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Facebook fined again in Italy for misleading users over what it does with their data

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Facebook has been fined again by Italy’s competition authority — this time the penalty is €7 million (~$8.4M) — for failing to comply with an earlier order related to how it informs users about the commercial uses it makes of their data.

The AGCM began investigating certain commercial practices by Facebook back in 2018, including the information it provided to users at sign up and the lack of an opt out for advertising. Later the same year it went on to fine Facebook €10M for two violations of the country’s Consumer Code.

But the watchdog’s action did not stop there. It went on to launch further proceedings against Facebook in 2020 — saying the tech giant was still failing to inform users “with clarity and immediacy” about how it monetizes their data.

“Facebook Ireland Ltd. and Facebook Inc. have not complied with the warning to remove the incorrect practice on the use of user data and have not published the corrective declaration requested by the Authority,” the AGCM writes in a press release today (issued in Italian; which we’ve translated with Google Translate).

The authority said Facebook is still misleading users who register on its platform by not informing them — “immediately and adequately” — at the point of sign up that it will collect and monetize their personal data. Instead it found Facebook emphasizes its service’s ‘gratuitousness’.

“The information provided by Facebook was generic and incomplete and did not provide an adequate distinction between the use of data necessary for the personalization of the service (with the aim of facilitating socialization with other users) and the use of data to carry out targeted advertising campaigns,” the AGCM goes on.

It had already fined Facebook €5M over the same issue of failing to provide adequate information about its use of people’s data. But it also ordered it to correct the practice — and publish an “amendment” notice on its website and apps for users in Italy. Neither of which Facebook has done, per the regulator.

Facebook, meanwhile, has been fighting the AGCM’s order via the Italian legal system — making a petition to the Council of State.

A hearing of Facebook’s appeal against the non-compliance proceedings took place in September last year and a decision is still pending.

Reached for comment on AGCM’s action, a Facebook spokesperson told us: “We note the Italian Competition Authority’s announcement today, but we await the Council of State decision on our appeal against the Authority’s initial findings.”

“Facebook takes privacy extremely seriously and we have already made changes, including to our Terms of Service, to further clarify how Facebook uses data to provide its service and to provide tailored advertising,” it added.

Last year, at the time the AGCM instigated further proceedings against it, Facebook told us it had amended the language of its terms of service back in 2019 — to “further clarify” how it makes money, as it put it.

However while the tech giant appears to have removed a direct “claim of gratuity” it had previously been presenting users at the point of registration, the Italian watchdog is still not happy with how far it’s gone in its presentation to new users — saying it’s still not being “immediate and clear” enough in how it provides information on the collection and use of their data for commercial purposes.

The authority points out that this is key information for people to weigh up in deciding whether or not to join Facebook — given the economic value Facebook gains via the transfer of their personal data.

For its part, Facebook argues that it’s fair to describe a service as ‘free’ if there’s no monetary charge for use. Although it has also made changes to how it describes this value exchange to users — including dropping its former slogan that “Facebook is free and always will be” in favor of some fuzzier phrasing.

On the arguably more salient legal point that Facebook is also appealing — related to the lack of a direct opt out for Facebook users to prevent their data being used for targeted ads — Facebook denies there’s any lack of consent to see here, claiming it does not give any user information to third parties unless the person has chosen to share their information and give consent.

Rather it says this consent process happens off its own site, on a case by case basis, i.e. when people decide whether or not to install third party apps or use Facebook Login to log into a third-party websites etc — and where, it argues, they will be asked by those third parties whether they want Facebook to share their data.

(Facebook’s lead data supervisor in Europe, Ireland’s DPC, has an open investigation into Facebook on exactly this issue of so-called ‘forced consent’ — with complaints filed the moment Europe’s General Data Protection Regulation begun being applied in May 2018.)

The tech giant also flags on-site tools and settings it does offer its own users — such as ‘Why Am I Seeing This Ad’, ‘Ads Preferences’ and ‘Manage Activity’ — which it claims increase transparency and control for Facebook users.

It also points to the ‘Off Facebook Activity‘ setting it launched last year — which shows users some information about which third party services are sending their data to Facebook and lets them disconnect that information from their account. Though there’s no way for users to request the third party delete their data via Facebook. (That requires going to each third party service individually to make a request.)

Last year a German court ruled against a consumer rights challenge to Facebook’s use of the self-promotional slogan that its service is “free and always will be” — on the grounds that the company does not require users to literally hand over monetary payments in exchange for using the service. Although the court found against Facebook on a number of other issues bundled into the challenge related to how it handles user data.

In another interesting development last year, Germany’s federal court also unblocked a separate legal challenge to Facebook’s use of user data which has been brought by the country’s competition watchdog. If that landmark challenge prevails Facebook could be forced to stop combining user data across different services and from the social plug-ins and tracking pixels it embeds in third parties’ digital services.

The company is also now facing rising challenges to its unfettered use of people’s data via the private sector, with Apple set to switch on an opt-in consent mechanism for app tracking on iOS this spring. Browser makers have also been long stepping up action against consentless tracking — including Google, which is working on phasing out support for third party cookies on Chrome.

 

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Snowflake latest enterprise company to feel Wall Street’s wrath after good quarter

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Snowflake reported earnings this week, and the results look strong with revenue more than doubling year-over-year.

However, while the company’s fourth quarter revenue rose 117% to $190.5 million, it apparently wasn’t good enough for investors, who have sent the company’s stock tumbling since it reported Wednesday after the bell.

It was similar to the reaction that Salesforce received from Wall Street last week after it announced a positive earnings report. Snowflake’s stock closed down around 4% today, a recovery compared to its midday lows when it was off nearly 12%.

Why the declines? Wall Street’s reaction to earnings can lean more on what a company will do next more than its most recent results. But Snowflake’s guidance for its current quarter appeared strong as well, with a predicted $195 million to $200 million in revenue, numbers in line with analysts’ expectations.

Sounds good, right? Apparently being in line with analyst expectations isn’t good enough for investors for certain companies. You see, it didn’t exceed the stated expectations, so the results must be bad. I am not sure how meeting expectations is as good as a miss, but there you are.

It’s worth noting of course that tech stocks have taken a beating so far in 2021. And as my colleague Alex Wilhelm reported this morning, that trend only got worse this week. Consider that the tech-heavy Nasdaq is down 11.4% from its 52-week high, so perhaps investors are flogging everyone and Snowflake is merely caught up in the punishment.

Snowflake CEO Frank Slootman pointed out in the earnings call this week that Snowflake is well positioned, something proven by the fact that his company has removed the data limitations of on-prem infrastructure. The beauty of the cloud is limitless resources, and that forces the company to help customers manage consumption instead of usage, an evolution that works in Snowflake’s favor.

“The big change in paradigm is that historically in on-premise data centers, people have to manage capacity. And now they don’t manage capacity anymore, but they need to manage consumption. And that’s a new thing for — not for everybody but for most people — and people that are in the public cloud. I have gotten used to the notion of consumption obviously because it applies equally to the infrastructure clouds,” Slootman said in the earnings call.

Snowflake has to manage expectations, something that translated into a dozen customers paying $5 million or more per month to Snowflake. That’s a nice chunk of change by any measure. It’s also clear that while there is a clear tilt toward the cloud, the amount of data that has been moved there is still a small percentage of overall enterprise workloads, meaning there is lots of growth opportunity for Snowflake.

What’s more, Snowflake executives pointed out that there is a significant ramp up time for customers as they shift data into the Snowflake data lake, but before they push the consumption button. That means that as long as customers continue to move data onto Snowflake’s platform, they will pay more over time, even if it will take time for new clients to get started.

So why is Snowflake’s quarterly percentage growth not expanding? Well, as a company gets to the size of Snowflake, it gets harder to maintain those gaudy percentage growth numbers as the law of large numbers begins to kick in.

I’m not here to tell Wall Street investors how to do their job, anymore than I would expect them to tell me how to do mine. But when you look at the company’s overall financial picture, the amount of untapped cloud potential and the nature of Snowflake’s approach to billing, it’s hard not to be positive about this company’s outlook, regardless of the reaction of investors in the short term.

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A first look at Coursera’s S-1 filing

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After TechCrunch broke the news yesterday that Coursera was planning to file its S-1 today, the edtech company officially dropped the document Friday evening.

Coursera was last valued at $2.4 billion by the private markets, when it most recently raised a Series F round in October 2020 that was worth $130 million.

Coursera’s S-1 filing offers a glimpse into the finances of how an edtech company, accelerated by the pandemic, performed over the past year. It paints a picture of growth, albeit one that came at steep expense.

Revenue

In 2020, Coursera saw $293.5 million in revenue. That’s a roughly 59% increase from the year prior when the company recorded $184.4 million in top line. During that same period, Coursera posted a net loss of nearly $67 million, up 46% from the previous year’s $46.7 million net deficit.

Notably the company had roughly the same noncash, share-based compensation expenses in both years. Even if we allow the company to judge its profitability on an adjusted EBITDA basis, Coursera’s losses still rose from 2019 to 2020, expanding from $26.9 million to $39.8 million.

To understand the difference between net losses and adjusted losses it’s worth unpacking the EBITDA acronym. Standing for “earnings before interest, taxes, depreciation and amortization,” EBITDA strips out some nonoperating costs to give investors a possible better picture of the continuing health of a business, without getting caught up in accounting nuance. Adjusted EBITDA takes the concept one step further, also removing the noncash cost of share-based compensation, and in an even more cheeky move, in this case also deducts “payroll tax expense related to stock-based activities” as well.

For our purposes, even when we grade Coursera’s profitability on a very polite curve it still winds up generating stiff losses. Indeed, the company’s adjusted EBITDA as a percentage of revenue — a way of determining profitability in contrast to revenue — barely improved from a 2019 result of -15% to -14% in 2020.

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The owner of Anki’s assets plans to relaunch Cozmo and Vector this year

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Good robots don’t die — they just have their assets sold off to the highest bidder. Digital Dream Labs was there to sweep up IP in the wake of Anki’s premature implosion, back in 2019. The Pittsburgh-based edtech company had initially planned to relaunch Vector and Cozmo at some point in 2020, launching a Kickstarter campaign in March of last year.

The company eventually raised $1.8 million on the crowdfunding site, and today announced plans to deliver on the overdue relaunch, courtesy of a new distributor.

“There is a tremendous demand for these robots,” CEO Jacob Hanchar said in a release. “This partnership will complement the work our teams are already doing to relaunch these products and will ensure that Cozmo and Vector are on shelves for the holidays.”

I don’t doubt that a lot of folks are looking to get their hands on the robots. Cozmo, in particular, was well-received, and sold reasonably well — but ultimately (and in spite of a lot of funding), the company couldn’t avoid the fate that’s befallen many a robotics startup.

It will be fascinating to see how these machines look when they’re reintroduced. Anki invested tremendous resources into bringing them to life, including the hiring of ex-Pixar and DreamWorks staff to make the robots more lifelike. A lot of thought went into giving the robots a distinct personality, whereas, for instance, Vector’s new owners are making the robot open-source. Cozmo, meanwhile, will have programmable functionality through the company’s app.

It could certainly be an interesting play for the STEM market that companies like Sphero are approaching. It has become a fairly crowded space, but at least Anki’s new owners are building on top of a solid foundation, with the fascinating and emotionally complex toy robots their predecessors created.

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