways to prevent collusion between self-learning algorithms might be one of the biggest challenges that competition law enforcers have ever faced… [Algorithms and Big Data] “may pose serious challenges to competition authorities in the future, as it may be very difficult, if not impossible, to prove an intention to co-ordinate prices, at least using current antitrust tools”.

While algorithmic trading has proliferated in financial services (reported in many popular books such as “Dark Pools”), it is their increasing use in consumer marketplaces which concerns the article’s authors – airline booking, hotels, and online retailing.

The problem for regulation is that “All of the economic models are based on human incentives and what we think humans rationally will do.” (Terrell McSweeny US FTC) while an AI algorithm which “learns” that its most profitable course of action is price coordination are poorly represented in our understanding.

“What happens if the machines realise it is in their interest to systematically and quickly raise prices in a co-ordinated way without deviating?” (Terrell McSweeny)

Indeed we might ask whether an algorithm which uses huge databases of historical demand and supply data, and detailed data of the competitive marketplace, to arrive at its most profitable price in the milliseconds of a webpage loading is acting competitively in keeping with market principles or against the consumer (who could never undertake similar analysis and therefore faces huge information asymmetry challenges).

An interesting example in the article is an App to track petrol pricing whereby, because the app highlights instantly to competitors that a price has been cut (and they can match the price cut before demand shifts), so it removes the incentive for anyone to discount.

The article even states: “the availability of perfect information, a hallmark of free market theory, might harm rather than empower consumers”


(Image (cc) Keith Cooper – thanks)

Professorship in Information Systems at the LSE

It’s exciting that the LSE Department of Management is recruiting another Professor in information systems… For details see…  http://bit.ly/LSEProfIS

“We welcome applicants with a successful research record in areas of digital innovation such as digital platforms, service innovation and e-business, social media and the digital economy, and information infrastructures and digital ecosystems. Scholarship on big data as a key component of digital innovation will be desirable. We expect research that demonstrates strong relevance for understanding the complexity of social or organizational processes and the institutional patterns within which digital innovation is embedded”


Artificial Intelligence and human work.

The best computer is a man, and it’s the only one that can be mass-produced by unskilled labour.” (Wernher von Braun)

Last night I began to think further about the role of AI and humans in society while attending Future Advocacy’s launch of a report on “Maximising the opportunities and minimising the risks of artificial intelligence in the UK”. While a very useful contribution which I recommend, my friend Rose Luckin[1] (Prof in Education Technology @ UCL) rightly criticised the lack of specific focus on improving education and pointed out that our current education strategy centres around teaching children things computers do really well (basic maths, repetition, remembering things) rather than those AI will struggle with – creativity, critical thinking etc. This left me wondering what work humans are going to provide, and whether we really understand the skills requirement of a world with AI?

In thinking about this I recalled the quote from Wernher von Braun, the German rocket scientist that “The best computer is a man, and it’s the only one that can be mass-produced by unskilled labour.”  Since the onset of the industrial revolution mechanisation has replaced human skill and as Prof Murray Shanahan[2] said last night, already replaced many jobs. After all, only around 5% of us work on agriculture today. It is therefore not a question of whether, but the degree to which new AI technology will replace jobs – and the economic efficiency of that replacement.

There are well-rehearsed arguments about the loss of jobs and plenty of books written on the subject[3]. Some jobs are clearly at risk such as professional driving in the face of self-driving technology[4]. Other jobs are safer as they involve complex unusual actions – plumbing, for example, is messy, contingent and complex (and Prof Shanahan argued this might be the last to go).

What is however lacking is a discussion of the new jobs that AI will create. Throughout history, we have underestimated the jobs created by digital technology. In 1943 IBM’s Thomas Watson predicted a worldwide-market of 5 computers, and in the 1980s people laughed at Bill Gates vision of a computer in every home.  Today we have spending forecasts for IT in the trillions[5]. With Bank of America anticipating that the “robots and AI solutions market will grow to US$153Bn by 2020” [6] it clear that disruptive innovation (Christensen, 1997) through these advanced algorithms will have a strong impact in creating new unimagined opportunity.

Since the rise of the industrial revolution we have created new jobs to replace those lost as people stopped working on farms and in factories: our grandparents would hardly imagine so many baristas, chefs, landscape gardeners, software engineering, financiers and marketers within modern society. What is interesting then is how AI might enhance and expand existing jobs, and create new ones. For instance, an AI supported lawyer might handle more cases so reducing the lawyer’s fees while maintaining their wages. This reduction may well mean more people can access the law rather than reducing the work for lawyers[7]. Similarly, we might imagine interior decorators “virtually” visiting our homes and recommending tasteful designs using AI and online stores. While I, like many others, are not currently prepared to pay designers fees for my small London home, if a store offered the service for a low fee I might well jump at the chance so creating new jobs in this area.

In this way, AI can offer huge efficiency savings which we should not necessarily be scared about. This is not however to downplay the risks to society – particularly as the distribution of this value may be inequitable with low-paid/low-skilled employees most at risk. If, however, we can ensure that those unable to capitalise on this opportunity aren’t left behind then I am cautiously optimistic.  We should also be aware that AI will likely create low-paid, low-skilled jobs as well. Someone will need to hold the 3d camera in my house for the AI designer to work. Someone will need to deliver parcels to my house for Amazon. Someone is needed to service the computers or clean up the data needed by the AI algorithm. And someone will need to make us all great coffee.

I am not trying to present a Utopian vision here – clearly there will be problems. But it is not the end of work either. After all, society has been very good at creating new work that involves sitting in front of computers shuffling files, writing text, and editing spreadsheets and PowerPoints – for people like me. Further, as Wernher von Braun’s quote reminds us – we humans are extremely good value in providing some extremely important intellegent activities: dealing with emotion and having empathy,  thinking creatively, interacting with other humans, understanding our human society and traditions. It will be a very long time, if even, before any AI can provide such intelligence. The problem is often that we underestimate the importance of these in modern work downplaying their significance in modern economic enterprise and thus overplaying the value technocratic automated AI might provide.

(This blog is an opinion piece based on personal musings rather than report on research)

CHRISTENSEN, C. M. 1997. The innovator’s dilemma: when new technologies cause great firms to fail, Harvard Business Press.

[1] https://iris.ucl.ac.uk/iris/browse/profile?upi=RLUCK37

[2] Prof Shanahan has a new book out which looks interesting:https://mitpress.mit.edu/books/technological-singularity

[3] E.g. The Rise of the Robots (Martin Ford)

[4] This is particularly pertinent for industrial driving such as farming and mining where self-driving technology is arriving already http://www.digitaltrends.com/cool-tech/self-driving-tractors/

[5] http://www.gartner.com/technology/research/it-spending-forecast/


[7] For a full analysis of this debate read https://www.amazon.co.uk/Future-Professions-Technology-Transform-Experts/dp/0198713398  or listen to the podcast of their talk at the LSE

Image (cc) Rolf obermaier – thanks!


Building Mobility-as-a-Service in Berlin: The rhythms of information infrastructure coordination for smart cities

[The following article was jointly written with my PhD Student Ayesha Khanna. The article was published today on LSE Business Review http://blogs.lse.ac.uk/businessreview/ and is syndicated here with their agreement]

The 21st century has seen a growing recognition of the important of cities in the world: not only does over half of humanity live in cities, but cities contribute 60 per cent of global GDP, consume 75 per cent of the world’s resources and generate 75 per cent of its carbon emissions. There is little doubt that the enlarging footprint of cities, with the rapid rate of urbanization in the developing world, will be where “the battle for sustainability will be won or lost” and, for those engaged in “smart-cities” initiatives, the focus of winning this battle is through the use of digital technology to efficiently manage resources. One of the key sectors for such smart cities initiatives is transportation.

Transportation infrastructures today rely heavily on private car ownership, which is powered by fossil fuels, and public transportation, both of which operate independently of each other. Policy makers believe radical innovation in this sector is needed to move it to a more sustainable system of mobility.

To achieve the goal of sustainable, seamless, and efficient mobility, an infrastructure would be required that would allow residents to move away from private ownership to a combination of car-sharing and public transport. For example, such an intermodal chain of mobility might include taking a rented bicycle to the bus station, a bus to a stop near the office, and then a car-sharing service to the office, covering every step from origin to the last mile. Powered by renewable energy, electric vehicles could make this journey entirely green.

In order to create such a mobility infrastructure, all the services offered (buses, trains, car-sharing systems, charging stations, and payments) would have to be integrated using digital technology in order to provide an urban resident with an easy way to map and take an intermodal journey using her smartphone. This change would transform transportation as we know it today to Mobility-as-a-Service but requires considerable innovation in the various heterogeneous digital computer-based systems (what we might term the information infrastructures), underpinning the physical transportation infrastructure. (For a more detailed account of the ideas of information infrastructure see Hanseth, O. and E. Monteiro, 1998)

Framing an Academic Project

Academic research on how such mobility information infrastructures would grow from the constituent disparate systems that currently exist in silos has been nascent, especially on the topic of the coordination efforts required. Part of the reason is that many required elements of such infrastructures do not currently exist, and that cities are only just beginning to prototype them.

In our research, we use a theory of digital infrastructure coordination as a framework to unravel the forces that influence the development of a mobility focused information infrastructure, extending it to focus particularly on the influence of temporal rhythms within the coordination. Understanding this has important implications for policy makers seeking to better support smart-cities initiatives. Our research took us to Berlin and a project which was prototyping an integrated sustainable mobility system there.

The BeMobility Case Study

The BeMobility project, which lasted from September 2009 to March 2014, was started as part of a concerted effort by the German government to become a market leader and innovator in electric mobility. A public-private partnership between the government and over 30 private and academic sector stakeholders, the goal of BeMobility was to prototype an integrated mobility services infrastructure that would be efficient, sustainable and seamless for Berlin residents. The largest railways operator Deutsche Bahn was chosen as the lead partner of the project, with the think-do tank InnoZ (an institute focused on future mobility research) as the project coordinator and intermediary. Organizations participating in the project ranged from energy providers like Vattenfall to car manufacturers such as Daimler to technical scientists provided by Technical University of Berlin.

The project, despite facing many challenges, was able to prototype a transportation infrastructure which integrated electric car sharing with Berlin’s existing public transport system. In the second phase of the project, it further integrated this infrastructure with a micro-smart power-grid, providing insights into how such mobility services could be powered by renewable energies. While the integration effort was both at the hardware and software levels, our research studied the coordination efforts related to information infrastructure in particular.

“Integration of all this information is what we now call Mobility-as-a-Service. BeMobility was  one of the first projects in the world to attempt to do it.” – Member of BeMobility Project

Findings and Discussion

Our analysis showed that individuals and organizations respond to coordination efforts based on a combination of historical cycles of funding, product development and market structures, and anticipated patterns of technology disruption, innovation plans and consumer behaviour. Peoples’ actions in contributing to an integrated infrastructure are tempered not only by these past and future rhythms, but also by the limits of the technologies they encounter. Some of these limitations are physical in nature, such as the inability to integrate data due to lack of specific computing interfaces, and some are political, such as blocked access to databases due to concerns about competitive espionage and customer privacy.

Our findings also surfaced the power of the intermediary as coordinator. Contrary to the limited perception of a coordinator as a project manager and accountant for a government funded project, we saw InnoZ emerge as a key driver of the information infrastructure integration. One of the most powerful tools for the intermediary was its role in mapping future rhythms of technology development. It achieved this by showcasing prototypes of different types of electric vehicles, charging stations, solar panels, and software systems, at InnoZ’s campus.

This campus itself acted as a mini-prototype where both hardware and software integration could be first implemented and tested. The ability to physically demonstrate how the micro-smart grid could connect with the car-sharing system to enable sustainable energy for electric cars, for example, both surprised and motivated other stakeholders to take the imminent possibility of a sustainable mobility infrastructure more seriously.

Ultimately, business stakeholders were especially concerned about the commercial viability of such radical innovation. Here too the intermediary proactively shaped their thinking by conducting its own extensive social science research on the behavioural patterns of current and future users. For example, by showing that young urban residents were more interested in car-sharing than private ownership of cars, InnoZ made a strong case for why an integrated infrastructure could also be a good business investment.


As more cities experiment with Mobility-as-a-Service, understanding the influence of rhythms on coordinating information infrastructure is helpful for policymakers. Insights that would be useful to policymakers include:

  • Keeping a budget for building an innovation lab where cutting edge technologies can be tested and integration efforts can be showcased will lead to more engagement with stakeholders.
  • Working more closely with the intermediary to conduct social research on the mobility habits of millennial urban dwellers will incentivise stakeholders as it will prove a market for the smart infrastructure.
  • Anticipating the disciplinary inertia imposed by legacy systems and organizational practices, and countering it by including stakeholders in the working group whose temporal rhythms include innovative product cycles more in line with the goals of the integrated infrastructure.

This study also contributes to the academic literature on information infrastructure development by providing insights on the role of time in coordinating integration efforts. It responds to a gap in the understanding of the evolution of large-scale multi-organizational infrastructures, specifically as they relate to mobility.



Will Venters is an Assistant Professor within the Department of Management at the London School of Economics and Political Sciences. His research focuses on the distributed development of widely distributed computing systems. His recent research has focused on digital infrastructure, cloud computing and knowledge management systems. He has researched various organisations including government-related organisations, the construction industry, telecoms, financial services, health, and the Large Hadron Collider at CERN. He has undertaken consultancy for a wide range of organisations, and has published articles in top journals including the Journal of Management Studies, MIS Quarterly, Information Systems Journal, Journal of Information Technology and Information Technology and People (where he is also an associated editor).  http://www.willventers.com

Ayesha Khanna is a digital technology and product strategy expert advising governments and companies on smart cities, future skills, and fintech. She spent more than a decade on Wall Street advising product innovation teams developing large scale trading, risk management and data analytics systems. Ayesha is CEO of LionLabs, a software engineering and design firm based in Singapore. She has a BA (honors) in Economics from Harvard University, an MS in Operations Research from Columbia University and is completing her PhD on smart city infrastructures at the London School of Economics.

Photo by Mueller felix (CC- thanks)

Eric Schmidt

Join conversation with Eric Schmidt “From LEO to DeepMind: Britain’s computing pioneers”

Join me in attending Eric Schmidt (Executive chairman of Alphabet (Google)) in conversation with my colleague Prof Chrisanthi Avgerou on the 14th October here at the LSE.

(Note getting a ticket will be difficult – see below for applications)

Click for full details : From LEO to DeepMind: Britain’s computing pioneers – 10 – 2016 – Events – Public events – Home

Department of Management and LEO Computers Society public conversation

Date: Friday 14 October 2016
Time:  6.30-7.30pm
Venue: LSE campus, venue TBC to ticketholders
Speaker: Eric Schmidt
Chair: Professor Chrisanthi Avgerou

Five years on from his 2011 MacTaggart lecture in which he traced Britain’s computing heritage and called for the inclusion of computer science (CS) in the National Curriculum, Alphabet executive chairman Eric Schmidt will discuss progress in CS education and digital skills, and the opportunities that flow from the next wave of British computing innovation in machine learning. Join Eric in conversation with Professor Chrisanthi Avgerou.

Eric Schmidt (@ericschmidt) is the executive chairman of Alphabet, responsible for the external matters of all of the holding company’s businesses, including Google Inc., advising their CEOs and leadership on business and policy issues. Eric joined Google in 2001 and helped grow the company from a Silicon Valley startup to a global leader in technology. He served as Google’s Chief Executive Officer from 2001-2011, overseeing the company’s technical and business strategy alongside founders Sergey Brin and Larry Page. Under his leadership Google dramatically scaled its infrastructure and diversified its product offerings while maintaining a strong culture of innovation.

Chrisanthi Avgerou is Professor of Information Systems at LSE’s Department of Management and Programme Director of LSE’s MSc Management, Information Systems and Digital Innovation. She is interested in the relationship of ICT to organisational change and the role of ICT in socio-economic development. She has served in various research and policy committees on information technology and socio-economic development of the International Federation for Information Processing (IFIP) from 1996 until 2012.

The Department of Management (@LSEManagement) is a globally diverse academic community at the heart of the LSE, taking a unique interdisciplinary, academically in-depth approach to the study of management and organisations.

In 1951 J Lyons and Co, an innovative British catering company famous for its teashops, ran the first practical business application and pioneered the world’s first business computer. In subsequent years, LEO (Lyons Electronic Office) computers were adopted by a host of blue chip companies at home and abroad. Today, the LEO Computer Society consists of former employers of LEO Computers and its succeeding companies, men and women who have worked with an LEO computer, and anyone who has an interest in the history of the company.

Twitter Hashtag for this event: #LSEcomputer

Ticket Information

This event is free and open to all however a ticket is required, only one ticket per person can be requested.

LSE students and staff are able to collect one ticket per person from the SU shop, located on Lincolns Chambers, 2-4 Portsmouth Street from 10am on Thursday 6 October. These tickets are available on a first come, first serve basis.

Members of the public, LSE alumni, LSE students and LSE staff can request one ticket via the online ticket request form which will be live on this listing from around 6pm on Thursday 6 October until at least 12noon on Friday 7 October. If at 12noon we have received more requests than there are tickets available, the line will be closed, and tickets will be allocated on a random basis to those requests received. If we have received fewer requests than tickets available, the ticket line will stay open until all tickets have been allocated.


Hype, Blockchain – and some Inconvenient Truths

Excellent piece on the problems of Blockchain for identity management from Jerry Fishenden… 

“For all the froth and hype about blockchain, you’d think it was going to bring about world peace, and simultaneously solve every problem known to mankind. There’s probably been more tosh written about it over the past year or so than all that previous guff about “big data”. Quite frankly, I’m disappointed blockchain hasn’t defeated ISIL single-handed and rebuilt the Seven Wonders of the Ancient World by now. Come on blockchain, what are you waiting for?!” (Click the link below to read on..)

Source: Hype, Blockchain – and some Inconvenient Truths