Fraud has plagued the on-line advertising market since its initiation. Back in 2009, Click Forensics estimated that for advertisers and ad networks, 14.1% of the clicks on their ads were bogus, and costs them money.
All PPC (pay per click) ad providers are keen to combat click fraud and have sophisticated methods for doing so although it still represents a significant proportion of their income since it is the advertiser who will always end up paying.
However, on Thursday (13th December 2013) Google announced that it was introducing a new system to deal with how ads are viewed and consequently charged for. “If you are an advertiser and a human being didn’t see your ad, then frankly nothing else matters,” said Neal Mohan, Google’s vice-president of display advertising products at Google. “If you are a marketer, why pay if a human being did not see the ad?”
The global on-line advertising industry is worth $117bn and it is estimated that as many as half of the digital ads that marketers buy are not seen at all, with a large portion only being viewed if a website user scrolls all the way down to the bottom of a web page. This issue of how effective advertising is has always been an issue for all forms of advertising be it TV of Bill Posters.
Now Google intends to introduce an approach called Active View. Google's new Active View offering is based on an emerging industry standard called IAB/3MS, which states that an ad is only “viewable” if more than 50 per cent of it is visible on the screen for one second or longer. Advertisers will be able to see a report of how many viewable impressions they have received for any given campaign, and this data can be used to inform future campaigns.
The Active View system ensures that if your ad is buried "below the fold" and doesn't get seen then you will not be billed and if your on-line ad has been seen for at least one second then you will be billed for that impression.
I have always been rather sceptical about the value of such viewed ads which do not have any "call to action" and certainly attempts to at least bill for a viewing by a human being is a step in the right direction, but it really doesn't make for very effective use of ones advertising dollar, pound or euro. Billing for ads that didn't get seen in the past was always a very dodgy practice and this approach should have been introduced a long time ago.
Whilst this may not be click fraud, I do think it continues to call into question the billions spent on adverts which are just about brand awareness on-line and fail to trigger a genuine sales lead.
Maybe advertisers and agencies placing the ads need to think rather more carefully about what they are attempting to achieve with their on-line campaigns.
This is a good start, but Google and the other major on-line players need to go much further to clean up this industry and ensure advertisers get the value for money they pay for.
Further reporting:-
Financial Times , The Daily Telegraph , BBC
Friday, December 13, 2013
Monday, December 09, 2013
Has the Mobile Internet finally emerged as a primary retail channel in 2013
Back in 2000, I worked with a former colleague from business school to raise investment for what we now refer to as a location based mobile application. The application was known as ZagMe enabled customers to send offers to users of the service in their location such as a shopping mall (BBC Zagme News report). Unfortunately the technology platform was based on WAP which proved unreliable and costly to use. Today companies such as Foursquare have taken the concept to a mobile broadband customer base happy to use and act on location based offers. However, 2013 has seen the break through of the mobile device including tablets etc. as a primary channel for online purchasing. Retailers have rushed to adapt to the new format and even bring out their own optimised devices such as Tesco and Aldi launching bespoke low cost tablets. According to mobile experience management platform Artisan (www.useartisan.com ), 77% of consumers intend to make purchases through a mobile and/or tablet app this holiday season.
This statistic suggests that using mobile devices to purchase through sites such as Amazon, John Lewis etc. is more likely to be the norm rather than the exception. In a recent survey, OFCOM forecast the number of mobile broadband subscribers to be in the region of 5.1 million. With sales of Tablet computers of every type likely to be the most sought after gift this Christmas, that number is sure to grow dramatically and with it the opportunity for retailers to grow their online sales channel as well as location based sales by offering incentives to bring users into High Street stores.
Sadly all this furious activity in mobile sales comes to late for Zagme which succumbed to the dotcom bust when trying to raise a second round of finance. Todays location based apps have a much brighter future!
Labels:
Amazon,
Artisan,
Foursquare,
John Lewis,
Location based services,
mobile internet,
Ofcom,
WAP
UK ISP, Mobile Internet and Cable Subscriber Numbers - December 2013
Here
is an update of the UK ISP market covering DSL and Cable Access market as well
as the Mobile Dongle market in the UK. I have also added in the published
figures for 3G and 4G mobile access devices. I have used ITU published data for
Broadband usage numbers and Neilson Ratings and ISP published figures to get an
accurate picture as well all the reports and disclosures for each of the
companies shown below. I believe these figures represent a reasonably accurate
representation of the genuine adoption of broadband either via DSL, Cable or
mobile dongle. Broadband connections included in this data cover download
speeds equal to or faster than 256kbit/s.
Table 1. Broadband ISPs (Source: ITU,
Neilsen, OFCOM & ISP Published Figures)
No.
|
ISP/Provider
|
User Numbers
|
% of UK Market (inc Mobile)
|
1
|
BT Retail
|
6,961,000
|
26.07%
|
2
|
Sky Broadband
|
5,017,000
|
18.79%
|
3
|
Virgin Media
|
4,488,600
|
16.81%
|
4
|
TalkTalk Group
|
4,076,000
|
15.27%
|
5
|
Orange
|
714,000
|
2.67%
|
6
|
Kingston Comms
|
178,200
|
0.67%
|
7
|
Zen Internet
|
94,000
|
0.32%
|
8
|
Vodafone UK
|
85,000
|
0.31%
|
9
|
Thus Group
|
80,000
|
0.30%
|
10
|
Entanet
|
70,000
|
0.26%
|
BT continues to grow its user base at the expense of the smaller
players. Sky Broadband has continued to
grow, primarily by acquisition having taken over O2’s broadband user base. However, although BT Sport is still in its
early days, it is clearly impacting Sky’s organic growth.
The total UK Internet connectivity market is not only made up of
Broadband ISPs, but connection is now frequently through 3G and a growing 4G user
base. Consequently I have taken the total market as being made up of both the
fixed-line broadband and mobile internet access as I think it would be
erroneous to suggest that they are not part of the same competitive market. The
Broadband ISP market size is estimated to be just under 22 million broadband
connections. OFCOM estimates the mobile internet connectivity to be in the
region of 5.0 million mobile broadband users in addition the 21.7 million fixed
line users. So the total market is
estimated at 26.7million subscribers. Of
these super broadband users make up just 3.7million.
Labels:
3G,
4G,
Broadband,
Broadband numbers,
BT,
BT Retail,
BT Sport,
Internet TV,
KIngston Telecom,
O2,
Orange,
Sky Broadband,
T-Mobile,
Talk Talk,
TalkTalk,
Thus,
UK ISP Market. ISP Numbers,
Virgin Media,
Vodafone
Sunday, September 29, 2013
Google Announces New Search Algorithm
Google has just announced their new search algorithm, codenamed Hummingbird. It is the first major
upgrade for three years and is a major step towards semantic web search.
Launched quietly about a month ago, the new algorithm affects
about 90% of Google searches. The update is designed to provide more accurate
results when faced with natural prose questions from web searchers according to
senior vice president of search Amit Singhal.
Google stressed that a new algorithm is important as users
expect more natural and conversational interactions with a search engine - for
example, using their voice to speak requests into mobile phones, smart watches
and other wearable technology.
Hummingbird is focused more on ranking information based on
a more intelligent understanding of search requests, unlike its predecessor,
Caffeine, which was targeted at better indexing of websites.
“We just changed Google's
engines mid-flight - again” Amit Singhal Senior VP, Google Search.
It is more capable of understanding concepts and the
relationships between them rather than simply words, which leads to more fluid
interactions. In that sense, it is an extension of Google's "Knowledge
Graph" concept introduced last year aimed at making interactions more
human.
In one example, shown at the presentation, a Google
executive showed off a voice search through her mobile phone, asking for
pictures of the Eiffel Tower. After the pictures appeared, she then asked how
tall it was. After Google correctly spoke back the correct answer, she then
asked "show me pictures of the construction" - at which point a list
of images appeared.
SEO just the same –
Content is king!
As regards developing successful SEO programmes, really very
little has changed. In order to be
successful in SEO the key is still to create relevant and interesting content
that delivers real value for their consumers.
However, a subtle change in how
the algorithm views the content is happening whereby the new Google’s ranking
algorithm focuses on the context of where content appears against search
queries rather than traditional keyword matching. Hummingbird tries to match documents based on
the underlying user intent.
The key to successful
SEO will thus require much better content editing and site writing to ensure
that the content is answering a question not just stuffing as many keywords and
phrases a text will take. The semantic
web is coming of age with a search engine to match.
Labels:
Google,
Hummingbird,
Keywords.,
Search,
semantic search,
semantic web,
SEO
Sunday, September 08, 2013
Apple on top, but Android's position is growing stonger!
Millennial Media, the Mobile
ad platform, has released their latest Mobile Mix report, covering Q2
2013. The report lists the top 20 mobile
devices adding tablets into the mix along with smartphones and feature phones. Apple
made devices dominate the rankings taking three of the top four places,
however, the increasing importance of Android based machines is crucial. Samsung
occupies the number two spot with its Galaxy S phones and gains some additional
presence in the top ten thanks to the appearance of the Galaxy Tab and Galaxy
Note in the top 10 list. HTC and Motorola lose some representation on the list,
however and Amazon debuts with the Kindle Fire ranking number eight overall for
impressions. The fall of alternatives to
iOS and Android make the market a two horse race. Blackberry is clearly in trouble and Windows
is failing to make any impression on the market. Microsoft’s purchase of Nokia is unlikely to
turn Windows prospects around.
![]() |
| Top 20 Devices - Ranked by Impressions |
The fact that Google Play is
now outpacing Apple App store for downloads suggest that the Android is
increasingly eating Apple’s lunch.
Saturday, September 07, 2013
iOS Continues to dominate mobile market for mobile ads, but for how long?
Most recent reports suggest that Apple's iOS continues to dominate the mobile advertising market in terms of impressions and revenue generation delivering almost 44% of all ad impressions and almost 50% of revenue (Figure 1). The mobile market is increasingly looking like a two horse race between Apple iOS and Android and whilst on the face of it Apple continues to dominate, the decline of any alternative operating system other than Android suggests that in the near term Android will soon pass iOS as it becomes the de-facto alternative operation system.
Traffic share (mobile phone OS)
Traffic share (mobile phone OS)
OS Share
|
% of Traffic
|
% of Revenue
|
Android
|
31.24%
|
28.08%
|
Phone
|
30.58%
|
27.76%
|
Tablet
|
0.66%
|
0.32%
|
iOS
|
43.75%
|
49.36%
|
IPhone
|
30.88%
|
36.44%
|
iPad
|
8.04%
|
10.21%
|
iTouch
|
4.83%
|
2.71%
|
RIM
|
3.37%
|
5.41%
|
Symbian
|
5.16%
|
1.56%
|
Windows
|
0.26%
|
0.30%
|
Other
|
16.21%
|
15.27%
|
Source: Opera mediaworks
The challenge presented by Android is strengthening as Google and its partners increase the rate of innovation. Apple is clearly showing signs of innovation fatigue. A recent report by Goldman Sachs pointed to several concerns, including “delayed product cycles, supply chain difficulties, product price erosion, and a slower pace of product innovation.” Apple’s ability to continue innovating at the breakneck pace it maintained over the past few years remains a major concern. The recent performance of Google Play surpassing Apple's App Store downloads particularly in emerging markets underline the direction of travel.
This rebalancing of the market suggests that in the longer term the Android market is set to become the most important mobile advertising market.
Wednesday, February 20, 2013
4G licences only raise £2.34 billion in auction
It beggars belief that the UK Government has only managed to raise just £2.34 bn in licence fees for the the 4G licences. It really does suggest that both the UK Government and Ofcom are totally disconnected either from the potential of the mobile internet market or they are totally incompetent at running an auction. Whilst it was clear from the start that the market would not pay the astronomical figures paid for the original 3G licences of £21 billion raised by Gordon Brown, the value of these licences should have achieved far beyond the Office of Budget Responsibilities own projection of £3.5bn, let alone the £2,34bn delivered. Everything Everywhere, Hutchison 3G UK, Telefonica (O2), Vodafone (VOD) and BT (BT.A)'s Niche Spectrum Ventures secured the 4G licences. It is a little disappointing that the winning bids all came from the usual suspects and that we will not see any new entrant to spice up the cosy market carve up between the major mobile networks and BT.
Given that the UK is one the largest mobile internet markets and combined with the superior quality of coverage and speed of performance offered by 4G’s 800 MHz network, the winning network providers and service providers stand to make significant revenue. The mobile broadband should provide smartphone and tablet computer users with "superfast" download speeds, and will provide £20 billion of benefits for UK consumers over the next ten years, Ofcom said.
However, when mobile operator EE, a joint venture between T-Mobile and Orange, became the first to launch a 4G service in October 2012 in a brief monopoly, it struggled to attract users. It was forced to cut its prices in January, lowering its entry price to £31 from £36 a month.
Despite this slow take up, I still believe that 4G has the power to become the de facto communications network for Internet access in the UK - a view clearly shared by BT - which is why they entered the auction to secure 4G capacity which they are using to extend their WiFi network. 4G has the capacity to be a game changer in technology terms and could change the local access in remote locations of 100 MHz Ethernet speed access reducing the need to take fibre to the home.
There may not be champagne corks popping in No 11 tonight, but I am sure they will be in the HQs of our major mobile providers.
Given that the UK is one the largest mobile internet markets and combined with the superior quality of coverage and speed of performance offered by 4G’s 800 MHz network, the winning network providers and service providers stand to make significant revenue. The mobile broadband should provide smartphone and tablet computer users with "superfast" download speeds, and will provide £20 billion of benefits for UK consumers over the next ten years, Ofcom said.
However, when mobile operator EE, a joint venture between T-Mobile and Orange, became the first to launch a 4G service in October 2012 in a brief monopoly, it struggled to attract users. It was forced to cut its prices in January, lowering its entry price to £31 from £36 a month.
Despite this slow take up, I still believe that 4G has the power to become the de facto communications network for Internet access in the UK - a view clearly shared by BT - which is why they entered the auction to secure 4G capacity which they are using to extend their WiFi network. 4G has the capacity to be a game changer in technology terms and could change the local access in remote locations of 100 MHz Ethernet speed access reducing the need to take fibre to the home.
There may not be champagne corks popping in No 11 tonight, but I am sure they will be in the HQs of our major mobile providers.
Labels:
3G,
4G,
4G Auction,
800MHz,
BBC,
Broadband,
BT,
EE,
Ethernet,
Everything Everywhere,
fibre,
Fibre to the home,
George Osborne,
Gordon Brown,
O2,
Ofcom,
Vodafone
Wednesday, February 06, 2013
The Appscape
Here are a number of interesting facts concerning the growth of mobile marketing and in particular the App market.
- Apple Apps – 700,000 (Nov 2012)
- Android Apps – 700,000 (Nov 2012)
- Microsoft – 120,000 (Dec 2012)
- 37mins the average time spent on apps per day
- Mobile apps will grow from a $6 billion industry today to $55.7 billion industry by 2015 (Forrester)
- The average Android smartphone user has downloaded 44 apps onto their phone
- 53% of American cellphone users now have a smartphone
- 38% of people who use social media on mobile devices cite general browsing as their main activity
The rapid growth of Android apps is very impressive, having caught up with Apple so quickly and will undoubtedly pass Apple in 2013. The fact that Apple apply rigid "quality control" as to which apps make it on to the iPhone and Google pretty much set a minimum compliance approach cannot be the only reason Android has blossomed since Microsoft has failed to grow in quite the same way. Apple need to decide whether they are going to carry denying other smartphone users the chance to use the Apple IOS and ultimately see the market they have owned slowly (or maybe not so slowly) eroded by Android as they did twenty years ago during the PC wars.
Labels:
Android,
Android OS,
Apple,
Apps,
cellphone,
Forrester,
Google,
Internet browsing,
IOS,
iPhone,
Microsoft,
PC Wars,
Smartphones
iPhone 5 Decline in face Samsung Challenge?
Sales of the iPhone 5 appear to be slowing dramatically in
the UK and around the world. In what seems like a bid to drum up sales, for the first time I can
recall, my mobile provider is making unsolicited calls to remind that I am due
an upgrade and have the opportunity of getting my hands on an iPhone 5 as part of my
package. Previous it appeared I needed
to be best friends with the chairman of the mobile operator to get such an offer. Furthermore, according to the Wall Street
Journal, Apple has cut an iPhone 5 display manufacturing order by half citing
"weaker-than-expected demand." The display order, which was targeted
for the January to March quarter, was cut along with other key component
manufacturing in December.
Given the crowded marketplace that the smartphone arena has
become, it is only good business that there should be changes to manufacturing
orders. However, this data seems to
confirm that globally, Samsung is beginning to get the upper hand in sales of
smartphones in head-on competition with Apple.
With 1.3 billion smartphones in use worldwide by end of 2012 and 465
million Android smartphones sold in 2012. Google’s operating system has now
captured a 66% global market share. Samsung has
used the Android OS to drive sales with their latest smartphone the Galaxy SIII with shipments estimated to be 18 million units for the third quarter of 2012, while
smartphone and overall mobile device shipments are projected at 59 million and
106 million units respectively.
Apple is rumoured to be accelerating the launch of the iPhone 6
to combat this growing Korean threat and thus it is of little surprise that they are ramping
down iPhone 5 production to make way for a newer model. Clearly being sued by Apple is good
commercial business for Samsung since it has crystallized the belief that the
once mighty Apple may have a worthy competitor in the form of Samsung. Litigation can have unexpected consequences and certainly it seems it may be the case that Apples lawyers are better at marketing Samsung's products than helping their own side win.
Labels:
Android,
Android OS,
Apple,
Galaxy,
Galaxy IIIS,
Google,
IOS,
iPhone,
iPhone 5,
iPhone 6,
Samsung,
Smartphone,
Wall Street Journal
Summary of the Latest Social Media Data.
I was recent required to pull together a presentation covering the impact of social media on search engine optimisation and as part of that exercise I extracted a collection of the latest data points on the three leading social media sites of Facebook, LinkedIn and Twitter. All the data is referenced from the companies themselves or studies they have commissioned.
Facebook
LinkedIn
Twitter
Facebook- 1 billion – Number of monthly active users on Facebook, passed in October 2012
- 31% - Percentage of users that check in more than once a day.
- 135 million – Number of monthly active users on Google+.
- Facebook accounts for approximately 26% of referral traffic.
- 47% – Percentage of Facebook users that are female.
- 29% - Percentage of Google+ users are female.
- 40.5 years – Average age of a Facebook user.
- 2.7 billion – Number of likes on Facebook every day.
- 24.3% – Share of the top 10,000 websites that have Facebook integration.
- 4.7 billion minutes are spent on Facebook daily
- 187 million – Number of members on LinkedIn (Sept, 2012).
- 44.2 years – Average age of a Linkedin user.
- Highly targeted professional networked audience with 50% of LinkedIn users having a bachelor’s degree or higher
- LinkedIn accounts for about 0.20% of referral traffic.
- American users spend an average of 17 minutes on the site.
- 22 million visit LinkedIn every day.
- There are 2 million companies on LinkedIn
- 200 million – Monthly active users on Twitter, passed in December 2012.
- 1 million accounts are added to Twitter every day
- 9.66 million – Number of tweets during the opening ceremony of the London 2012 Olympics.
- 175 million – Average number of daily tweets sent throughout 2012.
- 37.3 years – Average age of a Twitter user.
- 40 million visit Twitter daily
- 307 – Number of tweets by the average Twitter user.
- 51 – Average number of followers per Twitter user.
- 163 billion – the number of tweets since Twitter started, passed in July 2012.
- $259 million is Twitter’s projected ad revenue in 2012
- 123 – Number of heads of state that have a Twitter account.
Thursday, December 13, 2012
Will the 4G Auction exceed £3.5bn? You bet!
Although Chancellor George Osborne is unlikely to raise
anywhere near to Gordon Brown’s £21bn for 3G licences, I believe he may do
rather better than is being reported. Recent
auctions in Europe have raised £3bn which suggests that the UK 4G licences will
achieve £3.5bn. However, it is suggested
that Private equity firms, retail groups and banks as well as international
telecom players have entered the fray alongside the UK’s Big Four mobile
operators, EE, Vodafone, O2 and Three to win a slice of these 4G licences.
Ed Richards, chief executive of Ofcom, the telecoms
watchdog, said that it had “fired the starting gun” on an auction process that
would “release crucial capacity to support future growth, helping to boost UK
productivity”. Even in these recessionary
times, the total U.K. Internet traffic is currently projected to increase by an
average of 37 per cent each year until 2015. Although the majority of traffic
remains on fixed networks, traffic on mobile networks is growing at a faster
rate of 84% year-over-year and is expected to account for 11% of total traffic
by 2015.
Mobile access to the Internet accounts for even more time spent
browsing, communicating, and transacting than this traffic data suggests, with
fixed lines being used to consume bandwidth-intensive services such as video
and mobile used more for social media. Indeed, the Internet is increasingly
being accessed on mobile devices, whether through mobile connections or Wi-Fi
networks, and the next generation of mobile communications of 4G will continue
to shift this dynamic and economists have suggested could add as much as 0.5%
to GDP in infrastructure investment alone not to mention the enhanced
capability of the mobile web usage.
The superior quality of coverage and speed of performance
offered by 4G’s 800MHz network offers significant improvement over the current 3G
licences. This superior system will add
significantly to the opportunity for both network providers and service
providers to make significant revenue.
The UK is one the largest mobile internet markets and consequently the
opportunity to own a slice of this
market will in my opinion drive the value of these licences far beyond the
projected £3.5bn and along with the additional impact 4G will have on the UK
economy, the auction could bring a welcome additional windfall for Mr Osborne.
Labels:
3,
3G,
4G,
4G licences,
EE,
GDP,
mobile internet,
O2,
Ofcom,
Private Equity,
Three,
Vodafone,
Wifi
Tuesday, December 04, 2012
Guess who will ultimately pay Amazon’s UK Taxes?
The recent moral crusade waged by the Press to get the major
American Corporations such as Starbucks, Amazon and Google to pay more tax may
seem at first sight entirely laudable.
Previous campaigns by Occupy Wall Street to embarrass the likes of
Vodafone and Top Shop to pay more tax have had little effect. Certainly the press didn’t seem that
interested in pursuing Sir Philip Green as much as they seem to wish to pillory
Google. Maybe we are only affronted by
foreign companies that appear to be ripping off the state and are quite happy
for home grown companies such as Arcadia and Vodafone to avoid their share of
the tax burden.
In truth, none of the companies are to blame. Rather the issue lies not with the smart
accountants exercising their abilities to save businesses millions of pounds in
tax, but rather in the labyrinthine tax system Government have evolved not only
domestically, but internationally. Government
not only use the tax system to generate income to spend on the defence of the
Realm and the NHS but they also use it to achieve certain strategic and tactical
objectives such as encouraging investment by foreign nationals to create
jobs. Equally foreign powers user their
tax systems to attract companies to their jurisdictions.
So just how much is George Osborne missing out on. So let us examine the case of Google. Last year Google paid £6m on revenue of
£395m. However, the UK is the largest online ad market in Europe and Google is
the largest player in that market and given that Google’s EMEA (Europe, Middle
East and Africa) operations generated
€12.5bn (£10.1bn), the Google’s UK turnover was in the region of $4bn (£2.5bn)
and paid just £6m in corporation tax. Google
has located its European headquarters in Dublin where Google Dublin employs 2,500
employees to take advantage of Ireland’s favourable capital arrangements and
consolidates its ad revenue through this subsidiary. Google Ireland had pre-tax
profit of just €24.3m last year on turnover of €12.5bn. Google’s consolidated accounts suggest a
different picture of earnings generated by their operations of $11.7bn on just
under $38bn turnover. This suggests the
true profit contribution from Europe should be in the region of $3.85bn. By the same logic, the earnings contribution
for the UK market would have been $1.2bn or approximately £800m profit or
equivalent to £208m in Corporation Tax.
So there we have it, the UK Treasury is missing out on just over £200m
in corporation tax. Given that Google
employ just 1,500 people in the UK there can hardly be said to be a jobs bonus
whereby we are getting significant PAYE revenues instead.
Amazon is a somewhat different case. Amazon is the largest on-line retailer in the
world and has come to dominate the market.
However, in the UK, Amazon generated sales of £3.35bn, 25% of Amazon's
sales outside of the US and paid just £1.8m in Corporation Tax to the UK
Treasury. However, in fairness to Amazon
they have created 15,000 jobs in the UK, which is ten times that created by
Google, and make a far smaller margin on sales of the many products they ship
from Books to Microwaves. Equally those
15,000 employees are significant payroll taxes and Amazon continues to invest
heavily in the UK infrastructure. Yes
Amazon the Luxembourg holding company rouse, but I believe their contribution
to the country is far greater than Google’s.
Harmonisation of the European Union’s Tax laws as regards
companies and individuals would eliminate many of these distortions and
clamping down on the BVI (British Virgin Island) corporations would also
eliminate many of the tax loop holes that multi-national companies take
advantage of. However, these are
probably a step too far for most UK based politicians and unlikely to
occur.
The HMRC could go toe-to-toe with these
multinationals and try and get more out of them. However, the most likely outcome is the cost of
all these activities will eventually be borne by the consuming public through
increased prices. Years ago we used to
consider that the same cost of a good in the US compared to the UK was on the
basis what cost $100 in New York cost £100 in London. Much of this Atlantic Margin has been eroded
by the Internet and in no small part in the role taken by both Amazon and
Google. So I would not necessarily jump
to the conclusion that we would be better off if the HMRC managed to get more
out of the likes of Amazon and Google.
Labels:
Amazon. PAYE,
Arcadia,
Corporation Tax,
EMEA,
Google,
HMRC,
Starbucks. Osborne
Tuesday, November 27, 2012
Does Searle’s Chinese Room argument establish that the mind is not a computer program?
I recently looked at the case for artificial intelligence
and I revisited the arguments laid out by John R Searle in his argument that so
called strong artificial intelligence cannot evolve from a computer program. Using the Chinese Room (CR) argument advanced
by John R Searle, I examine whether his contention that the mind is not a
computer program is true in the context of what constitutes artificial
intelligence (AI) and thus the computational theory of the mind is false. In order to do this I will establish the
agreed basis of artificial intelligence, outline the Turing Test for evaluating
machine intelligence, describe the CR thought experiment and then evaluate the
Seale’s principle claim that the CR experiment is merely a syntactic process
requiring no semantic understanding and demonstrating strong AI to be false.
In order to evaluate Searle’s CR argument we first need to
have a clear understanding of artificial intelligence and in particular the
form of AI, so-called ‘Strong AI’, at which Searle is directing his thought
experiment. Strong AI is the
philosophical thesis that appropriately programmed computers have minds in
exactly the same sense that we do.
During the 1950s, Alan Turing proposed a simple test to
evaluate whether a machine is making an adequate simulation of the human
mind. The ‘Turing Test’ states that ‘if
a computer can pass for a human in online chat, we should grant that it is
intelligent’.
This leads us to divide AI into four specific categories:-
AI1 Computers are capable of thought;
AI2 Only computers are capable of thought;
AI3 A machine can think simply as a result
of instantiating a computer program;
AI4 Computer models are useful in the study
of the mind.
Clearly AI4 is the weakest form of AI and is not considered
to be particularly controversial. However, the AI argument builds from AI3
through to AI1 as the claims become stronger. Indeed if AI2 is true then we are
all computers! The combination of AI1
and AI3 suggest that a thinking machine is possible and all we need to do is
write the appropriate program and run it to demonstrate a thinking machine
(Wilkinson, 2005, pg 100). Strong AI of this form suggests that a suitably
programmed computer can understand natural language and actually have other
mental attributes similar to humans whose abilities they mimic. For this reason
if the AI3 form of AI can be undermined the entire strong AI argument is
invalid. Consequently AI3 is the form of AI that Searle considers ‘strong AI’
and which his CR argument is intended to show to be false and hence the mind is
not a computer.
Searle’s CR experiment is a thought experiment which
imagines an English speaker who knows no Chinese, locked in a room full of
boxes of Chinese symbols (the database) together with a book of instructions
for manipulating the symbols (the program).
Imagine the people outside the room send in other Chinese symbols (data
input) which, unknown to the person in the room are questions in Chinese. By following the instruction book, the man is
able to pass out Chinese symbols and answer the questions correctly (the
output). Searle contends that the man in
the CR has actually passed the Turing Test for understanding Chinese without having
to understand a word of Chinese. Put
simply the Searle argument may be sum up as follows:-
Premise 1. If
‘strong AI’ is true, there exists a program for Chinese such that if any
computing system runs that program, that system may be considered to understand
Chinese;
Premise 2. The program may be operated by anyone, without understanding Chinese;
Conclusion. Therefore, ‘Strong AI’ is false (from premise 2).
Premise 2 conforms to the CR and as such the inevitable
conclusion is that running a program does not constitute understanding. Searle’s central claim is that the CR
experiment shows that it is not possible for syntax to result in semantics. Syntax in this context refers to the way in
which the Chinese symbols are manipulated as opposed to semantics which relates
to the meaning of the symbols.
Essentially the program is purely a syntactical symbol system which
merely manipulates the symbols and entirely lacks semantic properties without
any understanding of their meaning (Wilkinson, 2005, pg 105).
Before I consider the case against Searle’s CR experiment,
it would be useful to describe the programming process. For a process to be programmable, the process
must be able to be constructed as an algorithm.
For a process to be algorithmic the following must apply:-
1.
Every step is specifiable entirely without
ambiguity;
2.
At every step, there is no ambiguity about what
the next step must be: no insight, inspiration or creativity is needed;
3.
Provided each step is correctly executed, the
procedure will produce the desired result in a finite number of steps.
All computers, whether based on traditional step-by-step von
Neumann architecture or parallel processing, are programmed in an algorithmic
manner (Wilkinson, 2005, pgs 100 - 101).
The key issue is the ability to ‘frame’ the question in an algorithmic
format to enable the computer to work.
Searle considers the computer program based on the algorithmic
formulation to be purely syntactic, therefore, unable to be semantic and hence
computer programs cannot produce minds.
Searle’s contention may be shown as follows:-
Premise 1. Programs
are purely formal algorithmic processes (syntactic);
Premise 2. Human
minds have mental contents (semantics);
Premise 3. Syntax
by itself is neither constitutive of, nor sufficient for, semantic content;
Conclusion. Therefore,
programs by themselves are not constitutive or sufficient for minds.
Premise 3 supports the CR thought experiment.
Now there are a number of criticisms to Searle’s CR argument
against Strong AI, however, they are essentially variants on the so-called
‘System Reply’. Essentially the counter
argument is that no single element should be considered as the ‘mind’ of the CR,
and certainly the man at the centre running the process does not understand the
Chinese language, but rather it is the whole system operating together that
develops an understanding of Chinese and hence a semantic grasp of the Chinese
symbols. Searle replies that if the man
in the room were to memorise the instruction book and the database of Chinese
characters and become the entire system, he still would not be able to attach
any meaning to the formal symbols even though he is now the entire system.
Others criticise the fact that the man in the room is
deprived of any sensorimotor connection to the world and that these are vital
missing factors. Searle counters that
the Chinese characters could be the outputs of a television camera and the
outgoing symbols be the commands to a robotic arm. He now has a connection, but
still no understanding.
Others suggest that the CR does not model the way the brain works
as complex neural network. Searle
counters by applying Ned Block’s Chinese Gym thought experiment, whereby
millions of people in a huge gym are connected to one another by walkie-talkie
radios passing instructions to one another acting as individual neurons participating
in a neural network. On the other hand,
the same issue regarding semantics applies in this case as well. The Chinese Gym does not understand Chinese
any more than the CR.
Daniel Dennett’s challenge to the CR is based on the issue
of complexity. He contends that Searle’s
experiment is far too simple and that this is the reason for no apparent
understanding being present within the system.
Dennett argues that with increasing complexity you will get unexpected
results resulting in radical changes in behaviour known as emergent properties
which only occur when a system is sufficiently complex. Such radical changes in behaviour or
properties of complex systems are common in the natural (Wilkinson, 2007, pg
113-114). Consequently, Dennett argues
that any system capable of conversing in Chinese would most likely be far more
complex than the CR experiment and it would be difficult to say confidently
that the computer system did not understand Chinese. Searle contends that running increasing
complex programs are no more than more complex algorithms and are just as
syntactic as previously described and not capable of semantics however complex. Whilst I agree that a complex computer
program is just an assembly of multiple simple routines, increasing complexity
often leads to increased computing capability and can result in unexpected
capabilities and even outcomes.
In the same vein, the challenge posed by Patricia and Paul
Churchland suggests that the issue is one of interpretation and speed, in that
the CR experiment is operating at a very much slower speed than the brain
operates and as such ‘understanding’ cannot be detected. They use the analogy based on Maxwell’s
theory of light being made up of electro-magnetic waves. In their thought experiment, a man stands in
a darkened room and waves a magnet up and down.
Although light is indeed made up of electro-magnetic waves, no light
would be detected. The man waving the
magnet does not disprove Maxwell’s theory that light consists of
electromagnetic waves. The missing component
is speed. The Churchlands’ thought
experiment slows down the waves to a range to which we humans no longer see
them as light. By trusting to our
intuitions in the thought experiment, we falsely conclude that rapid waves
cannot be light either. Similarly, the
Churchlands’ claim that Searle has slowed down the mental process to a range we
humans no longer think of it as ‘understanding’. Thus the Churchlands contend that the same
applies to Seale’s experiment and that if we were to meet the man from the CR
who seemed to converse intelligently in Chinese, but was really deploying
millions of memorised rules in a fraction of a second, it is not so clear that
we would deny he understood Chinese (Pinker, 1997, pgs 94-95).
In conclusion, in consideration of the narrow interpretation
of Searle’s claim that the mind is not a computer program I would accept his
argument to be valid and that the computer program itself does not ‘understand’
as we interpret that word. I found
Seale’s dismissal of the counter arguments to be reasonable, with exception of
Dennett’s and Churchlands’ arguments. The Churchlands’ thought experiment it is
based on a very simple premise and easy to understand and Dennett’s emergent
properties argument compelling. Speed
and complexity could be key factors in strong AI. What is undoubtedly true is that the ‘Turing
Test’ is no longer a sufficiently subtle evaluation of artificial intelligence.
Progresses in computing have advanced to
a stage whereby it is entirely possible to converse with a computer and believe
you are conversing with a human being.
The key issue in achieving a true computer ‘mind’ comes back to the
framing issue. This relates to the
ability to program algorithmically beyond the essentially mathematical and
logical tasks to consider such areas as intuition, belief or even love. These functions of the mind are frequently
considered irrational and illogical, but they are what make us human. The
ability or functionality to program ‘illogically’ is probably beyond
algorithmic programming of digital computers as we know them today. Equally Searle’s argument hinges on our
understanding of the semantics of language.
What do we mean by ‘understanding’ or ‘meaning’? Or finally, is it the limitation of English
as a language which is unable to provide an adequate explanation of differences
and similarities between the mind and artificial intelligence? Regardless, Searle’s valid dismissal of
strong AI will not slow the pace of computing development and the likely move
from the physical limitations of silicon-based computer architectures to
bio-computers which utilise biologically derived molecules to perform
computational processes. The future of
‘strong AI’ probably lies in the rapid development, dare I say growth, of such
bio-computers!
References
Wilkinson, RJ (2007) ‘Chapter 3 Monism (Conclusion) and
Artificial Intelligence (Beginning), Robert Wilkinson Minds and Bodies, 2007,
Open University Press.
Pinker, S (1997), Chapter 2, ‘Thinking Machines’, Steven
Pinker, How the Mind Works, W.W.Norton & Company Ltd., 10 Coptic Street,
London. WC1A 1PU
Copyright© John Tomany 2012
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