This week: Apple’s AirTag release raises platform competition issues, and the trend of suburban retrofitting changes what suburbs are for.

Sandra Peter (Sydney Business Insights) and Kai Riemer (Digital Disruption Research Group) meet once a week to put their own spin on news that is impacting the future of business in The Future, This Week.

The stories this week

09:47 – Apple launches Airtags

18:22 – Suburban high streets and the trend of suburban retrofitting

The whitest paint (ever)

New US emissions target hailed a ‘game changer’

Europe proposes strict rules for Artificial Intelligence

AI proposed regulation trying to balance EU need to become technological superpower and its values

More automation should mean more training for pilots

iPhone market share 2020

Apple balancing tracking and privacy

Tile’s long lived market domination and the Apple threat

Our previous discussion on The Future, This Week around moving to dense cities to fight climate change

Our previous discussion on The Future, This Week on co-housing

Like it or not, the suburbs are changing

The people the suburbs were built for are gone


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Our theme music was composed and played by Linsey Pollak.

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Disclaimer We'd like to advise that the following program may contain real news, occasional philosophy and ideas that may offend some listeners.

Sandra So what should we talk about today?

Kai Well, one interesting topic is paint. Somehow scientists discovered what is called in the article in Grist, the Holy Grail in material sciences, "the whitest paint ever".

Sandra And what exactly are they doing with the whitest paint ever?

Kai Well, typically, white paint reflects about 80 to 90% of the sunlight, this paint can reflect 98.1% of sunlight, and it's based on a new kind of material, barium sulphate, which means that if you paint it onto your roof, it can act like a kind of air conditioning.

Sandra How exactly would that work?

Kai So it's an interaction between radiating thermal heat, so any surface always radiates heat outward, and the absorption of heat. So this paint doesn't actually absorb almost any heat, but it still radiates heat, like any surface would do. So you get this negative effect that it can actually cool rather than just prevent the absorption of heat, which is a pretty neat trick.

Sandra Yes, it is. And it makes you wonder why no one's painting their roofs white ever?

Kai Well, in the US, there is actually a program underway where cities like Los Angeles or New York City, have started mandating painting roofs of industrial and commercial buildings with white reflective paint. So one extra tool in making buildings more energy efficient.

Sandra And speaking of tools, we could also talk about the European Union proposing strict new rules for artificial intelligence. There were stories across the board, in the New York Times and Financial Times, on the BBC, the ABC, all talking about the proposed new regulations in the European Union. On this podcast, we've spoken at length about algorithms, machine learning, artificial intelligence, and the risks it poses. There have been ethical questions raised for the past decade around their use around perpetuating existing biases, around privacy, and so on. So what the European Union is trying to do is to draft a set of rules around the uses of artificial intelligence, in particular in the domains where it's been most problematic.

Kai So the policy document lays out what it calls 'high risk' areas. So the use of AI in many of the areas we've discussed previously, like bank lending, or making hiring decisions, school enrolment selections, or the use in the court system, where it affects people's fundamental rights or threatens their safety.

Sandra It also bans some activities outright, we've had numerous discussions on the podcast around the use of artificial intelligence for facial recognition, including live facial recognition in public spaces, which would be explicitly banned by these new regulations. And this is an important development, both because it has far-reaching implications for the big tech companies like Google and Facebook and Amazon, but also because it again moves Europe centre stage in the artificial intelligence debate. Most of the development and advances debate has been played out between the US and China, which have been the leading investors in AI, and the leading developers of applications of AI. But this would move the European Union back in the game in the regulation of AI.

Kai I found another story that is about automation, this one not using AI, more traditional automation technology in planes, basically. There's an article in Wired called "The Plane Paradox", in which the authors, a former aviation accident investigator and a filmmaker, who have looked into the areas of plane safety, where they argued that the automation that we find in planes these days should lead to more pilot training and not less.

Sandra That was indeed a very interesting story. And it goes to a debate we've had on the podcast and that we've also done research around, and that is the fact that counter-intuitively automation of certain types of work does seem to make our jobs harder. We've discussed previously on the podcast the case of Kickstarter, the crowdfunding company, where people were having lots of fun putting up interesting projects for the general public to give money to so that they can take off. And as the company became more and more popular, they needed to automate the process of approval. So clear cut cases that seemed like they were good ideas that would make a lot of money would get approved by an algorithm, and the more difficult cases, the less clear cut cases with fewer chances of success would go to people. And the unintended consequences of that was that people's jobs became much more difficult and a lot less rewarding. And there's a similar thing happening here, with pilots requiring training not just for how an aircraft works and how to fly it, but also fully understanding how the automation of the plane works, and the ways in which that could go wrong.

Kai This discussion has come to the fore after two Boeing 737 MAX crashed in 2018, 2019, an Indonesian and an Ethiopian plane, and it led to a worldwide grounding of these planes. At the heart of this was an automation technology that Boeing had put into the planes for extra safety. It was never documented or included in pilot training, because it was assumed it would just operate by itself. The problem was that in both cases, the system received faulty sensor readings, then operated to specification, but because of the false readings, it basically ended up pushing the nose down and the pilots didn't know why it was happening, and therefore were disoriented and didn't know how to respond. Which leads the authors to argue that because safety can never be fully programmed into an automated system, because you cannot account for faults in the physical environment with sensors and inputs to the system, pilots effectively are now faced with a higher cognitive burden because not only do they need to know how the plane works, but also should know how the automation system works at every state of a flight so that when something goes wrong, they can intervene appropriately. So a much higher training load would be required, which is currently not being done.

Sandra There was also other big news last week, and that is the new US emissions target, which has been hailed a game changer. The US has announced last week that it will halve its emissions by 2030 from 2005 levels. And the President Biden has re-joined the Paris Agreement on his first day in office.

Kai And this is a really ambitious target considering that Obama pledged in 2014 to reduce emissions by 26 to 28%, below 2005 levels. This is now a 50% pledge and it comes years later after a growth in emissions. So a really ambitious target that aims to reverse the lax approach by the Trump administration.

Sandra And the speeding up of climate change targets we've actually seen from a number of countries, like the UK where the prime minister said that the carbon emissions must fall by 80% by 2035. That is 15 years earlier than previously planned. The EU have agreed to cut carbon emissions by 55% by 2030, as well, and their climate change goals around becoming climate neutral by 2050, will actually become legally binding for the European Union. So ambitious announcements across the board there.

Kai And the announcement coincides with a report released by Swiss Re, also reported in the New York Times, which frames the likely fallout from climate change in very economic terms, arguing that by 2050 it could cost the worldwide economy $23 trillion from spread of new diseases, having to protect coastal cities from rising sea levels, natural disasters and the like. So increasingly a discussion that is framed in economic terms.

Sandra But that's not what we're gonna discuss in detail today.

Kai No, really one of the stories we should look at today is how the face of our cities is changing. And that is because there's a new trend that is being accelerated by COVID, which is the fact that people increasingly spend their time in the suburbs, which leads to changes to what these suburbs are like.

Sandra So we'll talk about suburban retrofitting. And of course, we would have to talk about AirTags.

Kai The release of Apple's new tracking product, which ties in with previous discussions we've had around the power of platforms and competition issues around how platform providers create their services.

Sandra Let's do this.

Kai Let's do this.

Outro From The University of Sydney Business School, this is Sydney Business Insights, an initiative that explores the future of business. And you're listening to The Future, This Week where Sandra Peter and Kai Riemer sit down every week to rethink and unlearn trends and technology and business. They discuss the news of the week, question the obvious, and explore the weird and the wonderful.

Sandra Our first stories straight from Apple, Apple introduces AirTags, a very tiny disk accessory that helps you find stuff you've lost.

Kai So this has been a long time in the making, it was first rumoured in 2019 that Apple would release this product. These little tags can be attached to luggage, to key rings, to things that one does not want to lose, and if so wants to find.

Sandra So it's basically a tile from Apple.

Kai Yeah, so Tile, obviously, the competitor product has been on the market for quite a while. And AirTags compete directly with Tile. They're a little bit more shiny, you can engrave them, so Apple puts a bit of design around it. They've got some shortcomings, there's no key ring hole in these AirTags, you have to buy an accessory to attach it to things. But they're also a bit more expensive, much like Apple likes to do.

Sandra So what these tags actually do is you attach them to something that you value, whether that's your keys or your bike, you pair them with your phone, and then in case you've misplaced it, you use the FindMy app, which also finds all of your other Apple devices, to find the object. If it's close by, you can make it make a sound. And you can see the location of the last item on your phone much like you would use it to track down a lost iPhone you forgot, much like me, in an Uber.

Kai So what happens is that Apple basically uses all the iPhones in the world as a sensor network to locate lost AirTags, and to then connect the AirTag with its rightful owner. And Apple does not know where this AirTag is located because it's end-to-end encrypted and so preserves the privacy of those involved.

Sandra Before we move on to the bigger picture, which has to do with how competition works in these new markets, let's just address some of the obvious questions upfront. One of them is what happens if I slip Megan one of these AirTags in her pocket, and she walks away, and I theoretically can track where she goes without her knowing?

Kai So Megan, in this instance, is lucky because she owns an iPhone, and any iPhone will detect if there is an AirTag nearby that has been separated from its owner, which would be you. But it's not connected to Megan, and so her iPhone would notify her of a foreign tracking device nearby. And she could make it make a sound and then de-activate it. So Apple has actually thought about this, and it prevents people from being tracked, provided they are part of the Apple ecosystem.

Sandra Yes.

Megan Ha!

Sandra So if you're not part of the Apple ecosystem, it will take three days for the tag to actually make a sound and let you know. So if you are into tracking Android users, at this point you can do that for about three days before they would be alerted to the existence of a tag. And strangely, it's also quite difficult to opt out of detecting other people's AirTags. Say I don't want to buy one, Apple will still use my phone to track other people's AirTags, and should I disable that, I will automatically lose the ability to track my other Apple products. So FindMy phone will stop working as well if you opt out of tracking these tags.

Kai But Apple assures users that the energy and data implications would be negligible. And because everything is end-to-end encrypted, the location of those who are 'helping' with the tracking, so to speak, in a automatic background way, will never be revealed. So Apple effectively uses the installed base of all iPhones as a peer-to-peer tracking network for its AirTags.

Sandra And that feature is also potentially the problem as well and is what has made Apple the target of a new antitrust complaint by Tile. Tile has the competitor product and currently owns about 90% of the market, yet we've seen over the last few days, the Senate hearings in the US where the Tile complaint has joined other antitrust complaints from the likes of Spotify, which we've discussed on this podcast, where, again, the complaint is that Apple is making use of its platform position to unfairly compete with some of its suppliers like Spotify or Tile.

Kai So the argument is twofold. On the one hand, Tile argues that Apple has unfair data insight about its business, they've come out to say they know how our devices do in stores, they know who our customers are, they know our subscription take rates. They know what features people use, and that Apple would be able to use that information in the development of its own products. And the other is of course, the utilisation of its ecosystem of iPhones to use in the tracking itself.

Sandra So while Tile currently needs it app to be installed on phones for it to work, Apple users do not have to instal anything and can make use of all other iPhones, whether or not those people own AirTags or not.

Kai Which gives it an advantage because there's billions of iPhones out there that help with the tracking, but only millions of other Tile users that could do so for Tile. So Tile argues that Apple, because of this deep integration, has an unfair advantage over its own product.

Sandra And let's be fair, in the countries where Apple has at least 50% of the smartphone market, Tile is likely very much in trouble. So in places like the US or Japan, or indeed, Australia, Apple has at least half the smartphone market, giving them an unfair advantage over any competitor that is not integrated. In places like India or Brazil or even China, iPhone penetration rates are actually a lot lower. It would still give them a competitive advantage over a company like Tile, but there are much fewer iPhones to make use of.

Kai And Tile is platform agnostic. Its product operates on iOS, on Android, on Windows systems, that can be used to locate Tiles. So there's a slight advantage in markets where Apple hasn't got this dominant position.

Sandra And also on a side note, Tile is not the only competitor, but they do have 90% of the market. So Orbit and Chipolo are also providing the same tracking services, but they have a very low market share at the moment.

Kai And while Apple has opened up its FindMy app to companies such as Tile just a couple of months ago in the wake of the AirTag release, without the deep technical integration, Tile will always be at a disadvantage. Apple, of course, would argue that it needs that deep integration to create that service, and it cannot let other companies do the same integration to preserve security and safety of its platform.

Sandra So in the long-term, I think actually, the fact that Tile will be forced to integrate into the Find My iPhone network will actually hurt Tile's business even further, because one of the benefits of Tile is that it is platform agnostic. It works on Android, as well as on iOS, the moment it plugs into a proprietary system like Find My iPhone, it will likely have to give up interoperability, or at least many of the features that work now across platforms. So what's important in the end is that the very public conversations around protecting privacy and giving consumers access to a very good service do not crowd out equally important conversations around competition, access to market, and how platform competition does function by different rules than normal competition within the market.

Kai So it remains to be seen what regulators will do with this, do they follow the privacy argument that Apple will put forward or the anticompetition argument that Tile will put forward, where they will rightfully argue that in the long run, the more expensive product might win out because Apple can capitalise on its platform position to crowd out the more affordable alternative.

Sandra But let's move on to our bigger story today. And that's around suburban retrofitting. And we started thinking about this in a very roundabout way given that there were a host of articles in the last couple of weeks about Sydney's suburbs getting a facelift.

Kai And there's one recent one in the Sydney Morning Herald titled "Why Sydney's suburban high streets are waking up after years of drift".

Sandra And the article talks about suburban high streets going through a renaissance with the cafe and dining culture coming to the suburbs, much as it was in the city centres before the pandemic.

Kai With many people now working from home, people spent more time in their neighbourhoods, and they want the same sort of amenities that they used to from their CBD coffee or lunch break. So the government here in New South Wales has given out grants to redo high streets in suburbs to turn them into places that people want to frequent more often.

Sandra I think not only coffee shops, but larger footpaths, and trees, and artwork, and night markets, and parks, and places to exercise or do yoga.

Kai And interestingly, this ties in with a bigger trend that we've been seeing around the world whereby suburbs that used to be mainly places to live, increasingly are also places to work and socialise.

Sandra So this is a trend that's actually being accelerated by COVID-19. This trend of suburban retrofitting, so we thought today would have a bit of a closer look at it. Why is it happening and what are the consequences of this happening? The Suburbs to how we think about urban area cities as well.

Kai So let's start with why is this happening?

Sandra So the immediate answer that we jump to is, well, COVID-19. We're all working a lot more from home these days, spend less time in the city centres, and more in our suburbs, hence, we want many of the conveniences we used to enjoy in the city, we want them at home. And the surface answer that most people would jump to before COVID-19 was property prices were so expensive in the cities, that people have to move further and further away from all these amenities that they're used to enjoying, whether that's gyms or the theatre, or just nice places to walk or exercise or meet up with friends.

Kai But a deeper answer to this is demographic change. In the next 15 years, 80% of new households that will form will be one or two person households. And these households tend to prefer apartments, smaller units, but they might still not live in the city centre, which then leads to how the makeup of suburbs will change with more high rises, and more densely populated urban centres.

Sandra And also another interesting demographic change is highlighted by June Williamson from City College of New York and Ellen Dunham-Jones from Georgia Institute of Technology who've written a book on suburban retrofitting, who point out to a very big mismatch between what the suburbs have been built for, and the people today. And they highlight the fact that a lot of the suburbs that were built in the 50s and 60s catered for a population that no longer exist and catered for a demographic that owned their own homes, where most of the people would value privacy over socialising. So there were no mixed use properties, there weren't any communal spaces, there was no walkable block.

Kai So the authors referred to the separation of the home, workplace, and socialising spaces as the first place, second place, third place. And the traditional logic was that where you live was strictly separated from where you work, whereas people today want to reintegrate those spaces, don't want necessarily a long commute, if you work from home that falls away anyway, but want to be closer to the kind of amenities that you would normally find in city centres, be they shopping, be they culture or be they services.

Sandra So third places would be the places where you gather with other people, and they might be your coffee shop or your local pub, but they might also be farmer's markets, or concerts, or movie nights, or spaces to exercise or to bike together. So all those places that make a suburb a community.

Kai So the authors argue that what is needed is, on the one hand redevelopment of decrepit old buildings, that might be abandoned malls or parking spaces. So what we're trying to do with suburban retrofitting, according to the authors is to reduce car dependency, to improve public health, for people to be more connected with others can be a good measure to fight the loneliness epidemic, to have walkable spaces will improve public health, fighting things like obesity or diabetes, but also to support an ageing population.

Sandra So there are some very simple ways to do this. In many suburbs, you don't actually have sidewalks to walk from one place to the other. So simple things like building sidewalks that would encourage people to walk or to bike and would reduce car speeds on the road are an easy first step.

Kai Then there's the redevelopment of decrepit old buildings or turning parking lots into community centres, or indeed the repurposing of old spaces or the regreening of suburban centres with parks and trees along the main street.

Sandra And then there's other interesting ideas about co-housing. And we'll include an episode we did on this in the shownotes, allowing people to have different living arrangements, or infilling, with little courts or small apartment buildings that would complement what is now predominantly a very spread out single dwelling type landscape in the suburbs.

Kai Or indeed the creation of co-working spaces to cater for single entrepreneurs, freelancers, or startups, or mixed use spaces where you combine libraries with childcare centres and coffee shops, for example, that draw in people and let people from different generations mix and mingle.

Sandra But interestingly, suburban retrofitting can also have some unexpected side effects. And as we were discussing this story, we realised that we have actually done an episode back in 2017, and we'll include the link in the shownotes, around the fact that moving to dense cities is probably the best way to fight climate change. And the story we were discussing then came out of the US and quoted data that showed that New York City emitted 30% less greenhouse gases per capita than any other place in the US. And that living in a dense city was a good way to reduce our footprint on the environment, because people in big cities like New York, they walk or they bike or they take mass transit rather than using a car, they also take up less space, they live in much smaller dwellings and apartments, and therefore use less energy than anyone in a suburban setting.

Kai Because there's certain scale effects to high-density areas when it comes to food transport, energy delivery, or indeed the insulation of large apartment buildings, which is much easier and much cheaper on a per capita basis, then insulating and heating single dwellings.

Sandra So with this move to the suburbs, we're likely to also increase costs for infrastructure, we will need more hospitals, we'll need more supermarkets, we'll need more shopping centres, but we'll also encourage living in a lot less densely populated areas.

Kai So therefore, it remains to be seen that when suburbs are retrofitted, they become more urban, if they can indeed develop into regional urban centres that have the same scale as a big city would have, or whether this will negatively impact the fighting of climate change, because might lead to a de-urbanisation.

Sandra And then there's another potential side effect, which would have to very carefully be addressed when encouraging people to spend more time in the suburbs. And that has to do, interestingly, with social equity. So when thinking about social equity, the authors encouraged us to think about how people use social relationships in their social networks in order to get connected to opportunity.

Kai And so there's a real risk that when people do not commute to the city, do not mix and mingle in more centralised spaces, that they spent more time in their own communities, whether these are ethnic or culturally less diverse, or indeed economically disadvantaged communities, and therefore forego the benefits of being connected to wider groups of people.

Sandra So while this trend is really picking up and likely to be accelerated in the wake of the pandemic, it is really important that it does not undo the positive effects we have from living in high-density environments, whether that's creativity, sharing of ideas, social mobility, or sustainability and a lower carbon footprint.

Kai And that's all we have time for today.

Sandra Thanks for listening.

Kai Thanks for listening.

Outro This was The Future, This Week, an initiative of The University of Sydney Business School. Sandra Peter is the Director of Sydney Business Insights and Kai Riemer is Professor of Information Technology and Organisation. Connect with us on LinkedIn, Twitter and Flipboard, and subscribe, like or leave us a rating wherever you get your podcasts. If you have any weird and wonderful topics for us to discuss, send them to sbi@sydney.edu.au.

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