Big tech is battling bans and privacy reforms

In this edition, why are investors throwing big dollars at cyber startups that fight hackers using AI? Meanwhile, big tech is fighting some big battles in Australia and overseas at the moment — TikTok is on the backfoot as it tries to overturn a ban of its app in the US state of Montana, while Meta has copped a billion dollar fine from Europe over privacy concerns, as it also squares off with Australia over plans to strengthen national privacy laws. We break that down and ask experts on LinkedIn what they think.

But first, we chat to venture capitalist Tom Humphrey ?from Blackbird Ventures, about why investment in AI and cyber startups is booming. Read on for more.

Throughout this newsletter you'll see plenty of content and commentary from professionals on LinkedIn. If you want your insights to be featured, use the hashtag?#TechWrapUpAU ?or send me your posts over InMail.

?? Click here to subscribe and be notified of future editions of Tech Wrap Up Australia and follow me ?for more tech and startup news.

Meet the venture capitalists and founders behind Australia's most innovative startups

This week we talk to? Tom Humphrey ?— a newly minted Partner at Blackbird Ventures?— who specialises in go-to-market models, B2B sales startups, cybersecurity and artificial intelligence. Prior to working in venture capital, he launched a video streaming company in the US with his sister.

?: Congrats for the recent appointment as Investment Partner at Blackbird, Tom. What will your focus be from now on?

??:?We are all generalists at Blackbird in terms of how we invest, but we all have preferences, or “flavours of ice cream” as I like to call it. Given my background in B2B SaaS and sales at Kanopy and OurDeal, my flavours tend to lean more toward that. Of eight new company investments I have made to date, six are B2B and two are consumer.?

?: You’ve recently invested in Cyble , a global cyber intelligence startup that uses AI to help manage threats, and Spice AI , which helps developers working with web3 and blockchain data to build next gen apps. What’s attractive about AI and cyber startups right now as an investor?

??:?Cyber is an attractive and resilient market. Innovation and spending is growing rapidly at pace with increased cybercrime and while it might not be completely recession proof, the market holds up well. Cyber stocks were the best performing industry category through the market pullback of 2022. As Brian Moynihan, CEO of Bank of America, once said, "The only place in the business that doesn't have a budget constraint is cybersecurity."

AI was popular a decade ago based primarily on its technical promise. Recent steps forward with generative AI and ChatGPT have buoyed it again — this time as more of a technical reality, where the applications of AI seem so real, and broad-based, and applicable now. Within the next decade, AI will fundamentally touch every application and organisational function, from sales and customer success to accounting, in a significant way.

The intersection of cyber and AI is particularly interesting. A big theme in cyber over the past decade has been the shift from perimeter security to “zero trust”. We used to treat the organisation like a castle and focus on building big walls and moats around the network stack to keep hackers out; in a world where people work remotely, use personal devices, and host everything in the cloud, that gets hard so the focus has shifted from protection to detection. That trend plays strongly into the hands of AI as it helps sift through the complexity, separate signal from noise, and stay ahead.

?: What emerging technology interests you most?

??: There are so many areas of interesting innovation in Australasia at the moment — we’ve been diving into areas such as quantum computing (eg. PsiQuantum ), web3 and blockchain (eg. Spice AI ), climate tech (eg. SunDrive , EnergyBank , Mint Innovation ), farm robotics (eg. Halter ), and 3D printing (eg. Foundry Lab , Syenta ). I’m particularly excited by emerging technologies moving the needle on climate — having three young kids really elevates your concerns for the future of the planet!

?: You had some early wins as a founder with your on-demand streaming video platform Kanopy , which you ran with your sister. What did you learn from that?

??: There are many journeys to success. We actually didn’t take the VC route at Kanopy. We met with a few VCs when we landed in the US but we didn't really "fit" the VC model as a business, so we ended up bootstrapping for a number of years before raising from private equity. I think that is important and I often share that candidly with founders — VC is simply one path to grow a business, there is also bootstrapping, private equity, debt, crowdfunding, etc.

I also learnt that cash is key. Those years bootstrapping in the Bay Area really taught me the value of cashflow — we were a very lean team and made a bunch of smart decisions forced by that. We are currently seeing a heightened focus on profitability and cashflow in the broader public and private markets today than in previous years where the focus was largely on growth, and that aligns more to my personal experience.?

?: What qualities do you look for in an established startup?

??: Many of the qualities I look for at that later stage are the same as at the earlier stages of the company lifestyle. I look for “wild heart” founders who are captivating and see the startup not as a job but as a mission, a product roadmap that is vivid and enthralling, often crazy, and a line of sight to building something truly “needle moving” and worth caring about.

However, by Series B+, we often have the benefit of hindsight to add to the foresight — the ability to delve into historical financials, talk to customers, and see how things are actually working as opposed to how we imagine they could. I focus on really getting to the heart of the “customer love” for the product and the predictability and scalability of the go-to-market model.

?: What grabs your attention in a pitch, and how does a founder get you across the line?

??: I don’t have a set formula or checklist for a pitch. My primary advice to founders is to be themselves and tell their story in a way that is most genuine to what they hope to achieve. I’ve made investments where the pitch was frankly pretty terrible, but I was nonetheless magnetised by the founder and vision. My colleague Sam put together a great masterclass here for getting the pitch deck right.

?: What’s one of the most exciting startups in your portfolio?

??: There is a rule in VC that you can’t ask about their favorite startup! So diplomatically, I’ll resort to my most recently announced investment, which was for the Seed round of the savings-focused app Checkmate . I absolutely fell in love with the team, the consumer problem they are out to solve, and how they cleverly monetise on the backend through data and partner affiliations.

Want to learn more about venture capital? Follow Tom Humphrey on LinkedIn. You can also check out?these investors and read their Venture Chats.

?? Amanda Hjorring from Square Peg — read her interview here .

?? Dan Krasnostein from Square Peg — read his interview here .

?? Piruze Sabuncu from Square Peg — read her interview here .

?? Phil Morle from Main Sequence — read his interview here .

?? Raaj Rayat, CFA from Airtree — read his interview here .

?? Michael Tolo from Blackbird — read his interview here .

Catch up on the major tech discussions on LinkedIn this week

Meta cops US$1.3B fine in Europe for privacy breaches

European Union privacy regulators have fined Facebook's parent company Meta US$1.3 billion , accusing it of sending user information to the US. The record fine was announced Monday, with the EU saying data about European Facebook users had been stored illegally for years in America — with the information insufficiently protected from spy agencies there. The ruling "is potentially one of the most consequential" in the last five years since the EU introduced the General Data Protection Regulation, The New York Times reports , with the penalty adding pressure on the U.S. to finalise a data-flow deal with European officials. Meta said it would appeal the penalty.

Meta takes aim at Australia's privacy reforms, floats charging users for Facebook

Meta is also squaring off with Australia as the federal government tinkers away at its long-awaited privacy overhaul, with the tech giant suggesting dramatic changes could come at a cost for users and online businesses.

In February the Attorney-General’s Department?released a review?of Australia's privacy laws, which recommended a series of changes that would give Australians greater control of their personal information. The proposal would enable people to erase their data, sue for “serious invasions of privacy” and opt out of targeted ads.

If the recent visit to Australia by Meta's privacy policy director, Melinda Claybaugh — and subsequent media blitz — is anything to go by, the tech company doesn't love the idea of Australia limiting direct marketing and targeted advertising.

“The largest concern there is this ‘opt out’ of targeted advertising. It goes beyond any other law that’s been passed in any country right now, Claybaugh told? The Australian Financial Review .

In its submission to the government, Meta warned Australia is taking an “overly broad” approach to?privacy law reforms , claiming the proposed limits on targeted ads would restrict the ability of online platforms to personalise their products to local users, and said the measure was in response to “a perceived, unspecified harm”. Claybaugh also told multiple news agencies — including the AFR , Mumbrella and Guardian Australia — the changes would harm free digital platforms and could push them towards subscription models.

Meta is reportedly concerned the recommendations in the review “propose defining all online personalisation as ‘targeting’ and bringing it within scope of the?Privacy?Act " according to its submission. The social media company also claimed that “showing a consumer content that they have asked to see such as following an Instagram account” could also be regulated. In an interview with Guardian Australia, Claybaugh said “it’s safe to say that there could be changes to how people’s personalised experiences appear as in app, in?Facebook?and Instagram ... [any changes] to personalisation of content and ads need to be thought through carefully because personalisation really is the engine that drives free services online".

In an interview with Mumbrella , Claybaugh went further — when asked if charging users fees to use Facebook and Instagram could be used as an alternative to ad revenue she replied: “Look, it’s early days ... we don’t know what [the reforms] are ultimately going to look like. I think it’s just the truth – it’s the fact of the matter that companies that rely on ads to provide free services would be forced to find another revenue source.”

Apple and Google haven't yet weighed in publicly on the proposed ad change, because it is unlikely to have the same impact on them, explains The Sydney Morning Herald . That's because ads on those platforms appear when a product or item is searched for by a user, rather than an ad being targeted at them based on their identity.

However, despite objecting to the advertising measures — one of the most prominent in the AG's review — Meta does not oppose 106 of the review’s 116 recommendations, according to Guardian Australia . The tech giant even supports the right to sue for privacy breaches, which is an element of the proposed reforms opposed by many media organisations, including the Guardian Australia, News Corp, Nine, AAP, ABC and SBS. Media groups are concerned that if enacted, the reforms would give the information regulator — the Australian Information Commissioner — search and seizure powers over journalists and make litigation against news companies easier , especially by wealthy people subject to media reports they are unhappy with, according to The Australian Financial Review . The Business Council of Australia also has concerns with the review recommendations, along with the Real Estate Institute of Australia .

The recommendations in the Attorney-General Department's report are not government policy. Submissions to the report closed at the end of March, with the government yet to announce when it will respond.

Here's what social media and marketing professionals on LinkedIn are saying:

William Easton , managing director, Facebook Australia & New Zealand: "Digital technologies are an important driver of our economy, especially for SMBs. As industry, academics, policymakers and regulators work to update the Privacy Act, we must all ensure we do so in ways that enhance privacy protections without jeopardising the benefits of data-driven experiences for Australian consumers and businesses." Read more of this thoughts here .

Jason Elk , Head of Digital Performance Marketing at Scentre Group (Owner of Westfield destinations in Aus and NZ) : "If the Privacy Act updates remain in their full form as initially proposed, I think this is an understandable position for ad-funded companies to be taking ... Everyone agrees that a level of reform is needed, but if we land on the extreme end of the spectrum, where even de-identified data can't be used to target users with ads or content, we're effectively breaking not just business models but the effective conveniences and relevancy we have come to enjoy in the internet's modern age."

Savannah R. , Marketing Professional: "While the proposed changes aim to give consumers more control over their data and protect their privacy, they could restrict how advertising can be delivered to them. Affiliate publishers may need to adapt their targeting strategies and data collection practices to comply with the new regulations".

Haris Qureshi , Senior Account Manager at Amazon Web Services (AWS) and author of This Week in Australian Startups : "Countries with strict privacy regulations that create so much friction and barrier to innovation, will become less favourable destination for tech companies. It’s going to be more expensive to comply with narrower, stricter regulations for each individual market for smaller companies. Whilst companies like Meta are making the most noise, they will in the long run benefit most as they have the cash to lobby, and ultimately comply with most regulations. It will create a bigger moat around their businesses with a much higher barrier and cost for competition. Read Haris' full analysis here .

The latest in TikTok and ChatGPT bans

Montana's attempt to ban TikTok could serve as a precedent for other states and countries considering doing the same.

TikTok is now suing the US state of Montana to prevent it from banning the app on national security grounds, in a sign of how the social media giant plans to respond to attempts by jursidictions to prohibit its use.

The ban — due to take effect on January 1 2024 — would prohibit the app, owned by Chinese company?ByteDance , from operating within the state and making it unavailable to download in app stores.

However, in a federal lawsuit against Montana, TikTok's owners have argued the law violates the US Constitution's First Amendment — which protects the right to freedom of expression — and that national security concerns over TikTok aren't something state officials can regulate, as "foreign affairs and national security matters are a federal issue". TikTok claims to have hundreds of thousands of users in Montana, and said in the suit that "[Montana] has enacted these extraordinary and unprecedented measures based on nothing more than unfounded speculation".

In Australia the app is only banned on government devices , with exemptions granted on a case-by-case basis provided security mitigations are in place. A protective security direction?issued when the ban was announced in April states TikTok “poses significant security and privacy risks to non-corporate Commonwealth entities arising from extensive collection of user data and exposure to extrajudicial directions from a foreign government that conflict with Australian law”.

What do you think of Montana's attempt to ban TikTok? How could this set a precedent in Australia and other countries? Comment here . Here's what professionals on LinkedIn are saying:

Matthew Svenson , EV & Emerging Technologies professional: "This is a clear case of double standards. China does not respect the First Amendment in its own country, but it is now trying to use it to protect its own interests in the United States. This is laughable and hypocritical."

Diana “ladidai” ?Umana , Digital Creator: "Further, the law is just unnecessary. The app is being discriminated against on the basis of its Chinese ownership. However, TikTok has already taken steps to address the concerns that Montana has raised about the app’s data security, such as not storing any user data in China. The Montana law is likely to be challenged in court, and hopefully will be struck down. If the law is upheld, it could set a dangerous precedent for other states that are considering banning popular social media apps." Read more of her analysis here .

Jenny Mueller, M.A. Customer Advocate: "As?an ecommerce?professional who calls Montana home and is fortunate enough to work with multiple Montana-based outdoor brands, I'm curious if the individuals that sponsored this bill took in to consideration, or took the time to connect with, their constituents who own companies that rely on social commerce as part of their business strategy." Read more of her analysis here .

Ann-Liebschutz , Lecturer at the University of Louisville : "The obvious technical question, can it be enforced? Can downloads be tracked at the state level? Some public statements suggest app stores do not possess the ability to geofence apps at the state territorial level making it not technically possible to enforce the legislation." Read her legal questions here .

Struggling to keep up with all the advances in AI? Here's a recap

ChatGPT mobile app launches in the US

The first mobile version of ChatGPT debuted in the US on Thursday, parent company OpenAI announced. Here's what Americans are saying about it on LinkedIn.

ChatGPT banned in Home Affairs department

Australia's Home Affairs department has banned its employees from using ChatGPT . Given ChatGPT 'learns' from the information put into it, there's a strong security case to prevent public servants from using it within the department.

Microsoft ramps up AI offerings

Microsoft rolled out a string of generative AI upgrades at its annual Build Conference on Tuesday, further heating up the competition among Big Tech firms seeking to add this fast-developing technology to products. See what tech professionals on LinkedIn are saying about it here .

When AI overcomes gender bias in recruiting

Artificial intelligence is more likely to hire women in tech than human recruiters, according to a study by?Monash University ?and others. Read what recruiters are saying about it on LinkedIn.

Barb Hyman , Founder and CEO of Sapia.ai : "Independent research validating what all of our customers have been seeing for years. Ethical AI can increase diversity INTO the funnel and ensure you retain that diversity in your hiring process. The researchers found that 'using AI in recruitment almost doubled the number of women assessed to be among the top 10 per cent of performers, which means using it would likely result in?more women being hired for similar types of tech roles." Follow Hyman for more AI recruitment insights.

Here's what experts on LinkedIn are writing about

?? Want to get promoted? Try these ChatGPT prompts to accelerate your career, writes AI expert Alex Brogan .

??Google Maps?is currently used by billions of users every month, but their latest software release “Geospatial Creator” will help merge the metaverse with the physical realm , writes virtual reality expert Trent Clews-de Castella .

??AI regulation is coming – and regulators, policy makers and the public will hold companies accountable for failures to address AI risk much faster than they have for other risks with a 'technical' component. Here's how general counsel and boards should prepare , writes cybersecurity lawyer Valeska Bloch .

?? When viewed through a cybersecurity lens, the duality of AI's transformative power is evident — it's a catalyst for rapid threat detection and mitigation, yet also a weapon in adversarial arsenals , writes IT security expert Joel Earnshaw .

?? ChatGPT can do so much more with a few plugins. AI expert Laurel SilkCharm Papworth runs you through the many ones she has added to make her work easier. Take a look .

?? Do you want to start a side hustle, but you don't know where to begin? Tech entrepreneur and venture capitalist? ?? Michael Batko tells you how, and — importantly — how to monetise it. Learn his advice.

??The real roadmap to becoming a professional coder is so much more than just learning a few languages, especially when your rival is ChatGPT. Software engineer Zubin Pratap explains what it takes to succeed as a coder in the AI era .

Thank you to this edition's creators. If you would like to get featured, please send me your LinkedIn content over?InMail .

• Finance Wrap-Up Australia by Finance Editor Misa Han
• Get Hired Australia/ New Zealand by LinkedIn Careers Expert Cayla Dengate
• This Week In Australian Startups by Haris Qureshi
• AFR Success from The Australian Financial Review
• Afternoon Update from Guardian Australia

You don't have to look hard on LinkedIn to find someone saying "AI and robots are coming to take our jobs". But thanks to Canadian startup Sanctuary AI that's now even easier! Check out its humaoid robot called Phoenix . It walks, carried, packs, tabs, labels and folds item. With it's human-like hands! Could Phoenix take a retail or warehousing job soon? Maybe, although he/she is VERY slow.

Goodbyte.

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