The latest from TechCrunch
- Suit Against Apple Alleges Privacy Breaches By Apps
- Groupon Closing $950 Million Round, Valued At $4.75 Billion
- The SEC Investigation Into Private Stock Sales Is All About The Glaring Lack Of Disclosure
| Suit Against Apple Alleges Privacy Breaches By Apps | Top |
| Here’s a bit of a sticky situation: Apple is facing a class-action lawsuit alleging that they are allowing apps and ad partners to identify specific users — a breach of Apple’s privacy policy and supposedly of privacy itself. Apple’s privacy policy touches on this directly, yet leaves plenty of room for movement on their side, which is really what the suit is all about, though Apple is simply the biggest target at the moment. The lawsuit alleges that the “non-personal information” collected by likes of Pandora and The Weather Channel can easily be collated and used to identify individuals. It’s beyond a doubt that given a few key pieces of information, one could be positively identified; studies have shown (Paul Ohm credits Latanya Sweeney) that given birth date, gender, and ZIP code, one can identify a vast majority of Americans. How many times a day do you think you give out one or more of those things? I was tempted to take the cynical side here and say “what did you expect?” However, the truth is that despite the changing nature of privacy and what your personal information is worth, there appear to be shenanigans in play here. It’s not clear to the end user just what is being collected and used, and by whom. To be sure, the privacy policy says: “We may collect information such as occupation, language, zip code, area code, unique device identifier, location, and the time zone where an Apple product is used so that we can better understand customer behavior and improve our products, services, and advertising.” But are apps restricted in some or all of the same ways? Is “our advertising” the same as “advertising on our devices”? Does Pandora consider your music choices “personal” or “non-personal,” and how do they make that distinction? How far must something be anonymized before it can be called sufficiently so? The fact is that a huge amount of potentially personal or private information is being sent out by millions of users who not only have no idea it’s being sent out (which, as far as I’m concerned, is for them to find out at their own pace and peril), but also have no way of controlling it or opting out — other than not using a given service. Some say that’s as much of an opt-out as something like The Weather Channel is required to provide, but that puts a lot of power in the hands of the largest players. The lawsuit targets Apple currently, but the spirit behind it could easily have been directed at Google or a number of other companies that make a business out of creating individuals out of scraps of information. A compromise will have to be achieved here, but I doubt we’ll have a satisfactory one for a couple years, since all these potentially invasive services are at a very early stage. This lawsuit is a symptom of a growing problem, but I doubt it will result in any serious advances. Marketing companies themselves may in fact be the correct object for users’ frustration, and policy changes might have to be made specifically concerning them — though that may be putting too fine a point on that kind of legislation, which should be decisive and encompass as much as possible. As it is, these companies are having a grand time floating through the loopholes and gaping omissions of current privacy policy and law. Update : I should have included the relevant portion from the developers’ agreement: In addition, the use of any personal information should be limited solely as necessary to provide services or functionality for Your Application (e.g., the use of collected personal information for telemarketing purposes is prohibited (unless expressly consented to by the user)). You and the Application must also take appropriate steps to protect any such location data or personal information from unauthorized disclosure or access. Similar but more specific to the other stuff. Still leaves a lot to interpretation, though. | |
| Groupon Closing $950 Million Round, Valued At $4.75 Billion | Top |
| Lots of excitement today about Groupon’s intention to raise a new monster round of financing, with speculation that the valuation of the still-young startup reaching nearly $8 billion. That speculation is only partially right, says a source with knowledge of the financing. The company is raising big money – around $950 million. And the valuation is an impressive $4.75 billion valuation. Just not quite as impressive as the earlier figure being thrown around. A separate source says Allen & Co. is advising Groupon on the deal. The company, which just recently turned down an acquisition offer from Google, has raised $171 million to date, much of it taken off the table by founders and execs. Our expectation is that much of this new round of financing, if not all of it, will also be used to cash out existing investors. The deal should be closed in a few weeks, says our source. CrunchBase Information Groupon Information provided by CrunchBase | |
| The SEC Investigation Into Private Stock Sales Is All About The Glaring Lack Of Disclosure | Top |
| The Securities and Exchange Commission is asking questions about private stock markets like SecondMarket and SharesPost . The SEC has sent “information requests to several participants in the buying and selling of stock” to a number of companies, reports the New York Times (although private market SecondMarket says they have received no request from the SEC). [ Corrected : An earlier version of this story indicated that the private markets themselves received the information requests from the SEC, but the New York Times does not specify which firms were contacted]. Over the past year, trading in shares of still-private companies such as Facebook, Zynga, and LinkedIn has skyrocketed, allowing employees and early investors to sell their shares even without an IPO. About $400 million worth of shares will pass hands this year on SecondMarket, which is the largest of the private exchanges, up from about $100 million in 2009. The lack of liquidity because of the general postponement of IPOs among many Internet startups is fueling this growth. Only qualified institutions and high net-worth individual investors are allowed to participate in these markets, but as more and more shares trade hands the SEC’s 500-shareholder rule could be triggered which would require the companies to report audited financial results just like a publicly-traded company. Investors are buying shares on these markets with little to no knowledge of the actual financial results of the underlying companies. There are no disclosure requirements because these markets take advantage of employees or early shareholders who want to unload their shares to the highest bidder. Investors see these markets as a chance to get in on hot, pre-IPO, Internet startups. Facebook shares are the ones most in demand on these markets. They recently traded at an implied valuation of above $50 billion on SecondMarket, and $42.4 billion on SharesPost. A couple years ago, Facebook won an exemption from the SEC’s 500-shareholder rule by arguing that the shares were mostly held by employees, and it also changed the way it issued restricted stock. But if the number of external shareholders exceeds 500 investors, the SEC might want to revisit that exemption. The same issue would hold for other private companies who end up with more than 500 shareholders through these private sales. The SEC is obviously concerned about the growth of these unregulated markets, especially now that funds are being created specifically to invest in these types of securities. To the extent that they become an alternative to public markets, the SEC may require the same sorts of disclosures for companies which gain more than 500 shareholders as a result of their shares being traded there. At that point the companies may as well go public because they gain nothing from these secondary markets other than as a release valve for employees and early investors. (Companies typically do not sell their own shares through these markets, nor do they benefit financially from the trading). In the end, it is all about disclosure. Because nobody can really know what these companies are worth without knowing their true profits, losses, revenue growth, and other financial metrics. If it looks like a public company and trades like a public company then the SEC might just end up regulating it like a public company. Photo credit: Flickr/ andrecismo CrunchBase Information SecondMarket SharesPost Facebook Information provided by CrunchBase | |
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