So-Called 'AI' Is A House of Cards
The Market Ticker - Commentary on The Capital Markets
2017-05-12 11:35 by Karl Denninger
in Technology , 427 references Ignore this thread
So-Called 'AI' Is A House of Cards
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Let's dispose of the commonly-spewed horsecrap right up front: There is no such thing as "artificial intelligence" or "machine learning."

What does exist is pattern recognition and the price of doing it well has gone down very rapidly as the cost and power of computing devices has gone down and up, respectively.

Decades ago doing it "well" required mainframes and then only in certain segments -- because it was simply impossible to analyze a larger data set.  AC Nielsen made their business out of analyzing supermarket checkout scanner data.  So did IRI.  Both did it using big iron and they were only looking at specific data from a specific source, which they paid for (frequently by subsidizing the installation of all that hardware in the grocery stores) and then sold back to the suppliers of those stores (food companies like Heinz.)

That was a symbiotic relationship.  The grocery store got helped twice: First with the capital cost for installation of (at the time) extremely expensive checkout line scanners, which allowed them to bust the checker's union and hire people at half their previous salary -- and then again in that the overriding goal of a grocery store is, of course, to sell more groceries.  As such empowering the food suppliers in figuring out what sold and what didn't had no negative impact on the stores and in fact it was to their benefit.  While two potato chip companies fighting over an endcap might be amusing to a store manager it didn't do violence to the store's sales numbers and actually might improve them.

Today running much more complex pattern analysis requires only some server racks full of Xeon processors and SSDs -- a tiny fraction of the cost of a big IBM or Amdahl mainframe for much more capability.

But this belies a far larger problem when it comes to companies like Salesforce, Amazon and others: Essentially no firm, even the behemoths like Amazon and Salesforce, have enough data of their own to provide the enormous data sets that lead to better and better pattern recognition.  In fact companies like Salesforce have, for all intents and purposes, no data of their own upon which to apply said algorithms at all!

Equally important: NOR DO ANY OF THEIR CUSTOMERS STANDING ALONE.

To put it in simple terms: There is no symbiotic relationship, as will become clear in a moment.  In fact being a part of and plugged into these systems is actually likely to screw you as a company.

What does IBM's "Watson", for example, have to suck up to continue to process language at an ever-more accurate level?  Lots of language -- all of which has to come from somewhere.  With language it's pretty easy to come up with a huge data set on an ever-increasing basis that nobody actually owns, because speech is all around us all the time.

There are exceptions.  Visa, Master Card, Discover and American Express, for example, have very large and high-quality data sets to detect fraud from which they own because between those four they basically own the market.  Their volume is so high that they need nobody else's data to make good decisions nor do they have to share any of what they have.

But few companies -- even huge ones like Amazon -- have such a luxury.

So where do you think all these data sets come from that the "machine learning" touts are talking about?

I'll give you one place and in fact arguably the biggest placeAll the ad networks your computer is "accidentally" connected to.

Let me point out just one example: Fox News' web site, if I look at it critically, tries to transmit data to 30 different connected networks when I simply look at the top page.  And that's with transmission blocked.  With it unblocked it literally tries to connect data to over 100 different places on the Internet because each of the 30 passes on data to others.

This is not unusual.  In fact it's not only common it's universal!

So where do Salesforce and Amazon, never mind all these other sites, get their data sets?

From you, short -- both from when you contemplate buying something and when you actually buy something.

That shouldn't shock anyone because it's what data analysis is all about.

That sounds ok but in fact it's a huge problem for these "analysis" companies and their customers: Most if not all of that data winds up being massaged and then given back to others including their customer's competitors!

Essentially nobody has figured this out yet, but they eventually will.  Where do you think all those ads come from that target something you just looked at or bought somewhere?  If you didn't buy it on Amazon but was clicking around various other places like B&H Photo and similar how did Amazon get the data?

They got it from a competitor.

Indirectly, in many cases, but that's where it came from.

That sound great for Amazon but it really isn't because the same data is sold to anyone who wants it and that means that Amazon's competitors can and do buy that same data too!

This is true across the spectrum and is the dirty little secret about so-called artificial intelligence.  What is being sold as "AI" is not intelligence at all; it's pattern recognition and to feed it you need extremely large sets that can be crunched.

Since nobody owns that sort of data set on their own with damn few exceptions and none of the purveyors of these "solutions" are those exceptions the data that is going into them includes yours and it winds up being sold to competitors too!

This will eventually find recognition in the marketplace and when it does the paradigm of 100+ competitors to Fox News being given the data on what I read there who will then use it to pick off Fox's customers will run into a "wee problem" from Fox.

You've been sold a bill of goods from the likes of Mark Cuban and others in the tout investment game folks.  The entire concept of broad-based "machine learning" is utter and complete horse**** and so are all of the firms engaged in sustaining themselves on it at exponentially ever-higher valuations.  It is nothing more or less than pattern recognition and in order to have a data set large enough to provide an "advantage" it must inherently take data from other people and sell it on, including to the data source's competitors which inherently damages the very firm who is their client and the firm that provided the data itself!

That's the opposite of symbiosis -- it in fact is parasitic!

When the market recognizes this and the sources revolt against giving their trade secrets away to competing firms while paying for the privilege besides this entire segment of the so-called "Internet craze" will collapse.

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User Info So-Called 'AI' Is A House of Cards in forum [Market-Ticker]
Banditfist
Posts: 799
Incept: 2007-09-20
A True American Patriot!
Huntsville, Alabama
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I think that I read yesterday on /. where Amazon had turned off the spigot for Walmart to be able to get the pricing data on millions of items. I am sure that this is a game that the two companies play all the time. I don't necessarily see this as a bad thing from a consumer standpoint.

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"Are you sure you can't remember?"
"I'm sure I can't remember" ~ Ben Bernake 25 Jun 2009

Krzelune
Posts: 5692
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Another aspect to their use of pattern recognition from gathered data (AI), is that it isn't very accurate because most of the collected data comes from a narrow slice of the pie. And generally that slice is living in their parent's basement.
Tickerguy
Posts: 148666
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A True American Patriot!
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Quote:
Another aspect to their use of pattern recognition from gathered data (AI), is that it isn't very accurate because most of the collected data comes from a narrow slice of the pie. And generally that slice is living in their parent's basement.

Oh that's not true at all. That may have been true 20 years ago but it certainly isn't today.

It's virtually impossible to prevent this data from being collected and "leaked" about you if you have any sort of online presence AT ALL. If you have a modern cellphone, if you use a reward card somewhere, if you have broadband Internet at the house, if you buy any of the modern devices that "talk back to momma" it's all out there.

As I pointed out you need only ONE time you browse Fox News' web site to link back to over 100 different data endpoints at different places! ALL of that data NEVER GOES AWAY.

Given a large enough data set it's extremely easy to come up with a VERY accurate profile of who you are. Where you live. How much you make. How much debt you have. How many children you have, their ages and sexes. What you drive. Where you work. Where you worship, or if you worship. Whether you like ketchup, and if so, which brand.

The problem is that doing so inherently requires that the people doing the analysis get data from myriad places and sell it back to competitors of the sources.

This means the source gets ****ed by their participation in providing the data! They just don't recognize that it's happening.

YET.

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Krzelune
Posts: 5692
Incept: 2007-10-08

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That makes sense. I was fixated on the data gathered from Facebook, snapchat and things like that.
Zappafan
Posts: 2913
Incept: 2007-11-30

Atlanta
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A coworker showed me once (about 3 years ago) that there are three public IP addresses that when blocked (through either blacklisting or firewall rules) render google entirely useless. And no, they aren't the main search engine ones.

What do you think those three IP addresses are for?

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Little_eddie
Posts: 1049
Incept: 2009-04-30

Delaware
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Took one family member to buy a new car last month, she wrote a check for it.

They ran a credit check, it came back, no record.

No credit cards, no online accounts.

So it's still do-able

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Banks and governments depends on the real producers of the economythe people (workers) and the industrial corporations. IF these stop producing, both the banks and governments fall flat. (Gail Tverberg)
Tickerguy
Posts: 148666
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A True American Patriot!
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Quote:
Took one family member to buy a new car last month, she wrote a check for it.

They ran a credit check, it came back, no record.

No credit cards, no online accounts.

So it's still do-able

Which has nothing, really, to do with the topic of the article.

But your response makes clear why the problem exists -- rather than resolve the issue you'll point to the one person in 100,000 who has "hidden" (from the credit bureaus, anyway) and say "see, it can be done."

And?

The point of the article isn't that -- it's that this entire house of cards rests on the premise that businesses will sit for their data being crunched and then sold to their competitors -- and ultimately used to **** THEM.

THAT is what is going on right here and now.

WHEN that reaches consciousness in the corner offices this entire scheme collapses along with all the firms that have "created value" by doing so.

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Winding it down.
Little_eddie
Posts: 1049
Incept: 2009-04-30

Delaware
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Oh, I agree with you 100%, the data has no real value if everyone has it.

Just I don't meet many people that havent bought into the scam, or who are trying get away from it.


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Banks and governments depends on the real producers of the economythe people (workers) and the industrial corporations. IF these stop producing, both the banks and governments fall flat. (Gail Tverberg)
Tickerguy
Posts: 148666
Incept: 2007-06-26
A True American Patriot!
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Quote:
Oh, I agree with you 100%, the data has no real value if everyone has it.

Oh, on the contrary -- it has real value.

It's just being used against you after you supplied it.

The idiocy of supplying someone with the bullets to shoot you with WILL sink into corporate America's heads. It might take a while, but it will, and when it does then this entire house of cards blows up from within.

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Elkad
Posts: 271
Incept: 2009-09-04

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The companies will argue that "It's the same data, but our analysis is proprietary and better."

Which it may be for a few, but only by a tiny amount. And if you are betting on them, which one?
Tickerguy
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Point being this Elkad: Why are you letting them -- and the rest -- have the ****ing data in the first place?

THAT is the problem, in a nutshell. You can play the "yours is better than the other guys" game all you want but when you literally hand over the ammunition that your competitor uses to shoot you once that gets figured out all of that 'sharing' is going to stop in an afternoon.

POP! goes that bubble -- in a big way.

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Orionrising
Posts: 18
Incept: 2017-01-26

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I find it amusing too how much they don't use that data to help their clients. Streaming media- youtube, hulu and the various channels own streaming services, know exactly who/ what device it is streaming to yet they persist in running the same adds many times, so either their advertiser bookings are that sparse, or they just don't care. Either way the advertising clients are getting ripped off...
Lunatic_fringe
Posts: 9366
Incept: 2007-06-26

Location: Terra Firma
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Do people not use Ad Blockers anymore?

And no, if a site asks me to turn off my ad blocker I simply move on. I didn't want to read their article that badly.
Tickerguy
Posts: 148666
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Some people do, yes.

But consider the real scope of the issue here. Let's say you're Amazon, and you buy an ad through Google on Adsense.

Guess what -- Google owns the data on who it served that ad to, when, and why.

Where do you think all this "sales intelligence" data is coming from? DUH!

Now how long does it take before the merchants say '**** that!' since they're being shot with their own ammunition?

MCSNet bought advertising, and anyone who cared to listen to the radio could hear the ad. But the exact dayparts we purchased and the discussion with the rep that led to us doing it, while certainly the property of the radio station, weren't sold on to Frobozz Internet company! If I had ever caught the station selling that to Frobozz I would never do business with that station again -- period.

Well?

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Elkad
Posts: 271
Incept: 2009-09-04

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I'm not disagreeing, just playing a little devil's advocate.

Both (all) sides are probably thinking "I can use the data better, and beat them before the collapse comes." Hubris.


I do what I can to block them.
ublock, privacy badger, referrer redirect to their own sites, etc. For the more blatant ones (FB links), it has to really be attractive to make the move from "don't click" to "copy link, strip off identifying "random" characters at end and paste in incognito tab".

If that breaks a website completely (FoxNews, LA Times, etc), then I don't use it. But I'm sure they are still garnering data. I'm just hoping it doesn't point directly back to me.
Tickerguy
Posts: 148666
Incept: 2007-06-26
A True American Patriot!
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The problem from the standpoint of the Salesforce (or similar) customer IS NOT YOU.

It's that THEIR data is being sold to OTHERS that are competing with them using, in many cases, the same service they're buying!

They're LITERALLY arming their competitors.

Doing that is insane.

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Hstella
Posts: 691
Incept: 2009-08-18

Colorado
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Also, the current level of analysis on these projects is not very good, as it is not driven often by a coherent business case. Often it's something like "I heard Spark is a great platform, and would look great on my resume". A lot of the big data programs are failing to produce real results.
Malaclypse
Posts: 8
Incept: 2016-05-07

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What bothers me most is how effective do not track and no third-party cookies appear. And I'm pretty sure I just IDed myself as a firefox user here, thought I don't know what the other browsers call these options. Despite their last 30 major and couple hundred minor updates it's still my preference. But I'm terrified by my browser footprint and that companies ignore it when I choose one simple browser setting.

There's no reason Google can't trivially ID my home machine and feed tailored content. As soon as I enable third-party cookies I get ads either related to my browsing or based off of trends among users browsing similar sites. Apparently ZH readers are a big fan of Russian and Asian mail-order brides. But as soon as I disable third-party cookies, judging from the ads I get, it seem like they don't know my browsing history. Of course I'm going on the assumption that adsense is the largest ad network and pretty much omnipresent. I'm pretty sure Gen could ID and track my visits to his sites whether logged in or logged out, which makes my phone identifiable--though I think a bit less so. I think I've only logged in on my phone and this computer/browser.

So we have site owner and possibly ad-server able to associate multiple devices with an individual. Ad server can track browsing habits, as for the site owner I can't say, never been inclined to try and don't know if the ad server provides and metrics.

To keep on topic with where the discussion is going, I can't say I have a problem with the advertising companies playing both sides. Ultimately capitalism should reduce the profitability of companies to the minimum that they are willing to continue providing service, which should encourage innovation to reduce costs. If it's by more effectively targeting customers based on information from competitors so be it. These are generally companies that make their money on markup as opposed to content/value provided. They don't add value. Your site is one of those few where I've disabled my ad blocker, as you provide fresh content instead of just selling ****. Your site offers value.

And for Sarah's blog, ad block has been disabled by association, but I think the biggest draw would be full sized images without an account. That elk picture at 100K pixels or so doesn't do justice. The draw of seeing it at full size isn't enough to encourage me to make an account. Granted, if you're reading this, this is the mindset of somebody who doesn't want to just hand out personal information. And I hope you can capitalize on your content, as I don't see anything implemented to do so as of yet.

As a takeaway I have a strong urge right now to reread For Us the Living, but I donated my copy to a local library a couple years ago while emptying some bookshelves. It may be a bit of optimism, but Heinlein really nailed that post-capitalism/capitalism-end-game society that almost nobody even considers.
Tickerguy
Posts: 148666
Incept: 2007-06-26
A True American Patriot!
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Sarah is waiting for Adsense to approve her account; they haven't yet issued a decision. I suspect they figure "not enough content yet to decide she's not a jihadi", but who knows. Ads will show up there whenever they decide she's "worthy".

As for TRUE full-size pictures, she sells 'em -- PM her over there and she'll stick the full-size file on Smugmug and you can order a print. I've told her that she should be wise with the size of images she uploads, whether on the blog or anywhere else -- people DO steal and use them as their own, including stripping watermarks. The forum code won't allow extraordinarily huge files in the gallery anyway but the limit is pretty big (~5mb or thereabouts.) The original of that particular shot (she has a BUNCH of them of those elk) is extraordinarily impressive.

I don't care about the ad networks playing both sides; it's the so-called "AI business support" firms that are a house of cards -- such as Salesforce and their competitors, along with the "direct sales" people such as Amazon itself (which markets some of the same sort of AI tools via their "cloud" platform.) THAT is where the "**** you" job is; you buy "software as a service" from these guys and they literally **** you with your own dick. It's not that they designed it this way as much as it's inherent in WHAT they're selling since 99.9% of the companies out there simply CAN'T amass a legitimate data set for such an analytical system that they personally own and thus can keep control of.

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Winding it down.
Jmckenney
Posts: 6
Incept: 2014-11-04

Melbourne Florida
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I used to work for a software company whose product was a content management database solution for the publishing industry. Newspaper chains two decades ago were trying to save money by centralizing their operations. They still had satellite offices where reporters worked, but they sent the data to one place and moved all the pagination for the various publications there.

Over a period of years, the IT folks were up against a nightmare. As they replaced hardware, they accumulated various brands of computers with various CPUs, and they got a broader mix of operating systems, versions of operating systems, and applications from various vendors that were also of varying versions. Some places had multiple databases, Informix and Oracle, for instance. The more time went on, the more difficult managing that mess became.

I have often wondered what the poor suckers working in Bluffdale are dealing with about now. Not only are they having to deal with all of the above problems, but they must have to be plugging in both new and replacement multi-terabyte drives almost as fast as they can run down the aisle, and hope that RAID can restore the data of failed drives. And the worst of it must be the fact that all of the firehose of data coming in has to be indexed before it's searchable. They have so much data that I wonder if they have an index of their index?

Care to wade in on that, Karl?
Tickerguy
Posts: 148666
Incept: 2007-06-26
A True American Patriot!
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Quote:
I have often wondered what the poor suckers working in Bluffdale are dealing with about now. Not only are they having to deal with all of the above problems, but they must have to be plugging in both new and replacement multi-terabyte drives almost as fast as they can run down the aisle, and hope that RAID can restore the data of failed drives. And the worst of it must be the fact that all of the firehose of data coming in has to be indexed before it's searchable. They have so much data that I wonder if they have an index of their index?

Care to wade in on that, Karl?

Sure.

Systems that are not maintained rot. Band-aids applied to things fall off.

Part of the big problem with IT at an organizational level is that they never think more than the distance from their hip to the tip of their penis ahead of where they are. The "hype this and build it in that" crap is pervasive and outrageous.

NOBODY ought to be running mission-critical ANYTHING on any package they did not build and assemble themselves with a small "fire team" of PERSONALLY VETTED people. Why? Because if it ****s up it's bad enough but what happens in the above situation?

It gets even worse -- MUCH worse -- if you outsource it. What happens when you get unhappy with the place running it? What happens if they suffer a "business catastrophe" of some sort AND ACTUALLY GO UNDER? Think it can't happen? It sure as hell CAN happen, even to big public companies, and if it DOES happen -- then what?

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Winding it down.

Jmckenney
Posts: 6
Incept: 2014-11-04

Melbourne Florida
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Thank you, Karl. By the way, I apologize if my post was somewhat off topic, but the reason I began thinking of Bluffdale was your comment that AI algorithms needed a truly HUGE amount of data, and it occurred to me that Bluffdale must be the largest repository of data on the planet by several orders of magnitude. Makes me wonder if someone has an AI candidate pointed at that.
Tickerguy
Posts: 148666
Incept: 2007-06-26
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Yep.

Rolling-up acquired companies happens all the time but the "integration" part is often ignored. Part of any such action NEEDS to be evaluation of ALL of the IT-related systems the acquired firm uses to decide which way to port things -- you either port FROM theirs TO yours or the other way around.

YOU NEVER JUST RUN BOTH unless the acquired is a disjoint company AND WILL REMAIN SO in the future -- a merger in name only -- but a HUGE percentage of the time that's exactly what is done. If you do that you're guaranteed to have pain in the future.

There's no cheating the work required to do this sort of thing right, but there's plenty of cheating that goes on in corporate America, which usually does it wrong.

And then they pay for their stupidity in a major way down the road.

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Winding it down.
Dilbs
Posts: 71
Incept: 2011-04-19

Maryland
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Who is Sarah and where is the link to her blog?
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