Fearless Fund barred from awarding grant to Black women founders
Experts and venture industry insiders following the Fearless Fund case remain dumbfounded as it continues to unfold.
Should VCs back the FTC suit against Amazon?
Which do you prefer: Regulators working to contain market power or a potential ceiling being set on exit values for the companies that you back?
New California law would force firms to report diversity metrics
The bill requires venture capital firms operating in California to report the diversity breakdown of the founders they fund to the state.
Prosecutors in every state push to combat AI child exploitation
The Attorneys General in all 50 U.S. states, plus 4 territories, signed onto a letter calling for Congress to take action against AI-enabled child sexual abuse material (CSAM). “While internet crimes against children are already being actively prosecuted, we are concerned that AI is creating a new frontier for abuse that makes such prosecution more […]
YouTube is giving creators violating policies a way to wipe out their warnings
YouTube announced this morning a change to its Community Guidelines that impact creators who break its rules. Starting today, creators will now have the option of taking an educational training course when they receive a warning. When completed, YouTube will lift the warning from the creator’s channel as long as they don’t violate the same […]
Here’s what the Fearless Fund lawsuit could mean for venture
The first official piece of policy around diversity efforts in venture capital may soon see the light of day, but not because of any action by the government.
In a complaint filed this week, the American Alliance for Equal Rights — founded by conservative activist Edward Blum, the man driving the effort to end affirmative action — sued a minority-focused venture capital fund for unlawful racial discrimination.
In the complaint, the organization accuses Fearless Fund (an early-stage venture capital firm based in Atlanta that focuses on funding solely to women founders of color) of racially discriminating against non-Black individuals by having a $20,000 grant program for only Black women who are small-business owners.
The program is the Fearless Strivers Grant Contest, and the fund hosts it four times a year in partnership with Mastercard. The American Alliance for Equal Rights alleges that Fearless Fund is violating Section 1981 of the Civil Rights Act, which states that private contracts must be made and enforced without regard to race.
It’s still too early to draw winners and losers in this battle, but if the American Alliance for Equal Rights wins this lawsuit, it could result in the first official piece of law around diversity, equity and inclusion in venture capital. The result could very well set a lasting precedent for how the entire startup ecosystem evolves. And given Blum’s recent record, a loss for Fearless Fund could be on the cards.
Gregory Shill, a professor of law at the University of Iowa who teaches a class on the Civil Rights Act, told TechCrunch+ that a victory by Blum and the American Alliance for Equal Rights would stop many of the efforts designed to address the current disparities within venture capital.
The Civil Rights Act was the first piece of federal civil rights legislation passed in the U.S., enacted to guarantee that contracts would be honored regardless of race. At the time, it was widely held at the time that the market was open to everyone, but it wasn’t really.
“For years, Black founders have complained of discrimination, but they have been effectively blocked from doing anything about it, because, to prevail, they must show that the discrimination is intentional,” he said, adding that many avoid doing so because it can be harmful to their careers. “So rather than challenging this head-on, one alternative tack has been to set up funds that specifically recruit Black or women founders. That effort is what is being challenged here.”
Blum told TechCrunch+ that the American Alliance for Equal Rights was contacted by a woman-owned business that asked to help challenge Fearless Fund. “The program being challenged is racially exclusive, thus violating our nation’s civil rights laws. It is to be hoped that other programs like this one end these practices and offer the benefits to all small businesses regardless of the owner’s race,” he said.
Fearless Fund did not immediately respond to a request for comment.
OpenAI brings the competition to DeepMind’s doorstep with new London office
OpenAI is expanding overseas. To London, specifically.
Today, the Microsoft-backed AI startup announced that it plans to open an office in London, its first international outpost. When OpenAI’s London location opens its doors, it’ll focus on advancing “research and engineering capabilities” while balancing collaborating with “local communities and policymakers,” according to CEO Sam Altman.
“We see this expansion as an opportunity to attract world-class talent and drive innovation in AGI development and policy,” Altman, who reportedly had floated Poland and France as alternatives for the office, said in a canned statement. “We’re excited about what the future holds and to see the contributions our London office will make towards building and deploying safe AI.”
London is a conspicuous choice for OpenAI, which hasn’t expanded beyond its San Francisco headquarters since its founding in 2015. The city is the longtime home base of DeepMind, Google’s largest AI research division, and a wellspring of data science talent, owing to its rich academic history and renowned universities.
Broadly speaking, London is also becoming a booming center for AI startup ventures. According to a recent report, as of 2021, over 1,300 AI companies were based in London and the city was the top-funded in the U.K. in terms of venture dollars invested.
The city is also important politically to tech companies heavily invested in AI, like OpenAI, who seek to convince the U.K.’s governing bodies to regulate AI with a light touch. On a recent lobbying tour, Altman made an appearance at the University College London, where he called for “balanced” regulation and warned of the risks of deepfake disinformation.
At that same appearance, Altman said that OpenAI would “cease operating” in the European Union if it’s unable to comply with the provisions of the bloc’s AI Act, one of the first comprehensive set of regulations for the AI industry. He later backed down from the comments — but the play was made.
OpenAI brings the competition to DeepMind’s doorstep with new London office by Kyle Wiggers originally published on TechCrunch
Bipartisan Senate bill would ban social media algorithms for minors
In a bipartisan effort to “protect kids from harm,” an unlikely cohort of senators introduced a bill that would restrict minors’ access to social media, as well as ban companies from using algorithms to recommend content to minors.
Senators Brian Schatz (D-Hawaii), Chris Murphy (D-Conn), Katie Britt (R-Ala) and Tom Cotton (R-Ark) introduced the Protecting Kids on Social Media Act on Wednesday. The bill would set a minimum age of 13 to use social media sites, and would require parental consent and age verification for users under 18.
“The growing evidence is clear: social media is making kids more depressed and wreaking havoc on their mental health. While kids are suffering, social media companies are profiting. This needs to stop,” Schatz said in a press release. “Our bill will help us stop the growing social media health crisis among kids by setting a minimum age and preventing companies from using algorithms to automatically feed them addictive content based on their personal information.”
While some social media companies, like TikTok and YouTube, have launched kid-friendly versions of their platforms with content limits and parental controls, age verification is largely based on an honor system.
If the bill is signed into law, social media companies will be forbidden from using the “personal data” of any user to recommend content “unless the platform knows or reasonably believes that the individual is age 18 or older according to the age verification process used by the platform,” the bill’s text reads. Advertising to minors will still be allowed, as long as it’s “solely based on context,” and isn’t “targeted or recommended based on the personal data” of the user.
The bill’s language doesn’t outline how algorithms will be regulated. A representative for Schatz did not immediately respond to request for comment.
On Twitter, users have already raised concerns about the Protecting Kids on Social Media Act, and questioned whether the proposed regulations are even enforceable.
“Broadly speaking I’d say this: yes, Big Tech companies are harming kids,” Evan Greer, director of the digital rights nonprofit Fight for the Future, said in a tweet responding to Murphy. “We stop that by forcing those companies to change their business practices, not by kicking kids off the internet or taking away kids rights.”
Alejandra Caraballo, a civil rights attorney and clinical instructor at Harvard Law School’s Cyberlaw Clinic, also responded to Murphy’s tweet announcing the bill, in which he described prohibiting algorithms for kids.
“With all due respect Senator, but that is a terribly misinformed statement about social media technology. You might as well try saying you’re banning javascript for teens,” she said.
Murphy decried social media companies as “100% committed to addicting our children to their screens” in a press release.
“The alarm bells about social media’s devastating impact on kids have been sounding for a long time, and yet time and time again, these companies have proven they care more about profit than preventing the well-documented harm they cause,” he said. “In particular, these algorithms are sending many down dangerous online rabbit holes, with little chance for parents to know what their kids are seeing online.”
Most social media policies already require users to be at least 13 years old, but enforcement is flimsy at best. Minors can easily fly under the radar by submitting a fake date of birth and checking off a box attesting to their supposed age. The bill would require social media platforms to take “reasonable steps beyond merely requiring attestation,” instead employing “existing age verification technologies” to ensure that users are the age they claim to be.
The bill’s language forbids companies from storing and using any information collected during the verification process “for any other purpose.” It instead proposes a free “Pilot Program,” regulated by the Secretary of Commerce, that would provide “secure digital identification credential to individuals who are citizens and lawful residents of the United States.”
The Pilot Program is supposed to “meet or exceed the highest cybersecurity standards” of consumer products, and the bill promises that only anonymized aggregate data will be stored.
This isn’t the first bipartisan effort to try and curb kids’ internet use. Last year, Senators Richard Blumenthal (D-Conn) and Marsha Blackburn (R-Tenn) introduced the Kids Online Safety Act (KOSA), which would require sites to provide more parental control tools and limit the content that users under 16 can access. Dozens of civil liberties organizations, including the American Civil Liberties Union, the Electronic Frontier Foundation, Fight for the Future and GLAAD, opposed the bill.
The Protecting Kids on Social Media Act follows a larger nationwide push for age verification online. This year, Louisiana, Mississippi, Virginia and Utah passed laws requiring users to submit a government-issued ID in order to view porn sites. Eleven more states have proposed similar laws. But digital privacy advocates have expressed concerns over how age verification data is stored and used.
In the joint letter opposing KOSA, civil liberties organizations warned against age verification requirements.
“Age verification requirements may require users to provide platforms with personally identifiable information such as date of birth and government-issued identification documents, which can threaten users’ privacy, including through the risk of data breaches, and chill their willingness to access sensitive information online because they cannot do so anonymously,” the letter said. “Rather than age-gating privacy settings and safety tools to apply to only minors, Congress should focus on ensuring that all users, regardless of age, benefit from strong privacy protections by passing comprehensive privacy legislation.”
Bipartisan Senate bill would ban social media algorithms for minors by Morgan Sung originally published on TechCrunch
Twitter officially bans third-party clients after cutting off prominent devs
After cutting off prominent app makers like Tweetbot and Twitterific, Twitter today quietly updated its developer terms to ban third-party clients altogether.
Spotted by Engadget, the “restrictions” section of Twitter’s 5,000-some-word developer agreement was updated with a clause prohibiting “use or access the Licensed Materials to create or attempt to create a substitute or similar service or product to the Twitter Applications.” Earlier this week, Twitter said that it was “enforcing long-standing API rules” in disallowing clients access to its platform but didn’t cite which specific rules developers were violating. Now we know — retroactively.
As Engadget notes, Twitter clients are a part of Twitter history — Twitterific was created before Twitter had a native iOS app of its own. And they’ve gained a larger following in recent years, thanks in part to their lack of ads.
Twitter’s attitude toward third-party clients has long been permissive and even supportive, with the company going so far as to remove a section from its developer terms that discouraged devs from replicating its core service. But that seems to have changed under CEO Elon Musk’s leadership.
Image Credits: Twitter
The decision seems unlikely to foster goodwill toward Twitter at a time when the platform faces challenges on a number of fronts. In a blog post, Twitterrific’s Sean Heber called Twitter “increasingly capricious” and a company he “no longer recognize[d] as trustworthy nor want to work with any longer.” Matteo Villa, the developer of Fenix, in an interview with Engadget called the lack of communication “insulting.” (Twitter has no communications department at present.)
Twitter is under immense pressure to turn a profit — or at least break even — as advertisers flee the platform, spurred by unpredictable, fast-changing content policies. The company, which has $12.5 billion in debt, is on the hook for $300 million in its first interest payment and has lost an estimated $4 billion in value since Musk acquired it at the end of October 2022. Fidelity recently slashed the value of its stake in Twitter by 56%.
Cutbacks at Twitter abound. Some employees are bringing their own toilet paper to work after the company reduced janitorial services, the New York Times reported, and Twitter has stopped paying rent for several of its offices. Musk has elsewhere attempted to save around $500 million in costs unrelated to labor, shutting down a data center and launching a fire sale after putting office items up for auction in a bid to recoup costs.
Twitter’s also heavily pushing its Twitter Blue plan (now with an annual option), aiming to make it a profit driver. It plans to lift its ban on political ads, chasing after campaign dollars in the 2024 U.S. elections. And the company is reportedly considering selling usernames through online auctions.
Twitter officially bans third-party clients after cutting off prominent devs by Kyle Wiggers originally published on TechCrunch
Ticketmaster faces antitrust scrutiny after Taylor Swift ticket chaos
Ticketmaster is facing more scrutiny from politicians after its chaotic presales for tickets to Taylor Swift’s tour. Tennessee attorney general Jonathan Skrmetti said he is looking into whether Ticketmaster violated consumer’s rights and antitrust regulations. Skrmetti is the latest politician who has called attention to Ticketmaster and Live Nation’s hold on the ticketing market.
This comes as Ticketmaster cancelled its public sales for Swift’s tour, called Eras. In a tweet, Ticketmaster said the cancellation was due to “extraordinarily high demands on ticketing systems and insufficient remaining ticket inventory to meet that demand.”
The public sale would have been for tickets left over from the site’s troubled presales, which started on Tuesday for members of its Verified Fan program. Many fans experienced technical glitches and hours-long wait times, with many ultimately unable to buy a ticket.
According to the New York Times, Ticketmaster said in a now-deleted post that 3.5 million people registered for the Verified Fan program. Around 1.5 million were given a special access code, and the rest were put on a waiting list. “Never before has a Verified Fan on sale sparked so much attention—or uninvited volume,” Ticketmaster said.
Skrmetti said he had received complaints from fans who tried to purchase tickets for Eras. In a tweet on Thursday, the attorney general said that other state attorney generals are also looking into the matter: “Ticketmaster’s decision to cancel sales underscores the important need for accountability. Fans deserve a fair chance to buy a ticket. I’m encouraged by other state AGs who are taking this issue serious as well.”
The Washington Post reports that Skrmetti said Ticketmaster should have been better prepared for the high demand and questioned whether “because they have such a dominant market position, they felt like they didn’t need to worry about that.”
In another tweet before the sale was cancelled, the attorney general’s office said Skrmetti “is concerned about consumer complaints related to @Ticketmaster’s pre-sale of @taylorswift13 concert tickets. He and his Consumer Protection team will use every available tool to ensure that no consumer protection laws were violated.”
TechCrunch has contacted Ticketmaster and the Skrmetti’s office for comment.
Eras is Swift’s first tour in four years and comes after the release of her new album “Midnights.”
Other politicians who have raised concerns over the combined company of Ticketmaster and Live Nation, which merged in 2010, including Representative Alexandria Ocasio-Cortez, Representative David N. Cicilline and Representative Bill Pascrell, Jr.
On Tuesday, Representative Ocasio-Cortez said in a tweet on Tuesday that “Ticketmaster is a monopoly, its merger with LiveNation should never have been approved, and they needed to be reigned in. Break them up.”
Representative Cicilline tweeted on Wednesday that Ticketmaster’s “excessive wait times and fees are completely unacceptable, as seen with today’s @taylorswift13 tickets, and are a symptom of a larger problem. It’s no secret that Live Nation-Ticketmaster is an unchecked monopoly.”
And Representative Pascrell, Jr., who was among the millions of fans put on a waitlist for Swift tickets, tweeted that Ticketmaster “The Ticketmaster-Live Nation monopoly should never have been allowed to merge and must be broken up.”
Consumers are also pushing for a break up of Ticketmaster and Live Nation. An alliance of consumer rights groups, including antitrust nonprofit American Economic Liberties Project, launched a campaign last month called Break Up Ticketmaster, saying that Ticketmaster’s “market power over live events is ripping off sports and music fans and undermining the vibrancy and independence of the music industry.”
Ticketmaster faces antitrust scrutiny after Taylor Swift ticket chaos by Catherine Shu originally published on TechCrunch