• Sonderveröffentlichung: Merck Finck Privatbankiers

The end of privacy.

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Technology. Video camera systems and search engines monitor us almost completely. At the same time, digital helpers improve our health and make life easier. Is the end of privacy a reasonable or too high price to pay for technical progress?

Seven decades ago, the British writer George Orwell published his novel "1984". At that time, the vision of a totalitarian state, in which the thought police observed every human being completely, left the readers stunned. "Today 1984 is overtaken by reality," Robert Greil, chief strategist at Bankhaus Merck Finck, makes clear.

Hundreds of millions of video cameras have been installed worldwide - more than 170 million of them in China alone. According to the government, another 400 million will have been built there by 2020. Nationwide, this will result in a video surveillance network that, according to Beijing, will be "ubiquitous, fully networked, always in motion and fully controllable".

But data is also being collected in the western world. We "liken" every second Facebook post with joy, don't pay any further attention to advertisements on Google that are frighteningly well tailored to us, install voice-activated Amazon assistants in our apartments, accept countless cookies every day and never give a damn about the small print.

The ever faster technological change, the so-called techceleration of our everyday life, has only just begun. In 2025, according to IDC, people will interact with networked devices once every 18 seconds, 4800 times a day. Then not only much more data will be produced. These will also be more strongly evaluated. According to a study by the investment house Merrill Lynch, only 0.5 to 1 percent of all data is used today. By 2025, the volume of analyzed data is expected to skyrocket to 37 percent. "Data creation and acquisition will explode," Greil is sure, "and the imminent introduction of the 5G wireless standard, which is ten to 20 times faster than the current standard, will accelerate it."

So do we have to be afraid? "Above all, we must distinguish. Many innovations will significantly improve our lives. But things always get critical when Big Data meets Big Brother," Greil analyses.

The 18th of September last year was a real eye-opener for him. "On that day, Apple held its annual presentation. But the new iPhone was not the main topic. The focus was on the Apple Watch with its new features such as emergency call or real-time ECG. I wondered why Apple is devoting so much space to this still tiny area in terms of sales. But I quickly realized that the portable devices could become a real game changer for medicine."


CEO Tim Cook had announced that Apple Watch would help millions of people around the world to be more active and live healthier lives. And Ivor J. Benjamin, president of the American Heart Association, describes the ability to access health data when needed as "groundbreaking. The real-time acquisition of data about a person's heart changes the entire medical practice.

The portable guardians of health are addressing a problem that has been with us for a very long time. Global obesity has tripled since 1975. Today, 650 million adults are obese and another 1.8 billion are overweight. These include 34 percent of adults in the United States. The World Health Organization has even coined its own term for this international epidemic: Globesity.

But in the meantime the wind has changed. Being slim is very popular today. And this forms the basis of a worldwide health and wellness industry that has now reached a sales volume of more than four trillion US dollars. The beautiful new world of high-tech health consciousness is fueled primarily by the demand of the millennials. The 18-34 age group is willing to spend a lot of money on a healthier lifestyle.

In addition to Apple Watch and its competitors from FitBit to Garmin, there are many other portable niche products for health. These include devices for controlling asthma, back pain and ulcers, for example. iSono Health in the USA has even launched an "intelligent bra" that can detect early signs of breast cancer and pass this data on to a doctor. Dexcom provides diabetes patients with devices to monitor glucose levels in real time. The next step - the automatic delivery of insulin - is being prepared by a company called Tandem Diabetis.

According to HIS Global, the rapid 5G standard could pave the way for services worth a trillion US dollars in the healthcare industry. It will become the basis for the development of continuously available networking and for sensors based on data acquisition on health and well-being. Merrill Lynch estimates that the personal healthcare segment alone could reach a volume of up to ten trillion US dollars worldwide.

Robert Greil is convinced that "Digital health will revolutionize our healthcare system".

Other sectors will also benefit. The key to autonomous driving also lies in data collection and data management. This technology of the future will only be possible with a complex network of sensors and cameras that will map the outside world for the computer. The information about the destination is supplemented by data from the environment recording - distance to objects, kerbstones, pedestrians,  Straßenmarkierungen and traffic light signals. Das Auto knows when to accelerate, brake or turn.

This makes more efficient and ecological mobility systems conceivable, especially in large cities. "And the security aspect should not be underestimated either", überlegt Greil. According to the World Health Organization, around 1.25 million people die every year in road traffic worldwide. In around 90 percent of cases, the cause of the accident is the driver. "People make mistakes," Greil says. Is the end of privacy not a fair price to pay for all these improvements in our lives?

"Let's look at China, the country that is leading the way in these trends," Greil suggests. In China, video cameras are supported at every corner by modern face recognition software. In Beijing and Shanghai, people can now be recognized by their gait or the shape of their body alone. Wartix, the company that developed this system, claims to be able to identify people up to 50 metres away - from behind or with their faces covered.

The Chinese are also leading in the field of speech recognition. iFlyTek, an artificial intelligence company, claims to be able to recognize the voice of a target person in a room full of people and to record their utterances.

"China is ahead of all other players because data protection laws are much less strict there," Greil explains. "Companies have access to vast amounts of personal information. And because artificial intelligence learns faster the more data it is provided with, the whole field in China is likely to develop better than elsewhere." The close ties between the private sector and the government are also helpful when it comes to financing. Thanks to state aid for research, development and capital raising, China today has more "Unicorns" - privately owned companies with a value of more than one billion US dollars - than the USA.


"There's a way," says Greil. By 2030, China wants to establish a domestic industry worth 150 billion dollars in the field of AI. Then criminal records, patient files, online shopping or articles in social media are to be linked with identity documents and the face of the individual.

"All this is part of a comprehensive 'social scoring system' to be introduced in 2020, in which each person is rated with a 'social rating', erklärt Greil. Penalties for wrongdoing that the state judges may include exclusion from travel abroad, from private schools, domestic hotels or certain employment opportunities. In addition, the offenders are probably named by name and exposed on a public black list.

"To us in the West, this may seem incredibly "Orwellian. But is our world so much different?" asks Greil. Trendsetting legal provisions such as the European Basic Data Protection Regulation, which has been in force since May 2018, regulate how companies may store and use personal data. But the state's control is left out. And even the most well-meaning laws will hardly be able to keep up with the pace of technological progress.

One example is Facebook. In 2006, the company first encountered the great displeasure of consumers when it introduced its "News feed". Later, this service became a major success factor for the company. However, this was only the first in a series of skirmishes with users and regulators. These included issues such as selling private data to third parties, massive unreported theft of data, electoral interference in other states and even experiments to manipulate people's moods. Nevertheless initiatives like "#DeleteFacebook" seem to have hardly any popularity.

Facebook data fishing still fades compared to Google, which stores the search history of all devices and creates individual profiles - sold to advertisers - based on location, gender, political preferences, hobbies, career history, interests, relationship status and user income. "The rise of niche search engines like DuckDuckGo, which do not collect personal information and block hidden web trackers, is very interesting in this context," says Greil.

Since its introduction a decade ago, this privacy-conscious Google alternative has initially been used very little. By 2015, DuckDuckGo had less than five million searches per day. By 2016, the figure had risen to ten million. Today it's over 30 million. "Compared to Google, with its 3.5 billion searches per day, this is still tiny, but the strong growth of DuckDuckGo could indicate that the struggle for privacy and data protection is about to begin.

It's not that far yet. In our homes and workplaces, in our cars and on the streets, data about us is constantly being collected and analysed. We are followed, observed and identified around the clock in a way that even George Orwell would have considered unimaginable. "And in many cases, we would also like to see the associated advances in safety, health or online shopping," Robert Greil makes clear and concludes: "Whether this is a curse or a blessing will be decided by future generations. ®


Digital Wealth - investing in the new world.

"Daniel Kerbach, Chief Investment Officer at Bankhaus Merck Finck, analyzes that "four major investment themes can be derived from the end of privacy: health, data security, digitization with a special focus on artificial intelligence, and the broad field of sustainability.

Advances in personal health and well-being are driven by digital technologies, reshaping the way we live and work, and creating entirely new industries. "Companies in the digital health sector benefit directly from this. Thanks to disruptive technologies - sensors, connectivity or cloud computing - they bring new and improved products and services to the market. Because it fights civilisation diseases and increases age, it has an indirect impact on lifestyle, leisure,  Wellness and nutrition."

When Big Data meets Big Brother, cyber security becomes more and more important. "97 percent of Fortune 500 companies have already been hacked. And three percent were hacked, they just don't know it," informs Kerbach. "That's why investments in cyber security are rising massively. Whereas in 2015 it was still 91 billion US dollars, by 2020 it will already be 161 billion. It's a big deal."

A third area covers topics related to artificial intelligence and the associated new products and productivity increases. rät Kerbach investors to take Asia and especially China more into account. "It is estimated that revenue from narrowly defined AI solutions alone will increase from $7.3 billion in 2018 to approximately $90 billion in 2025. Ironically, in the global competition, the person who runs the wenigsten Datenschutz will be ahead of the pack."

Kerbach favours thematic investments in the concrete implementation of investment ideas. It is important not to be too narrow about the topics. "Managers must have a certain range of titles available to respond. In addition, the smaller the investment universe, the lower the weight of the idea in the portfolio should be. We find systems in digital safety, in automation or in robotics interesting. Asia Tec' also remains an issue for us. Just like the rapidly growing health sector - especially with the interface between health and digitisation. Of course, our clients also receive specific recommendations on ETFs, funds, certificates and individual securities. However, we cannot name them without appropriate advice."

In addition, there is also a kind of detour to approach this issue. "At a time when socially responsible investments are more important than ever, the long-term growth of industries that undermine personal freedom could be at risk. Sustainable investment strategies take this into account and thus provide a kind of counterpole in the portfolio," explains Kerbach.


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