Between the creation of a social rating system and street cameras with facial recognition capabilities, technology reports coming out of China have raised serious concerns for privacy advocates. These concerns are only heightened as Chinese investors turn their attention to the United States education technology space acquiring companies with millions of public school users.
A particularly notable deal this year centers on Edmodo, a cross between a social networking platform and a learning management system for schools that boasts having upwards of 90 million users. Net Dragon, a Chinese gaming company that is building a significant education division, bought Edmodo for a combination of cash and equity valued at $137.5 million earlier this month.
Edmodo began shifting to an advertising model last year, after years of struggling to generate revenue. This has left critics wondering why the Chinese firm chose to acquire Edmodo at such a price, some have gone as far as to call the move a data grab.
William Carter, the deputy director and fellow of the Technology Policy Program at Center for Strategic and International Studies (CSIS), says US government officials are taking note of these Chinese acquisitions in the tech startup space.
“There is a concern that data is now a strategic resource, and that acquiring companies for their large data sets could be a means by which China could undermine the strategic influence of the United States,” says Carter.
He notes that, historically, United States officials have been hesitant to regulate the tech startup space for fear that innovation could be stifled. The Senate Committee on Foreign Investments in the United States (CFIUS) generally focuses on foreign investments in U.S. companies that could pose a risk to national security—meaning companies that do business with the Department of Defense, the intelligence community, or large firms with strategically important technologies.
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