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June 25, 2019
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lawsuit

Facebook sues analytics firm Rankwave over data misuse

in Apps/Cambridge Analytica/Delhi/Facebook/facebook platform/Facebook Policy/India/lawsuit/mobile/Policy/Politics/Rankwave/Social/TC by

Facebook might have another Cambridge Analytica on its hands. In a late Friday news dump, Facebook revealed that today it filed a lawsuit alleging South Korean analytics firm Rankwave abused its developer platform, and has refused to cooperate with a mandatory compliance check regarding how it used Facebook data.

TechCrunch has attained a copy of the lawsuit that alleges that Rankwave misused Facebook data outside of the apps where it was collected, purposefully delayed responding to a cease-and-desist order, claimed it didn’t violate Facebook policy, lied about not using its apps since 2018 when they were accessed in April 2019, and then refused to comply with a mandatory audit of its data practices.

“By filing the lawsuit, we are sending a message to developers that Facebook is serious about enforcing our policies, including requiring developers to cooperate with us during an investigation” Facebook’s director of platform enforcement and litigation Jessica Romero wrote. Facebook tells TechCrunch that “To date Rankwave has not participated in our investigation and we are trying to get more info from them to determine if there was any misuse of Pages data.”

 

Facebook explains that “Rankwave used the Facebook data associated with Rankwave’s apps to create and sell advertising and marketing analytics and models — which violated Facebook’s policies and terms”  and that it “failed to comply with Facebook’s requests for proof of Rankwave’s compliance with Facebook policies, including an audit.”

More specifically, Facebook cites that its “Platform Policies largely restrict Developers from using Facebook data outside of the environment of the app, for any purpose other than enhancing the app users’ experience on the app.” But Rankwave used Facebook data outside those apps.

Facebook alleges that “Rankwave’s B2B apps were installed and used by businesses to track and analyze activity on their Facebook Pages . . . Rankwave operated a consumer app called the “Rankwave App.” This consumer app was designed to measure the app user’s popularity on Facebook by analyzing the level of interaction that other users had with the app user’s Facebook posts. On its website, Rankwave claimed that this app calculated a user’s ‘Social influence score’ by ‘evaluating your social activities’ and receiving ‘responses from your friends.’”

Facebook is seeking monetary damages plus injunctive relief restraining Rankwave from accessing the Facebook Platform, requiring it to comply with Facebook’s audit, requiring that it delete all Facebook data.

You can learn more about Rankwave’s analytics practices from this 2014 presentation.

Smartcar accuses $50M-funded rival Otonomo of API plagiarism

in API documentation/Automotive/Car API/cease and desist/copying/Delhi/Developer/Drama/funding/Fundings & Exits/India/lawsuit/Otonomo/plagiarism/Policy/Politics/Smartcar/Startups/TC/Transportation by

Ruthless copying is common in tech. Just ask Snapchat. However, it’s typically more conceptual than literal. But car API startup Smartcar claims that its competitor Otonomo copy-and-pasted Smartcar’s API documentation, allegedly plagiarizing it extensively to the point of including the original’s typos and randomly generated strings of code. It’s published a series of side-by-side screenshots detailing the supposed theft of its intellectual property.

Smartcar CEO Sahas Katta says “We do have evidence of several of their employees systemically using our product with behavior indicating they wanted to copy our product in both form and function.” Now a spokesperson for the startup tells me “We’ve filed a cease-and-desist letter, delivered to Otonomo this morning, that contains documented aspects of different breaches and violations.”

The accusations are troubling given Otonomo is not some inconsequential upstart. The Israel-based company has raised over $50 million since its founding in 2015, and its investors include auto parts giant Aptiv (formerly Delphi) and prestigious VC firm Bessemer Ventures Partners. Otonomo CMO Lisa Joy provided this statement in response to the allegations, noting it will investigate but is confident it acted with integrity:

Otonomo prides itself on providing a completely unique offering backed by our own intellectual property and patents. We take Smartcar’s questions seriously and are conducting an investigation, but we remain confident that our rigorous standards of integrity remain uncompromised. If our investigation reveals any issues, we will immediately take the necessary steps to address them.

Both startups are trying to build an API layer that connects data from cars with app developers so they can build products that can locate, unlock, or harness data from vehicles. The 20-person Mountain View-based Smartcar has raised $12 million from Andreessen Horowitz and NEA. A major deciding factor in who’ll win this market is which platform offers the best documentation that makes it easiest for developers to integrate the APIs. 

“A few days ago, we came across Otonomo’s publicly available API documentation. As we read through it, we quickly realized that something was off. It looked familiar. Oddly familiar. That’s because we wrote it” Smartcar explains in its blog post. “We didn’t just find a few vague similarities to Smartcar’s documentation. Otonomo’s docs are a systematically written rip-off of ours – from the overall structure, right down to code samples and even typos.”

The screenshot above comparing API documentation from Smartcar on the left and Otonomo on the right appears to show Otonomo used nearly identical formatting and the exact same randomly generated sample identifier (highlighted) as Smartcar. Further examples flag seemingly identical code strings and snippets.

Smartcar founder and CEO Sahas Katta

Otonomo has pulled down their docs.otonomo.io documentation website, but TechCrunch has reviewed an Archive.org Wayback Machine showing this Otonomo site as of April 5, 2019 featured sections that are identical to the documentation Smartcar published in August 2018. That includes Smartcar’s typo “it will returned here”, and its randomly generated sample code placeholder “”4a1b01e5-0497-417c-a30e-6df6ba33ba46” which both appear in the Wayback Machine copy of Otonomo’s docs. The typo was fixed in this version of Otonomo’s docs that’s still publicly available, but that code string remains.

“It would be a one in a quintillion chance of them happening to land on the same randomly generated string” Smartcar’s Katta tells TechCrunch.

Yet curiously, Otonomo’s CMO told TechCrunch that “The materials that [Smartcar] put on their post are all publicly accessible documentation, It’s all public domain content.” But that’s not true, Katta argues, given the definition of ‘public domain’ is content belonging to the public that’s uncopyrightable. “I would sure hope not, considering . . . we have proper copyright notices at the bottom. Our product is our intellectual property. Just like Twilio’s API documentation or Stripe’s, it is published and publicly available — and it is proprietary.”

Otonomo’s Lisa Joy noted that her startup is currently fundraising for its Series C, which reportedly already includes $10 million from South Korean energy and telecom holdings giant SK. “We’re in the middle of raising a round right now. That round is not done” she told me. But if Otonomo gets a reputation for allegedly copying its API docs, that could hurt its standing with developers and potentially endanger that funding round.

China’s largest stock photo provider draws fire over use of black hole image

in 500px/Asia/Baidu/Beijing/black hole/China/copyrights/Creative-Commons/Delhi/flickr/India/lawsuit/photo sharing/Politics/shanghai/social media by

While the world marvels at the first black hole image ever taken, a Chinese photo-sharing community is setting off a huge public outcry over its use of the landmark photo and a wider debate over copyrights practices in China.

As soon as the European Southern Observatory released the black hole photo on April 10, Visual China Group (VCG), China’s leading stock image provider that’s compared to Getty Images and owns Flikr’s one-time rival 500px, made the image available for sale in its library without attribution to the Event Horizon Telescope Collaboration (EHT), an array of radio telescopes that captured the image of the black hole.

“This is an editorial image. Please call 400-818-2525 or consult our customer service representative for commercial use,” said a note for the black hole image on VCG’s website.

Internet users took to social media slamming VCG for monetizing a photo intended for free distribution among the human race. Most of images on ESO are, according to the organization, under the Creative Commons license.

Unless specifically noted, the images, videos, and music distributed on the public ESO website, along with the texts of press releases, announcements, pictures of the week, blog posts and captions, are licensed under a Creative Commons Attribution 4.0 International License, and may on a non-exclusive basis be reproduced without fee provided the credit is clear and visible.

VCG swiftly revised the note to say the black hole photo should not be used for commercial purposes, but Pandora’s box was already open. The incident sparked a plethora of comments on Weibo, China’s equivalent of Twitter, condemning VCG’s opportunist business practice. The site is said to often play the role of the victim to obtain financial compensation, and it does so by seeking damages from users who inadvertently use a public domain photo that VCG has preemptively copyrighted.

Shares of VCG plummeted 10 percent Friday morning in Shanghai, giving it a market cap of 17.66 billion yuan ($2.63 billion).

Assets of VCG’s massive content library range from logos of large tech companies like Baidu, all the way to the Chinese national flag.

“Does your company also own copyrights to the national flag and national emblem?” remarked the Chinese Communist Youth League on its official Weibo account in a snarky response to VCG’s unscrupulous licensing practice.

The price tag of the national emblem image is, lo and behold, no less than 150 yuan ($22) for use in a newspaper article and at least 1,500 yuan ($220) on a magazine cover.

Screenshot: The image of the Chinese national emblem was for sale on VCG at 150 yuan to 1500 yuan

“Copyrights protection should definitely be promoted. The question is, why is VCG allowed to price photos of the black hole and the likes out of the market? Why is it able to exploit loopholes?” Du Yu, a Beijing-based freelance technology journalist, said to TechCrunch.

TechCrunch has reached out to ESO for comments and will update the story once we hear back.

Government intervention soon followed on the heels of online criticisms. On April 11, the cyberspace watchdog of Tianjin, where VCG’s parent company is based, ordered the photo site to end its “illegal, rule-breaking practices.”

VCG apologized on April 12 in a company statement, admitting the lack of oversight over its contracted contributors who allegedly uploaded the images in question. “We have taken down all non-compliant photos and closed down the site voluntarily for a revamp in accordance with related laws,” said VCG.

Startup Law A to Z: Regulatory Compliance

in antitrust/Banking/compliance/Delhi/employment/employment law/Finance/Government/Hiring/India/intellectual property/law/lawsuit/legal/patents/Personnel/Policy/Politics/privacy/regulation/securities law/Security/Startups/talent/Tax/Tax law/taxes/TC/Verified Experts by

Startups are but one species in a complex regulatory and public policy ecosystem. This ecosystem is larger and more powerfully dynamic than many founders appreciate, with distinct yet overlapping laws at the federal, state and local/city levels, all set against a vast array of public and private interests. Where startup founders see opportunity for disruption in regulated markets, lawyers counsel prudence: regulations exist to promote certain strongly-held public policy objectives which (unlike your startup’s business model) carry the force of law.

Snapshot of the regulatory and public policy ecosystem. Image via Law Office of Daniel McKenzie

Although the canonical “ask forgiveness and not permission” approach taken by Airbnb and Uber circa 2009 might lead founders to conclude it is strategically acceptable to “move fast and break things” (including the law), don’t lose sight of the resulting lawsuits and enforcement actions. If you look closely at Airbnb and Uber today, each have devoted immense resources to building regulatory and policy teams, lobbying, public relations, defending lawsuits, while increasingly looking to work within the law rather than outside it – not to mention, in the case of Uber, a change in leadership as well.

Indeed, more recently, examples of founders and startups running into serious regulatory issues are commonplace: whether in healthcare, where CEO/Co-founder Conrad Parker was forced to resign from Zenefits and later fined approximately $500K; in the securities registration arena, where cryptocurrency startups Airfox and Paragon have each been fined $250K and further could be required to return to investors the millions raised through their respective ICOs; in the social media and privacy realm, where TikTok was recently fined $5.7 million for violating COPPA, or in the antitrust context, where tech giant Google is facing billions in fines from the EU.

Suffice it to say, regulation is not a low-stakes table game. In 2017 alone, according to Duff and Phelps, US financial regulators levied $24.4 billion in penalties against companies and another $621.3 million against individuals. Particularly in today’s highly competitive business landscape, even if your startup can financially absorb the fines for non-compliance, the additional stress and distraction for your team may still inflict serious injury, if not an outright death-blow.

The best way to avoid regulatory setbacks is to first understand relevant regulations and work to develop compliant policies and business practices from the beginning. This article represents a step in that direction, the fifth and final installment in Extra Crunch’s exclusive “Startup Law A to Z” series, following previous articles on corporate matters, intellectual property (IP), customer contracts and employment law.

Given the breadth of activities subject to regulation, however, and the many corresponding regulations across federal, state, and municipal levels, no analysis of any particular regulatory framework would be sufficiently complete here. Instead, the purpose of this article is to provide founders a 30,000-foot view across several dozen applicable laws in key regulatory areas, providing a “lay of the land” such that with some additional navigation and guidance, an optimal course may be charted.

The regulatory areas highlighted here include: (a) Taxes; (b) Securities; (c) Employment; (d) Privacy; (e) Antitrust; (f) Advertising, Commerce and Telecommunications; (g) Intellectual Property; (h) Financial Services and Insurance; and finally (i) Transportation, Health and Safety.

Of course, some regulations may touch on multiple regulatory areas, for example, the “Fair Credit Reporting Act” is a law ultimately about privacy, but it impacts many financial and employment-related services as well. Certain laws may therefore be cross-listed in more than one regulatory area. Also, since we can’t look at every U.S. state and city, this article will focus primarily on the federal and California state laws.

After you focus on the particular regulatory areas that may implicate your business, next reference the short quotations and links to relevant primary and secondary sources below, then work to identify the specific compliance risks you face. This is where other Extra Crunch resources can help. For example, the Verified Experts of Extra Crunch include some of the most experienced and skilled startup lawyers in practice today. Use these profiles to identify attorneys who are focused on serving companies at your particular stage and then seek out any further guidance you need to address the regulatory matters pertinent to your startup.

With that as context, the Startup Law A to Z – Regulatory Compliance checklist is below:


Taxes

Securities

Employment

Privacy

Antitrust

Advertising, Commerce and Telecommunications

Intellectual Property

Financial Services and Insurance

Transportation, Health & Safety

Before diving into further detail, it may be helpful for some readers to note the distinction between a law and a regulation. Simply put, regulations provide more detailed direction on how certain laws should be followed. So regulations are not technically laws, but they carry the force of law (including penalties for violation), since they are adopted by governmental agencies under authority granted by statute. Beyond that, understanding how laws and regulations are actually enacted is helpful to illustrate the extent to which the process is politically driven.

In the U.S., a bill must first pass both legislative branches of government, then, if signed by the executive branch, it will be codified in statute as law (Schoolhouse Rock anyone?). Once codified, the legislative branch will authorize the relevant executive department or agency to determine whether specific regulations are necessary to give the law effect. If so, those executive departments or agencies will determine what further rules are needed, and in turn, work to enforce them.

At the federal level, for example, proposed regulations are developed first through a “Notice of Proposed Rulemaking,” listed in the Federal Register and filed in the corresponding executive agency’s official docket (available at Regulations.gov). This affords the public an opportunity to comment on the regulations. After receiving comments, the filing agency may revise the proposed regulation before final rules are issued, which again will be published in the Federal Register and then filed in the agency’s official docket at Regulations.gov, before they are codified in the Code of Federal Regulations (CFR).

At nearly every step in this process then, institutions, government, and interest groups are working – sometimes at cross purposes – to shape what the law will be and how it will impact your startup.

The Startup Law A to Z – Regulatory Compliance reference guide is below:


A. TAXES

Court dismisses Paris lawsuit against Airbnb for illegal listings

in Airbnb/Delhi/Europe/France Newsletter/India/lawsuit/Policy/Politics/Startups by

A court in Paris has dismissed a case against Airbnb, as Le Monde reported. Last month, the City of Paris sued Airbnb for 1,010 illegal listings. According to the mayor’s office, Airbnb failed to comply with regulation in Paris.

Paris has been trying to limit the effect of Airbnb on the housing market in Paris. Paris is one of the top cities for Airbnb in the world. A few years ago, many people stopped renting their apartments the traditional way in favor of Airbnb. The average rental price in some areas of Paris has increased as a result.

Mayor of Paris Anne Hidalgo didn’t want to ban Airbnb altogether. Instead, the city asked hosts to get an ID number so the city can track how many nights someone is listing their apartment on Airbnb. You can’t rent an apartment more than 120 days a year.

But many listings still don’t have that ID number. The mayor’s office flagged around 1,000 apartments, saying that Airbnb was also responsible by dragging their feet.

But the court has said that screenshots are not enough to prove that these apartments without an ID number are permanently available on Airbnb. Maybe some of these apartments are available for less than 120 days a year, after all.

The case is not over, as this is just a summary judgement. But it sounds like the case is not strong enough to condemn Airbnb.

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