Federated learning: a guide to what it is and how it works

Federated learning can transform how we build AI models. Instead of collecting vast amounts of sensitive data into a single, central location, federated learning brings the training process directly to the data. This decentralized approach cannot only offer robust privacy protections but also helps unlock new possibilities for collaboration and model improvement across a wide range of industries.

What is federated learning?

Federated learning (FL) is a machine learning approach that enables the training of a shared AI model using data from numerous decentralized edge devices or servers. This process occurs without the need to exchange the local data samples. Think of it as a collaborative learning process where individual participants contribute to a common goal without revealing their private information.

This contrasts sharply with traditional machine learning, which typically requires aggregating all data into a central repository for model training. While centralized approaches have driven significant AI advancements, they can raise concerns about data privacy, security, and compliance with regulations like GDPR. Federated learning offers a privacy-preserving alternative by keeping sensitive data localized on the user's device or within an organization's secure environment.

Federated learning versus machine learning

As mentioned above, the main difference between federated learning and traditional, centralized machine learning lies in where the data resides during the training process.

  • Traditional machine learning (centralized): Data is collected from various sources and brought together in one place, such as a cloud server or data center. The machine learning model is then trained directly on this consolidated dataset. This method can offer advantages like straightforward data access and simpler development, but it may also create significant privacy risks and potential vulnerabilities if the central data repository is compromised.
  • Federated learning (decentralized): Instead of moving data, the machine learning model is sent to the data, and participants (clients) train the model on their local data. Only the model updates—such as learned weights or gradients—are then sent back to a central server for aggregation. This process allows the global model to learn from diverse datasets without ever accessing the raw, sensitive information from any single participant.

While centralized machine learning is well established and often easier to implement, federated learning is gaining traction because it can inherently address data privacy concerns, reduce bandwidth requirements, and allow for model training on data that might otherwise be inaccessible due to regulations or confidentiality agreements. 

The different types of federated learning

Federated learning adapts to various needs. The primary distinctions often stem from how data is distributed or how participants engage in collaboration. Here's a breakdown of common types:

Federated learning type

Data overlap

Key difference

Example applications

Horizontal federated learning

Same feature space, different data instances.

Participants share the same data schema but have distinct sample sets. Training is distributed across these samples.

Mobile keyboard prediction, smart device personalization, collaborative spam detection.

Vertical federated learning

Same data instances, different features.

Participants share the same samples (for example, users, customers) but have different features for those samples.

Joint fraud detection (combining financial and e-commerce data), credit scoring, personalized recommendations using complementary data sources.

Federated transfer learning

Different features and different samples.

Uses knowledge from a source task/domain to improve performance on a related but different target task/domain. This often involves a pre-trained model being adapted or fine-tuned by participants on their local data in a federated setting.

Adapting a general medical model to a specific hospital's patient data, or applying models trained on large datasets to niche industrial applications.


Federated learning type

Data overlap

Key difference

Example applications

Horizontal federated learning

Same feature space, different data instances.

Participants share the same data schema but have distinct sample sets. Training is distributed across these samples.

Mobile keyboard prediction, smart device personalization, collaborative spam detection.

Vertical federated learning

Same data instances, different features.

Participants share the same samples (for example, users, customers) but have different features for those samples.

Joint fraud detection (combining financial and e-commerce data), credit scoring, personalized recommendations using complementary data sources.

Federated transfer learning

Different features and different samples.

Uses knowledge from a source task/domain to improve performance on a related but different target task/domain. This often involves a pre-trained model being adapted or fine-tuned by participants on their local data in a federated setting.

Adapting a general medical model to a specific hospital's patient data, or applying models trained on large datasets to niche industrial applications.


How does federated learning work?

Federated learning works through an iterative process involving a central coordinator (typically a server) and multiple participating clients (devices or organizations). The general workflow can be broken down into these key steps:

1. Initial model distribution

The process begins with a central server initializing a global machine learning model. This model serves as the starting point for the collaborative training. The server then distributes this global model to a selected subset of participating client devices.

2. Local model training

Each selected client device receives the global model. Using its own local data, the client trains the model, updating its parameters based on the patterns and information present in that local dataset. Crucially, the raw data remains on the client device throughout this step, never being sent to the server.

3. Model update aggregation

After local training, each client sends its updated model parameters (for example, gradients or weights) back to the central server. These updates represent what the model learned from the local data, but they do not expose the data itself.

4. Global model update

The central server receives the model updates from multiple clients. It then aggregates these updates, often by averaging them (a common method being federated averaging, or FedAvg), to create a new, improved version of the global model. This aggregated model benefits from the collective learning across all participating clients. 

5. Iterative refinement

The server then distributes this newly updated global model back to a new set of (or the same) clients for another round of local training. This cycle repeats multiple times, progressively refining the global model with each iteration until it reaches a desired level of accuracy or convergence.

Key components of a federated learning system

A typical federated learning system comprises several interconnected elements:

Clients (data owners)

These are the individual devices or organizations that hold the data and perform local model training. Clients can range from mobile phones and IoT devices to hospitals or financial institutions. They’re responsible for executing the model locally and generating parameter updates.

Central server (aggregator)

The central server acts as the orchestrator of the federated learning process. It initializes and distributes the global model, collects model updates from clients, aggregates these updates to refine the global model, and then redistributes the updated model. It doesn’t directly access the clients' raw data.

Communication protocol

This defines how clients and the server exchange information, primarily the model parameters and updates. Efficient and secure communication protocols are crucial, especially given the potential for a massive number of clients and varying network conditions. 

Model aggregation algorithm

This is the method used by the central server to combine the model updates received from various clients. Algorithms like federated averaging are commonly used to average the weights or gradients, creating a single, improved global model.

Benefits of federated learning

Federated learning can offer some compelling advantages, particularly in scenarios where data privacy, security, and distributed data are key considerations.

Enhanced data privacy and security

This is arguably the most significant benefit. By keeping data localized on client devices, federated learning can drastically reduce the risk of sensitive information exposure during transmission or storage. This inherently enhances user privacy and helps organizations comply with stringent data protection regulations.

Access to diverse data

Federated learning allows models to learn from a wide array of real-world data sources that might otherwise be siloed or inaccessible. This diversity can lead to more robust, generalizable, and accurate models, as they’re trained on a broader spectrum of user behaviors, conditions, or environments compared to models trained on a single, centralized dataset. 

Reduced communication costs

Transmitting model updates (which are typically smaller than raw datasets) is often more bandwidth-efficient and less costly than transferring massive amounts of raw data to a central server, especially in scenarios involving many edge devices or geographically dispersed locations. 

Collaborative model improvement

Federated learning enables organizations or individuals to collaborate on building and improving AI models without needing to share proprietary or sensitive data. This helps foster a more inclusive AI development ecosystem and allows for pooled intelligence from disparate sources. 

Streamlined regulatory compliance

The inherent design of federated learning keeps data local, which can significantly aid in meeting complex data privacy regulations such as GDPR, CCPA, and HIPAA. By minimizing data movement and centralization, organizations can better ensure data residency requirements are met and reduce the compliance burden associated with handling sensitive personal or health information.

Upholding data sovereignty

This approach respects data ownership and control. Participating organizations or individuals retain full authority over their data assets. Even when contributing to a collective model, the raw data remains securely within its original environment, empowering data governance and maintaining trust between collaborators.

Challenges and considerations in federated learning

Despite its advantages, federated learning also presents some unique potential challenges that need careful consideration:

  • Heterogeneity of data and devices: Clients in a federated learning network can vary significantly in terms of their data distribution (non-independent and identically distributed, or non-IID data) and their computational capabilities (device hardware, network connectivity). This diversity can impact model convergence and overall performance.
  • Communication overhead: While reduced compared to centralized data transfer, federated learning still requires frequent communication between clients and the server. Managing this communication efficiently, especially with a large number of clients or unreliable networks, can still be a technical challenge. 
  • Security and privacy vulnerabilities: Although designed for privacy, federated learning isn’t immune to all security threats. Model updates themselves can potentially leak information about the local data through advanced techniques like inference attacks or data poisoning. Robust security measures, such as differential privacy and secure aggregation, are often employed to mitigate these risks, though they can introduce trade-offs with accuracy or computational cost.
  • Model drift: Over time, the data distribution on individual client devices can change, leading to "model drift" where local models diverge from the global model. Addressing this requires mechanisms for continuous adaptation or personalized federated learning approaches. 

Federated learning applications

Federated learning enables users to build sophisticated, privacy-preserving applications across a variety of domains. Some potential use cases for federated learning include:

Developing privacy-first mobile applications

Users can leverage federated learning to build mobile applications that learn from user data without compromising privacy. This is crucial for features like predictive text on keyboards (for example, Gboard), next-word suggestions, personalized recommendations, and on-device voice recognition. By training models directly on user devices, developers can improve app functionality and user experience by adapting to individual interaction patterns, all while ensuring sensitive personal data remains local and protected, aligning with regulations like GDPR and HIPAA. 

Building cross-organizational AI solutions

Federated learning empowers users to create collaborative AI systems for enterprises where data is siloed across different organizations. This is invaluable in sectors like healthcare and finance, where data sharing is restricted due to privacy regulations or proprietary concerns. Users can build platforms that enable multiple institutions (for example, hospitals for medical research, banks for fraud detection) to train shared models on their combined data without exposing raw information. This helps foster collaboration, enhances model accuracy through diverse datasets, and helps meet stringent compliance requirements.

Enabling intelligent edge devices in IoT and Industrial IoT (IIoT)

For those working with Internet of Things (IoT) and Industrial IoT (IIoT) devices, federated learning offers a powerful way to embed intelligence at the edge. This allows for the creation of applications such as predictive maintenance for industrial equipment, anomaly detection in sensor networks, or optimizing resource usage in smart cities. Models can be trained on data generated by distributed sensors and machinery directly on the edge devices. This approach reduces communication overhead, enables real-time insights, and keeps sensitive operational data within secure factory or device boundaries, essential for maintaining proprietary information.

Creating secure and compliant data analytics platforms

Users can use federated learning to help build robust data analytics platforms for enterprises that need to derive insights from distributed and sensitive datasets. It helps ensure that analytical models can be trained and executed without centralizing data, significantly aiding compliance with regulations like GDPR, CCPA, and HIPAA. This allows organizations to gain valuable business intelligence, identify trends, or build predictive models across their various departments or entities while maintaining strict data governance and security protocols.

Enhancing cybersecurity with distributed learning

Federated learning can be applied to build more resilient and effective cybersecurity solutions. Models can be trained across numerous endpoints (for example, computers, servers, mobile devices) to detect malware, identify network intrusions, or flag suspicious activities without exfiltrating sensitive data from individual systems. This decentralized training approach can lead to more comprehensive threat detection capabilities by learning from a wider variety of network behaviors and local security events, all while respecting the privacy of individual users or systems. 

Federated learning frameworks

To make federated learning easier to use, several open source and commercial frameworks have emerged. These tools give developers what they need to handle the training across different devices, how they communicate, and how to keep data private.

  • TensorFlow Federated (TFF): Developed by Google, TFF is an open source framework for machine learning and other computations on decentralized data. It integrates seamlessly with TensorFlow and is excellent for simulating federated training and building new federated learning algorithms. 
  • PySyft: Part of the OpenMined ecosystem, PySyft is a Python library focused on privacy-preserving AI. It enables federated learning and works with popular deep learning frameworks like PyTorch and TensorFlow, supporting techniques such as differential privacy and secure multi-party computation (SMPC).
  • Flower: Flower is a framework-agnostic and highly customizable framework for federated learning. It works with any machine learning library, including PyTorch, TensorFlow, and scikit-learn, making it versatile for teams with diverse ML stacks. 
  • NVIDIA FLARE: This framework is designed for medical imaging and genomics, enabling collaborative AI development in healthcare. It's also used in applications like autonomous vehicles.
  • FATE (Federated AI Technology Enabler): Developed by WeBank, FATE is an enterprise-focused platform that supports federated learning with advanced privacy techniques like homomorphic encryption. It offers a web-based interface for managing workflows. 
  • Substra: Initially developed for a multi-partner medical research project, Substra is now hosted by the Linux Foundation. It's particularly strong in the medical field, emphasizing data ownership, privacy, and traceability. 

The future of federated learning

The field of federated learning is rapidly evolving. Current research focuses on addressing its challenges, such as improving robustness to data and system heterogeneity, developing more sophisticated privacy-preserving techniques, creating more efficient communication protocols, and enabling truly personalized federated learning experiences. As AI becomes more integrated into sensitive domains, federated learning is poised to play an even more critical role in enabling secure, private, and collaborative intelligence. While a central server currently orchestrates many federated learning systems, future developments are likely to explore more truly decentralized or peer-to-peer federated learning approaches, enhancing robustness, scalability, and eliminating single points of failure.

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