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President Donald Trump points at CNN’s Jim Acosta and accuses him of “fake news” while taking questions during a news conference following Tuesday’s midterm congressional elections at the White House in Washington, U.S., November 7, 2018.

Kevin Lemarque | Reuters

“The Boy Who Cried Wolf” has long been a staple on nursery room shelves for a reason: It teaches kids that joking too much about a possible threat may turn people ignorant when the threat becomes an actual danger.

President Donald Trump has been warning about “fake news” throughout his entire political career putting a dark cloud over the journalism professional. And now the real wolf might be just around the corner that industry experts should be alarmed about.

The threat is called “deepfaking,” a product of AI and machine learning advancements that allows high-tech computers to produce completely false yet remarkably realistic videos depicting events that never happened or people saying things they never said. A viral video starring Jordan Peele and “Barack Obama” warned against this technology in 2018, but the message was not enough to keep Jim Carrey from starring in “The Shining” earlier this week.

The danger goes far beyond manipulating 1980s thrillers. Deepfake technology is allowing organizations that produce fake news to augment their “reporting” with seemingly legitimate videos, blurring the line between reality and fiction like never before — and placing the reputation of journalists and the media at greater risk.

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Ben Zhao, a computer science professor at the University of Chicago, thinks the age of getting news on social media makes consumers very susceptible to this sort of manipulation.

“What the last couple years has shown is basically fake news is quite compelling even in [the] absence of actual proof. … So the bar is low,” Zhao said.

The bar to produce a convincing doctored video is lower than people might assume.

Earlier this year a clip purporting to show Democratic leader Nancy Pelosi slurring her words when speaking to the press was shared widely on social media, including at one point by Trump’s attorney Rudy Giuliani. However, closer inspection revealed that the video had been slowed to 75% of its normal speed to achieve this slurring effect, according to the Washington Post. Even with the real video now widely accessible, Hany Farid, a professor at UC Berkeley’s School of Information and a digital forensics expert, said he still regularly receives emails from people insisting the slowed video is the legitimate one.

“Even in these relatively simple cases, we are struggling to sort of set the record straight,” Farid said.

It would take a significant amount of expertise for a fake news outlet to produce a completely fabricated video of Oprah Winfrey endorsing Trump, but researchers say the technology is improving every day. At the University of Washington, computer vision researchers are developing this technology for positive, or at least benign, uses like making video conferencing more realistic and letting students talk to famous historical figures. But this research also leads to questions about potential dangers, as the attempts made by attackers are expected to continually improve.

How to detect a deepfake

To make one of these fake videos, computers digest thousands of still images of a subject to help researchers build a 3-D model of the person. This method has some limitations, according to Zhao, who noted the subjects in many deepfake videos today never blink, since almost all photographs are taken with a person’s eyes open.

However, Farid said these holes in the technology are being filled incredibly rapidly.

“If you asked me this question six months ago, I would’ve said, ‘Yeah, [the technology] is super cool, but there’s a lot of artifacts, and if you’re paying attention, you can probably tell that there’s something wrong,'” Farid said. “But I would say we are … quickly but surely getting to the point where the average person is going to have trouble distinguishing.”

In fact, Zhao said researchers believe the shortcomings that make deepfake videos look slightly off to the eye can readily be fixed with better technology and better hardware.

“The minute that someone says, ‘Here’s a research paper telling you about how to detect this kind of fake video,’ that is when the attackers look at the paper and say, ‘Thank you for pointing out my flaw. I will take that into account in my next-generation video, and I will go find enough input … so that the next generation of my video will not have the same problem,'” Zhao said.

Once we live in an age where videos and images and audio can’t be trusted … well, then everything can be fake.

Hany Farid

professor at UC Berkeley’s School of Information

One of the more recent developments in this field is in generating speech for a video. To replicate a figure such as Trump’s voice, computers can now simply analyze hundreds of hours of him speaking. Then researchers can type out what they want Trump to say, and the computer will make it sound as if he actually said it. Facebook, Google and Microsoft have all more or less perfected this technology, according to Farid.

Manipulated videos of this sort aren’t exactly new — Forest Gump didn’t actually meet JFK, after all. However, Farid says this technology is hitting its stride, and that makes the danger new.

“To me the threat is not so much ‘Oh, there’s this new phenomenon called deepfakes,'” Farid said. “It’s the injection of that technology into an existing environment of mistrust, misinformation, social media, a highly polarized electorate, and now I think there’s a real sort of amplification factor because when you hear people say things, it raises the level of belief to a whole new level.”

The prospect of widespread availability of this technology is raising eyebrows, too. Tech-savvy hobbyists have long been using deepfakes to manufacture pornography, a consistent and comically predictable trend for new technology. But Zhao believes it is only a matter of time before the research-caliber technology gets packaged and released for mass-video manipulation in much broader contexts.

“At some point someone will basically take all these technologies and integrate and do the legwork to build a sort of fairly sophisticated single model, one-stop shop … and when that thing hits and becomes easily accessible to many, then I think you’ll see this becoming much more prevalent,” Zhao said. “And there’s nothing really stopping that right now.”

Facing a massive consumer trust issue

When this happens, the journalism industry is going to face a massive consumer trust issue, according to Zhao. He fears it will be hard for top-tier media outlets to distinguish a real video from a doctored one, let alone news consumers who haphazardly stumble across the video on Twitter.

“Once we live in an age where videos and images and audio can’t be trusted … well, then everything can be fake,” Farid said. “We can have different opinions, but we can’t have different facts. And I think that’s sort of the world we’re entering into when we can’t believe anything that we see.”

Zhao has spent a great deal of time speaking with prosecutors, judges — the legal profession is another sector where the implications are huge — reporters and other professors to get a sense for every nuance of the issue. However, despite his clear understanding of the danger deepfakes pose, he is still unsure of how news outlets will go about reacting to the threat.

“Certainly, I think what can happen is … there will be even less trust in sort of mainstream media, the main news outlets, legitimate journalists [that] sort of react and report real-time stories because there is a sense that anything that they have seen … could be in fact made up,” Zhao said.

Then it becomes a question of how the press deal with the disputes over reality.

“And if it’s someone’s word, an actual eyewitness’ word versus a video, which do you believe, and how do you as an organization go about verifying the authenticity or the illegitimacy of a particularly audio or video?” Zhao asked.

Defeating the deepfakes

Part of this solution may be found in the ledger technology that provides the digital infrastructure to support cryptocurrencies like bitcoin — the blockchain. Many industries are touting blockchain as a sort of technological Tylenol. Though few understand exactly how it works, many swear it will solve their problems.

Farid said companies like photo and video verification platform Truepic, to which he serves as an advisor, are using the blockchain to create and store digital signatures for authentically shot videos as they are being recorded, which makes them much easier to verify later. Both Zhao and Farid are hoping social platforms like Facebook and Twitter will then promote these videos that are verified as authentic over non-verified videos, helping to halt the spread of deepfakes.

“The person creating the fake always has the upper hand,” Farid said. “Playing defense is really, really hard. So I think in the end our goal is not to eliminate these things, but it’s to manage the threat.”

Until this happens, Zhao said the fight against genuinely fake news may not start on a ledger, but in stronger consumer awareness and journalists banding together to better verify sources through third parties.

“One of the hopes that I have for defeating this type of content is that people are just so inundated with news coverage and information about these types of videos that they become fundamentally much more skeptical about what a video means and they will look closer,” Zhao said. “There has to be that level of scrutiny by the consumer for us to have any chance of fighting back against this type of fake content.”

A woman in Washington, D.C., views a manipulated video that changes what is said by President Donald Trump and former president Barack Obama, illustrating how deepfake technology can deceive viewers.

ROB LEVER | AFP | Getty Images

Nicholas Diakopoulos, assistant professor in Northwestern University’s School of Communication and expert on the future of journalism, said via email that the best solutions involve a mix of educational and sociotechnical advances.

“There are a variety of perceptual cues that can be tip-offs to a deepfake and we should be teaching those broadly to the public,” he said.

Diakopoulos has referenced Farid’s work on photo forensics among ideas outlined in an article he wrote for the Columbia Journalism Review last year. He also cited a research project called FaceForensics that uses machine learning to detect, with 98.1% accuracy, whether a video of a face is real. Another research technique under study: Blood flow in video of a person’s face can be analyzed in order to see if pixels periodically get redder when the heart pumps blood.

“On the sociotechnical side, we need to develop advanced forensics techniques that can help debunk synthesized media when put into the hands of trained professionals,” he told CNBC. “Rapid response teams of journalists should be trained and ready to use these tools during the 2020 elections so they can debunk disinformation as quickly as possible.”

Diakopoulos has studied the implications of deepfakes for the 2020 elections specifically. He also has written papers on how journalists need to think when “reporting in a machine reality.”

And he remains optimistic.

“If news organizations develop clear and transparent policies of their efforts using such tools to ensure the veracity of the content they publish, this should help buttress their trustworthiness. In an era when we can’t believe our eyes when we see something online, news organizations that are properly prepared, equipped and staffed are poised to become even more trusted sources of information.”

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experts predict more pound weakness



Sterling whipsawed Tuesday as Boris Johnson emerged as the winner of the Conservative Party leadership contest, and will become British Prime Minister as of Wednesday.

The currency initially fell for a third day running during morning trade, plunging a further 0.4% against the dollar to reach a 27-month low. Investor jitters center around concern that Johnson could pull the U.K. out of the European Union without a formal deal in place.

But immediately after Johnson was announced as the country’s next leader, the pound pared its losses to trade around the flatline at $1.2474. Johnson’s rise to power had largely been priced in by the markets and the announcement meant one rung of uncertainty had been removed.

Johnson will deliver his maiden speech as prime minister outside 10 Downing Street on Wednesday. On Tuesday, Johnson struck a compromising tone, promising to “unite the country,” but reiterated calls for optimism on the prospect of the U.K. leaving the bloc.

Michael Brown, a senior analyst at Caxton FX, said his focus would quickly switch to the next steps: “Namely, Cabinet appointments and the Brexit plan. The latter will be of more importance for markets, with sterling set to remain under pressure should Boris continue his ‘do or die’ Halloween Brexit stance.”

Britain’s National Institute of Social and Economic Research (NIESR) published a report on Monday which suggested that there is now a 40% chance of a “no-deal” Brexit on October 31, an event anticipated by many to be profoundly damaging for the British economy.

Johnson has vowed repeatedly to take the U.K. out of the EU with or without a deal in place, while also rejecting the existing Withdrawal Agreement negotiated by his predecessor Theresa May, and pledging to return to Brussels to seek new terms.

In the past week, as 160,000 Conservative Party members cast their ballots to elect the country’s next leader, both Johnson and rival Jeremy Hunt hardened their stance on the Irish backstop clause insisted upon by Brussels, therefore increasing the likelihood of a no-deal departure.

In a recent note, Berenberg senior economist Kallum Pickering raised the risk of a hard Brexit — in which the U.K. exits both the EU’s customs union and its single market to trade on World Trade Organization terms — to 40%, making it Berenberg’s base case.

However, as Pickering pointed out, Johnson has a reputation for adapting his rhetoric to changing tides of political sentiment. A Conservative member of the House of Lords, Michael Heseltine, once described Johnson as “a man who waits to see the way the crowd is running and then dashes in front and says ‘follow me’.”

Speaking to CNBC Monday, Pickering said an unresolved Brexit was like a “kidney stone lodged in the abdomen of the British economy,” and projected greater sterling weakness until a resolution is found.

In a further note Tuesday, Pickering suggested that Johnson’s promise to scrap the Irish backstop from the Withdrawal Agreement may just be a high-risk negotiating strategy, with a low chance of success, to push for compromise from Irish Prime Minister Leo Varadkar to accept a half-way deal. If the EU refuses Johnson’s demand, Pickering predicted, moderate British lawmakers could move to thwart a no-deal exit, setting the stage for a “major showdown in Parliament” in the fall. This could lead to a further Brexit extension, a snap election or a second referendum.

“While Johnson may be forced to take a more pragmatic line eventually, we do not expect him to use soft words on Brexit in his first speech,” Pickering wrote on Tuesday.

“In the not-unlikely event that he doubles-down and appears to harden his Brexit stance further, U.K.-oriented equities and sterling would likely react negatively.”

Boxed into a hard Brexit

Two further developments suggest that the hard Brexit risk has increased. Ahead of his anticipated coronation, Johnson has been surrounding himself with hardliners likely to box him into pursuing the exit door on Halloween come what may. As he begins to name his Cabinet this week, the extent of the euroskeptic makeup of his ministers could further impact the currency.

Meanwhile, the main opposition Labour party is sliding in the polls, rendering it a lesser threat in the event of a snap general election and potentially leading moderate Conservative members of parliament (MPs) to back no deal, in order to protect their seats from the surging Brexit Party.

The odds of an election in the fall are rising sharply. Stephen Gallo, European head of FX strategy at BMO Capital Markets, said in a note Monday that Johnson will have an “incredibly narrow window of opportunity” to exploit Labour’s vulnerability, cut a deal with the Brexit Party to preserve Conservative seats, and lay out a post-EU and domestic policy agenda.

“That window starts to close rapidly by the end of the year, and there is no telling what 2020 will bring without a new parliamentary arithmetic for the Tory (Conservative) leadership to work with,” Gallo said.

“We still believe there is more GBPUSD weakness to come.”

Kamal Sharma, director of G-10 FX strategy at Bank of America Merrill Lynch, said the combination of Brexit factors weighing on the U.K. economy meant a potential “flash crash” for sterling could not be ruled out.

“The current account deficit has been the Achilles heel for the U.K. for a number of years now. Historically, the U.K. has been a very big recipient of FDI (foreign direct investment),” he told CNBC’s “Squawk Box Europe” on Monday.

“It’s now becoming more of a net debt story, so if investors start to suddenly give up on the U.K., for example, given the liquidity situation of sterling already, that really opens us up to a potential flash crash.”

Things can only get better

However, not all analysts were quite so pessimistic. Giles Keating, senior advisor at Torchwood Capital, told CNBC Tuesday that most of the bad news is already priced into sterling and investors could “start to look forward.”

“What do you look forward to? Fiscal expansion — can the Bank of England react to a big fiscal expansion by cutting interest rates? It doesn’t seem to me to make sense. That debate could end up being to hold rates here at a time when others were cutting them,” he told CNBC’s “Squawk Box Europe.”

“The Bank of England is looking at an economy where wages are accelerating. The latest wage rises are really moving up sharply, we had the National Institute warning yesterday of 4% inflation as a risk — the Bank, in my mind, can’t cut against that background.”

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Europe is at odds over who will replace Christine Lagarde at the IMF



International Monetary Fund (IMF) managing director Christine Lagarde speaks during a press conference in Tokyo on October 4, 2018.

Kazuhiro Nogi | AFP | Getty Images

European officials are still scratching their heads over Christine Lagarde’s successor at the International Monetary Fund (IMF), according to several people with knowledge of the discussions, with no standout candidate for the role.

Lagarde is due to start her new job as president of the European Central Bank (ECB) in November, leaving the IMF’s chair empty. In Europe, EU member states agree that the next IMF managing director needs to be from the continent — but they’re struggling to rally behind one particular name.

“The truth is that there is no readily available tried and tested European all-rounder,” a European minister, who did not want to be named due to the sensitive nature of the talks, told CNBC.

There is no official shortlist of candidates, but many governments of EU nations have put forward a name to take the top job. Some of the non-official candidates are:

  • Jeroen Dijsselbloem, former Dutch finance minister and president of the Eurogroup (which brings together the 19-euro zone finance ministers).
  • Mario Centeno, the Portuguese finance minister and currently Eurogroup chief.
  • Nadia Calvino, the Spanish finance minister.
  • Olli Rehn, central bank governor of Finland and former European commissioner for the euro.
  • Mark Carney, the current governor of the Bank of England — a Canadian citizen who also has Irish and English passports.
  • Kristalina Georgieva, from Bulgaria, who is currently serving as chief executive of the World Bank.
  • Mario Draghi, the outgoing ECB president.

According to two other European officials, who also preferred to remain anonymous, none of the candidates have the right profile at this stage. Some names also don’t have enough experience or they are not liked by certain governments due to their political affiliation, their past comments or their background, the officials told CNBC. Since the IMF’s formation back in 1945, the managing director has always been from Europe.

There is also an age restriction to deal with. The IMF’s rules state that managing directors must be under 65 years of age when appointed and cannot serve beyond their 70th birthday. As such, the chances of certain candidates, such as Kristalina Georgieva, become much smaller.

“If (the) age limit is adapted to today’s realities, there is Georgieva and Draghi,” the European minister told CNBC.

France, who’s chairing the discussions across the different EU capitals, is reportedly looking at ways to change the laws. However, it is unclear whether that idea would be approved inside the IMF.

A source within the French government told CNBC that Paris “does not have a preferred candidate and will play its coordination role impartially.” Meanwhile, a separate EU official confirmed to CNBC that the aim is to have an agreement by the end of the month.

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EU has 35 billion euro list ready if US hits EU cars: EU trade chief



European Commissioner Cecilia Malmstrom holds a news conference in Brussels, Belgium March 7, 2018.

Eric Vidal | Reuters

The European Union would retaliate with extra duties on 35 billion euros ($39.1 billion) worth of U.S. goods if Washington went ahead with tariffs on EU cars, the bloc’s trade chief said on Tuesday.

“We will not accept any managed trade, quotas or voluntary export restraints and, if there were to be tariffs, we would have a rebalancing list,” European Trade Commissioner Cecilia Malmstrom told a committee of the European Parliament.

“It is already basically prepared, worth 35 billion euros. I do hope we do not have to use that one,” she continued.

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