SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY October 27th 2012 A sense of place

TECHCOV.indd 1 16/10/2012 14:39 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

A sense of place

Geography matters as much as ever, despite the digital revolution, says Patrick Lane THERE WAS SOMETHING odd about the black car at the junction of Sut- ter and Hyde Streets. It was an ordinary saloon. Its windows were clear, and it looked in good condition. And yet, as the lights changed and the car pulled away into the bright San Francisco morning, a question remained. Why was it sporting a luxuriant pink moustache at its front? The moustache is the trade mark of Lyft, a ride-sharing service that began in the city this summer. Its drivers are private individuals who, in eect, rent out seats in their cars for a few dollars a time. Lyft’s cut is 20%. It works through a smartphone app. When you register as a customer, you supply your phone number and credit-card details. When you want a ride, you open the app and see a map with the locations of the nearest moustachioed motors. You tap to request a ride, and the app shows you your driver’s name, his rating by past passengers (out of ve CONTENTS stars) and photos of him and his car. He will probably greet you 3 Local services online with a friendly st-bump. After- Your friendly neighbourhood wards you rate him and pay app through the app. He rates you, 5 Maps too, so if you are poor company The world in your pocket you may not get another Lyft. So that Lyft cars can avoid 7 The geography of start-ups being classed as taxis, with all the Something in the air attendant regulation, technically 8 Shapeways the drivers do not charge fares New Eindhoven but receive donations from their passengers. You may con- 9 Urban life sider that distinction too ne to Open-air computers survive legal scrutiny: a regulator 11 Data centres has sent Lyft and two rivals, Side- Not a cloud in sight Car and Tickengo, cease and de- sist letters. But John Zimmer, 12 National dierences chief executive of Zimride, the The world is what you make it rm that runs Lyft, seems con- 14 Life o- and online dent that it will. Mr Zimmer explains that Zimride, which also runs com- ACKNOWLEDGMENTS The new local muting and inter-city car pools, is named not after him but after Zimba- In preparing this report the author has beneted from the ideas, time bwe, where his co-founder, Logan Green, saw people sharing minibuses. and kindness of many people besides You might also ask whether people will be willing to accept Lyfts those mentioned in the text. Special from strangers, or to let strangers into their cars. But Mr Zimmer says the thanks are due to Azeem Azhar, rating system allows both sides to establish a reputation as friendly and Hugo Barra, Henrik Berggren, Nathan Blecharczyk, Nicolas trustworthy. A driver averaging less than 4.5 stars will be dropped. The Brusson, Grady Burnett, Dan Crow, company vets potential drivers carefully, requiring higher standards (for Sarah Garrison, Bill Gourlay, Manik example, on criminal records) than some taxi companies. Lyft has also ar- Gupta, Florian Heinemann, Andrew ranged insurance of up to $1m for its drivers. Hogue, Aljoscha Kaplan, Saul Klein, Aleks Krotosky, Christian Madsbjerg, The ride-sharers spied an opportunity partly because in San Fran- John Lee, Paul Lee, Roger Lee, Ruth cisco taxis can be hard to nd. Uber, which provides black limousines at Lindley, Mariana Mazzucato, Florian the tap of an app, saw a similar gap (though its cars are pricier) and has Meissner, Jill Miles, Lanham Napier, since rolled on to 16 other cities. Kenny Peng, Chris Riley, Danny Rimer, Saul Singer, Anil Stocker, But the opportunity would not exist had the physical and digital A list of sources is at Linda Strick, Alexander Trewby, Molly worlds not become tightly intertwined. Every ride using Lyft involves not Economist.com/specialreports Turner, Amy Tykeson and colleagues, only a physical trip but also several much longer digital journeys: be- Elizabeth Varley, Niko Waesche and tween the passenger’s and the driver’s smartphones, via Wi-Fi and cellu- An audio interview with Julian, Susan and Sophie Shel- the author is at bourne. lar base-stations, along telecoms carriers’ networks and through switch- Economist.com/audiovideo/ es and routers to and from the servers of Lyft as well as, ultimately, the 1 specialreports

The Economist October 27th 2012 1 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

The future is mobile Forecasts from 2011

Subscriptions, bn Tablets and mobile PCs Smartphones 3.1 2.2 2.7 1.7 1.2 0.4 0.9 0.3 0.2 0.2 0.6 0.3 0.7 0.2 0.4 0.5 0.6 0.04 0.08 0.1 2008 09 10 11 12 13 14 15 16 17

Mobile broadband subscriptions, bn 5.0 Mobile traffic, monthly exabytes* 4.4 2011 2017 forecast 3.6 2.8 2.0 3.6 4.4 1.4 0.5 0.9 0.1 0.1 0.3 0.17 0.09 0.2 2008 09 10 11 12 13 14 15 16 17 Voice Mobile phones Mobile PCs and tablets

Source: Ericsson *1018 bytes

2 passenger’s, the driver’s and Zimride’s banks. But it also demon- ferent places varies so much. Forecasts of the death of cities strates the importance of physical location to today’s digital have turned out to be even wider of the mark: over the next two realm. It is central to services such as Lyft, connecting a passenger decades the United Nations expects the world’s urban popula- in one place with a driver in another so that both can travel to a tion to grow by 195,000 a day. third. Geography still matters. A second line of thought puts digital and physical life in Obvious? Not necessarily. In the couple of decades since separate spheres. Internet idealists declared cyberspace to be in- the internet began to expand from academic to widespread pub- dependent of governments of esh and steel. In online games lic use, there have been three main ways of thinking about its re- people thousands of miles apart can battle their way through the lationship with the physical realm. The rst, which reached its ruins of the same imaginary cities even though they will never peak in the late 1990s, emphasised how the digital world would meet on Earth. More peaceful souls can have a go at virtual agri- reshape the real one. People everywhere would have access to culture without getting their hands dirty. Their avatars can live the same electronic libraries of information, news and com- out their dreams in the virtual online worlds of Minecraft. But ment. Many companies would be freer to choose their location, these two worlds were never really separate. Governments have as better communications meant they would no longer need to wielded power over the internet as well as over their physical be near their suppliers or customers. Setting up businesses domains, blocking sites and bashing bloggers. Weapons in on- would become easier, as would the outsourcing of services that line war games, virtual cows in FarmVille and playing Mine- could be supplied electronically. Sta could work just as well at craft with others cost real money. Cyberbullying is just bully- home as in expensive and noisy oces, communicating with ing. What happens online does not stay online. colleagues by e-mail or video link. This special report will emphasise the third option: that the A good deal of this has come to pass. Amazon has shifted physical realm also shapes the digital one. One big reason for this book-buying from the high street to the computer, leaving many is that nowadays a lot of people are online wherever they go. empty shops in its wake; now it is leading the move from the More and more people are connected to the internet in more and printed page to the e-reader. Mechanical Turk, a division of Ama- more places at ever higher speeds. They carry powerful comput- zon, oers companies an on-demand, scalable workforce, ers, in the form of smartphones or tablets, which are continuous- available around the clock, to carry out online tasks for a few ly updated with new information. By 2017 the volume of mobile cents a time. Today’s worker may leave the oce physically but data trac will be 21times greater than it was in 2011, according to never digitally: he is attached to it with invisible tethers through Ericsson, a big maker of telecoms-network equipment. The num- his smartphone and his tablet. He can take part in videoconfe- ber of mobile-broadband subscriptions (mostly for smart- rences so realistic that he might be in the same room. Even medi- phones) will jump from 900m to 5 billion. Local information cal examinations can be carried out online. (where the nearest chemist is; whether there is a taxi nearby) is more valuable to people when they are on the move than when Geography lives they are sitting at a desk. In other respects, however, reports of the death of dis- For the companies racing to provide local services over the tance (the title of a 1995 special report in this newspaper) have internet, maps are an essential foundation. In recent years there been much exaggerated. As this report will explain, many inter- has been an explosion of investment in creating online represen- net start-ups head for San Francisco, New York, Berlin, London or tations of the real world: maps in two dimensions and in three, other hubs to be close to like-minded people. Talk of the end of indoors as well as out, and in ever ner detail. It is possible, once geography (another phrase from the mid-1990s) is about as con- your ngers get the hang of the controls, to y around New vincing as the end of history when the digital presence of dif- York, San Francisco and several other cities, noting the street 1

2 The Economist October 27th 2012 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

2 names and the landmarks and stopping o to learn about places sied-advertising site, has been going since 1999. But the spread as you go. Giant technology companiesnotably Google and of the smartphone has made a huge dierence: it is a powerful, Apple, which has just dropped its arch-rival’s maps from its mo- portable computer that allows its user’s position to be tracked to bile operating systemare locked in a struggle to create the best within a few yards, so that he can be told all sorts of information maps and embed the best information into them. about what is around him. Especially in America and particular- Smartphones are only part of the story. By 2020, reckons ly in its big cities, this has sparked a proliferation of location- Cisco, another big equipment-maker, 50 billion devices of va- based servicesan ugly mouthful meaning, roughly, services rious kinds will be connected. According to Wim Elfrink, Cisco’s arranged or provided online, according to where the user is. head of globalisation, at present only 0.2% of such devices are. They can be anything from driving directions to discounts at lo- The Earth is beginning to be electronically mapped in many di- cal shops or restaurant reservations. Matt Roberts, OpenTable’s mensions. John Manley of HP Labs in Bristol envisages a central chief executive, says that 28% of his bookings are made from mo- nervous system for the Earth, a planet-wide network of tiny, bile devices. He expects that eventually most will be. cheap, tough detectors that will see, hear, feel (by detecting vibra- The catalyst was clearly the iPhone, says Jeremy Stoppel- tions), even smell and taste (by analysing the chemistry of their man, founder and chief executive of Yelp, which lists and re- surroundings), and report back. views local businesses. Easy access to a user’s location, passive- All this will be especially good for the growing numbers of ly, where they just have to open their phone and it tells you city-dwellers. Even the devices in use today are already produc- where they are: that’s really what’s led to everything. Yelp has ing huge amounts of data. Most of these data are, and will con- been around since 2004, three years before the iPhone appeared, tinue to be, generated in cities, because that is where the phones, but Mr Stoppelman says he had always thought Yelp’s content cars, buildings and infrastructure to which they relate are con- would be useful on the go. Of the 78m people who look at Yelp centrated. If those data are combined and analysed, they will on the web, 25% come from its mobile website. The 7.2m who make cities better places to live. Cities are already smart, in that used its mobile apps at least monthly in the rst half of this year people are more productive when they live in close proximity account for 40% of searches. than far apart. Big data can make cities smarter still. Geography is also important to where the internet’s output As easy as one, two, three is produced. Young techies are still drawn to Silicon Valley and Location-based services take three main forms. The rst similar hubs. And although more and more digital information matches unmet demand with unused supply, with the middle- is kept in the cloud, the remote servers that make up the cloud man taking a cut. OpenTable, which tells diners where and are resolutely earthbound, with their location chosen mostly for when there is space and helps restaurants ll tables, is one exam- its climate, its existing infrastructure and its tax regime. ple. Daily deals sites such as Groupon and LivingSocial, which The digital and the physical world are interacting ever more sell special oers from local businesses, are another. closely. The rapidly declining cost of communications and com- Services of this type are coming to the streets too. Uber, puting power has already wrought huge changes in the way peo- from San Francisco, has been running taxis in Boston, Chicago ple go about their daily lives. Digital maps and guides will aect and Toronto as well as limousine services in several cities. Hailo, the way people behave in the physical world and bring about yet a start-up based in London whose founders include three drivers more changes. The digital and the physical are becoming one. 7 of the city’s black cabs, has taken its taxi app to Dublin and com- petes with Uber in Boston and Toronto. Both services work through smartphone apps that show users the nearest available Local services online cars and an estimate of how long one will take to arrive. A tap on the smartphone hails the cab. Both would also like to help New Yorkers pinpoint yellow Your friendly taxis. Although the streets are chock-a-block with them, nding one that will take you where you want to go can be a hair-tearing neighbourhood app experience, especially just be- fore a change of shift. Uber was rst out of the garage in New Essential apps The internet is going local York, in early September. But by mid-October it was back in. Tra- OPENTABLE WAS BORN of frustration. Why, asked Chuck vis Kalanick, the company’s Most popular categories, Templeton, its founder, can I book a seat on an aeroplane chief executive, says demand % of smartphone* users in online but not in a restaurant? So Mr Templeton set out to build was brisk but blames the city’s United States, August 2012

an online service of his own, starting in San Francisco. In a frag- taxi regulator for a shortage of 93 mented industry of small family businesses, that meant signing cabs (160 drivers took part). The Social networks up restaurants one by one. What made it harder still was that the regulator has said that for now Search 92 year was 1998, when many restaurants did not even have inter- taxi drivers may not accept deb- Travel 88 net connections. So OpenTable not only had to persuade restau- it- or credit-card payments rateurs to take its software, it often had to supply hardware too. through smartphones, but must News/information 88 Fourteen years on, OpenTable has spread across North use the system already installed Maps/navigation 86 America and to Germany, Japan and Britain. Restaurants pay a in their cabs. Nor may they use 79 subscription of $199 a month, plus $1 for seats lled through a smartphone on the move. Commerce and shopping OpenTable’s website and 25 cents for those booked through the Uber’s limos are still run- Weather 60 restaurant’s own. In the rst half of this year the rm’s revenue ning and it hopes to try again was $79m, well over twice as much as three years earlier. with taxis next year. Hailo still *Apple: iPhone As OpenTable’s story shows, local services have been pro- only; Android: expects to start a service when Source: Nielsen all devices vided over the internet for many years. Craigslist, an online clas- new rules are in place. It says 1

The Economist October 27th 2012 3 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

2 4,000 drivers have pre-registered for its app. Ricardo Merisme, a Haitian-born cabbie who has signed up, thinks it is a great idea for customers, especially at weekends. On the weekend, some- times it is slow. We don’t have a lot of taxis, especially early morning. If you can just [call] a taxi to come and get you, you would not stand outside to look for one. There are benets for drivers too. Jay Bregman, Hailo’s chief executive, reckons that London cabbies spend up to half of their shifts looking for fares. A variation on the theme of matching supply and demand is collaborative consumption or the sharing economy. Again, idle assets are married to unmet wants, and the match- maker takes a slice of the resulting deal. The dierence is that, un- like restaurant tables or seats in taxis, the assets in question are usually private property. But for the collaborative-consumption services, they would probably not be on the market at all. The point is to share unused resources that already exist and would otherwise, in eect, go to waste. This is the idea un- derlying ride-sharing services such as Zimride, BlablaCar, a French company, and Carpooling.com, a German one, that con- nect drivers and passengers who want to make the same inter- city journeys. Perhaps the best-known example of collaborative consumption is Airbnb, through which people rent out spare rooms, ats or houses to travellers looking for somewhere to stay. Most people book before they travel, but within Airbnb’s smartphone app you can also look for a bed once you have ar- rived, via a button marked Help! I need a place, tonight! The second sort is the location-based social network. This may keep you in touch with your friends: on Foursquare users check in at cafés, bars and other places to let their pals know about their movements (perhaps with a view to meeting). Or it may introduce you to strangers whom you might like to meet such as Badoo (which says it has hundreds of thousands of new pliers into the network. Once a restaurant has joined OpenTable guys and girls joining daily), Highlight and Banjo. or a homeowner has subscribed to Airbnb, there is little point in Another idea is to make it easier to meet your neighbours. going to a rival service and running the risk of double-booking. Local groups can (and do) already create pages on Facebook, but Many location-based services work best in big cities, where Nirav Tolia, the founder of Nextdoor, has quietly set up more there are lots of places to eat and lots of car seats going spare than 5,000 neighbourhood networks in 48 American states in within a few square miles. They tend to start in one city and just over a year. Your neighbours are not your friends, he says, spread out. For many services San Francisco has been the start- but you do have a range of interests in common, from crime rates ing point. It is big enough to be an urban testing ground and full to local schools to good plumbers; or you might just want to bor- of techies who can write the software to make the services work. row a lawnmower. The internet has been about building virtu- It also has plenty of people who are willing to try them: San Fran- al communities, Mr Tolia adds. It’s now about strengthening ciscans seem to eat out more than most. existing physical communities. The third form of location-based service is local informa- Feedback loops tion, search and listings. Yelp has been elbowing aside the Yel- Such services generate a lot of useful data which can low Pages, providing not only phone numbers and addresses but strengthen a network further. Cabbies using Hailo get a record of also links to websites as well as online maps and reviews by cus- their day’s trips and fares, from which they can see when and tomers. Mostly this is nanced by advertising: about 70% of where they are making money. Restaurateurs using OpenTable Yelp’s revenues come from ads by local businesses listed on its can learn who the regular diners are and perhaps make them es- site. Trulia and Zillow allow househunters to search for proper- pecially welcome when they walk through the door. Reputation ties online. On Zillow you can use your nger to draw around can be particularly important in collaborative consumption, your preferred area on a touchscreen; on Trulia you can compare where the suppliers are individuals rather than businesspeople crime rates in dierent places. Both make their money from sell- and therefore have no brand. Ratings and reviews are one meth- ing services to subscribing estate agents. od, though people sometimes pay for puery. With Airbnb, trav- Some companies now span several of these categories. For ellers can choose to stay with Facebook friends, friends of instance, Foursquare is evolving into a local search engine, using friends or hosts recommended by friends. the data it has amassed from members’ check-ins and recom- Not everyone is glad to see new services arrive. Local regu- mendations. Based on where you have been in the past and lations and politics can get in the way, especially in the taxi busi- what you and your friends like, it suggests places and makes of- ness, where Uber, in particular, is seen as a disruptive force. Ev- fers, such as a discount on a cup of coee. Since the middle of this ery city is dierent, says Mr Kalanick. New York is not the only month people have also been able to search its website without place where it has found a spoke in its wheels. In Washington, logging in or signing up for a Foursquare account. DC, local taxi drivers lobbied against competition from Uber’s The strength of all these services depends largely on their limos. The city council proposed a minimum charge for Uber ability to build networks of suppliers and users. The more peo- that was ve times the price of a taxi, but relented after the com- ple join, the more are attracted in. The act of signing up ties sup- pany organised a brisk social-media campaign. 1

4 The Economist October 27th 2012 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

Maps The world in your pocket

Mapmakers are competing for your smartphone WHAT IS A map? There are two things you want, says Pe- ter Birch, product manager for Google Earth. One is to nd your wayhow do you remove all the information except [what] you really need to answer your question? The other is the opposite of the cartographic aim: to create a sense of reality, a completely comprehensive representation of the world. To do the rst, you have to do the second. So that anyone can nd precisely what he is looking for, he must be able to look for anything. Google’s plan for the physical realm, in other words, is the same as for the digital one: to organise the world’s information to make it universally accessible and useful. It wants to map every last hiking trail and park bench, and then make it easy to nd. The detail being brought to digital mapmaking by Google and others is breathtaking. A fast-growing portion of the world is being mapped in three dimensions. Nokia is collecting minute details about roads to feed into advanced driving systems: antici- pating a hill, a car can speed up in order to cruise rather than la- bour up the slope; or it can slow down if the driver is going too fast for a bend ahead. Above the tarmac you can already y, digitally, through sev- 2 Regulators are not the only obstacle to moving into new ter- eral cities. So far Google has generated 3D versions of about 20 ritory. A rival may already have established itself there. Blabla- metropolitan areas, plus bits of others. By the end of the year, Car has spread from France into Britain, Spain and Italy; but in says Je Huber, head of local and commerce, we aim to have 3D Germany Carpooling.com is strongly entrenched and has de- coverage for metropolitan areas with a combined population of signs on Zimride’s patch, America. 300m people. One way of getting into new markets is to buy your way in. Mapmakers are going indoors as well as out. Late last year In Britain Airbnb bought Crashpadder, a similar venture, and both Google and Nokia said they would be helping people nd OpenTable digested toptable, a reservation and review site for their way around places like shopping malls and airports. Nokia smart restaurants. has indoor maps of 5,100 venues in 40 countries. One of Goo- The global giants of the internet, notably Facebook and gle’s rst projects was to cover Tokyo’s metro, which to strangers Google, want to go much more local, too. About 7m small busi- can be a bewildering warren, and the city’s two airports. Google nesses have regularly maintained Facebook pages, which may says that more than 10,000 oor plans are available to users of its be their only online presence. Facebook’s selling point is that its Android mobile operating system. IMS Research, a consultancy, advertising platform makes it remarkably easy to go further in forecasts that by 2016 almost 120,000 maps of indoor venues reaching potential customers and aim ads at nely targeted audi- will be available to consumers. ences selected from the network’s membership of 1 billion. Ad- vertisers can narrow down their target audience by age, gender Not for garage start-ups and tastes (expressed through Facebook’s likes) as well as by Collecting all these data demands a huge investment. No- area. A price pops up, and a sponsored story can be planted. If kia sends out cars with lasers to build up its pictures of the plan- people choose to like the ad or the company, then stories appear et; Google, having had cars going round photographing the in their friends’ news feeds. Facebook has also introduced world at street level, now also maintains a eet of aeroplanes. Li- Foursquare-style check-ins and has bought Glancee, another censing such information from others is cheaper, and Google still app to help you discover interesting people nearby. It is also said does some of that, but gathering it yourself gives you a much fre- to be considering restaurant reviews. er hand. People who use the maps or who want to be on them of- Google’s self-described mission is to catalogue all the ten help by lling in gaps or pointing out errors. A number of An- world’s information and to make it searchable online. Naturally droid’s indoor maps have come from shops or museums. that includes local businesses, from restaurants to ironmongers, Describing the contours of the Earth is only the start. The and what their users think of them. But to be comprehensive it great thing about a digital map is that there is no limit to the infor- needs content, not least more reviews (although its search results mation that can be attached to it. Drivers can be told, turn by bring up reviews from other sources). To help ll that gap, it re- turn, how to get from A to B, and what the trac will be like on cently bought Frommer’s, a travel-guide business, and Zagat, a the way. People using public transport can nd out which bus or restaurant-review company. Still, it has other things in its favour: train to get and how long it will take to change from one to anoth- a powerful search engine, the brains of 33,000 Googlers, and the er. A business’s location can be tagged with its contact details, ad- determination to map the world in the most intricate detail. 7 vertisements and reviews by people who have used its services. 1

The Economist October 27th 2012 5 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

2 Landmarks can have photos and videos attached. maps, the more valuable they get as millions of bits of data are Places in the material domain are being festooned with lay- gathered and fed back in. Data collected from drivers’ smart- er upon layer of online information known as the geoweb. phones and connected navigation systems make it possible to Some of this has been created by Google and other commercial predict how, for example, speeds and journey times vary with mappers: here is a branch of Starbucks; here is Interstate 101. A lot the seasons, the weather and the time of day. A commuter’s past more is being added by people uploading place-tagged photos habits and the jiggling of a phone in his pocket, says Michael and social-media posts, writing reviews and Wikipedia entries Halbherr, head of Nokia’s location and mapping business, may indicate that he is about to arrive at a rail- way stationand can be sent Groupon of- A commuter’s past habits and the jiggling of a phone in fers from businesses on the concourse as he walks in. his pocket may indicate that he is about to arrive at a Broadly, says Martin Garner of CCS railway stationand can be sent Groupon o ers from Insight, another consulting rm, the map business covers four areas. One is whole- businesses on the concourse as he walks in sale supply, where Nokia is the leader. Its customers include Bing (Microsoft’s and suggesting amendments to published maps. The spread of search engine), Yahoo! and Foursquare. Recently the company smartphones has made it much easier for people to add their concluded a deal with Amazon for the Kindle Fire tablet. Its plat- own little annotations to the geoweb. form is integrated into Windows 8, the latest version of Micro- In a recent paper Mark Graham, of the Oxford Internet In- soft’s operating system. And four out of ve cars with in-vehicle stitute (part of the university), and Matthew Zook, of the Univer- navigation systems use its maps. sity of Kentucky, measured the thickness of the geoweb, taking In the other three areas Google is top dog. Its maps are the as their gauge the number of places (businesses, schools, parks most popular among developers of applications and, at least in and so on) with information attached to them in Google Maps. the West, for use on people’s desktops. (In China and Russia, Yan- The data are messy, Mr Graham says, but by and large the geo- dex and Baidu, the biggest search companies in those countries, web is a lot thicker in rich places than in poor ones, and thickest rule the roost.) Google has also dominated the maps used on mo- of all in the Nordic countries (see map, next page). In May 2011 bile devices. Norway boasted 434 hits per 1,000 people; Finland, Swe- The huge costs of creating a good map are a big barrier to den and Denmark were also in the top ve. Afghani- entry. Google, which entered the fray only eight years ago, stan had a mere 0.03. There was more content about was bold enough to surmount it. Apple hopes to do the Tokyo than about the whole of Africa. same. Until recently Google’s maps were built into Ap- Moreover, dierent groups of people see the ple’s iPad and iPhone as well as into smartphones that same place through dierent lenses. Mr Graham and use Google’s own Android operating system. This year Ap- Mr Zook trawled the geoweb for ref- ple, which has bought three mapping companies since erences to 18 words in several lan- 2009, decided to go its own way. guages. Even in the Palestinian Maps had become too important for it to depend on territories, searches in Arabic Google’s. Through the maps, Google was gaining generally return only 5-15% of the valuable probe data because it knew where number in Hebrew and only a iPhones were (according to comScore, a re- 1 third to a quarter of the number in English. In Tel Aviv a search for the word restaurant brings up quite dierent results in Arabic from those in English or Hebrew. Flemish content in Belgium is much more likely to refer to tax than French content, whereas in French there are more references to govern- ment. Amor is much more common than love in most of Spain, but in tourist spots the English word holds sway. Much of the content embedded in digital maps is still patchy. Driving direc- tions are sometimes eccentric; suggestions for public transport can be unreliable; trying to learn about the Massachusetts State House in Boston when your phone insists you are across the river in Cambridge is plain annoying. But the systems are im- proving fast. And a digital map, especially one in three di- mensions, is great fun to explore. A good one can also be extremely useful. People want the best maps to guide them when they drive or when they are look- ing for things to do or buy. And the more people that use the

6 The Economist October 27th 2012 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

The geography of start-ups Thick and thin Number of indexed places in Maps per 1,000 people, May 2011 Something in the air 0-0.99 1-4.99 5-19.99 20-99.99 100-200 >200

Why birds of a tech feather ock together IN THE LATE 19th century Alfred Marshall, a founding fa- ther of modern economics, asked why rms in the same in- dustry were often geographically near each other. Proximity, he said, created something in the air: if one man starts a new idea, it is taken up by others and combined with suggestions of their own; and thus it becomes the source of further new ideas. Marshall was thinking about Victorian manufacturing, but the same is true of the information-technology companies of the Source: Mark Graham and Mathew Zook 2010s. Silicon Valley is home to many of the industry’s giants, and hopeful founders of young start-ups still head for northern 2 search rm, iPhone owners are likelier than users of Android California. A certain Mark Zuckerberg left Harvard for Palo Alto phones to consult mobile maps). And Google provided better as soon as he got the chance. Others beat a path to newer hubs, maps for Android devices than for Apple’s: in particular, they such as Berlin, London, Moscow, New York or Tel Aviv. had spoken, turn-by-turn driving directions. Economic theory suggests four main reasons why rms in The new version of Apple’s operating system for mobile the same industry end up in the same place. First, some may de- devices, iOS 6, released in September and built into the iPhone 5 pend on natural resources, such as a coaleld or a harbour. Sec- that went on sale in the same month, contains Apple’s own ond, a concentration of rms creates a pool of specialised labour maps, not Google’s. The company has licensed data from Tom- that benets both workers and employers: the former are likely Tom, a Dutch navigation-systems rm. There are spoken turn-by- to nd jobs and the latter are likely to nd sta. Third, subsidiary turn directions, and the maps are seeded with listings and re- trades spring up to supply specialised inputs. Fourth, ideas spill views from Yelp; touching a symbol on the map opens Yelp’s over from one rm to the next, as Marshall observed. But there content. Yelp has, by and large, many more (and more up-to- are also forces that encourage companies to spread out. One is date) reviews than Google, although outside the United States its the cost of transporting their products to widely dispersed cus- coverage is much thinner than at home. tomers. Another is rents, which rise when rms cluster together. You might imagine that the dramatic fall in the cost of com- Crimson Apple munications and computing would have pushed rms in the in- But when Apple’s maps appeared, they were not a patch on formation-technology industry (among others) farther apart. Google’s. Not only were they much less detailed, but they con- Natural resources do not matter to them; all they need is a good tained a number of errorssuch as marking an Irish farm called internet connection. The ease of online communication should Aireld as an airport and depositing Leknes, a Norwegian town, reduce the need for their people to be close together in order to about a mile out to sea. Some cities could be viewed in 3D, but work, to deal with customers and suppliers or to swap ideas. certain structures were distorted (though some, such as the Young companies really can pick their spot. That would seem to Brooklyn Bridge, were soon xed). Apple’s maps, unlike Goo- count against Silicon Valley, where premises are costly, and gle’s, also lacked integrated public-transport information: a tap against London and New York, which are not only expensive but on a metro station or a bus stop, if it was marked at all, brought also lack California’s high-tech history. Berlin is cheaper, but up a menu of apps to be downloaded separately, some of them there are plenty of places all over Europe where costs are lower. paid for. Yet although you can nd tech companies of all shapes and Apple was so embarrassed by these aws that about a sizes almost anywhere, the smaller ones especially have a fond- week later its chief executive, Tim Cook, posted an open letter on ness for huddling together. Jed Kolko, Trulia’s chief economist, the company’s website in which he apologised to customers and puts this down mainly to the continuing attraction of a deep suggested that those who had bought the iPhone 5 (or upgraded pool of skilled labour. The less an industry needs to be near nat- an older iPhone or iPad with iOS 6) use other suppliers’ maps, ei- ural resources, its suppliers or its customers, he says, the more ther via apps or via the web browser on Apple’s devices. Google it’s likely to cluster where its workers want to live. is widely thought to be preparing a map app for Apple’s online store, but it has not submitted one for Apple’s approval so far. The magnet factor In eect, in breaking with Google and giving iPhone users For the tech industry, workers want to live either where the worse maps than before, Apple has gambled on three things. jobs already are (eg, Silicon Valley) or in lively cities (London, First, that users will like its maps’ embedded content. Second, New York, Berlin and perhaps San Francisco). At Wooga, an on- that it will be able to improve fast. And third, that the allure of the line-games company in Berlin, the 250 sta come from 35 coun- iPhone and the loyalty of Apple’s fans will buy it time. After all, tries. Jens Begemann, the founder and chief executive, says that people do not buy smartphones for the maps alone, and queues Australians and Canadians sign contracts even before leaving for the iPhone 5 were every bit as long as for previous incarna- home. Dmitry Repin of Digital October, a co-working and meet- tions of the revered device. But Apple has more catching-up to do ing place for start-ups in Moscow, says that for a university kid, than it expected. In a market where brands can rise and fall fast, it studying in the regions, moving to Moscow sounds smart. Even may also have less time than it thought. 7 short distances can make a dierence. Zimride’s Mr Zimmer says 1

The Economist October 27th 2012 7 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

2 he moved his young company just 30-odd miles (50km) from Palo Alto to San Francisco because that was where most of his then 20 employees lived (he now has 32). For programming talent, says Mr Stoppelman at Yelp, noth- ing beats Silicon Valley. The Valley is big enough and old enough to have clusters within clusters, from makers of semiconductors and network equipment near San Jose to Google and Facebook The cycles of investment, success, failure farther north and a host of smaller young internet companies in and regeneration have made the Valley San Francisco. Even within the city, there are divisions between districts: South of Market, or SOMA, with lots of smaller start- what it is ups; the Design District, which houses Airbnb and Zynga, a games company, in bigger premises; and Mission Bay, the base of Brian McClendon, who oversees Google Maps and Google Dropbox, a cloud-storage rm (see map, next page). Earth, says he has been working within a mile of where he is Young companies need more than labour; they also need now for 22 of his 24 years in the Valley: rst at Silicon Graphics money and advice. Anthony Goldbloom of Kaggle, which runs and later at his own company, Keyhole Earth. That was sold to online competitions for data scientists, moved his company to Google, which now occupies Silicon Graphics’s former home. the SOMA district from Melbourne this year. Mr Goldbloom The diaspora of Silicon Graphics, he says, created many, (who was once an intern at The Economist) says that being in a many companies throughout the Valleyas a diaspora we com- cluster makes serendipity possible: he can have more face-to- municate and we contact and we hire each other and we steal face meetings, which are often more productive than phone calls each other’s people. Google already has a diaspora of its own. or e-mails, and there is a good chance of bumping into someone In the Valley people are also close to the latest ideas. Ideas interesting, such as a venture capitalist. The venture funds, in- are exposed to that little tiny region possibly years ahead of the deed, constitute another cluster within the Valley. rest of the world, reckons Mr Stoppelman. You are always The recycling of people is as important as that of money. building on the idea that came immediately before. If you are trying to build the thing that comes next, early access to information about the things that are out there helps you. That New Eindhoven sounds like what Marshall had in mind. Will other hubs ever catch up? New York, London and Berlin have two possi- Why a Dutch start-up chose to make its home in New York ble advantages. One is that they are bigger and therefore livelier and more attractive IN THE LIFT at 419 Park Avenue South, head- prints the products and handles payments. to young people than San Francisco, let ing out for a bite of lunch, are four reasons Amateurs with the 3D bug have their own alone the smaller places on the way to why Shapeways moved its headquarters designs, or customised versions of other San Jose. Chad Dickerson, chief executive from Eindhoven, in the Netherlands, to New people’s, made there. New York has plenty of of Etsy, an online marketplace for hand- York. Anthony Cangelosi and Erin O’Keee designers wanting to use 3D printers to made and vintage goods based in are web designers; Christopher Carter is a create jewellery, components or beautiful Brooklyn, jokes that in San Francisco product manager; Natalia Krasnodebska shapes. Mr Weijmarshausen thinks 3D print- everything closes at ten o’clock. liaises with customers. Mr Cangelosi is the ing will hit the fashion world, too. The The other is that they have a wider veteran, having clocked up nine whole material in which he prints most is nylon. pool of industries and hence skills on months with the 3D-printing rm; the In conventional manufacturing, which companies can draw. To many this others have been there for ve or less. economies of scale matter. With 3D printing variety is invaluable. It’s not just engi- Finding very talented people in a big it costs no more, per unit, to make one item neering talent, says Dennis Crowley, city is easier than in a small town, says than to make thousands, so rening a pro- boss of Foursquare, which is based in Peter Weijmarshausen, Shapeways’ chief duct is much less costly than it used to be: as New York. You can nd that all over the executive and one of its founders. People designers see where improvements can be place. We may have a whole bunch of en- like to be in a vibrant, cool city. As well as made, or receive feedback from customers, gineers, but we also have a whole bunch the oce in Manhattan, Shapeways has a they can tweak the products as they go of product people. 25,000-square-foot manufacturing site in along. Some items printed by Shapeways go New York’s programming pool was Queens, with machines building up all through as many as 50 iterations. deepened when Google started putting manner of weird and wonderful shapes in In a business of small batches and engineers into its oce in the city in 2003. more than 30 materials. The factory is not continuous renements, proximity to clients Some alumni have since set up or joined full yet, but Mr Weijmarshausen expects it is a virtue. Showing people what is possible start-ups there. Matthew Brimer of Gen- will be by the end of this year. The company is very important, says Mr Weijmarshausen. eral Assembly, a co-working and educa- is still printing in Eindhoven too. Every month Shapeways organises a walk- tion rm, explains that since the nancial Many other young, growing rms come about at its factory. It also runs monthly crisis people have been readier to work in to tech hubs to sh in their pools of skilled meet-ups at which designers and buyers start-ups; Wall Street has become less of a labour. Mr Weijmarshausen had a further, can share ideas. As the company grows, the draw. People in London start-ups also see equally important motive for coming to New boss expects to build more facilities, but he the presence of Google and other big York: to be close to his customers. Profes- is determined to stay close to the market: I companies as a boon. Some say the same sional designers upload digital versions of don’t think it makes sense at all to start about the city’s advertising and nancial their products to Shapeways and open manufacturing in one place and ship it industries, but others see them as deep- virtual shops on its website. Shapeways across the globe. pocketed competitors for sta. As for capital, New York and London 1

8 The Economist October 27th 2012 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

2 have their own crop of venture funds. Much of Europe is ser- Urban life viced from London too, and London and Silicon Valley funds, as well as local ones, are active in Israel. Is Europe small enough for investors to feel the benets of proximity? Adam Valkin of Accel Open-air computers Partners in London thinks so. I woke up in Berlin today and I was in the oce at 9am, he says. His colleague, Philippe Botteri, adds that on a bad-trac day it can take him three hours to drive from San Francisco to San Jose. Younger hubs are also trying to conjure up Marshall’s Cities are turning into vast data factories something in the air. Alexander Ljung of SoundCloud, a site for publishing audio les, was drawn to Berlin from Stockholm IN 1995 GEORGE GILDER, an American writer, declared by the German capital’s strong intersection of technology and that cities are leftover baggage from the industrial era. art and creative chaos. He sees a sense of reciprocity among Electronic communications would become so easy and univer- its start-ups: his Sunday activity is trying to advise people. sal that people and businesses would have no need to be near Almost every hub has its co-working spaces, accelerators one another. Humanity, Mr Gilder thought, was headed for the and incubators where tiny rms of perhaps two or three people death of cities. work cheek by jowl. The provider of the space may oer equity It hasn’t turned out that way. People are still ocking to cit- or just a place to work, meet and learn. There are also regular con- ies, especially in developing countries. Cisco’s Mr Elfrink reck- vivial gatherings, such as Silicon Drinkabout in London, where ons that in the next decade 100 cities, mainly in Asia, will reach a troubles can be shared as well as drowned. population of more than 1m. In rich countries, to be sure, some Capital from past successes is being recycled too, through cities are sad shadows of their old selves (Detroit, New Orleans), investors such as Stefan Glaenzer of Passion Capital in London, but plenty are thriving. In Silicon Valley and the newer tech hubs Christophe Maire, a Berlin-based entrepreneur, and Kai-Fu Lee, a what Edward Glaeser, a Harvard economist, calls the urban former Google executive who now runs Innovation Works in ability to create collaborative brilliance is alive and well. Beijing. Watchers of the British tech scene are waiting to see what Cheap and easy electronic communication has probably Mike Lynch, the founder and ex-boss of Autonomy, will do with helped rather than hindered this. First, connectivity is usually the money he made when his software rm was bought by Hew- better in cities than in the countryside, because it is more lucra- lett-Packard. HP pushed him out in May. tive to build telecoms networks for dense populations than for sparse ones. Second, electronic chatter may reinforce rather than Nothing quite like the Valley replace the face-to-face kind. In his 2011 book, Triumph of the But no other place has seen the cycles of investment, suc- City, Mr Glaeser theorises that this may be an example of what cess, failure and regeneration in the information-technology in- economists call Jevons’s paradox. In the 19th century the in- dustry that have made the Valley what it is, so no other place as vention of more ecient steam engines boosted rather than cut yet has the Valley’s scale and resilience. Some still question the consumption of coal, because they made energy cheaper whether other young ecosystems would have the strength to across the board. In the same way, cheap electronic communica- survive anything like the dotcom bust of a decade ago. They tion may have made modern economies more relationship-in- probably would, but until a crash happens, no one knows. tensive, requiring more contact of all kinds. For cities as big and diverse as London and New York, it Recent research by Carlo Ratti, director of the SENSEable may not matter much. They have other strengths. And many oth- City Laboratory at the Massachusetts Institute of Technology, er cities too may be about to discover an asset they did not know and colleagues, suggests there is something to this. The study, they had. It is neither people nor money, but something else in based on the geographical pattern of 1m mobile-phone calls in the city air: data. 7 Portugal, found that calls between phones far apart (a rst con- tact, perhaps) are often followed by a urry within a small area (just before a meeting). MARIN CONTRA COSTA Bay Data deluge Downtown Bridge Berkeley San Francisco San Francisco A third factor is becoming increasingly important: the pro- Golden Gate Bridge Airbnb duction of huge quantities of data by connected devices, includ- SAN Craigslist ing smartphones. These are densely concentrated in cities, be- FRANCISCO Dropbox Tickengo Kaggle cause that is where the people, machines, buildings and Nextdoor infrastructures that carry and contain them are packed together. OpenTable San Francisco Salesforce.com They are turning cities into vast data factories. That kind of Bay SideCar ALAMEDA merger between physical and digital environments presents an Trulia Twitter opportunity for us to think about the city almost like a computer PACIFIC S Uber Design District in the open air, says Assaf Biderman of the SENSEable lab. As OCEAN i Oracle Yelp Mission Bay l Zynga South of Market those data are collected and analysed, and the results are recy- i Facebook cled into urban life, they may turn cities into even more produc- c Menlo Park o PaloAlto NetApp tive and attractive places. Stanford Google n Yahoo! Cisco SANTA Some of these open-air computers are being designed

Hewlett-Packard Mountain Intel V CLARA from scratch, most of them in Asia. At Songdo, a South Korean Highway 101 a View Santa Clara l city built on reclaimed land, Cisco has tted every home and SAN l eApple San Jose Caltrain y business with video screens and supplied clever systems to MATEO Adobe Urban area eBay manage transport and the use of energy and water. But most cit- CALIFORNIA ies are stuck with the infrastructure they have, at least in the 20 km short term. Exploiting the data they generate gives them a chance 1

The Economist October 27th 2012 9 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

2 to upgrade it. Potholes in Boston, for instance, are reported auto- matically if the drivers of the cars that hit them have an app called Street Bump on their smartphones. And, particularly in poorer countries, places without a well-planned infrastructure have the chance of a leap forward. Researchers from the SENSE- able lab have been working with informal waste-collecting co- operatives in São Paulo whose members sift the city’s rubbish for things to sell or recycle. By attaching tags to the trash, the re- searchers have been able to help the co-operatives work out the best routes through the city so they can raise more money and save time and expense. Exploiting data may also mean fewer trac jams. A few years ago Alexandre Bayen, of the University of California, Berkeley, and his colleagues ran a project (with Nokia, then the leader of the mobile-phone world) to collect signals from partici- pating drivers’ smartphones, showing where the busiest roads were, and feed the information back to the phones, with congest- ed routes glowing red. These days this feature is common on smartphones. Mr Bayen’s group and IBM Research are now moving on to controlling trac and thus easing jams rather than just telling drivers about them. Within the next three years the team is due to build a prototype trac-management system for California’s Department of Transportation. Cleverer cars should help, too, by communicating with ware helped to reduce serious crime by 30% and violent crime by each other and warning drivers of unexpected changes in road 15% between 2006 and 2010. conditions. Eventually they may not even have drivers at all. However, the real prize, says John Day of IBM Research, lies And thanks to all those data they may be cleaner, too. At the not in single areas such as trac or policing but in making whole Fraunhofer FOKUS Institute in Berlin, Ilja Radusch and his col- cities better by drawing on data from multiple sources for multi- leagues show how hybrid cars can be automatically instructed ple purposes. Smartphones and cameras, say, can track the ow to switch from petrol to electric power if local air quality is poor, of people as well as that of cars. A social-media urry may show say, or if they are going past a school. that more people than expected are going to turn up at a rock Enforcing the law may also become easier. Andrew Hud- concert, suggesting that trac should be redirected, more public son-Smith, director of the Centre for Advanced Spatial Analysis transport laid on or more police deployed. at University College London, thinks that within ve years or so Even brilliant technology is not much use if cities are badly police forces will be able to predict and prevent some crimes by run or their politics are dysfunctional. Dierent departments or watching Twitter and other social media. The thought may give local authorities have to work together. In Rio de Janeiro’s con- civil libertarians the creeps, but some Londoners, recalling the trol centre, ocials from several departments watch screens part played by instant messaging in last year’s riots in their city, side by side. When a thunderstorm strikes, the airport and may wish the police already had such foresight. schools can be closed and trac redirected from this single cen- More mundanely, existing data about crime can be ana- tre. In newly built places institutions have to be designed along lysed more systematically. Law enforcement’s main problem is with the infrastructure. Simon Giles of Accenture, a consulting the fragmentation of information, says Mark Cleverley of IBM. rm, explains that when his rm worked on a creative digital Local policemen may know that street robberies are likelier on city in Guadalajara, Mexico, a structure of trusts was created to certain days of the week; combining information like this with oversee the development and running of the place, helping to other data (such as weather, time of day and so forth) makes ensure that the benets of development are shared equally with- crimes easier to prevent. In Memphis predictive-analytics soft- in the community. Another problem is how to pay for all the analytics and new infrastructure in cities. Private provision is one possibility. For example, German insurers are providing their customers The lure of the city FOKUS Urbanisation rate, % with weather-warning systems developed at , says Ul- rich Meissen, head of the institute’s electronic-safety depart- Economies: developed developing FORECAST ment. Cisco’s Mr Elfrink points out that cities themselves could 85.9 charge for many smart services. Residents might pay a few dol- 77.5 82.1 lars a month for online medical consultations, alerts that their 72.3 children have reached school or internet access on the bus. 66.6 64.1 But quite a lot of things to make city life better can be done 55.8 54.5 inexpensively by residents themselves. Many governments and 46.0 cities are encouraging this by making public data available. The 34.9 European Union is sponsoring a project called CitySDK, involv- 25.3 ing eight cities from Manchester to Istanbul, to give developers 17.6 data and tools to create digital urban services. One pilot, in Hel- sinki, is meant to make it easier for citizens to report problems. Another, in Amsterdam, will use real-time trac data to allow 1950 70 90 2010 30 50 people to nd the best way around town and avoid trac jams. Source: UN A third, in Lisbon, will guide tourists. 1

10 The Economist October 27th 2012 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

One project The internet, as Andrew Blum vividly describes in his book, Tubes, published this year, is a physical entity. Mr Blum, tracked a journalist with Wired, a technology magazine, traced his way 3,000 bits through the internet, from the wire that goes out of the wall of his house, along the street and thence through bre-optic cables, of rubbish into exchanges where network operators’ cables meet, through from routers and switches, to data centres (including Facebook’s and Google’s in Oregon) and back home again. Seattle. All this equipment has to be kept somewhere. And as Mr Inform- Blum shows for several dierent types of kit, once one big com- pany installs a load of equipment, for whatever reason, others ation like are likely to be drawn to the same place. this may The amount of data being generated is growing at an eye- popping pace: IBM estimates that 2.5 quintillion bytes are being make created every day and that 90% of the world’s stock of data is less people than two years old. A growing share of these data is being kept not on desktops but in data centresbuildings containing rack think about after rack of computers. what they Even in the age of superfast bre-optic cables, companies do not like their data to travel too far. Concern about latency [de- throw away lay] used to be the privilege of big corporates, but it has started to matter again for a certain number of applications, says Vivek Badrinath, chief executive of Orange Business Services, the en- 2 Mr Biderman says there is an even richer seam to be mined terprise arm of France Telecom-Orange. Companies with sales- as people nd and create their own data in real time. For exam- men on the road, for instance, want orders to be entered and pro- ple, air quality can be continually monitored by cyclists and cessed at once. His data centres are at most 150 milliseconds away cross-checked with time, place and weather. In fact, just about from any big city. Distance is not dead; but it is measured in time any object can tell a story. An earlier SENSEable project tracked not space. 3,000 bits of rubbish from Seattle to nearby dumps, to Portland, Some data, such as nancial and medical information, are via Chicago to Florida and California, and to landlls all over more sensitive than others. There are regulations and strict certi- America. Information like this may make people think about cation of the conditions in which they can be kept. At Bend- what they throw away. Some may even do something about it. Broadband, about 30 miles from Prineville, the main customers Many ideas are brewing in the world’s cities, from grand of a new centre that opened last year are health-care and nan- projects to single apps. Some will be dead ends; others will rely cial institutions. on the enthusiasm of citizens, which will not always be in plenti- ful supply. But in lots of imperceptible ways, from better trac Awesome Oregon management to bins that tweet when they are ready to be emp- Many companies rent space in shared (or co-location) tied, city life is getting better. 7 centres belonging to companies such as Rackspace or Bend- Broadband. Some, such as Amazon or Google, are big enough to build their own. Facebook too has outgrown co-location. It had Data centres been renting space in California and Virginia, but needed sites of its own. It wanted one in the western states, to serve users on that side of the country and with good connections to Asia. It is also Not a cloud in sight building centres in the east, in Forest City, North Carolina (a state that also plays host to Apple, Google and others), and in Europe, at Lulea, in northern Sweden. But why did it choose a little town in the Oregonian desert, miles from anywhere? Jay Park, who runs the company’s design, construction and The best places to store your terabytes operations teams for data centres, says Prineville is the ideal lo- cation for the evaporative cooling system that Facebook uses. PRINEVILLE, OREGON, IS home to only about 10,000 peo- Data centres are power-hungry beasts. Energy accounts for ple but to hundreds of thousands of servers. In January much of their operating cost, both to supply the servers and to 2010 Facebook decided to build a huge data centre on a 124-acre cool them. Most contain a water-chiller which cools the air in the plot in the high, juniper-pocked desert east of the Cascade server rooms, consuming lots of energy. mountains. The rst building is as long as an aircraft carrier. A Facebook, though, cools its centres with the dry (and often second, nearing completion, is slightly bigger. chilly) desert air, which enters a chamber on the roof of the Facebook is not alone. Bulldozers are chugging away on a building and is mixed with warm air recycled from the server 160-acre site nearby, digging for Apple. The iCloud will be rooma little in summer, a lot in winter. After passing through housed here, in far-from-nebulous concrete and metal. The state two sets of lters, the air is misted with high-pressure water boasts a growing collection of such centres (see map, next page). sprays, then pulled through an array of fans. From there it drops Google landed farther north, in The Dalles. Amazon is in Board- into an aisle in the server hall where a perforated metal plate man, on the Columbia river, which marks the border with Wash- slows it down and helps distribute it around the server racks. ington state. Rackspace, a fast-growing keeper of other compa- Warm air is returned to the mixing chamber where the process nies’ data, is planning a facility in the same town. A group of began and used to heat oces if the weather is cold or expelled smaller centres is clustered around Portland. from the building if it is hot. The centre’s design also contains 1

The Economist October 27th 2012 11 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

a i National dierences Electricity b

m transmission u

Seattle l

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C Quincy Above 500 kV The world is what you WASHINGTON make it PACIFIC OCEAN Airport Boardman Hillsboro Portland The Dalles Every country has its own internet

s n i IN MARCH 2012 two Chinese internet companies, Youku a IDAHO t Prineville and Tudou, announced they were going to merge. The deal n u Bend Eugene o sounded just like many in the West: in a booming but over-

M crowded market, consolidation was overdue and the two lead- e

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a ers, both still making losses, decided to join forces. Yet the deal

c s was also unlike any in the West, because there is nothing quite a C like Youku and Tudou elsewhere. OREGON The two are online video companies, showing anything from Japanese cartoons to Prison Break, as well as an increas- 75 km CALIFORNIA NEVADA ing amount of their own content. Each has more than 200m sub- scribers. The closest thing elsewhere is YouTube, but the Chinese are less keen than Westerners on home-made videos, preferring 2 other elements intended to keep energy costs down. All in all, professional fare as a welcome alternative to the dull fodder Facebook gets a lot of cooling in Prineville for nothing. served up on state television. There is another dierence, too. Be- But the weather was not the only reason for coming. The hind the Great Firewall, YouTube, like Facebook, is blocked. town is close to the main carriers’ bre routes, and connections China demonstrates a basic truth: that the internet, despite to Asia, via Portland, are good too. When Facebook rst arrived, its global image, is not the same everywhere. The internet the site was only about half a mile from high-voltage electricity doesn’t exist, says Steve Prentice of Gartner, a research and con- lines running from Washington to California, although the com- sulting rm. There are 190 dierent internets. One way or an- pany has since had to add a longer spur, adding to its costs. La- other, just about every government tries to control what its citi- bour was available both to build the centre and to run it. zens may do online. Using Skype to make a voice call, Mr Another big reason, perhaps as important as the climate, Prentice notes, is routine in America, subject to some restrictions was tax. Oregon is one of only ve states with no sales tax. You in Canada and can get you arrested in Ethiopia. replace a server every three years and a server costs a lot, so sales In his book, The Internet of Elsewhere, published last tax is a big deal, says Mr Park. Electricity can be cheaper else- year, Cyrus Farivar, a journalist with Ars Technica, a website, where, but Mr Park reckons that the power rate is easier to chronicles the development of the internet in Estonia, Iran, Sene- change than the tax law. In Washington state, which also has a gal and South Korea. In Estonia civic-minded techies and bright cluster of data centres (Microsoft, among others, is at Quincy), young ministers introduced widespread free access to the inter- legislators have been willing to make deals with inward inves- net. The country came under concerted cyber-attack from Rus- tors, but in Oregon there is no need for special arrangements. sians after the Bronze Soldier of Tallinn, a Soviet monument in The other main incentive is a concession on property taxes. the Estonian capital, was moved in 2007. In South Korea decades In rural enterprise zones, which include Boardman and The of government investment and hard work have created a rich Dalles as well as Prineville, investments are exempt from these economy from the ruins of war. The country not only has broad- for up to 15 years provided that they create at least 35 jobs and band speeds that most Westerners can only dream of but also wages are at least 50% above the local average. professional computer-games leagues. In Senegal, despite the In damper western Oregon, John Sheputis, chief executive country’s potential, nearly every single hope has ended in dis- of Fortune Data Centers, a co-location operator based in San appointment. In Iran, where Mr Farivar’s father was born, blog- Jose, has just opened a data centre at Hillsboro, near Portland. gers were arrested and tortured and had to leave the country. Hillsboro may not have a desert climate, but it has bags of infra- Some of the internet’s early idealists did not think that gov- structure. Fortune’s site is a stone’s throw from a huge Intel semi- ernments would be able to interfere in the digital realm. In 1996, conductor factory, which brought with it a plentiful, reliable (and in the grandly named Declaration of the Independence of Cy- pretty green) power supply. It also attracted contractors that spe- berspace, John Perry Barlow addressed governments as you cialise in building mission-critical facilities such as data cen- weary giants of esh and steel. He went on: tres, which need to operate around the clock without fail. The risk of lightning, the biggest cause of power cuts, is low. Hillsboro You have no sovereignty where we gatherI declare the global social space we are building to be naturally independent of the tyrannies sits on top of the main domestic and transpacic bre networks. you seek to impose on usYour legal concepts of property, expres- And it is near Portland’s busy airport, making it easy for Mr She- sion, identity, movement, and context, do not apply to us. putis’s tenants to visit. Again, the absence of sales tax counts for a lot; and in urban To which governments replied: oh, yeah? Because the inter- western Oregon, Mr Sheputis needed to create only one new job net is a physical entity, of bres, routers and switches, govern- to be exempt from property tax. Without its tax system, he says, ments can and do disable parts of it. That explains the blocking the state wouldn’t be as compelling. With it? Given the same of YouTube in China and Iran, as well as other interruptions per- rents, even if power were free in California, he reckons he would iodically published by Google. In September there were reports still be better o in Oregon. If you’re west of the Mississippi and that Iran was planning to create its own domestic internet by you’re not in Oregon, you’re paying too much, he says. 7 next March. It was not clear whether it would also try to cut o 1

12 The Economist October 27th 2012 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY Brazil United States Don’t like Governments’ requests for content removal to July - December 2011, by number of requests

Germany India South Korea

Source: Google Britain Argentina Turkey Spain France

194 187 103 101 94 49 46 45 43 31

2 access to the global system, which in any case is heavily ltered. will turn up and that they are happy with it before they payand Government blocks can often be circumvented, but doing so can in any case they may not have a credit card. Oskar Hartmann, be cumbersome and dangerous. chief executive of KupiVIP, an online seller of clothing in Russia, Governments often ask internet companies to remove ma- says 95% of his sales are paid for in cash on delivery, either to the terial that breaks local laws or oends local sensibilities, and door (where the courier may have to wait while the customer even Western democracies are not above trying to censor politi- tries on the clothes) or to a drop-o point in a nearby shop. Since cal content. Last year Google turned down a request from Span- the big international couriers do not cover Russia, KupiVIP and ish regulators to delete 270 search results referring to mayors, OZON, a broader e-commerce group, have set up their own de- prosecutors and other public gures. In September this year po- livery operations to make sure that goods reach their destina- lice in Brazil briey detained the head of Google’s operations tion. Cash on delivery is common in China and India, too. there after the company balked at an order to remove YouTube Jun Lee of ReD Associates, a consulting rm, who has ob- videos about a paternity suit involving a mayoral candidate, be- served how people use technology in Kenya and Nigeria, says fore Google complied. Africa is seen as a mobile rst market, in which most people’s Internet companies sometimes accept that compliance is introduction to the internet brings them in contact with fairly ad- the price of doing business. Until 2010 Google ltered the results vanced services, such as money transfer. This, many say, prom- from its Chinese search enginein eect, accepting censorship ises great opportunities to technology companies. But Mr Lee demanded by the Chinese government. It now routes searches cautions that in such countries the idea of the internet as a place coming from the mainland through less constrained Hong Kong. where you can hang out and travel just does not exist. The cost In some Muslim countries Google blocked a YouTube trailer for a of using it is prohibitively high. It is seen as a place to nd an- lm called The Innocence of Muslims that outraged people of swers to specic questions, such as the market price for a crop. that faith. It is appealing against a judge’s ruling in Brazil that it Sometimes the queries are too hard even for Google: How do I should remove clips there, too. Twitter blocks certain tweets become a better entrepreneur? Services that might seem won- from being seen in countries where they would break the law. derful to Westerners may not be much use to an African. A continually updated map on your phone has little value if you Taste and technology always travel by the same route because there is only one, or you But it is not only politics that shapes the way the internet do not want to risk breaking down in a strange place. develops and interacts with the world around it. Consumers and And even in Western countries not everyone is looking for the state of a country’s infrastructure also make a big dierence. online reviews of the newest sushi bar and an app-summoned An American or British online shopper may well pay in advance car to take him there. In the suburbs of cities such as Birmingham with a credit card for his goods, trusting both the supplier to send (England) or Turin, says Mr Lee, people typically live not far from it and the post oce or courier company to deliver it. Russians where they grew up, travel no more than a mile or two to work are a good deal warier. They want to be sure that what they order and see their friends in the pub. They don’t need Facebook. 7

The Economist October 27th 2012 13 SPECIAL REPORT TECHNOLOGY AND GEOGRAPHY

Life o- and online to an internet full of local dier- ences that are not conned to Offer to readers particular places. For example, Reprints of this special report are available. The new local A minimum order of five copies is required. Trinidadians use Facebook in a Please contact: Jill Kaletha at Foster Printing distinctive way to reect local Tel +00(1) 219 879 9144 concepts of scandal and gossip. e-mail: [email protected] But because more than half of Corporate offer Trinidadian families have at The physical and the digital world are becoming Corporate orders of 100 copies or more are increasingly intertwined least one member living available. We also offer a customisation abroad, this form of use is not service. Please contact us to discuss your OF ALL THE methods of communication invented by hu- tied to Trinidad; it could just as requirements. manity over the centuries, none has disseminated so much easily be adopted by Trinidadi- Tel +44 (0)20 7576 8148 e-mail: [email protected] information so widely at such high speeds as the internet. It is ans living in London or Toronto. For more information on how to order special both a unifying force and a globalising one. But, as this report has A further prediction is reports, reprints or any copyright queries argued, its very ubiquity makes it a localising one too, because it that, as people rely more on con- you may have, please contact: is clearly not the same everywhere, either in what it provides or nected devices to explore the The Rights and Syndication Department how it is operated and regulated. physical world, digital informa- 26 Red Lion Square The smartphone has liberated its user from the PC on his tion will have a growing inu- London WC1R 4HQ desk, granting him access on the go not just to remote computers ence on how they see the physi- Tel +44 (0)20 7576 8148 Fax +44 (0)20 7576 8492 and long-lost friends on the other side of the world but also to cal realm and on how they e-mail: [email protected] the places around him. If he lives in a city, as most users do, then move through it. Mr Graham www.economist.com/rights his fellow city-dwellers and the buildings, cars and streets and Mr Zook, with Andrew around them are throwing o almost unimaginable quantities Boulton, also of the University Future special reports of valuable data from which he will benet. And although com- of Kentucky, begin a forthcom- France November 17th2012 munications across continents have become cheap and easy, ing paper by imagining a young Mexico November 24th 2012 Obesity December 15th 2012 physical proximity to others remains important in creating new woman’s progress through Oshoring January 19th 2013 ideas and productsespecially (and perhaps ironically) for com- Dublin on a Saturday nighta panies oering online services. You cannot (yet) have a coee to- kind of digital Ulysses. She Previous special reports and a list of forthcoming ones can be found online: gether online. checks texts and tweets from economist.com/specialreports This simultaneously more localised and more globalised her boyfriend (where is he?), world will be more complicated than the world of old. Dierent passes a bar (a favourite band rules will continue to apply to dierent countries’ bits of cyber- once played here) and looks up a review of a restaurant (seems space. Gartner’s Mr Prentice thinks that three basic forces will good). But the city she sees has been digitally constructed for her. shape the mobile internet, the transport of data across it and the Her boyfriend sends her a text to arrange a meeting place. She content available on it: politicians’ demand for control; (most) knows about the band because her past online searches have people’s desire for freedom; and companies’ pursuit of prot. It is prompted her smartphone to provide the details. And the restau- possible to imagine scenarios in which rant review is nothing more than the sum of other people’s opin- one of these forces comes out on top; for ions, delivered electronically. instance, a Big Brother state that keeps a All this is harmless, even helpful, but there is a darker side close eye on the internet and determines to it. Eli Pariser, an American journalist, has written of a lter who can do what on it. But it is more likely, bubble in which people are presented only with ideas and says Mr Prentice, that dierent combina- opinions that their past online behaviour suggests they are likely tions of the three forces will prevail in dif- to agree with. As they make their digital way through the physi- ferent places. cal realm, something similar may happen. Being steered away What seems certain is that life online from areas of high crime late at night is no bad thing. But not be- will become more local without becom- ing pointed towards a museum or a club because you haven’t ing any less global. With a smartphone in been anywhere like it before may be a missed opportunity. your hand you can nd out more, if you want to, about what is going on immedi- ately around you. The next bus goes in What seems certain is that life online will become more ve minutes. The coee shop across the local without becoming any less global street, where you haven’t been for a few weeks, is oering you a free cappuccino. Those cushions you looked at online are available in the depart- Standing in front of a monument and being given a version of ment store around the corner. Mr Hudson-Smith of UCL specu- history that reinforces your prejudices closes rather than opens lates that the smartphone could even help revive the high street the mind. Messrs Graham, Zook and Boulton point out that Goo- if people knew that they could take home today what Amazon gle provides very dierent information about the Bronze Soldier could not deliver until tomorrow. of Tallinn to Estonian- and to Russian-speakers. None of this will reduce the scope or the appetite for catch- Yet on the whole it is surely a good thing for the digital and ing up with friends, news and stories from far away. The truth is the physical worlds to become increasingly interwoven. They that three things will go on at once, says Danny Miller, an an- are complements, not substitutes for each other. The digital over- thropologist at UCL. There will continue to be unprecedented lay will, in eect, allow people to see not only through walls opportunities for homogenisation and globalisation, but there (what’s in that shop?) and around corners (is there a taxi nearby?) are also possibilities for great localisationincluding services but even through time (what happened here in 1945?). Each realm such as Foursquare. Lastly, there will be a new localism, thanks on its own is fascinating; together they are irresistible. 7

14 The Economist October 27th 2012