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The Dark Side of Israeli Innovation

Israeli startups have found themselves at the center of a global data privacy controversy

In 2013, Facebook offered to buy Snapchat, whose messaging app was just two years old, for a cool $3 billion. After Snapchat founder Evan Spiegel rejected the offer, Facebook turned to Instagram, a photo-sharing service it acquired in 2012 for $1 billion, to play Snapchat’s game.

Instagram introduced features such as filters and Instagram Stories aimed at the Snapchat demographic, made possible by the technology Facebook acquired when it bought Israeli startup Onavo for $150 million in 2013 and turned into its Israeli research and development center.

 

Onavo was critical to Facebook’s strategy because the Israeli company’s Insights service anonymously collected data on smartphone usage patterns from users who installed the applications on their devices.

 

But the Facebook-Onavo partnership is just the tip of the iceberg: All over the world, companies are using similar technology that was developed in Israel — and they don’t always use it appropriately.

In recent years, several Israeli startups that specialize in collecting and analyzing user data have been ensnared in cases involving invasion of privacy, security problems and a lack of transparency regarding how companies used data they collected on users.

 

In a few cases, Israeli companies have found themselves clashing with the giants of global high-tech.

 

Public awareness of the problem has grown especially acute since the Cambridge Analytica affair surfaced last year, revealing that the British political consulting firm had illicitly acquired data on some 87 million Facebook users.

 

At about the same time Europe and Israel introduced tougher privacy protection rules that sets red lines for how businesses make use of the personal data they collect on users. Governments have finally taken it upon themselves to protect their citizens’ privacy.

 

Last week the technology website TechCrunch revealed how several popular iPhone apps offered by hotels, travel websites, airlines, cellphone companies and banks record and amass data without clearly informing users. That includes every tap, button push and keyboard entry sent back to the app developers.

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