Welcome to Episode 123 of The Digital Life, a show about our adventures in the world of design and technology. I’m your host, Jon Follett, and with me is founder and co-host, Dirk Knemeyer.
Hey, Jon, how’s it going?
Pretty good. Today I wanted to talk with you a little bit about what is turning out to be one of the biggest corporate scandals of the year and it just happens to be also a software-related scandal, so I thought it would be an interesting topic to explore for us. Of course, I’m talking about the Volkswagen scandal and alongside that the increasingly important role that software is playing in controlling our physical world. The Volkswagen scenario may just be one of many software-based cheating scandals to come and it’s probably not the first time software has been used to circumvent regulation, but it’s so high-profile that it feels like a game changer to me.
Let’s get started here with a quick recap of the scandal so far. We’ve got Volkswagen, the biggest automaker in the world and they get caught red-handed for rigging their diesel engine emission tests in the U.S. and in Europe. They did this by installing a software defeat device. I love this name. It’s all over the news now, a defeat device, to make cars appear cleaner when they’re being tested and then the software changes the settings in the car and then when it’s on the road it emits whatever, 40x as much emissions and pollution into the atmosphere.
There’s a lab that discovers this and brings it to the attention of the EPA and so far they’ve figured that these defeat devices have been on cars since 2009, so around six years or so. The provider of the software, Robert Bosch GmbH, that they have a warning from them to VW that basically says if you use this software to rig emission tests that’s illegal, you can’t do that. You have this incredibly sophisticated software, but for media attention purposes and for the purposes of your everyday viewer or listener or reader it’s a very simple scandal. They used software to cheat like gangbusters for the past six years on emission tests, so what do you make of this situation so far, Dirk?
It’s certainly shocking in its audacity and scale, but not surprising from another perspective, right. Big company, trying to make more money, trying to … Who knows what the genesis is. Probably invested a whole bunch in some technology, some engine technology or whatever the hell and then in reality it didn’t … From an emissions perspective it wasn’t working the way it should or they miscalculated something, whatever, and then they’re left with a choice. The company could take huge financial hits beset years back in their model year strategy and all that rubbish or they can fudge the tests and keep going. I suspect that once this is all unpeeled it’s going to come down to something like that where it wasn’t that they set out and said oh, we’re going to make the world’s most emissions unfriendly cars and then just hide it, ha, ha, ha.
I’m sure it’s a response to something, but that’s a response that’s terrible. We’re in the midst of all these issues around global warming and trying to control carbon output and the whole nine yards and then there’s this. Yeah, conceptually not surprised, it’s what big companies do, but in the specifics of it it’s pretty horrifying.
Yeah, I wonder if it’s the equivalent of the Superfund sites of the 1970s except you’ve got your software equivalent, right. This is dumping barrels of toxic chemicals into the river when you know very well what they’re going to do, right. This is the software equivalent of that. What’s fascinating to me is that you have this digital world which we all know that the effects that software has on real life whether it’s all this talk about the Internet of things, or the software that runs our electrical systems, or the software that runs any of the appliances, or anything else that’s in the physical world, but we have …
Nothing brings it home more than realizing that the software’s now a really sophisticated tool for changing the physical outputs of things and people are going to use those things for really bad purposes. To make matters even worse it’s going to be embedded into a physical device like a car. We just saw that wired report on car hacking, how hackers could take control of cars remotely and cause all sorts of mischief including acceleration or making the breaks inoperable, things like that.
Now we have not a hacker, but an internal part of the company that’s making these changes for ill effect. My follow-on questions I think are what responsibilities do software makers have for providing this software that’s going to have real world implications like this VW scandal. Without passing judgment on whether you should be delivering software that can do this stuff, what are the responsibilities for software makers and at what point do we start seeing, I don’t know, regulation of software for critical industries?
There are legal responsibilities and ethical responsibilities. Legal responsibilities are minimal, near zero. You can just make it, right. It’s a tool, it’s like a gun. You make the gun and then somebody takes the gun and what are they going to do with it, so from a legal perspective almost nothing and so that’s where … You talked about regulatory, what needs to happen there. That’s where there’s some potential in the wake of this for something to happen. Ethically, Jesus, right, it’s tricky. One of the hardest parts about ethics is that everyone views the world differently, so carbon emissions accelerating global warming are something important to me and something that from an ethical perspective I treat very seriously.
There’s other people who think it’s bullshit, who don’t believe it and so from their perspective like ah, you know carbon emissions, it’s the liberals making up all this crap anyway, so dot, dot, dot, let’s do what we want to do. To me that’s the hardest part about ethics is that most of the things that fall under an ethical umbrella in our everyday lives are open to the subjectivity of the participants and the perceivers. I guess I’m talking about ethics and maybe I’m not really answering the question. I think their ethical responsibility given the legal expectations of the emissions, I don’t know what the regulatory body is that set the rules for emissions and what the expectations were, but within that lens I think it’s a pretty major ethical failing.
Yeah, that falls on VW’s head right now and I think if they get the full extent of the finds from DEPA I believe it is, it’s something like $18 billion which is a pretty massive potential fine. I just wonder if the software maker is going to be in trouble for anything. It reveals this possibility, so software that’s within the realm of medical devices gets regulated by the FDA and so there are certain protocols that that has to go through. I wonder if software soon can have a few more hoops to jump through as a result of this. I can’t imagine that it wouldn’t.
Yeah, I think you said that the fines would come up to $18 billion. I’ve got news for you, the Volkswagen group had revenues in 2014 of $202 billion, so we’re talking about the high-end of that being less than 10% of a single year’s annual revenues. While I’m sure it will put a crimp in executive bonuses and private jet use perhaps, this will have no impact on Volkswagen whatsoever. It’s one of those things I’ve always found mindboggling that corporations can act any way they want and then they get a slap on the wrist and life goes on.
It certainly seems like another example of it here, but you sound like you’re bullish about regulatory change. I’m perhaps hopeful that there would be some degree of regulatory change that would have some impact on what could be done with software basically, but I’m not optimistic that’s going to happen. You would need it both at a national level and at an international level. You would need a lot of people who don’t really understand what’s going on to agree and people who are used to disagreeing about damn near everything pretty much here in the United States …
… in particular. I don’t know that this is going to really change anything, but it does point to the risk that software has. Specifically in the physical world things are for the most part able to be objectively evaluated. You can check the tolerances on a physical product in a lot of different ways, but software, it’s almost like someone’s mind, right. You don’t know what’s hidden in there and doubly so because the software’s made in so many ways to not be hackable, right.
There’s so many checkpoints and security aspects to it, so it’s one recursive thing onto another. The idea that we could get to the point where … Unless it’s the national government or some international platform under the software that everything is built on which will never happen, it’s a labyrinth within the software. Again it would be just like someone’s mind trying to see in and say what’s really going on in the dark beating heart of this individual. It’s really naughty because of the virtual aspect of it all.
Yeah, and I think to build on that point. This is a fine example of how an emerging technology is ahead of the regulators, right, in a big way. It’s been going on for a period of time, six years or so. Additionally it wasn’t the regulator who caught it, it was environmentally an advocate group, right. They didn’t actually catch them. They were tipped off and it seems to be a fairly cut and dry scenario for them to handle now, but you wonder the more sophisticated these kinds of software cheats become, you wonder how any regulatory agency could keep up with that which if you’re in software and you’re going to work for the government, I don’t know, I imagine if you’re looking at the private sector, the salaries and benefits are probably a lot better there.
Who knows if the government’s going to be able to attract the talent that think a couple steps ahead of companies of hackers, things like that and really get immersed in this software world and become part of the 21st century. I don’t know for sure, but if I were part of the EPA right now I’d be looking into hiring some engineers to help out with this sort of thing because VW might be the tip of the iceberg here.
Yeah, it very well might be, but if it is who cares, right. The companies that violated will get a slap on the wrist. Everything will just keep rolling on. I don’t know, it would be interesting to see. When there’s massive corporate malfeasance like this with some of the things going on in Wall Street before the recession or during the recession happened, things like this, I think you’ll see some companies killed. Kill them, what the hell.
There’s a point where what that thing is doing is just like jail, right. We’ll throw people in jail for their whole lives, but companies, boy, oh boy, they can get away with whatever they want and just keep going on even though it has the potential to harm billions or in this case perhaps even trillions of people, so it’s also broken. I’m not going to predict what the government’s going to do. What I will predict is say that the government either will do nothing or will do something that’s horrible and wrong, but there is near zero chance that they both do something and they do something that is appropriate and helpful to the situation and round and round we go.
Listeners, remember that while you’re listening to the show you can follow along with the things we’re mentioning here in real time. Just head over to TheDigitaLife.com. That’s just one L in the digital life and go to the page for this episode. We’ve included links to pretty much everything mentioned by everybody, so it’s a rich information resource to take advantage of while you’re listening or afterward if you’re trying to remember something that you liked. If you want to follow us outside of the show you can follow me on Twitter @JonFollett. That’s J-o-n F-o-l-l-e-t-t and, of course, the whole show is brought to you by Involution Studios which you can check out @goinvo.com. That’s G-O-I-N-V-O.com. Dirk?
You can follow me on Twitter @dknemeyer. That’s D-K-N-E-M-E-Y-E-R or email me email@example.com.
That’s it for episode 123 of The Digital Life. For Dirk Knemeyer, I’m Jon Follett and we’ll see you next time.