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Google and IAB adtech targeted with more RTB privacy complaints

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Another batch of complaints has been filed with European Union data protection agencies urging enforcement action against the adtech industry’s abuse of Internet users’ information to target ads.

The complaints argue that behavioural ads are both harmful and unlawful.

Earlier complaints over the same Real-Time Bidding (RTB) programmatic advertising issue were filed across the EU in 2018 and 2019 but have yet to result in any substantive regulatory action.

Ireland did open a probe into Google’s ad exchange last year. While Belgium’s DPA has been progressing an investigation into a flagship industry tool that’s used for gathering consents to ad targeting — making a preliminary finding of non-compliance in October. But litigation to reach a final verdict on the IAB Europe’s ‘Transparency and Consent’ (TCF) framework won’t take place until next year.

(Related: The UK’s data protection agency is facing a legal challenge over its failure to act on RTB complaints, despite repeatedly expressing concern about the industry’s lawfulness problem.)

Both Google and the IAB continue to deny any problems with their adtech. Last year Google said authorised buyers that use its systems are subject to “stringent policies and standards”. While the IAB Europe rejected the Belgium DPA’s findings — saying its preliminary report “fundamental misunderstand[s]” the TCF tech.

The latest GDPR complaints target how the RTB component of programmatic advertising broadcasts Internet users’ personal data to scores of entities involved in these high speed eyeball auctions — arguing it runs counter to core security requirements in the General Data Protection Regulation (GDPR), as well as being horrible for people’s privacy.

A key principle of the GDPR is security by design and default — with the regulation placing legal requirements on personal data handlers to make sure people’s information is properly secured.

The complaints, which target Google and the IAB in their capacity as RTB standard setters, have been filed by civil society groups in six European countries — namely: Asociatia pentru Tehnologie si Internet (ApTi), Romania; D3 – Defesa dos Direitos Digitais, Portugal; GONG, Croatia; Global Human Dignity Foundation, Malta; Homo Digitalis, Greece; and the Institute of Information Cyprus.

They’re being coordinated by a consortium led by the Civil Liberties Union for Europe (Liberties), the ORG (Open Rights Group) and the Panoptykon Foundation

“Real-time bidding, which is the bedrock of the online advertising industry, is an abuse of people’s right to privacy,” said Dr Orsolya Reich, senior advocacy officer at Liberties, in a supporting statement. “The GDPR has been in place since 2018 and it is there precisely to give people a greater say about what happens to their data online.

“Today, more civil society groups are saying enough with this invasive advertising model and are asking data protection authorities to stand up against the harmful and unlawful practices they use.”

The consortium is asking for a joint investigation by their respective national DPAs — and for regulators to join with ongoing adtech investigations in Ireland (into Google’s adtech) and Belgium (into the IAB Europe’s TCF framework).

It’s not clear how far the Irish DPC’s investigation of Google has progressed — but it continues to face criticism for the lack of decisions on cross-border GDPR cases, some 2.5 years after the regulation technically begun being applied.

A mechanism in the GDPR means cross-border cases (basically anything related to mainstream consumer tech) get passed to a lead agency to investigate. However other agencies also remain involved, as interested parties, and must agree with any final decision made.

The system has led to a bottleneck of cases in certain EU locations, such as Ireland, where many tech giants base their European HQ. So the concern is this one-stop-shop mechanism is adding an unworkable level of friction to GDPR investigations — delaying decisions and enforcement action so much it risks the entire framework.

The Commission has acknowledged weakness in GDPR enforcement. Most obviously because it’s working on a massive package of new digital regulations. Though its strategy for fixing the enforcement problem is less clear as EU Member States look set to remain responsible for the bulk of this additional oversight, just as they’re responsible for resourcing their own DPAs now. (And yet more complaints have been filed this year accusing European governments of a GDPR resourcing failure.)

Ireland’s DPC is slated to issue its first cross-border GDPR decision in a case that relates to a Twitter security breach very shortly. But last year its commissioner, Helen Dixon, suggested it would come with its first such decisions early in 2020 — so the gap between GDPR expectation and reality is running almost 12 months late at this point.

 

The consortium filing the latest RTB complaints writes in a press release that while some of the earlier adtech complaints were referred to lead authorities it has no knowledge of “any meaningful cooperation or joint operations between national authorities and the lead authorities”.

“This suggests that cooperation and consistency mechanisms as envisioned in the GDPR are yet to be implemented fully,” the group adds, calling for a joint investigation into the RTB issue because the technology functions in the same way across borders — and “produces the same negative effects in all EU member states”, as they put it.

However it’s not clear how extra joint working — if indeed that’s really what’s being called for — would help to speed up GDPR enforcement. Nor how referring additional complaints to Ireland and Belgium would work to speed up their current investigations.

Most likely, the intent is to keep up pressure on the regulators to act.

Asked about the call for joint working, a Liberties spokesman told us: “The problem is that Google and IAB are big players, standard-setters in the market, and they affect all Internet users. Given the geographical scope of the issues raised in the complaints, we think it’s better for supervisory authorities to act in unison, not to be working alone in their corner.  This is why national partners are inviting their national DPAs to refer this complaint to the lead supervisory authorities who are already investigating Google’s and IAB’s compliance with the GDPR.”

Commenting in another supporting statement, Mariano delli Santi, legal and policy officer at the ORG, added: “These new complaints show that the GDPR is working. Individuals are increasingly aware of their rights, and they demand change. Now, it is up to the authorities to support this process, and make sure these laws are properly and consistently enforced against the widespread abuses of the adtech industry.”

At the time of writing, the only extant example of enforcement against a tech giant under the updated regulation was a January 2019 decision to fine Google $57M by France’s CNIL. That investigation was limited to having a national scope, though, rather than being treated as a cross-border case.

Since then Google has shifted its legal base in Europe to Ireland — so now falls under the lead jurisdiction of the DPC.

This arrangement appears to suit big tech, enabling it to avoid the risk of speedier investigations conducted by single Member State agencies acting faster alone. (So it’s very interesting to see TikTok ramping up its business infrastructure and headcount in Ireland — as it’s also now on CNIL’s radar… )

 

As noted earlier, EU lawmakers have conceded GDPR enforcement has been a weakness thus far.

In a review of the two year old regulation this summer the Commission highlighted a lack of universally vigorous enforcement.

Last week the values and transparency commissioner, Vera Jourouv, also raised the problem as she set out the bloc’s plan to bolster democratic values against a range of online risks, such as algorithmically amplified or microtargeted disinformation and election interference — acknowledging GDPR alone isn’t enough to fix myriad intersecting tech-fuelled problems.

“[After the Cambridge Analytica scandal] we said that we are relieved that after GDPR came into force we are protected against this kind of practice — that people have to give consent and be aware of that — but we see that it might be a weak measure only to rely on consent or leave it for the citizens to give consent,” she said.

“Enforcement of privacy rules is not sufficient — that’s why we are coming in the European Democracy Action Plan with the vision for the next year to come with the rules for political advertising, where we are seriously considering to limit the microtargeting as a method which is used for the promotion of political powers, political parties or political individuals.”

The European Commission is in the progress of drafting an ambitious and interlocking package of digital regulations, that it wants to fuel a regional data economy and set firm online rules to engender the necessary trust — and has said it wants this major digital policymaking effort to serve Europe for decades.

But without effective enforcement of its Internet rulebook it’s not clear how the bloc’s digital strategy will deliver as intended.

 

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Extra Crunch roundup: antitrust jitters, SPAC odyssey, white-hot IPOs, more

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Some time ago, I gave up on the idea of finding a thread that connects each story in the weekly Extra Crunch roundup; there are no unified theories of technology news.

The stories that left the deepest impression were related to two news pegs that dominated the week — Visa and Plaid calling off their $5.3 billion acquisition agreement, and sizzling-hot IPOs for Affirm and Poshmark.

Watching Plaid and Visa sing “Let’s Call The Whole Thing Off” in harmony after the U.S. Department of Justice filed a lawsuit to block their deal wasn’t shocking. But I was surprised to find myself editing an interview Alex Wilhelm conducted with with Plaid CEO Zach Perret the next day in which the executive said growing the company on its own is “once again” the correct strategy.


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In an analysis for Extra Crunch, Managing Editor Danny Crichton suggested that federal regulators’ new interest in antitrust enforcement will affect valuations going forward. For example, Procter & Gamble and women’s beauty D2C brand Billie also called off their planned merger last week after the Federal Trade Commission raised objections in December.

Given the FTC’s moves last year to prevent Billie and Harry’s from being acquired, “it seems clear that U.S. antitrust authorities want broad competition for consumers in household goods,” Danny concluded, and I suspect that applies to Plaid as well.

In December, C3.ai, Doordash and Airbnb burst into the public markets to much acclaim. This week, used clothing marketplace Poshmark saw a 140% pop in its first day of trading and consumer-financing company Affirm “priced its IPO above its raised range at $49 per share,” reported Alex.

In a post titled A theory about the current IPO market, he identified eight key ingredients for brewing a debut with a big first-day pop, which includes “exist in a climate of near-zero interest rates” and “keep companies private longer.” Truly, words to live by!

Come back next week for more coverage of the public markets in The Exchange, an interview with Bustle CEO Bryan Goldberg where he shares his plans for taking the company public, a comprehensive post that will unpack the regulatory hurdles facing D2C consumer brands, and much more.

If you live in the U.S., enjoy your MLK Day holiday weekend, and wherever you are: thanks very much for reading Extra Crunch.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

 

Rapid growth in 2020 reveals OKR software market’s untapped potential

After spending much of the week covering 2021’s frothy IPO market, Alex Wilhelm devoted this morning’s column to studying the OKR-focused software sector.

Measuring objectives and key results are core to every enterprise, perhaps more so these days since knowledge workers began working remotely in greater numbers last year.

A sign of the times: this week, enterprise orchestration SaaS platform Gtmhub announced that it raised a $30 million Series B.

To get a sense of how large the TAM is for OKR, Alex reached out to several companies and asked them to share new and historical growth metrics:

  • Gthmhub
  • Perdoo
  • WorkBoard
  • Ally.io
  • Koan
  • WeekDone

“Some OKR-focused startups didn’t get back to us, and some leaders wanted to share the best stuff off the record, which we grant at times for candor amongst startup executives,” he wrote.

5 consumer hardware VCs share their 2021 investment strategies

For our latest investor survey, Matt Burns interviewed five VCs who actively fund consumer electronics startups:

  • Hans Tung, managing partner, GGV Capital
  • Dayna Grayson, co-founder and general partner, Construct Capital
  • Cyril Ebersweiler, general partner, SOSV
  • Bilal Zuberi, partner, Lux Capital
  • Rob Coneybeer, managing director, Shasta Ventures

“Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder,” says Matt, noting that the pandemic fueled wide interest in fitness startups like Mirror, Peloton and Tonal.

Bonus: many VCs listed the founders, investors and companies that are taking the lead in consumer hardware innovation.

A theory about the current IPO market

Digital generated image of abstract multi colored curve chart on white background.

Digital generated image of abstract multi colored curve chart on white background.

If you’re looking for insight into “why everything feels so damn silly this year” in the public markets, a post Alex wrote Thursday afternoon might offer some perspective.

As someone who pays close attention to late-stage venture markets, he’s identified eight factors that are pushing debuts for unicorns like Affirm and Poshmark into the stratosphere.

TL;DR? “Lots of demand, little supply, boom goes the price.”

Poshmark prices IPO above range as public markets continue to YOLO startups

Clothing resale marketplace Poshmark closed up more than 140% on its first trading day yesterday.

In Thursday’s edition of The Exchange, Alex noted that Poshmark boosted its valuation by selling 6.6 million shares at its IPO price, scooping up $277.2 million in the process.

Poshmark’s surge in trading is good news for its employees and stockholders, but it reflects poorly on “the venture-focused money people who we suppose know what they are talking about when it comes to equity in private companies,” he says.

Will startup valuations change given rising antitrust concerns?

GettyImages 926051128

financial stock market graph on technology abstract background represent risk of investment

This week, Visa announced it would drop its planned acquisition of Plaid after the U.S. Department of Justice filed suit to block it last fall.

Last week, Procter & Gamble called off its purchase of Billie, a women’s beauty products startup — in December, the U.S. Federal Trade Commission sued to block that deal, too.

Once upon a time, the U.S. government took an arm’s-length approach to enforcing antitrust laws, but the tide has turned, says Managing Editor Danny Crichton.

Going forward, “antitrust won’t kill acquisitions in general, but it could prevent the buyers with the highest reserve prices from entering the fray.”

Dear Sophie: What’s the new minimum salary required for H-1B visa applicants?

Image Credits: Sophie Alcorn

Dear Sophie:

I’m a grad student currently working on F-1 STEM OPT. The company I work for has indicated it will sponsor me for an H-1B visa this year.

I hear the random H-1B lottery will be replaced with a new system that selects H-1B candidates based on their salaries.

How will this new process work?

— Positive in Palo Alto

Venture capitalists react to Visa-Plaid deal meltdown

A homemade chocolate cookie with a bite and crumbs on a white background

OLYMPUS DIGITAL CAMERA

After news broke that Visa’s $5.3 billion purchase of API startup Plaid fell apart, Alex Wilhelm and Ron Miller interviewed several investors to get their reactions:

  • Anshu Sharma, co-founder and CEO, SkyflowAPI
  • Amy Cheetham, principal, Costanoa Ventures
  • Sheel Mohnot, co-founder, Better Tomorrow Ventures
  • Lucas Timberlake, partner, Fintech Ventures
  • Nico Berardi, founder and general partner, ANIMO Ventures
  • Allen Miller, VC, Oak HC/FT
  • Sri Muppidi, VC, Sierra Ventures
  • Christian Lassonde, VC, Impression Ventures

Plaid CEO touts new ‘clarity’ after failed Visa acquisition

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Alex Wilhelm interviewed Plaid CEO Zach Perret after the Visa acquisition was called off to learn more about his mindset and the company’s short-term plans.

Perret, who noted that the last few years have been a “roller coaster,” said the Visa deal was the right decision at the time, but going it alone is “once again” Plaid’s best way forward.

2021: A SPAC odyssey

In Tuesday’s edition of The Exchange, Alex Wilhelm took a closer look at blank-check offerings for digital asset marketplace Bakkt and personal finance platform SoFi.

To create a detailed analysis of the investor presentations for both offerings, he tried to answer two questions:

  1. Are special purpose acquisition companies a path to public markets for “potentially-promising companies that lacked obvious, near-term growth stories?”
  2. Given the number of unicorns and the limited number of companies that can IPO at any given time, “maybe SPACS would help close the liquidity gap?”

Flexible VC: A new model for startups targeting profitability

12 ‘flexible VCs’ who operate where equity meets revenue share

Spotlit Multi Colored Coil Toy in the Dark.

Spotlit Multi Colored Coil Toy in the Dark.

Growth-stage startups in search of funding have a new option: “flexible VC” investors.

An amalgam of revenue-based investment and traditional VC, investors who fall into this category let entrepreneurs “access immediate risk capital while preserving exit, growth trajectory and ownership optionality.”

In a comprehensive explainer, fund managers David Teten and Jamie Finney present different investment structures so founders can get a clear sense of how flexible VC compares to other venture capital models. In a follow-up post, they share a list of a dozen active investors who offer funding via these non-traditional routes.

These 5 VCs have high hopes for cannabis in 2021

Marijuana leaf on a yellow background.

Image Credits: Anton Petrus (opens in a new window) / Getty Images

For some consumers, “cannabis has always been essential,” writes Matt Burns, but once local governments allowed dispensaries to remain open during the pandemic, it signaled a shift in the regulatory environment, and investors took notice.

Matt asked five VCs about where they think the industry is heading in 2021 and what advice they’re offering their portfolio companies:

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GitLab oversaw a $195 million secondary sale that values the company at $6 billion

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GitLab has confirmed with TechCrunch that it oversaw a $195 million secondary sale that values the company at $6 billion. CNBC broke the story earlier today.

The company’s impressive valuation comes after its most recent 2019 Series E in which it raised $268 million on a 2.75 billion valuation, an increase of $3.25 billion in under 18 months. Company co-founder and CEO Sid Sijbrandij believes the increase is due to his company’s progress adding functionality to the platform.

“We believe the increase in valuation over the past year reflects the progress of our complete DevOps platform towards realizing a greater share of the growing, multi-billion dollar software development market,” he told TechCrunch.

While the startup has raised over $434 million, this round involved buying employee stock options, a move that allows the company’s workers to cash in some of their equity prior to going public. CNBC reported that the firms buying the stock included Alta Park, HMI Capital, OMERS Growth Equity, TCV and Verition.

The next logical step would appear to be IPO, something the company has never shied away from. In fact, it actually at one point included the proposed date of November 18, 2020 as a target IPO date on the company wiki. While they didn’t quite make that goal, Sijbrandij still sees the company going public at some point. He’s just not being so specific as in the past, suggesting that the company has plenty of runway left from the last funding round and can go public when the timing is right.

“We continue to believe that being a public company is an integral part of realizing our mission. As a public company, GitLab would benefit from enhanced brand awareness, access to capital, shareholder liquidity, autonomy and transparency,” he said.

He added, “That said, we want to maximize the outcome by selecting an opportune time. Our most recent capital raise was in 2019 and contributed to an already healthy balance sheet. A strong balance sheet and business model enables us to select a period that works best for realizing our long-term goals.”

GitLab has not only published IPO goals on its Wiki, but its entire company philosophy, goals and OKRs for everyone to see. Sijbrandij told TechCrunch’s Alex Wilhelm at a TechCrunch Disrupt panel in September that he believes that transparency helps attract and keep employees. It doesn’t hurt that the company was and remains a fully remote organization, even pre-COVID.

“We started [this level of] transparency to connect with the wider community around GitLab, but it turned out to be super beneficial for attracting great talent as well,” Sijbrandij told Wilhelm in September.

The company, which launched in 2014, offers a DevOps platform to help move applications through the programming lifecycle.

Update: The original headline of this story has been changed from ‘GitLab raises $195M in secondary funding on $6 billion valuation.’

 

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Facebook blocks new events around DC and state capitols

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As a precaution against coordinated violence as the U.S. approaches President-elect Joe Biden’s inauguration, Facebook announced a few new measures it’s putting in place.

In a blog post and tweets from Facebook Policy Communications Director Andy Stone, the company explained that it would block any events slated to happen near the White House, the U.S. Capitol or any state capitol building through Wednesday.

The company says it will also do “secondary” sweeps through any inauguration-related events to look for violations of its policies. At this point, that includes any content connected to the “Stop the Steal” movement perpetuating the rampant lie that Biden’s victory is illegitimate. Those groups continued to thrive on Facebook until measures the company took at the beginning of this week.

Facebook will apparently also be putting new restrictions in place for U.S. users who repeatedly break the company’s rules, including barring those accounts from livestreaming videos, events and group pages.

Those precautions fall short of what some of Facebook’s critics have called for, but they’re still notable measures for a company that only began taking dangerous conspiracies and armed groups seriously in the last year.

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