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Location, location, location data

Protocol Enterprise

Hello, and welcome to Protocol Enterprise! Today: why the FTC is taking direct aim at a company that you probably don’t know, but that probably knows you; Cloudflare reverses course on Kiwi Farms; and how the U.S. government plans to roll out the chip bucks.

The real reason the FTC targeted an unknown ad tech company

When the Federal Trade Commission launched its investigation of little-known ad tech company Kochava late last month, it wasn’t just about selling location data that could identify people who visited abortion clinics. It was about unintended consequences of a data industry fueled by ad dollars, ruled by chaotic obfuscation and shielded through nondisclosure agreements.

My story digs into how Kochava’s business reflects a data ecosystem the FTC says is at the heart of a digital data surveillance industry it aims to shackle.

Kochava is best known amid digital advertisers and app makers for providing mobile app and advertising measurement, helping app publishers verify the number of app installs that come through paid partners.

  • “You go to [Kochava] if you don’t trust your partners and you want raw data to track [mobile app installs and advertising],” said a digital ad tech practitioner who asked not to be named in the story.
  • But Kochava has a separate, related business selling data. The FTC alleged that location data Kochava sold could identify people who visit sensitive locations such as reproductive health centers.

Kochava will not reveal where the location data it sold comes from.

  • It’s typical in the opaque mobile location data industry, where partnerships are almost always obscured by nondisclosure agreements.
  • The original sources of location data are almost always media companies and app developers that give data sellers access to the information.
  • There are incentives for app makers: Companies like Kochava help use location data to target ads geographically to earn more for the ads they sell.
  • Sometimes media companies don’t even use it for ads; they simply get paid a per-user fee for the data.

Kochava is putting up a fight against the FTC, which alleged data sold by Kochava can be pieced together with other information to identify people in a harmful way.

  • The agency describes a technique requiring some sleuthing: Using map coordinates and device IDs provided by Kochava to detect a home address, then matching it with data about who lives there to identify people who visit specific places.
  • “What the FTC has suggested about Kochava is technologically completely plausible,” said an ad tech company vice president who asked not to be named in this story.
  • But Kochava filed its own suit against the FTC, contending that the onus is on consumers who could stop location data gathering by turning off permissions on their phones.

This might seem like some wonky ad tech case against a company few have heard of. But it’s about a lot more.

  • The ad industry helped make location data valuable, feeding the so-called surveillance economy.
  • Although advertisers use location data for seemingly benign purposes, the FTC aims to show it can be used to harm consumers in ways that have serious consequences.
  • It's an aggressive approach by the FTC, and we’re likely to see more data-related cases like it in the future.
Check out the full story to learn more about Kochava’s business and the FTC’s case against it.

— Kate Kaye (email | twitter)

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Cloudflare says no

Three days after insisting it would not remove its services from one of the worst sites on the internet, Cloudflare changed its mind, and did not appear happy about it.

Cloudflare’s abrupt reversal knocked Kiwi Farms offline through the holiday weekend, and the site was struggling to find providers to keep it up and running as the week began. Last Wednesday, Cloudflare CEO Matthew Prince insisted the company would not end its relationship with Kiwi Farms — a transphobic website dedicated to harassment and linked to several suicides — despite an organized pressure campaign following the swatting and ongoing stalking of Clara Sorrenti, a Twitch streamer.

But Saturday, in a terse blog post that appeared to blame the pressure campaign for escalating the behavior of the site’s users, Prince said Cloudflare had “taken steps to block their content from being accessed through our infrastructure. This is an extraordinary decision for us to make and, given Cloudflare's role as an internet infrastructure provider, a dangerous one that we are not comfortable with.”

Just about every other major internet infrastructure provider seems to be comfortable with cutting off companies that violate their terms of service. Why does Cloudflare keep finding itself in this situation, carrying water for terrible people while claiming to stand on an important principle, only to fold when the rest of the world discovers how terrible those people really are?

— Tom Krazit (email | twitter)

Modernizing payments

NACHA and other industry groups and regulators are pushing for big changes. In this virtual Protocol event, we'll speak with a panel of payment experts and regulators to discuss how banks can stay ahead of the curve and ensure the U.S. can catch up with innovation overseas.

Join Protocol’s Tomio Geron on Thursday, Sept. 8 at 10 a.m. PDT for a panel discussion featuring Sara Xi, chief product officer, Prime Trust; James Colassano, senior vice president, product development and strategy, The Clearing House; and Leigh Lytle, U.S. policy lead, Plaid. RSVP here.

Here come the chip bucks

The Biden administration published its plan to dole out the $50 billion in funding designed to boost chip manufacturing in the U.S. in a 20-page document released by the Commerce Department on Tuesday.

The funding, which was signed into law by President Joe Biden last month as part of the $280 billion Chips and Science Act, will largely be used to help companies expand existing chip factories or start construction on new ones.

Of the total cash, the Commerce Department will allocate about $28 billion to build new factories for chipmaking, and assembly and packaging that are geared toward producing the most advanced logic and memory chips; $10 billion will be set aside to expand capacity for current and older-generation chips that can be crucial for national security uses.

Part of the funding will go toward building the National Semiconductor Technology Center, or NSTC, a public-private organization that will conduct research, offer prototyping capabilities and help develop the necessary workforce to fill the new jobs created, among other objectives. Overall, the Commerce Department will commit $11 billion toward creating the new organization, and also fund additional research and development initiatives.

The chips funding is part of a broad push by the Biden administration to tackle a perceived threat from China. The U.S. has unveiled several measures to hurt China’s ability to pursue AI-related applications, including last week placing restrictions on the export of specific chips designed for AI computing made by Nvidia and AMD.

Companies that accept cash from the Chips for America Fund are barred from using it for new advanced manufacturing investments in China or other countries “of concern” or from using it for stock buybacks. The Commerce Department said it could claw back cash it sees as used improperly.

Commerce said it would release funding application guidelines by February.

— Max A. Cherney (email | twitter)

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Around the enterprise

InterContinental Hotels was hit by a cyberattack that disrupted its bookings system for more than a day, and it’s unclear if the company has recovered.

Our cousins over at POLITICO were able to check out a list of chips that the Russian government is hoping to find, an interesting look at how the trade embargo is affecting the country’s internal systems.

Thanks for reading — see you tomorrow!

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