P2P lending platform PeopleFund raises $20M Series C extension led by Bain Capital

PeopleFund, a South Korean marketplace that connects borrowers and investors to enable lending, has recently added $20 million to its $63.4 million Series C.

Existing backer Bain Capital led the extension, with participation from previous investors such as Access Ventures, CLSA Capital Partners Lending Ark Asia, D3 Jubilee Partners, 500 Global, Kakao Investment, TBT Partners and IBX Partners.

The additional funding brings PeopleFund’s total raised to around $100 million in equity. Apart from the capital, PeopleFund also secured $240 million in debt financing in 2022 from Goldman Sachs, CLSA Lending Ark Asia and Bain Capital. The company did not disclose its valuation when asked.

In 2021, PeopleFund raised $63.4 million (75.9 billion won) in equity for Series C, also led by Bain Capital, to further develop its credit-scoring system.

PeopleFund plans to use its new capital to continue to advance its AI-powered risk management and credit scoring system for its users, which includes borrowers and lenders. On top of that, the startup aims to launch a B2B service this year to provide AI-enabled customized credit scoring system services to financial institutions.

Another reason for its runway extension is to meet one of the requirements for a P2P lending license, according to industry sources. In South Korea, P2P lending marketplaces must pass yearly requirements to get a license from Financial Services Commission (FSC) to run their business. To operate its business in 2023, PeopleFund, which reports that it is making a profit loss, must own a minimum capital ranging from $400,000 to $2.4 million, depending on its loan balance. (The loan balance is the remaining amount of loans made by PeopleFund that the borrowers have not yet repaid.) PeopleFund’s loan balance was $264.3 million (326.8 billion won) as of December 2022, the company said. That means the outfit’s requirement capital is around $1.5 million to $2.4 million, according to the industry sources and local media.

Joey Kim, founder of PeopleFund, said in a statement that “2022 will be marked as a year of turbulence for fintech, with the global public market adjustment alongside changes in the macro environment. Meanwhile, the Korean consumer lending market has undergone a dramatic transition into the mobile sphere, with big players like KakaoPay and Toss leading the change. This transition, coupled with the instability of the credit market, is opening up opportunities for tech-based digital lenders and its technologies to highlight our competence compared to traditional financial institutions.”

Image Credits: PeopleFund

The outfit says its total amount of loans deployed to borrowers to date was estimated at $1.3 billion in December, up from $936 billion in October 2021. The startup says it has seen more than 56.7% growth in the number of borrowers and 9.6% in the number of lenders compared to the previous year. The number of its borrowers and lenders was 20,688 and 2,943,883, respectively, as of December last year.

The Seoul-based P2P lending startup, founded in 2015, successfully closed its extension. Still, the impact of the extremely tough market condition was inevitable, leading to several tech industry layoffs in the last few months. PeopleFund confirmed that it had cut about 10% of its staff in the fourth quarter of 2022 to “operate the business efficiently and effectively” amid the possibility of a worsening economy. PeopleFund had nearly 150 people as of December 2021.

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P2P lending platform PeopleFund raises $20M Series C extension led by Bain Capital by Kate Park originally published on TechCrunch

Daily Crunch: Apple powers up 14- and 16-inch MacBook Pro models with M2 Pro and Max chips

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PST, subscribe here.

Good news — we are back with another round of events for TechCrunch, and we have early-bird tickets available to our Early Stage event in Boston in April. Woohoo!

Today, we also particularly enjoyed Connie’s peek into the future as Sam Altman sees it. — Christine and Haje

The TechCrunch Top 3

An Apple a day…: Get ready to take a big bite out of Apple. Kyle and Brian peel off the cover to unveil the consumer tech giant’s M2 Pro and M2 Max chips that pack some power. The chips will be available in the 14- and 16-inch MacBook Pros, and if you are looking around for a new computer, the M2 Mac Mini arrives January 24, starting at $599.
Cloudy with a chance of embedded analytics: Nothing but blue skies so far for Cumul.io, a low-code embedded analytics platform for SaaS companies. The company raised $10.8 million to continue developing its business intelligence platform that quickly “connects just about any data source, drag-and-drop specific features to customize their dashboards, and then copy-paste a snippet of code into their application to serve thousands of end-users,” Paul writes.
The headline says it all: We couldn’t help but steal from the TC+ section because Tim’s headline is just so good: “Nest co-founder Matt Rogers’ new startup is trash.” We won’t ruin it any more for you.

Startups and VC

ChatGPT, the AI that can write poems, emails, spreadsheet formulas and more, has attracted a lot of negative publicity lately, Kyle writes. That’s perhaps why AI21 Labs, an Israeli startup developing text-generating AI systems along the lines of ChatGPT, tried a different tack with its newly released assistive writing tool, Wordtune Spices. A part of AI21’s expanding suite of generative AI, Wordtune Spices doesn’t compose emails and essays like ChatGPT. Instead, it suggests options that change the voice and style of already written sentences, also offering up statistics from web-based sources to “strengthen arguments.”

Apropos robots that write…On the heels of raising at a $1 billion valuation last week, DeepL is taking the wraps off a new language product, the first extension for a startup that made its name from its popular AI-based translation tools, Ingrid, er, writes. Write is a new tool that fixes your writing — catching grammar and punctuation mistakes, offering suggestions for clarity and more creative phrasing and (soon) giving you the option to change your tone.

There was a lot of fun startup news on the site over the past few days, so it was hard to choose just five to load up in our little recommendation engine, but here’s what we came up with:

QR isn’t dead…: It’s the tech that won’t die, as Beaconstac lands a $25 million investment for its QR code management platform, Kyle reports.
The DM says nah: Amanda reports that D&D publisher says “We rolled a 1” as it addresses backlash over controversial license.
That price is un-Hinge-d: Dating app Hinge tests a pricier $60 per month subscription, similar to Tinder Platinum, Sarah writes.
Want to buy that again?: CloseFactor raises $15.2 million to automate repetitive sales processes, Kyle reports.
Time for 100 push-ups, stat: Darrell takes a closer look at Vitruvian’s Trainer+, writing that it is an all-in-one home gym that actually lives up to its promises.

7 space tech predictions for 2023

Image Credits: Orlando Sentinel (opens in a new window) / Getty Images

At the time of this writing, Wikipedia notes that there have been eight successful spaceflight launches so far this year.

New spaceports are entering operation, cell phone users will soon have connectivity from space, and the Artemis program backed by NASA is one of several ventures that will bring robots (and eventually human crews) to the moon.

“Despite the economic uncertainty, we believe new records will be established in spacetech as giant commercial projects get funded,” says Mark Boggett, CEO and co-founder of Seraphim Space Manager LLP.

Three more from the TC+ team:

A feature does not a company make: Build a company, not a feature, by Haje.
Mo IP, mo money: Cost-effective IP strategies can lead to massive exit valuations, by Kyle Graves.
Here’s a flying crystal ball: Mark Boggett has 7 space tech predictions for you for the upcoming year.

TechCrunch+ is our membership program that helps founders and startup teams get ahead of the pack. You can sign up here. Use code “DC” for a 15% discount on an annual subscription!

Big Tech Inc.

Extra, extra, read all about how the Royal Mail confirmed a cyberattack that disrupted postal service in the United Kingdom. Carly writes that the confirmation comes a week after the Royal Mail said it was hit by an unspecified “cyber incident” that caused it to not be able to dispatch items overseas. CEO Simon Thompson said he didn’t believe customer data was compromised, but notified authorities in case that changes. Some reports say the LockBit ransomware group is behind this, and Carly is working on confirming that.

And we have five more for you:

“Baby Yoda” back again: Get ready for more cuteness from a galaxy far, far away. Disney+ released ‘The Mandalorian’ Season 3 trailer, Lauren writes. May the Force be with you.
We see you: Frederic writes that Wyze is going back to its OG way with the Wyze Cam OG and OG Telephoto security cameras.
Do you hear what I hear?: Ivan and Jagmeet paired up to report on a new pilot Google is doing of a “soundbox” in India for merchants to get audio-based payment alerts.
If you like fast cars and you cannot lie: Get ready to burn rubber. Chevy unveiled its fastest Corvette yet, the electrified 2024 Corvette E-Ray. Matt has more.
One company’s trash is another company’s treasure: If you’re thinking of getting a giant neon Twitter bird light for your home or office, Amanda knows where you can procure one.

Daily Crunch: Apple powers up 14- and 16-inch MacBook Pro models with M2 Pro and Max chips by Christine Hall originally published on TechCrunch

Tesla engineer testifies that 2016 video promoting self-driving was faked

Tesla faked a 2016 video promoting its self-driving technology, according to testimony by a senior engineer reviewed by Reuters.

The video, which shows a Tesla Model X driving on urban, suburban and highway streets; stopping itself at a red light; and accelerating at a green light is still on Tesla’s website and carries the tagline: “The person in the driver’s seat is only there for legal reasons. He is not doing anything. The car is driving itself.”

CEO Elon Musk used the video as evidence that Tesla “drives itself” by relying on its many built-in sensors and self-driving software. Yet according to Ashok Elluswamy, director of Autopilot software at Tesla, the video was staged using 3D mapping on a predetermined route, a feature that is not available to consumers.

In his July deposition, which was taken as evidence in a lawsuit against Tesla for a fatal 2018 crash involving former Apple engineer Walter Huang, Elluswamy said Musk wanted the Autopilot team to record “a demonstration of the system’s capabilities.”

Elluswamy’s statement also confirms and provides more details on what anonymous former employees told the New York Times in 2021. While there appeared to be no legal ramifications for Tesla following the NYT’s investigation, an on-the-record testimony from a current employee could cause trouble for the automaker, which is already beleaguered by lawsuits and investigations surrounding its Autopilot and Full Self-Driving (FSD) systems. (To be clear, neither system is actually self-driving. They are advanced driving-assistance systems that automate certain driving tasks, but as Tesla has made clear on its website, drivers should stay alert and keep their hands on the steering wheel when the systems are engaged.)

When electric truck maker Nikola was accused of and eventually admitted to faking a video of its fuel cell–powered Nikola One semitruck prototype — Nikola had actually placed the truck on a small hill, allowing gravity, not the motor, to do its thing — state and federal investigations were launched into both Nikola and its chairman and founder, Trevor Milton. Milton was found guilty on charges of securities fraud in October.

Tesla’s fake video was created using 3D mapping on a predetermined route from a house in Menlo Park, California, to Tesla’s office in Palo Alto, according to Elluswamy. Drivers had to intervene to take control during test runs, and the scenes that were left on the cutting room floor included the test car crashing into a fence in Tesla’s parking lot when trying to park itself without a driver.

“The intent of the video was not to accurately portray what was available for customers in 2016. It was to portray what was possible to build into the system,” Elluswamy said, according to a transcript of his testimony seen by Reuters.

Musk promoted the video at the time, tweeting Tesla vehicles require “no human input at all” to drive through urban streets to highways and eventually to find a parking spot.

Neither Musk nor Tesla, which has disbanded its press office, responded in time to TechCrunch’s request for comment.

The revelation comes at a time when Tesla is facing litigation for multiple fatal crashes involving its Autopilot system, as well as a criminal investigation from the U.S. Department of Justice for claims Tesla made about Autopilot. Just this week, a Tesla that had FSD engaged suddenly accelerated and crashed into a BC Ferries ramp in Canada, totaling the vehicle.

Regarding the 2018 crash that killed Huang, the National Transportation Safety Board concluded in 2020 Tesla’s “ineffective monitoring of driver engagement” had contributed to the crash, which the board said was likely caused by Huang’s distraction and the limitations of the system.

While Tesla does tell its drivers to pay attention to the road, there are ways drivers can fool the system to make the car believe they were paying attention, said Elluswamy. Many drivers even go so far as to buy Tesla counterweights on websites like Alibaba, which can be placed on steering wheels to mimic the weight of human hands that are otherwise engaged while the car is in movement.

Even amid regulator scrutiny and reports of crashes, Tesla recently extended access of its FSD software to customers across North America.

Tesla engineer testifies that 2016 video promoting self-driving was faked by Rebecca Bellan originally published on TechCrunch

Discord acquires Gas, a compliments-based social media app for teens

The messaging platform Discord announced its acquisition of Gas, an app that’s popular among teens for its positive spin on social media.

On Gas, users sign up with their school, add friends, and answer polls about their classmates. But the questions in the polls are intended to boost users’ confidence, rather than damage it. Teens might be asked to choose which of four friends is the best DJ, or has the best smile. Then, the person who was chosen will get an anonymous message with their compliment, sent from a vague “boy in 10th grade” or “girl in 11th grade.”

Gas was founded by Nikita Bier, who previously sold a similar app called tbh to Facebook in 2017 — tbh has since been shut down.

According to data from Sensor Tower, Gas reached 7.4 million installs and almost $7 million in consumer spending since its launch in summer 2022. Users can subscribe to a paid feature called “God Mode,” which gives users hints about who their secret complimenters are.

Gas got gassed up on the Today Show this morning https://t.co/qEJfMp7M2Z

— Nikita Bier (@nikitabier) January 10, 2023

“At this time, Gas will continue as its own standalone app and the Gas team will be joining Discord to help our efforts to continue to grow across new and core audiences,” Discord wrote in an announcement. As of October, Bier said Gas had four team members.

Despite Gas’s fast popularity, the app has had a rocky road to its exit. The app was the subject of a widespread sex trafficking rumor, which was completely false, yet still impacted the app’s downloads. Bier told the Washington Post that he and his team received hundreds of graphic death threats as a result of this hoax. Other viral social apps IRL and WalkSafe have also been hit with unfounded trafficking accusations.

Gas is one of several anonymous apps — some based around compliments, some not — that have gone viral recently. But TechCrunch found that apps like NGL and Sendit were using bots to simulate engagement. Like Gas, these apps offer users the ability to pay to see who asked questions. Understandably, some customers felt scammed when it turned out that these questions didn’t actually come from their friends. Meanwhile, 9count, the company that made Spark and Summer, is working on a product similar to Gas called nocapp.

Even though Discord is currently going to keep Gas operating as a standalone product, Discord recently announced that it would integrate a selection of apps into its servers. So, it’s possible that we could see these positive community polls on the messaging platform in the future.

“We’re always working to create an inclusive world where no one feels like an outsider and we’re excited to welcome Gas to the Discord community as our next step to fulfilling that vision,” Discord wrote in its announcement.

The terms of Discord’s acquisition of Gas have not been disclosed.

Discord acquires Gas, a compliments-based social media app for teens by Amanda Silberling originally published on TechCrunch

Oversight Board presses Meta to revise ‘convoluted and poorly defined’ nudity policy

Meta’s Oversight Board, which independently evaluates difficult content moderation decisions, has overturned the company’s takedown of two posts that depicted a non-binary and transgender person’s bare chests. The case represents a failure of a convoluted and impractical nudity policy, the Board said, and recommended that Meta take a serious look at revising it.

The decision concerned two people who, as part of a fundraising campaign for one of the couple who was hoping to undergo top surgery (generally speaking the reduction of breast tissue). They posted two images to Instagram, in 2021 and 2022, both with bare chests but nipples covered, and included a link to their fundraising site.

These posts were repeatedly flagged (by AI and users) and Meta ultimately removed them, as violations of the “Sexual Solicitation Community Standard,” basically because they combined nudity with asking for money. Although the policy is plainly intended to prevent solicitation by sex workers (another issue entirely), it was repurposed here to remove perfectly innocuous content.

When the couple appealed the decision and brought it to the Oversight Board, Meta reversed it as an “error.” But the Board took it up anyway because “removing these posts is not in line with Meta’s Community Standards, values or human rights responsibilities. These cases also highlight fundamental issues with Meta’s policies.”

They wanted to take the opportunity to point out how impractical the policy is as it exists, and to recommend to Meta that it take a serious look at whether its approach here actually reflects its stated values and priorities.

The restrictions and exceptions to the rules on female nipples are extensive and confusing, particularly as they apply to transgender and non-binary people. Exceptions to the policy range from protests, to scenes of childbirth, and medical and health contexts, including top surgery and breast cancer awareness. These exceptions are often convoluted and poorly defined. In some contexts, for example, moderators must assess the extent and nature of visible scarring to determine whether certain exceptions apply. The lack of clarity inherent in this policy creates uncertainty for users and reviewers, and makes it unworkable in practice.

Essentially: even if this policy did represent a humane and appropriate approach to moderating nudity, it’s not scalable. For one reason or another, Meta should modify it. The summary of the Board’s decision is here and includes a link to a more complete discussion of the issues.

The obvious threat Meta’s platforms face, however, should they relax their nudity rules, is porn. Founder Mark Zuckerberg has said in the past that making his platforms appropriate for everyone necessitates taking a clear stance on sexualized nudity. You’re welcome to post sexy stuff and link to your OnlyFans, but no hardcore porn in Reels, please.

But the Oversight Board says this “public morals” stance is likewise in need of revision (this excerpt from the full report lightly edited for clarity):

Meta’s rationale of protecting “community sensitivity” merits further examination. This rationale has the potential to align with the legitimate aim of “public morals.” That said, the Board notes that the aim of protecting “public morals” has sometimes been improperly invoked by governmental speech regulators to violate human rights, particularly those of members of minority and vulnerable groups.

…Moreover, the Board is concerned about the known and recurring disproportionate burden on expression that have been experienced by women, transgender, and non-binary people due to Meta’s policies…

The Board received public comments from many users that expressed concern about the presumptive sexualization of women’s, trans and non-binary bodies, when no comparable assumption of sexualization of images is applied to cisgender men.

The Board has taken the bull by the horns here. There’s no sense dancing around it: the policy of recognizing some bodies as inherently sexually suggestive, but not others, is simply untenable in the context of Meta’s purportedly progressive stance on such matters. Meta wants to have its cake and eat it too: give lip service to people like the trans and NB people like those who brought this to its attention, but also respect the more restrictive morals of conservative groups and pearl-clutchers worldwide.

The Board Members who support a sex and gender-neutral adult nudity policy recognize that under international human rights standards as applied to states, distinctions on the grounds of protected characteristics may be made based on reasonable and objective criteria and when they serve a legitimate purpose. They do not believe that the distinctions within Meta’s nudity policy meet that standard. They further note that, as a business, Meta has made human rights commitments that are inconsistent with an approach that restricts online expression based on the company’s perception of sex and gender.

Citing several reports and internationally-negotiated definitions and trends, the Board’s decision suggests that a new policy be forged that abandons the current structure of categorizing and removing images, substituting something more reflective of modern definitions of gender and sexuality. This may, of course, they warn, leave the door open to things like nonconsensual sexual imagery being posted (much of this is automatically flagged and taken down, something that might change under a new system), or an influx of adult content. The latter, however, can be handled by other means that total prohibition.

When reached for comment, Meta noted that it had already reversed the removal and that it welcomes the Board’s decision. It added: “We know more can be done to support the LGBTQ+ community, and that means working with experts and LGBTQ+ advocacy organizations on a range of issues and product improvements.” I’ve asked for specific examples of organizations, issues, or improvements and will update this post if I hear back.

Oversight Board presses Meta to revise ‘convoluted and poorly defined’ nudity policy by Devin Coldewey originally published on TechCrunch

Putting numbers on the global venture slowdown

“Tell me something I don’t know,” was my first reaction when reports on venture capital in 2022 hit my inbox this month. It is pretty clear by now that there was a slowdown, so what’s the point of harping on about it as we enter a new year?

The point, as often with data, is that we can now confirm what was merely intuition until Q4 actually closed: 2022 saw fewer exits and venture deals than 2021.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

If we had to retain only one fact, it would be the decline in capital invested in startups last year. According to CB Insights, whose State of Venture report is one of our sources today, total venture funding in 2022 amounted to $415.1 billion, 35% less than in 2021.

According to the PitchBook-NVCA Venture Monitor report, deal count was more stable, with 2022’s estimated deal count approaching 2021’s figure. But looking at quarterly data reveals that Q4 had the lowest deal count of 2022, which doesn’t necessarily bode well for 2023.

Putting numbers on the global venture slowdown by Anna Heim originally published on TechCrunch

2022 global smartphone shipments were the lowest in nearly a decade

One of these days I’ll have some positive news to share about the global smartphone market. Today is not that day. The industry capped off another dismal year with a 17% year over year drop for Q4. That number puts the full year’s shipping figures 11% below 2021, per new numbers from Canalys, which refer to it as “an extremely challenging year for all vendors.”

It’s been one thing after another from the industry. Slowing figures pre-dated 2020, while the pandemic and its various knock-on effects have continued tossing up roadblocks. For 2022, the same macroeconomic headwinds that have impacted practically every facet of life took their own toll on the industry. Notably, the figures for the quarter and the year were at their lowest in nearly a decade. The firm tells TechCrunch, “we have to go back to 2013 to find lower numbers — and back then the market situation was very different as the technology was a lot more emerging.”

Image Credits: Canalys

Apple returned to the top spot for Q4, at a quarter of the total market. Samsung held onto No. 2, but still captured the top spot for the entirety of 2022.

“The channel is highly cautious with taking on new inventory, contributing to low shipments in Q4,” analyst Runar Bjørhovde said in a new release. “Backed by strong promotional incentives from vendors and channels, the holiday sales season helped reduce inventory levels. While low-to-mid-range demand fell fast in previous quarters, high-end demand began to show weakness in Q4. The market’s performance in Q4 2022 stands in stark contrast to Q4 2021, which saw surging demand and easing supply issues.”

It’s a long way of saying the industry saw a bit of a rebound when supply chain constraints began to ease up, but additional external forces reversed those positive trends — and then some. The firm doesn’t expect much in the way of rebound for the remainder of 2023, either, predicting that growth will be “flat to marginal,” as economic uncertainty and inflation remains.

Unemployment, interest rate hikes and other issues are expected to have an adverse effect on “mid-to-high-end-dominated markets,” including North America and parts of Europe. That should, to some extent, be counteracted by a bump from China, as the world’s largest smartphone market continues the reopening process.

2022 global smartphone shipments were the lowest in nearly a decade by Brian Heater originally published on TechCrunch

Twitter rivals, unicorn trivia and valuation homework

Welcome back toEquity, the podcast about the business of startups, where we unpack the numbers and nuance behind the headlines. It’s Tuesday, not Monday, but hey, the week ahead is as busy as ever.

Here’s what I chatted about today:

Big tech: Good news for Bitcoin and Ethereum, even as late-stage companies in the space cut to stay afloat.
Big idea: I had two ones to get through. First, Africa had no new unicorns last year, despite record fundraising raising. What’s that all about? Second, I want to talk about Stripe’s internal valuation cut, yet again, and what that news means on the outside.
Big innovation: I talk about yet another Clearco executive shake up and yet another Clearco round of layoffs, as well as the energy for the fintech moving forward. We end with a look at freshly-backed T2, which is opening up its game plan in a spreadsheet format. We love to see a Twitter rival, love even more to see one utilize the beauty of read-only spreadsheet features

As always, you can support me by following me on Twitter and Instagram.The show also tweets from @equitypod, so follow us there and turn on notifications to never miss a new update from your favorite podcast team in tech (ugh, you shouldn’t have).

Equity drops at 10:00 a.m. PT every Monday and at 7:00 a.m. PT on Wednesdays and Fridays, so subscribe to us onApple Podcasts,Overcast,Spotifyandall the casts. TechCrunch also has agreat show on crypto, ashow that interviews founders, one thatdetails how our stories come together, and more!

Twitter rivals, unicorn trivia and valuation homework by Natasha Mascarenhas originally published on TechCrunch

UK privacy watchdog silent as Google flicks off critique its Topics API fails to reform ad-tracking

Late last week it emerged Google intends to ignore a call by the World Wide Web Consortium (W3C) — the international body that works to guide the development of web standards — to rethink the Topics API: A key ad-targeting component of Google’s so-called “Privacy Sandbox” proposal to evolve the adtech stack Chrome supports for targeted advertising.

Topics refers to an ad-targeting component of the Sandbox proposal which is based on tracking web users interests via their browser.

The W3C Technical Architecture Group (TAG) raised a series of concerns following a request from Google last March for an “early design review” of the Topics API — writing last week that its “initial view” is Google’s proposed Topics API fails to protect users from “unwanted tracking and profiling” and maintains the status quo of “inappropriate surveillance on the web”.

“We do not want to see it proceed further,” added Amy Guy, commenting on behalf of the TAG.

The TAG’s take is not the first downbeat assessment of Topics. Browser engine developers WebKit and Mozilla also both recently gave a thumbs-down to Google’s approach — with the former warning against pre-existing privacy deficiencies on the web being used as “excuses for privacy deficiencies in new specs and proposals”; and the latter deeming Topics “more likely to reduce the usefulness of the information for advertisers than it provides meaningful protection for privacy”.

And the risk of the web user experience fragmenting if there’s only limited support among browsers for Topics — which could lead to implementing sites seeking to block visitors who are using non-Chromium browsers — is another of the concerns flagged by the TAG.

Despite deepening opposition from the world of web infrastructure to Google’s approach, the UK’s privacy watchdog — a key oversight body in this context as the Information Commission’s Office (ICO) it’s actively engaged in assessing the Sandbox’s compliance with data protection law following a major antitrust intervention by the UK’s Competition and Markets Authority (CMA) which it joined — appears content to stand by and let Google proceed with a proposal that technical experts at the W3C are warning risks perpetuating the kind of privacy intrusions (and user agency and transparency failures) that have mired the adtech industry in regulatory (and reputational) hot water for years.

Asked whether it has any concerns about Topics’ implications for privacy, including in light of the TAG’s assessment, the ICO took several days to consider the question before declining comment.

The regulator did tell us it is continuing to engage with Google and with the CMA — as part of its role under commitments made by Google last year to the competition watchdog. The ICO’s spokesperson also pointed back to an 2021 opinion, published by the prior UK information commissioner on the topic (ha!) of evolving online advertising — which set out a series of “principles” and “recommendations” for the adtech industry, including stipulating that users are provided with an option to receive ads without any tracking, profiling or processing of personal data — and which the spokesperson said lays out its “general expectations” in relation to such proposals now.

But more fulsome response from the ICO to a detailed critique of Topics by the W3C TAG there was none.

A Google spokesman, meanwhile, confirmed it has briefed the regulator on Topics. And responding to questions about the TAG’s concerns the company also told us:

While we appreciate the input of TAG, we disagree with their characterization that Topics maintains the status quo. Google is committed to Topics, as it is a significant privacy improvement over third-party cookies, and we’re moving forward.

Topics supports interest-based ads that keep the web free & open, and significantly improves privacy compared to third-party cookies. Removing third-party cookies without viable alternatives hurts publishers, and can lead to worse approaches like covert tracking. Many companies are actively testing Topics and Sandbox APIs, and we’re committed to providing the tools to advance privacy and support the web.

Additionally, Google’s senior director of product management, Victor Wong, took to Twitter Friday — following press reporting on the implications of the TAG’s concerns — to tweet a threaded version of sentiments in the statement (in which Wong also claims users can “easily control what topics are shared or turn it off”) — ending with the stipulation that the adtech giant is “100% committed to these APIs as building blocks for a more private internet”.

So, tl;dr, Google’s not for turning on Topics.

It announced this component of Sandbox a year ago — replacing a much criticized earlier interest-based ad-targeting proposal, called FLoCs (aka Federated Learning of Cohorts), which had proposed grouping users with comparable interests into targetable buckets.

FLoCs was soon attacked as a terrible idea — with critics arguing it could amplify existing adtech problems like discrimination and predatory targeting. So Google may not have had much of a choice in killing off FLoCs — but doing so provided it with a way to turn a PR headache over its claimed pro-privacy ads evolution project into a quick win by making the company appear responsive.

Thing is, the fast-stacking up critiques of Topics don’t look good for Google’s claims of “advanced” adtech delivering a “more private internet” either.

Under the Topics proposal, Chrome (or a chromium-based browser) tracks the users’ web activity and assigns interests to them based on what they look at online which can then be shared with entities that call the Topics API in order to target them with ads.

There are some limits — such as on how many topics can be assigned, how many are shared, how long Topics are stored etc — but, fundamentally, the proposal entails the user’s web activity being watched by their browser which then shares snippets of the taxonomy of interests it’s inferred with sites that ask for the data.

100% clear to (and controllable by) the web user this is not, as the TAG’s assessment argues:

The Topics API as proposed puts the browser in a position of sharing information about the user, derived from their browsing history, with any site that can call the API. This is done in such a way that the user has no fine-grained control over what is revealed, and in what context, or to which parties. It also seems likely that a user would struggle to understand what is even happening; data is gathered and sent behind the scenes, quite opaquely. This goes against the principle ofenhancing the user’s control, and we believe is not appropriate behaviour for any software purporting to be an agent of a web user.

Giving the web user access to browser settings to configure which topics can be observed and sent, and from/to which parties, would be a necessary addition to an API such as this, and go some way towards restoring agency of the user, but is by no means sufficient. People can become vulnerable in ways they do not expect, and without notice. People cannot be expected to have a full understanding of every possible topic in the taxonomy as it relates to their personal circumstances, nor of the immediate or knock-on effects of sharing this data with sites and advertisers, and nor can they be expected to continually revise their browser settings as their personal or global circumstances change.

There is also the risk of sites that call the API being able to ‘enrich’ the per-user interest data gathered by Topics by using other forms of tracking — such as device fingerprinting — and thereby strip away at web users’ privacy in the same corrosive, anti-web-user way that tracking and profiling always does.

And while Google has said “sensitive” categories — such as race or gender — can’t be turned into targetable interests via the Topics processing that does not stop advertisers identifying proxy categories they could use to target protected characteristics as has happened using existing tracking-based ad targeting tools (see, for eg, “ethnic affinity” ad-targeting on Facebook — which led to warnings back in 2016 of the potential for discriminatory ads excluding people with protected characteristics from seeing job or housing ads).

(Again the TAG picks up on that risk — further pointing out: “[T]here is no binary assessment that can be made over whether a topic is ‘sensitive’ or not. This can vary depending on context, the circumstances of the person it relates to, as well as change over time for the same person.”)

A cynic might say the controversy over FLoCs, and Google’s fairly swift ditching of it, provided the company with useful cover to push Topics as a more palatable replacement — without attracting the same level of fine-grained scrutiny to a proposal that, after all, seeks to keep tracking web users — given all the attention already expended on FLoCs (and with some regulatory powder spent on antitrust Privacy Sandbox considerations).

As with a negotiation, the first ask may be outrageous — not because the expectation is to get everything on the list but as a way to skew expectations and get as much as possible later on.

Google’s highly technical plan to build a new (and it claims) ‘better-for-privacy’ adtech stack was formally announced back in 2020 — when it set out its strategy to deprecate support for third party tracking cookies in Chrome, having been dragged into action by far earlier anti-tracking moves by rival browsers. But the proposal has faced considerable criticizm from publishers and marketers over concerns it will further entrench Google’s dominance of online advertising. That — in turn — has attracted a bunch of regulatory scrutiny and friction from antitrust watchdogs, leading to some delays to the original migration timeline.

The UK has led the charge here, with its CMA extracting a series of commitments from the tech giant just under a year ago — over how it would develop the replacement adtech stack and when it could apply any switch.

Principally these commitments are around ensuring Google took feedback from the industry to address any competition concerns. But the CMA and ICO also announced joint working on this oversight — given the clear implications for web users’ privacy of any change to how ad targeting is done. Which means competition and privacy regulators need to work hand-in-glove here if the web user is not to keep being stiffed in the name of ‘relevant ads’.

The issue of adtech for the ICO is, however, an awkward one.

This is because it has — historically — failed to take enforcement action against current-gen adtech’s systematic breaches of privacy law. So the notion of the ICO hard-balling Google now, over what the company has, from the outset, branded as a pro-privacy advancement on the dirty status quo, even as the regulator lets privacy-ripping adtech carry on unlawfully processing web users’ data — might look a bit ‘arse over tit’, so to speak.

The upshot is the ICO is in a bind over how proactively it can regulate the detail of Google’s Sandbox proposal. And that of course plays into Google’s hand — since the sole privacy regulator with eyes actively on this stuff is forced to sit on its hands (or at best twiddle its thumbs) and let Google shape the narrative for Topics and ignore informed critiques — so you could say Google is rubbing the regulator’s face in its own inaction. Hence unwavering talk of “moving forward” on a “significant privacy improvement over third-party cookies”.

“Improvement” is of course relative. So, for users, the reality is it’s still Google in the driving seat when it comes to deciding how much of an incremental privacy gain you’ll get on its people-tracking business as usual. And there’s no point in complaining to the ICO about that.

UK privacy watchdog silent as Google flicks off critique its Topics API fails to reform ad-tracking by Natasha Lomas originally published on TechCrunch

Delphia co-founder placed on leave after sexual assault allegations from former employee

Delphia, a mobile investment platform, is facing a lawsuit and allegations that its co-founder and CTO Cameron Agius-Westland sexually assaulted and harassed a former employee, according to a complaint filed on Monday and shared exclusively with TechCrunch.

The complaint alleges that on August 17, 2022, Westland “sexually assaulted and harassed Plaintiff for at least 30 minutes, as he rubbed her back and legs in a hot tub in a sexual manner during a work retreat.” The complaint was filed in both the U.S. and Canada.

“Later in the night, Westland whispered in Plaintiff’s ear – ‘what do you say, we should do this, you and I, let’s do this.’ Plaintiff acted like she did not understand or hear him,” the document alleged. “Then at her first opportunity, Plaintiff told everyone she was going to bed, went into her room, and locked the door.” In the complaint, the former employee also alleges that she later received a text from Westland asking “Want to cuddle,” to which she says she did not respond.

The following day, Westland is said in the complaint to have at least partly acknowledged his behavior by sending the Plaintiff and two other colleagues the following message, as shared in a screenshot in the document:

After the alleged incident, the Plaintiff was fired in mid-November 2022, after Westland wanted to “change company strategy,” according to the document. She was replaced shortly after by what the former employee’s complaint characterizes as Westland’s “close friend,” Max Cameron, who is now director of community products at Delphia.

Andrew Peek, CEO and co-founder of Delphia, shared a statement with TechCrunch in response to the lawsuit allegations:

Delphia takes the allegations of sexual misconduct against Mr. Westland very seriously. Delphia has always held itself to the highest standards and, accordingly, we have retained an independent third-party investigator to look into these allegations. Mr. Westland has been placed on a leave of absence pending the investigation. That said, Delphia denies the allegations that the plaintiff in this litigation was terminated for any reason other than the fact that her services were no longer needed. In addition, the person identified as Mr. Westland’s “close friend” works in an entirely different part of the organization and did not take over the plaintiff’s responsibilities.

Delphia closed a $60 million Series A led by Multicoin Capital in June 2022. Other investors in the round include fintech-focused Ribbit Capital, M13, Lattice Ventures and the now-defunct FTX Ventures. In December 2022, Delphia announced its acquisition of Fathom Privacy, a data rights company that aims to provide individuals the ability to own personal application data.

Delphia co-founder placed on leave after sexual assault allegations from former employee by Jacquelyn Melinek originally published on TechCrunch

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