Will privacy and security be critical differentiators in cloud computing?

The debut this week of Google's new web-only Chromebook laptop, coming hot on the heels of Sony's massive data security breach just a few weeks ago suggests that data security is becoming increasingly critical for the success of technology companies. Google, no stranger to accusations over infringements of privacy, is upping the ante with the release of a computer that, rather than running software and storing files on its own hard drive, will instead rely predominantly on cloud computing. Yes, that means everything that you'd usually keep stored on your laptop will actually be held somewhere in a vast data center run by Google ... and of course, everything that you do can be tracked and recorded because you're signed-in and doing it online.

Although the Chromebook itself may not become quite the challenger to Microsoft and their Windows operating system that Google hopes it will be, the shift to cloud computing (which anyone using Picasa, Google Docs, Dropbox or numerous other applications is already very much part of) is sure to continue apace. But cloud computing raises a number of troubling ethical issues. On the one hand there are the environmental problems associated with running servers capable of storing such huge amounts of data. And then, of course, there are the privacy and data security issues that are faced by any company storing so much personal data online.

In recent weeks, consumers have been made all too aware of these privacy and security issues because of several high profile data disasters. Last month, for example, Amazon, which has been a leader in cloud computing, was forced to shut down its service for several days. A number of companies using its services were paralyzed and some even lost potentially valuable data. Then Sony's travails with hackers reached a new zenith when the company was forced to concede that more than 20,000 of users of its online gaming system had their financial details stolen. Osama bin Laden even got in on the action when a swath of spam Facebook messages purporting to be photos and videos recording the death of the former Al Qaeda leader turned out, according to the Financial Times, to be malicious malware designed to phish for passwords and financial data from infected computers. Ironically, even as we tried to publish this post, Blogger experienced a service disruption that meant that we were unable to publish for more than 24 hours. So much for the instantaneity of social media! All of this added up to bad news for technology companies looking to convince customers of the safety and security of their products and services.

This then raises the question of whether data security and privacy protection will increasingly become critical areas of competition between leading technology companies, especially those relying on cloud computing, rather than just being a kind of necessary evil for everyone concerned. Microsoft, whose operating systems and internet software had long been plagued with security problems, certainly seemed to be thinking this way when it launched its Windows 7 operating system. The company has long been compared unfavourably in terms of security to Apple's Mac OS - but appears to have regained some ground with its latest version. But as more and more personal data moves to the cloud, and companies like Facebook and Google become increasingly involved in recording, using and selling data related to our usage stats and preferences, this is likely to affect a wider range of companies ... and potentially in an even more significant way. Yesterday's revelations that Facebook employed a leading PR company to plant negative stories in the media about Google's privacy policies gives some indication of just how high the stakes are becoming. And nothing focuses corporate attention more than the threat of multiple lawsuits, which is the latest ignominy faced by Sony in the fall-out from its hacking attack.

Despite all this, there are still reasons to doubt whether security and privacy will ever become major differentiators in the battle for technology market share. Unlike speed, performance and design, security is a tricky intangible that is difficult to evaluate up front. And besides, despite their criticisms of technology companies, most end users in practice tend to display a fairly carefree disregard for security issues, and even for their own privacy protection. After all, how many people actually read all of those terms and conditions when they download another Facebook app or install a new piece of software? With commercial users the equation is different, of course, but for the average Joe, security is a concern but not one that yet impacts significantly on their technology choices.

In the end, a better way of looking at this might be for technology companies to start looking at privacy and security as pre-competitive issues. That is, rather than competing on the quality of their privacy protections, why not collaborate with one another to improve standards across the industry. After all, a major hack at Sony, an outage at Amazon, or a spate of malware at Facebook threaten the reputation for security across the board not just for the individual company that is targeted. Problems at one company can spell reputational damage for the industry as a whole. Sure, healthy competition can drive innovation in new security systems. But so too can healthy cooperation. And in the long run it might just be more effective, and provide a better service for skeptical consumers unsure of how far they want to put their trust in tech companies.

Picture by samplereality. Reproduced under Creative Commons licence.

Minefields and Mining

What a couple days we had! First a Royal Wedding watched by half of the Globe. Then Obama’s capture of Osama. And finally, for us here in Canada, an election with a scary winner.

Welcome to the world of ambiguity. Wills & Kate look like a nice couple and less fake than most of what has been on display by the British Royals in the last decades. But all this pomp, glitter and archaic ceremony? It’s 2011,folks, wake up! But we still preferred the ecstatic crowds Friday a week ago in London to those in Washington last week Sunday night. A middle-ages inquisition ceremony could not have been jollier - or should we say - barbaric. Osama bin Laden? Certainly a person that has some things to answer for. But do we buy Obama’s ‘brought to justice’ rhetoric? After all, according to many Bin Laden and his movement was largely an American creation in the first place. And then the Canadian election: the Bonsai-George-Double-U Stephen Harper has now a solid majority. He will ‘Americanize’ the country further until it can just apply for becoming the 51st state of those ‘South of the Border’. The same election though gave us also the victory of the centre-left NDP winning the biggest number of seats in history. A bit of pyrrhic victory though.

All in all a minefield for the ethicist. Which provides some space to talk about – why not – mining. In fact that industry has taken our attention here in our School in Toronto over the last couple of months. As it turns out, Schulich will launch later this year a specialization in ‘Mining and Minerals’ on the MBA program. A core topic for this new program in fact will be the social responsibilities and ethics of mining.

Now, that’s a minefield in itself. Our school prides itself on being the leading school in the world in integrating environmental and social issues into business education. How does this go together with getting into bed with the mining industry? An industry which has a fairly dubious legacy with regard to ethics and social responsibility as the main focus of a school focusing exactly on these issues? There was some debate among faculty about this.

For us, this question gave rise to some thinking, too. As academics, we can stay, as one of our colleagues sometimes put it, ‘small and clean’ – or one can get out there, engage with issues, actors and industries which are of big importance and get the hands a little bit dirty. For the time being, the latter approach seems to be more intriguing and rewarding. In the sense that our research and teaching might in fact have an impact on the real world.

Of course a closer engagement with mining surfaces the rather complex nature of the industry. On a recent visit to some goldmines in Turkey we were able to witness these issues from closer up. We visited the area around Canakkale, 3 hours southwest of Istanbul, where currently some substantial explorations in gold mining are taking place. On the one hand, mining can in fact have substantial positive impacts on economic and social development of communities. This of course assumes that mining companies (in this case Australian and Canadian firms) share employment, infrastructure and profits with local communities. The effect can be rather substantial as often mines are located in otherwise not very developed regions. On the other hand, the disruption of the environment and the pollution around mining operations are huge.

The push for responsible mining, as we witnessed on site, is challenged by a number of characteristics of the industry. First, mining in the early, exploratory stages is still pretty much a gamble. Hundreds of millions investment is needed before even the first drop of oil or the first ounce of gold can be mined. This puts a rather tight budget and intense investor scrutiny on the companies and will make extensive voluntary expenses on environmental or other social responsibility issues rather difficult to justify. Second, unlike the big mining MNCs such as Rio Tinto, Glencore or AngloAmerican, the majority of companies are rather small, especially in the early stages of mining. They often simply lack the resources, often also the awareness of managers who mostly have science/engineering backgrounds with little understanding of wider social impacts of mining. Third, and finally, mining predominantly takes place in contexts of rather poor governance and regulation where the immediate pressure on companies to avoid harm to the environment and local communities is rather weak.

This is certainly an educational challenge. One executive we spoke to mentioned, just as an example of the dimensions of social responsibility, that the manager of a large mining project he was involved in in Papua New Guinea is now more or less in charge of half of the GDP of this country. This entails responsibilities beyond just the immediate profitable management of the extracting operations (which is a 24/7 job to begin with). Those managers inevitably assume – whether they know it or not – wider responsibilities for economic, social and environmental development and welfare of a country. We consider this a stark challenge – in education, research and engagement with the industry and their many critics in civil society. We might talk more about mining in this space!

Ethical slum tourism

"Money good, working bad." Our guide, Ishaq has no shortage of aphorisms to capture the light and dark of life in Dharavi, one of Asia's largest slums. He points to the clouds of noxious fumes rising from the aluminium recycling unit where battered old containers are melted down and turned back into usable product. There are few if any environmental standards adhered to here, and health and safety is a concept seemingly irrelevant to the wage laborers whose safety boots are flip flops. But although the dangers are many, there is regular paid work. And for Mumbai's slum dwellers, that is what matters most. And besides, who else is going to do the dirty work of recycling the city's discarded junk and refuge, and returning it into productive use?

The life of a business ethics professor takes you to some pretty interesting places. It is not too often though that we find ourselves in the middle of a huge urban slum. Not that we've been short of opportunities having spent time in cities such as Rio, Cape Town, and Mumbai over the last few years. But there is always a profound sense of unease about stepping into the life of the city's poorest residents. Of course, in some cases it's just plain dangerous, such  in the favelas of Rio. But even when it isn't, or when there's a local guide at hand to provide security, there are significant ethical doubts too. Knowing that you can just saunter back into the air conditioned hotel at the end of your trip to the slum means that you're little more than a slum tourist exploring the underbelly of society for your own voyeuristic pleasure. However much you may claim it to be educational to see how other sections of society live, slum tourism can't but help to raise moral uncertainty. This New York Times op ed from last year summarizes these concerns pretty succinctly. As a result, we've stayed away from the dubious attractions of slum tourism. Until now.

On the advice of a colleague, we decided to investigate a so-called 'ethical' slum tour provider. Whilst in Mumbai teaching at our school's MBA program in India we hooked up with Reality Tours and Travel, which offers tours of Dharavi, the city's largest and most well known slum. Dharavi is pretty much slap bang in the middle of modern metropolitan area of Mumbai, and just a short ride away from the 5-star luxury hotel where our school puts up its itinerant professors. The contrast, as with much of modern Mumbai, couldn't be more stark. Air-conditioned comfort is immediately replaced by a sweltering cacophony of noise and dirt. And discreet service is replaced by perilous, unrelenting industry.

It's clear that this is not just any old slum tour. There is a strict 'no cameras' policy, and the focus of the tour is not so much the corrugated iron shacks of the residential quarters of Dharavi, but the remarkable commercial activity that powers the slum's economy. It is said that some 5000 businesses operate in the tightly packed lanes of Dharavi, accounting for an incredible $600m of turnover annually - much of it in the illegal or informal economy. Recycling, leather and pottery make us the largest proportion of this, and so it is these that provide the focus of Reality's slum tour. Ishaq leads us first to a fragrant bakery and then onto a micro plastics recycling business where piles upon piles of multicoloured plastics are dried and then painstakingly sorted on the roof, before being melted down and then formed into pellets for resale in the cramped concrete rooms below. A sink and a few rolled mats is the only evidence that this is also where the workers live and sleep once the days' work is done. After that we move on to other recycling businesses, before passing the leather cutting, tanning and treating area and then onto the more peaceful environs of the potters colony which called Dharavi home since the 1930s. Along the way, we also take in a popadom bakery to see how the cross legged women shape and bake the traditional Indian appetisers, and briefly pass through (but do not stop at) some residential lanes.

According to Reality, the aim of the tour is "to show the positive side of the slums and break down negative stereotypes about its people and residents". Our trusty guide certainly doesn't fail to offer a positive spin on what might otherwise simply turn into a grim picture of India's unrelenting filth and poverty. He engages amiably with local residents, and he shows us a local health centre, an English language middle school, thriving businesses - this is no sob story meant to induce pity but an encouraging (if realistic) glimpse into Dharavi's struggle to sustain and prosper against the odds. As if to reinforce this, the tour finishes at the community centre run by Reality's sister organization (the NGO Reality Gives) which provides English, computing and skills training to disadvantaged young people.

It's a nice touch, but the real kicker is that this is not just some minor charitable add-on to 'put something back'. When Reality talks about changing the image of the slum, it goes beyond simply refocusing the optics. The company is putting its money where its mouth is. Since setting up in 2006, Reality has pledged that a full 80% of the profits from the slum tours would go to local charities. They even publish a summary of their accounts on the web to prove it. The establishment of their sister NGO Reality Gives in 2009 has provided a focus for these efforts, and along with the community centre, has now opened a kindergarden to provide quality education for preschoolers in the slum.

'Ethical' or 'responsible' tourism of all stripes, is a work in progress. Ethical slum tourism, in particular, poses all kinds of moral challenges. In our opinion, Reality is doing a fine job in walking that tightrope. Whilst it doesn't appear to have yet addressed the critical questions of scale - the more it succeeds, the more it risks overwhelming the slum with tourists - it does tackle both the content of its tours, and what it puts back into the community. Training and employing disadvantaged young people as guides, focusing on slum businesses rather than people's private lives, and banning cameras all help remove some of the moral tensions that can give slum tourism a bad name. And making investments that help educate slum residents and give them a chance to improve their lives helps balance the one-sided equation a little. Just ask the Dharavi resident who reveled in taking snaps of our small band of tourists whilst our own cameras stayed firmly in our backpacks.

Photo by Meanest Indian. Reproduced under Creative Commons License.

Labour rights - back to the future?

While a lot of the topics we comments on in this blog are usually about either international events or the latest, contemporary developments, it is good to remember that some of the age old issues in business ethics are worth revisiting from time to time.

One of these is fair wages and the right to unionise. In North America these issues are currently high on the agenda as if we were still in the dark ages of capitalism in the 19^th century. This was nowhere more surprisingly evident than in last week’s instalment of ‘Real Time’ with Bill Maher. The show took off with an interview of Chesly ‘Sully’ Sullenberger. You remember, the pilot who landed his plane for lack of other options safely into the Hudson River in January 2009, after both engines had been struck by birds. Since then, Sullenberger, with his cool attitude and gigantic moustache not only reminded us what a real pilot should look like, but also became something of a hero.

What is interesting though is what he’s currently using his fame for. Before Congress, some time ago, he focused attention on some of the crucial ethical issues in his industry. The pay of most pilots and airline staff has dropped by around 40% and most employees – including Sullenberger – have lost their pensions when their airlines filed for Chapter 11 bankruptcy – as most large airlines in the US have done.

This silent infringement of workers’ rights has gone on for some time – but has received little attention.  One of the big events – next to celebrity campaigning by ‘Sully’ – that did draw the attention to this was the crash of a Colgan Air jet in Buffalo only a month after the New York incident in February 2009. Meanwhile, a PBS documentary unearthed some interesting details, such as that most commuter airlines, like Colgan Air (a subsidiary of Continental Airlines), pay their pilots below a living wage – between US$16 to 20,000! The documentary suggests that one major contributor to the air crash was pilot fatigue and working conditions. The co-pilot, for instance, had to sleep in the airport the night before because she felt unable to afford a hotel in Newark before starting work in the morning.

The interesting ethical issues here clearly point to the need to revisit and re-apply some stakeholder thinking to the airline industry. While customers have seen falling prices in air tickets in the last decades this seems to have largely taken place at the expense of employees. It is somewhat tragic that it took a plane crash killing all 49 people on board to alert the public to these imbalances.

Now, the issue of a living wage is something we often discuss in the context of so-called ‘developing’ countries. But these questions obviously also need to be addressed in many industrialized countries. In some ways, the US ‘leads’ the way here, especially with respect to the big controversy in recent weeks over new legislation, discussed in the states of Wisconsin, Ohio, Florida and New Jersey, which substantially cuts back the rights of public sector workers to organize and bargain collectively with their employers.

Sifting through the US papers these days, it is a little bit like good old class warfare all over again. Union membership, long in decline, is surging: the American Federation of State, Country and Municipal Employees (AFS) has grown from 900,000 to 1.4 million members in the last couple of years.

Academically, it is interesting to see that these bread-and-butter labour issues initially did not have their natural home in the business ethics curriculum. Rather, these things are mainly studied among ‘Industrial Relations’- or ‘Labour Process’ scholars, with their separate conferences, journals and textbooks. With the return of these issues to the fore, it is clearly also time for the business ethics and CSR communities to start looking closer to home. Ahead of the curve here is the Aspen Institute which has launched an initiative on Low Wage Workers. This involves a teaching module for use in MBA courses and a white paper looking at low wage work in the US economy. Let's hope it's the spur for further action that we need.

Photo by Rochelle Hartman, reproduced under Creative Commons Licence.

Can India hit corruption for six?

India, a country of cricket fanatics, has been in serious celebration mode since the national team's thrilling victory in the cricket world cup last weekend. News and media outlets here have covered little else for days. It's been front page news in the national press and all the rolling news programmes have been swamped with wall-to-wall coverage. Now though, as the euphoria starts to die down after Sunday's big victory, attention is beginning to turn to another major issue facing the country - corruption. The big question is though, will India be as victorious in fighting corruption as it has been at fighting its cricketing rivals. And the answer, we fear, is almost certainly no.

Corruption has been a serious problem in India for longer than anyone cares to remember. At 87th, it currently ranks about half way up the Corruption Perception Index from Transparency International. A score of 3.3 (out of a possible 10) suggests a major corruption problem. But recent events, such as the 2G bandwidth auction scandal, and investigations of widespread corruption at last year's Commonwealth Games in Delhi, have suggested a growing willingness by the media to investigate and report on corruption issues, and there is discontent with the practice amongst ordinary Indian people.

Much of the attention has understandably focused on public sector corruption, but few cases exclude companies as alleged bribe payers too. Late in 2010 Telecommunications Minister Andimuthu Raja was forced to resign over allegations that he lost the Indian Government some $38 billion in revenues by offering 2G telecom spectrum licences to favoured companies on beneficial terms. This week, struggling for media attention amongst the cricket hullabaloo, Raja, eight other individuals, and three companies were formally charged with criminal conspiracy, forgery, cheating and corruption in relation to the case. Meanwhile a parliamentary committee investigating the scandal this week quizzed Ratan Tata the head of the Tata Group about his role in the scandal, although unlike some of its rivals, there is no suggestion that Tata is likely to be subject to any charges.

The 2G scandal is gradually gathering momentum, and is putting significant pressure on the Indian government to do something serious about the escalating corruption problems. As yet, though, little tangible action is on the cards. One significant piece of legislation, the Jan Lokpal Bill, proposes to introduce an independent corruption ombudsman body at both national and state levels, but has been held up in protracted redrafting. The country was first promised such a law some 40 years ago. Now, with a view to preventing the government from procrastinating further and watering down the bill, social activist Anna Hazare from India Against Corruption, has pledged to go on an indefinite hunger strike to force the authorities to act. His demand is that they allow civil participation in the bill's review rather than let the government simply force through a toothless version that will do little to address the country's endemic corruption problems. Hazare's promise to fast until death is garnering huge attention and hundreds of people are now planning to join the fast.

Whether the Indian government will see this perfect storm around corruption reform as an opportunity to address a problem that drags down growth and hampers social equity remains to be seen. We certainly hope so. As Rahm Emanuel said at the time of the financial crisis in 2009, "you never want a serious crisis to go to waste."So far though, Prime Minister Singh's Government looks set to do exactly that - waste a perfectly good crisis. India, the country of world champions, deserves better.