10 ★ FT Weekend 17 August/18 August 2019COMPANIES
deepfakes is getting lower,” said Michael
Farrell, executive director of the Insti-
tute for Information Security & Privacy
at Georgia Tech. “There is a significant
opportunity for cyber security compa-
nies to play in this space when it comes
to fraud prevention.”
Symantec, based in California, said
last month that it had recorded three
instances of deepfaked audio attacks on
corporations in 2019. Other potential
attacks could include market manipula-
tion — for example creating a video of a
chief executive announcing a fake
merger or false earnings in order to shift
the share price — or brand sabotage.‘A host of nightmare scenarios’
While there have been no confirmed
reports of these latter attacks to date,
cyber security experts say companies
should be on alert.
“Deepfakes... will allow cyber crim-
inals to up their game in terms of social
engineering,” said John Farley, who
heads the cyber practice at Gallagher,
the global insurance broker. “There’s a
whole host of nightmare scenarios.”
Darren Shou, vice-president of
research labs at Symantec, said: “Every-
body has to have a plan for what’s going
to happen in the age of deepfakes.
“Every single bank that I’ve talked to
recently, we’ve had [a] discussion
[about this], and quite a few non-finan-
cial sectors are having it too,” he said,
citing board-level conversations with
healthcare and retail companies.
Given the increasingly complexnature of deepfake technologies, secu-
rity companies and academics are
exploring a wide range of techniques to
combat them.
Some are using AI to detect discrepan-
cies in fake media based on an under-
standing of how deepfakes are created.
Tell-tale signs for videos, for instance,
can include changes in pixels around a
subject’s mouth, or inconsistencies in
the generation of shadows or the angles
of a person’s face.
But this technology is still very new
and developers face hurdles. “Some
detection methods are really accurate
but right now there’s not enough data
out there to build a data set for thedetection model,” said Matthew Price,
principal research engineer at Balti-
more-based ZeroFOX, which last week
launched its own video analysis tool for
detecting deepfakes.
Mr Shou said Symantec was research-
ing ways of mapping the provenance of
video and audio media — whether it
originated on reputable websites and
how it had since travelled online — as an
indication of its authenticity.
The company is also exploring the
possibility of whether 3D-printed
glasses that can be used to evade facial
recognition — by tricking the software
into misclassifying the wearer — could
also be repurposed to help chief execu-
tives prevent deepfakes being made
of them.
Start-ups such as ProofMode and
Truepic offer technology that stamps
photos with a watermark to prove thatthey can always be trusted. The latter is
partnering withQualcomm, the chip-
maker, to potentially include these
capabilities in mobile phone hardware.
Rumman Chowdhury, head of
“responsible AI” consulting atAccen-
ture, the professional services company,
said that another option was to look
at preventive measures, such as
requiring those who publish code for
creating deepfakes to build in verifica-
tion measures.Hype and reality
Still, some remain sceptical about the
dangers of deepfakes, saying that the
technology is in its infancy and that the
risks, particularly to businesses, are in
danger of being prematurely hyped.
“Theoretically, it’s a threat,” said
Camille François, chief innovation
officer at Graphika, where she leads
social media threat investigations.
“[But] people need to be confronted
with the clunkiness of the technology.
“CEOs are not going to be the first vic-
tims of this — women are,” she said,
pointing to its use by some to add
women’s faces to pornography.
Others warn of the limits of trying to
combat the trend. Ms Chowdhury said
that even the best techniques to detect
deepfakes could be undermined by
human nature.
“We need to be cognisant that no mat-
ter how many tools we put out there,
there will always be a certain percentage
of people who will not believe a verifica-
tion tool,” said Ms Chowdhury. “I don’t
think we should discount people’s desire
to consume fake media.”
Nevertheless, cyber security compa-
nies are pushing forward with their
work. “The biggest concern is reputa-
tion damage,” said Mr Price of ZeroFOX.
“We are going to see some interesting
scams coming out.”HANNAH MURPHY— SAN FRANCISCOWhen a chief executive called a finance
employee to request the urgent wire
transfer of $10m to a supplier, the task
was carried out even though it went
against company protocols. After all, it
was the boss on the phone. But was it?
So far this year, as many as three com-
panies have fallen victim to fraudsters
using manipulated media, or “deep-
fake” technology, to con them into mak-
ing fund transfers, according toSyman-
tec, the cyber security group.
In one case, $10m was wired to crimi-
nals who used artificial intelligence to
impersonate an executive on the phone.
Deepfaking, in which content is doc-
tored to give uncannily realistic but false
renderings of people, is attracting
increasing attention online with the
emergence of a number of viral videos.
Typically the technique involves
replacing one person’s face with that of
another or “lip syncing”, in which a sub-
ject’s mouth moves along with an audio
track that has been laid over it. Audio,
too, can be faked by training AI pro-
grams to mimic existing recordings.‘Barrier to entry is lower’
Much of the debate around the potential
of the nascent technology has focused
on whether it can be used as a means to
spread political disinformation. But as
the techniques, which are developed via
complex machine learning, have
become cheaper and more readily avail-
able online, there is evidence that they
are starting to be adopted by criminals
in commercial settings.
And as a result, several cyber security
companies are racing to find ways to
thwart potential attacks. “Not only are
deepfakes evolving rapidly and improv-
ing their level of realism, but also the
barrier to entry to create and distributeScammers take online
fakery to a higher level
Threat raised of criminals making use of doctored video and audio
OLAF STORBECK—HERZOGENAURACHFor Adidas, big cities are vital for
shaping “global trends and consumers’
perception, perspectives and buying
decisions”.Yet on the cusp of its 70th anniversary
this month, the second-largest sports-
wear group has opened a new €350m
HQ in Herzogenaurach — a bland Fran-
conian town, 22km north-west of
Nuremberg in Bavaria, with just 25,
inhabitants and no railway access.
It seems an unlikely location for a
brand seeking to identify the next big
thing. But roughly 70 per cent of all
product innovations originate at its
headquarters, with “hubs” in Amster-
dam, Shanghai and Portland, Oregon,
accounting for the rest.
Karen Parkin, head of global human
resources at Adidas, admits without
hesitation that, were consultants
searching for the ideal base for a multi-
billion-euro sportsbrand, “of all the
locations in the world, I doubt whether a
pin would fall in Herzogenaurach”.
Indeed, when US citizen Scott Zal-
aznik was approached for the job as
head of digital in 2017, “I had to do a
Googlesearch to find out where this
place actually is,” he recalled.
Adidas may be global and its produc-
tion outsourced to Asia, but for the com-
pany, Herzogenaurach remains “very
important to our culture and to our
identity. Product creation, the brand
thinking, the guidelines starthere,” said
Ms Parkin.
Founder Adolf “Adi” Dassler, scion of
a cobbler’s family who made the shoes
Jesse Owens wore in the 1936 Olympics,
lived in Herzogenaurach. He launchedAdidas in August 1949 after falling out
with his older brother Rudolf. The same
year, his sibling founded rival sports-
wear makerPuma, which is still based
next door though it is five times smaller.
“We’re a global brand on a global
stage, but we are also very proud of our
DNA,” said Ms Parkin.
Herzogenaurach is where Dassler
invented the first football boots with
interchangeable studs that the German
team wore when they won the 1954
World Cup; where “Adilette” pool slides
— a favourite ofFacebookfounderMark
Zuckerberg— were designed; and where
the ball for the 2018 Fifa World Cup in
Russia was created.
Astatue of Dasslerholding the 1954
boots stands outside the main entrance
of the company’s Arena building in Her-
zogenaurach. Over the past decade, glo-
bal revenues at Adidas have more than
doubled to €22bn while net profit has
increased sevenfold. This year, shares
are up almost 40 per cent, lifting the
group’s stock market value to €50bn.
“The stock has been a star performer
[year-to-date],” Adam Cochrane, aCiti-
groupanalyst, wrote in a note this
month. On average, analysts expect
annual sales growth of more than 7 per
cent a year by 2021, and increases in
operating profit at twice that rate.
The group’s biggest mis-step this year
has been botchedsupply chain planning
in the US, a blunder that will shave up to
€400mfrom revenues after being una-
ble to meet demand.
Adidas’s decision to maintain its rural
headquarters is not unusual in Ger-Retail & consumer
Small-town HQ site belies
big global clout of Adidas
Baltimore-based
ZeroFOX last week
launched its own
video analysis tool
for detecting
deepfakes‘Some methods are
accurate but there’s not
enough data to build a setfor the detection model’
many, but J. Vernon Henderson, profes-
sor for economic geography at the Lon-
don School of Economics, pointed out
that “in a major city you have the diver-
sity of ideas for innovation”, while “how
to attract talent” can be a key issue for
companies in remote locations.
Lacking the proximity of a global
urban centre, Adidas is trying to
develop its own centre of gravity.
The Arena accommodates 2,000 staff,
and is the latest addition to Adidas’s
“World of Sports” campus since 1999, a
development costing €1bn to date. Built
on a former US military base over an
area equivalent to almost 100 football
pitches, one in 10 of the company’s
57,000 global employees work here.
The campus ispeopled by English-
speaking hipsters with an average age of
38, who look to be as sporty as they are
happy. Walking through thecafés and
outdoor meeting areas, alongside foot-
ball pitches and tennis courts, everyone
appears to be young and good-looking,
discussing the latest tracksuit and
trainer designsover a latte and a vegan
banana bread.
Raphael Curet isan Adidas footwear
designer, working on boots for the 2022
football World Cup in Qatar. He
describes his job as having “to get the
latest inspirations from the kids on the
streets”, creating “a link between the
game, their life and what is happening in
society, in the world”.
In football, close co-operation with
professional teams that Adidas spon-
sors helps to achieve that. “We are spon-
soring Manchester United, and we meet
the pro athletes as well as the young
players,” said Mr Curet.
Inmetropolises such as London, Los
Angeles and Tokyo, Adidas has desig-
nated “city teams” which liaise with
local influencers, organise sales events
and cultivate communities like “Adidas
runners”, where customers meet to
workout together.
Mr Curet, 33, gave up a job in Paris
with French retailerDecathlonin 2015.
Since his move to Herzogenaurach,
where he worked as an intern a decade
ago, he has designed the latest football
boots for Lionel Messi. “This is one of
my dream jobs,” he said.
The trendyand international atmos-
phere at Herzogenaurach is carefully
cultivated. A video promoting jobs at
the campus features people from Scot-
land, France, Poland and China — but no
Germans — in an effort to tout the head-
quarter’s global credentials.About
nationalities are represented. Chief
executiveKasper Rorstedis Danish, and
among the five other board executives,
just two hold a German passport.
It does not appeal to everyone, how-
ever. Some candidates visit thetown
and conclude “this isn’t for me”, con-
ceded Ms Parkin. “This can happen, but
then you are not going to be right for our
company.” Yet for now, Adidas can cope.
It receives 1m job applications a year.A statue of founder Adi Dassler at
the company’s Arena building‘I had to do a Google
search to find out where
this place actually is’Scott Zalaznik, digital chiefWho’s talking? The words of Donald Trump and Barack Obama are changed in a video that demonstrates advances made in ‘deepfake’ technology— Rob Lever/AFP
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