Silicon Valley Funding News - Week of August 3 2020

Can Microsoft make Tiktok more American?

Maybe.

Bytedance, Tiktok's parent company, is considering the sale of its U.S. operations to Microsoft to fend off threats of a ban by President Trump.

What started all these?
In 2018, TikTok acquired Musical.ly for $1 billion. TikTok did not seek CFIUS clearance at the time as it did not perceive an obvious link to national security, which would have automatically triggered a CFIUS review. In Q4 2019, TikTok became THE most downloaded app in the U.S. After the subsequent CFIUS review, concerns over national security surfaced, and the threats from the White House intensified.

But would selling Tiktok to Microsoft really solve the problem? 
I agree with Kevin Roose’s op piece in the NYT on this: “I’ll be honest, I don’t buy the argument that TikTok is an urgent threat to America’s national security. Or, to put it more precisely, I am not convinced that TikTok is inherently more threatening to Americans than any other American and Chinese-owned app that collects data from Americans”.

Instead of banning TikTok, or forcing ByteDance to sell it to Microsoft, why not make an example by turning it into the most transparent, privacy-protected, and ethically governed tech platform in existence?

The U.S. government could (and should) regulate all tech platforms (Google, Apple, Facebook, Amazon, Microsoft, and Tiktok) to play a responsible role in our information ecosystem without getting rid of or breaking up any of them. The debate over TikTok’s fate should really be a debate about how all of the big tech platforms should operate, and what should be required of them, whether they’re based in China or California.

The U.S. government could require tech platforms to open-source key parts of its software and AI/ML algorithms. It could require them to submit to regular audits of its data-collection process.  It could force them to open up its internal content moderation practice and guidelines.

What we really need is a new model of tech regulation that could improve the accountability and responsibility of not just Chinese-owned tech companies but American ones as well.

P.S. On August 13, join our next Wartime conversations and hear from Alfred Chuang - Founder and CEO of BEA Systems and Race Capital, William H. Janeway, Special Limited Partner of Warburg Pincus and Gina Chon, Reporter, The Reuters, discuss China-US tension, investment opportunities for 2020 and how the election would impact the economy.

Join us.

This week a total of 16 startups raised $513.2M in funding, 3 M&As:

• $129.5M goes to 5 Enterprise startups
• $120M goes to 2 FinTech startups
• $15.9M goes to 1 Construction startup
• $60M goes to 1 Wellness startup
• $2M goes to 1 FoodTech startup
• $46.9M goes to 2 Healthcare startups
• $116.3M goes to 2 BioTech startups
• $20M goes to 1 Manufacturing startup
• $2.6M goes to 1 Other startup