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Diversity advocates in Silicon Valley are cheering on a proposal from Sen. Elizabeth Warren (D-Mass.) that aims to increase federal funding for minority entrepreneurs. 

They say the 2020 hopeful's plan — which would create a $7 billion “Small Business Equity Fund” that would deploy grants to entrepreneurs of color — could be a game-changer in an industry that has been slow to diversify its largely white or Asian male ranks. More funding for underrepresented entrepreneurs could actually move the needle at a time when companies and venture capital firms are prioritizing lip service about diversity over real, structural change, they argue. 

“I think the idea is bold, innovative, refreshing . . . it gets right to the heart of the matter,” said Arlan Hamilton, the founder and managing partner of Backstage Capital, a venture capital firm that invests in underrepresented founders. “It's cold hard cash, with a plan of where to get it and how to spend it.” 

As Washington politicians are eager to step up their oversight of Silicon Valley, there's a broader effort among advocates to ensure policymakers are also taking a closer look at the industry's lack of diversity. The industry's homogenous culture might mean the next big thing will be built without representation from diverse viewpoints, they argue. And as tech products play an increasingly outsized role in people's lives, they fear this lack of diveristy could have a negative effect on society at large. 

“There will be some start-up today that will be the Uber of tomorrow,” said Tracy Chou, an entrepreneur and co-founder of Project Include, a nonprofit group that aims to diversify the tech industry. “To not have more representation in these teams feels dangerous to me.”

Diversity advocates such as Chou, who have been working for years to bring attention to the lack of representation of women and minorities in Silicon Valley, see Warren's plan as a signal that some of that work is going “mainstream.” Chou kicked off a campaign in 2013 to pressure tech companies to show her the numbers and be more transparent about data related to the diversity of their workforces. 

“It’s really powerful to see that a potential viable presidential candidate understands the tech world this well,” Chou said. “Just this proposal is evidence that she has more understanding of the lack of diversity than even a lot of people who work in the industry.” 

The data behind venture-backed deals underscores the urgency of the problem. About 77.1 percent of venture-backed founders are white, according to a study from RateMyInvestor and DiversityVC that examined publicly available VC-backed deals over the past five years and polled close to 10,000 founders. Black and Latino founders have been particularly left out of Silicon Valley funding rounds. Just 1 percent of venture-backed founders are black, and Latino founders made up 1.8 percent of those receiving funding. 

Warren is seeking to position herself as the candidate with a plan for everything, and she says her administration would level the playing field for entrepreneurs through this proposed fund by providing grants — not loans or guarantees -- to minority entrepreneurs who have less than $100,000 in household wealth. The program would have clear federal standards but be operated through state and city municipalities. The states and cities would be required to work with diverse investment managers — ensuring women and minority investors are putting the capital to work. In addition, Warren says her administration will direct all federal pension and retirement fund managers to seek out diverse fund managers as they invest their capital.

“The small-business gap is another example of how the racial wealth gap in America holds back our economy and hurts Black, Latinx, Native American, and other minority families and communities,” Warren said Friday in a Medium post about her plan. “And because the government helped create that wealth gap with decades of sanctioned discrimination, the government has an obligation to address it head on — with bold policies that go right at the heart of the problem.”

Hamilton said she hopes the Warren team works with existing minority-focused funds on the proposal, like her firm Backstage Capital as well as 645 Ventures and others, if it moves forward. Hamilton said the Warren campaign reached out to her several days before releasing the proposal for her input. 

“The one thing I hope they keep in mind is that there are several fund managers and organizations that already exist and have been doing the work, and they should be reviewed and considered when the time comes,” she said. “There's a wealth of information and data from them and us because we've been in the trenches and on the ground doing the footwork.” 

To be sure, Warren's plan is not a panacea for those seeking an overhaul. While Warren's plan is a solid starting point, funding also needs to be available to entrepreneurs as businesses grow and seek later-stage capital, said Y-Vonne Hutchinson, the founder of ReadySet, a diversity consulting firm. 

“It's hard to raise startup funds, but its nearly impossible to get later stage backing as a black or brown founder,” she said in an email. “I say this as someone who has had to it. Trying to grow a business and competing against folks who have racial privilege and VC funding is brutal.” 

And of course, for the plan to be realized, Warren would have to secure the party's nomination -- and then the White House. But advocates say it is a relief to see that she's paying attention. 

“There is nothing happening in the absence of this,” said Karla Monterroso, the chief executive of the diversity nonprofit organization Code2040.  "For all the great talk that has happened in the Valley about leveling that playing field, most of the efforts are not looking internally to companies or venture capital firms." 

BITS: The music site Genius is accusing Google of lifting lyrics from its site in a complaint that could have ripple effects as Washington lawmakers and regulators step up antitrust oversight of the search giant, the Wall Street Journal’s Robert McMillan reports. The case might prove a hard win in court, experts tell Robert, but it may illustrate the struggles smaller tech companies experience when competing with a larger tech platform.

Genius said it has found more than 100 examples of Google using its lyrics in Google search information panels since Genius began “watermarking” its lyrics with a signature punctuation pattern in 2016, according to the April complaint. A random Journal review confirmed at least three of the examples provided by Genius. Google claims that the lyrics that surface in their information panels come from LyricFind, a Canadian publisher that also denied stealing from Genius.

Google’s push to include more services on its own search page, ranging from directions to lyrics, has made it difficult for competitors to garner search traffic. Over half of Google searches don’t result in a click-through, Robert reports, dinging the earnings of ad-revenue driven sites such as Genius.

NIBBLES: Private Facebook groups have become a meeting ground for “hundreds of active-duty and retired law enforcement officers from across the United States” to engage in racist, homophobic and anti-Islamic speech without reprisal, according to an investigation by Reveal reporters Will Carless and Michael Corey. By cross-referencing Facebook groups data from both extremist groups and groups for law enforcement, and then confirming employment with police departments, the nonprofit news organization also found at least 150 current and former officers who were engaged with radical anti-government groups.

“Anti-SJW Pinochet’s Helicopter Pilot Academy,” one of the dozens of private groups infiltrated by Reveal, had at least six current law enforcement members. Members of the group “seemed well-versed in the alt-right’s terminology” and openly posted racist slurs about African Americans, Latinos and other marginalized groups, according to Reveal’s reporters. 

Several of the officers identified during the year-long investigation were already accused of misconduct by their departments. The report has resulted in at least one firing and internal investigations at 50 different law enforcement agencies across the country.

Concerns about the lack of moderation in Facebook's private groups comes as the company is pushing for a shift toward groups and away from the News Feed. Civil rights advocates have long flagged the dangers of private groups in spreading hate speech, doxing and other harassment on the platform.

Tim Cook gives the 2019 Stanford University commencement address.

BYTES: Apple CEO Tim Cook had a warning for Silicon Valley in his Stanford University commencement speech yesterday: Companies can no longer “dodge responsibility for the chaos” they’ve created.

“We see it every day now with every data breach, every privacy violation, every blind eye turned to hate speech, fake news poisoning out national conversation, the false miracles in exchange for a single drop of your blood,” said Cook, making veiled references to competitors including Facebook and Google as well as the now defunct blood-testing start-up Theranos. “Too many seem to think that good intentions excuse away harmful outcomes, but whether you like it or not, what you build and what you create define who you are.”

This isn’t the first time Cook has taken a swipe at Silicon Valley rivals over their data and privacy practices. Apple, with the recent release of a privacy-focused sign-on feature, is trying to position itself as a Silicon Valley good guy even amid growing antitrust scrutiny from D.C. lawmakers.

“If we accept as normal and unavoidable that everything in our lives can be aggregated, sold and even leaked in the event of a hack, then we lose so much more than data,” Cook warned. “We lose the freedom to be human.”


— News from the public sector:

Russia conducted a “continued and sustained” disinformation campaign against Europe’s recent parliamentary elections, the European Union reported Friday in the latest sign that Russia’s high-tech efforts to influence democratic votes have not slowed down.
Michael Birnbaum and Craig Timberg
Huawei's American chip suppliers, including Qualcomm and Intel, are quietly...
Officials want to extend the city's limit on the number of for-hire vehicles, and may consider a congestion charge.
Pete Buttigieg said the way credit scoring is done in the U.S. is fraught with inequality and he’s worried the process may get worse with systems based on artificial intelligence.

— News from the private sector:

Google is the major force at every layer between advertisers and websites, one reason the Justice Department is laying the groundwork for potential antitrust action. Here’s a look at the tech giant’s advertising dominance, in three charts.
Wall Street Journal
The U.S. campaign against Huawei Technologies is taking a toll, with the company’s founder forecasting a hit to revenue of about $30 billion over the next two years.
Wall Street Journal
A review of dozens of Amazon’s Choice products by BuzzFeed News found listings with troubling product defects and warnings, as well as review manipulation.
The website was also asked to turn over IP and metadata information of those who commented on John Earnest’s post.
The Daily Beast

-- Tech news generating buzz around the web:

Backers of artificial-intelligence startups are paying more attention to ethics and rooting out potential biases embedded in algorithms that power AI systems, a focus that is starting to affect company development.
Wall Street Journal
The technology that was supposed to give us robo-taxis is making human-driven cars safer at a rate that completely autonomous vehicles may have trouble matching.
Wall Street Journal
Amazon’s two-year-old Instagram competitor, Amazon Spark, is no more. Hoping to capitalize on the social shopping trend and tap into the power of online influencers, Amazon in 2017 launched its own take on Instagram with a shoppable feed of stories and photos aimed at Prime members.
Mail-in genetic tests offer a wealth of information about your ancestry and insight into medical risks — in exchange for a lot of data. Here’s where that data goes, and how to delete it.
New York Times

— Talent news at the intersection of the tech industry and Washington:

Brian Kenner, deputy mayor for planning and economic development in the District, is joining Amazon as a senior policy manager at the company’s D.C. office. (Amazon founder and CEO Jeff Bezos owns The Washington Post.)


— Today:

  • The Washington Post and the Knight Foundation will host their third annual "Free to State" summit on the First Amendment, including a including an interview with Sen. Ted Cruz (R-Texas) on online censorship.
  • CVPR 2019 takes place in Long Beach, California through the 20th.

— Coming soon:

  • On Tuesday, the Senate Committee on Foreign Relations will host a hearing on security in Ukraine and Russian activity in the area.
  • On Wednesday, New America's Blockchain Trust Accelerator and the Office of Educational Technology will host a reception to open the Summit on Education Blockchains.
On the latest episode of Patriot Act, Hasan discusses Internet inequality in the U.S. and the reasons why millions of Americans cannot get online in 2019.