[HN Gopher] SEC charges App Annie and its founder with securitie...
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SEC charges App Annie and its founder with securities fraud
Author : jakarta
Score : 112 points
Date : 2021-09-14 18:56 UTC (4 hours ago)
(HTM) web link (www.sec.gov)
(TXT) w3m dump (www.sec.gov)
| usmannk wrote:
| What I don't get is where does App Annie get its data? Implied
| here is that app developers hand it over, but what do they get in
| return? And is that the primary source of App Annie's data?
| tcldr wrote:
| Yes, in most cases they hand it over for free in return for
| analysis tools for viewing their own data.(Charts, filters,
| etc.)
|
| This was a pretty big benefit when all Apple offered was an
| unwieldy CSV broken out into line items for each country, but
| less so today.
| etskinner wrote:
| So that makes me think: Given how ubiquitous Google's
| analytics service is, they could conceivably pull the same
| fast one, just substitute 'app' for 'website'. And the SEC is
| essentially saying "we'll probably only fine you a fraction
| of the money you made on this".
| lifeisstillgood wrote:
| So (getting my head round this) ... mobile app creators added an
| App Annie agent to their apps, which downloaded performance /
| usage data on their app to central servers. And App Annie
| promised not to sell that data to third parties unless it was
| "aggregated and anonymised".
|
| (Does App Annie pay the app creators for this?)
|
| App Annie sells this so people can work out which app to
| advertise on (the one with all the usage!) and which all to
| invest in (the one with all the usage).
|
| But they found that no-one wanted the aggregated data, or it was
| nit accurate enough, so they stopped using anonymised data and
| used the raw data.
|
| but said "it's ok we have permission"
|
| Ok.
|
| So they signed contracts on both sides, which contracts directly
| contradicted each other - they were always going to get caught.
|
| But this is aggregated app usage data - Apple could publish this
| in a heart beat and (presumably) it would be legal and App Annie
| would have no market.
|
| I know that "everything is securities fraud" and if you lie to
| both sides you will get caught. But this feels like a non-
| prosecution. The SEC had to - it was so blatent when it gets laid
| out, but really I doubt anyone thinks this will drain the swamp.
| It's all usage data.
|
| Edit: less ! marks
| tcldr wrote:
| It's the app's financial data. Not usage data.
|
| App developers would keenly sign up for this to get analysis
| and visualisation tools of the financial reports provided by
| Apple.
|
| At the time App Annie came about all that Apple provided devs
| with was a CSV broken down into line items per country.
|
| A bunch of companies made paid for visualisation and analysis
| tools/saas for this data but then app Annie had the bright idea
| of offering it for free and using the data to create aggregated
| (or not) intelligence tools.
| lifeisstillgood wrote:
| So the app developer would download Apple data, load it up on
| AppAnnie and get a nice bar chart? And an assurance they
| would not sell the data (without anonymising it). This is who
| signed up when and who made a purchase etc.
|
| Thank you
| detaro wrote:
| If Apple were to publish it, it wouldn't be confidential
| insider information. But they don't, so it is, so misusing it
| is a problem.
| wyager wrote:
| In this case, the issue would not be that the information is
| private, but that App Annie had a contractual fiduciary
| obligation to its customers which it violated.
| usmannk wrote:
| It sounds to me like the contracts did not contradict.
|
| > [App Annie] went to great lengths to assure [Trading Firms]
| that the financial and app-related data [App Annie] sold was
| the product of a sophisticated statistical model and that [App
| Annie] had controls to ensure compliance with the federal
| securities laws. These representations were materially false
| and misleading
|
| It's illegal because App Annie was feeding trading firms
| insider information while swearing it was actually just a
| really good statistical model. Presumably the actual model
| wasn't good enough, so they started using unaggregated data to
| eke out perf.
|
| What they did is not just breach of contract, but insider
| trading as they fed private information to trading firms.
|
| > the order finds that from late 2014 through mid-2018, App
| Annie used non-aggregated and non-anonymized data to alter its
| model-generated estimates to make them more valuable to sell to
| trading firms.
| lifeisstillgood wrote:
| Oh I see yes.
|
| But I still read it as similar as going to a bank and saying
| can you supply me a list of people with over a million
| dollars and the bank says "we used our aggregated knowledge
| of our customers to create a statistical model of which of
| our customers has over a million. Plug your parameters in
| here and see what pops out"
|
| It's a struggle to think this was ever anything but a nod and
| a wink.
| soheil wrote:
| My first thought was "there are publicly traded companies that
| use an app to monitor their app performance instead of relying on
| data directly from Apple?!"
|
| Surely giving access to your app's data to a random company is
| not without risks and is kind of irresponsible specially more so
| if you're a public company having fiduciary duties to your
| investors.
| gh123man wrote:
| Not directly related but when I was releasing an iOS app recently
| - App Annie made me realize how "pay to win" building apps is
| these days. You know a service is expensive when there is only a
| "contact sales" button on the homepage.
|
| It's impossible for an indie dev to afford the data they provide,
| and gives a massive SEO/keyword ranking edge to the larger
| companies that pay for the subscription.
| m_ke wrote:
| When we were launching our app 5 years ago all of the App Store
| optimization experts told us the only way to get discovered was
| to spend a few 100K on advertising or downloads on launch day
| to show up on the top 100 chart.
| ajsharp wrote:
| No idea if true, but someone once told me that Sequoia
| essentially owns App Annie and uses the data to win deals on
| companies before anyone knows they're about to pop. I'm not a
| lawyer, but if true, pretty brilliant from a purely competitive
| standpoint (not legal/moral/ethical/etc).
| 1vuio0pswjnm7 wrote:
| Curios: Searches of Wikipedia for "app annie" return hundreds of
| Wikipedia pages, but there is no page for App Annie itself.
|
| https://en.wikipedia.org/w/index.php?limit=500&profile=all&n...
|
| https://en.wikipedia.org/w/index.php?search=App+Annie&title=...
| elliekelly wrote:
| > The order finds that App Annie and Schmitt understood that
| companies would only share their confidential app performance
| data with App Annie if it promised not to disclose their data to
| third parties, and as a result App Annie and Schmitt assured
| companies that their data would be aggregated and anonymized
| before being used by a statistical model to generate estimates of
| app performance. Contrary to these representations, the order
| finds that from late 2014 through mid-2018, App Annie used non-
| aggregated and non-anonymized data to alter its model-generated
| estimates to make them more valuable to sell to trading firms.
|
| Interesting.
| ajsharp wrote:
| Sub headline more relevant than the headline: "Company Will Pay
| $10 Million to Settle First Enforcement Action Against
| Alternative Data Provider".
|
| This is such an insanely good arb for App Annie it boggles the
| mind. Paying a $10mm vig to the SEC for a scheme that probably
| minted hundreds of millions in revenue from hedge funds is a no
| brainer.
|
| If the SEC actually wanted to disincentivize future bad actors
| they'd prosecute rather than issue hilariously petty fines.
| outworlder wrote:
| Yeah. At those levels, it's essentially a tax.
| spaetzleesser wrote:
| It seems that's pretty much by design these days. Most fines
| are not high enough to be a real deterrent.
| JumpCrisscross wrote:
| > _If the SEC actually wanted to disincentivize future bad
| actors they 'd prosecute rather than issue hilariously petty
| fines_
|
| The SEC can't prosecute. They can only make criminal referrals
| to the DoJ.
| ajsharp wrote:
| I assume DOJ can't prosecute when SEC comes to a settlement
| agreement?
| JumpCrisscross wrote:
| > _I assume DOJ can 't prosecute when SEC comes to a
| settlement agreement?_
|
| This is incorrect. The SEC has no prosecution authority.
| That means it can't prosecute. It also means it can't take
| criminal prosecution off the table.
| vmception wrote:
| That's not a good assumption. Parallel enforcement
| routinely happens. Sometimes simultaneously, sometimes
| later. Sometimes both are reported in the same places,
| other times one is not reported at all except on DOJ's own
| website or in more obscure court dockets. Sometimes there
| is no referral. Sometimes the DOJ passes on it.
| ajsharp wrote:
| So if that's the case, what is the incentive to settle
| for the company? Or can the SEC just arbitrarily levy
| fees?
| tych0 wrote:
| Companies/directors can (and do, see e.g.
| Theranos/Elizabeth Holmes) settle without admitting
| fault.
|
| Presumably the goal is to lower the number of three
| letter agencies investigating you.
| hermitdev wrote:
| Well, at least in the case of Holmes, her legal troubles
| are not over. I'm not familiar with the details, but
| among the charges are defrauding investors. The trial
| just started on Sep 8th.
| [deleted]
| belltaco wrote:
| Several reasons.Just the lawyer fees to fight the SEC
| lawyers will be a lot. What they did could be worse than
| what the SEC found so far. Discovery process may be
| painful and lead to emails and documents to be published
| on the web. It will be a big distraction for the top
| brass.
| derefr wrote:
| Nothing has happened here that breaks a regulation under
| which a civil suit can be brought?
| JumpCrisscross wrote:
| > _Nothing has happened here that breaks a regulation on
| which a civil suit can be brought?_
|
| That's what this announcement is. The SEC charged them.
| They settled. The investigation, meanwhile, provides
| documentary evidence for some of the wronged to pursue
| claims against the wrongdoers.
| vmception wrote:
| > App Annie and Schmitt assured companies that their data would
| be aggregated and anonymized before being used by a statistical
| model to generate estimates of app performance. Contrary to these
| representations, the order finds that from late 2014 through
| mid-2018, App Annie used non-aggregated and non-anonymized data
| to alter its model-generated estimates to make them more valuable
| to sell to trading firms.
|
| Nice to see the government making a statement about this pretty
| known practice. When the government doesn't do anything people
| think its a tolerated practice. Its better for the government to
| even lose if it allows for the position of the administration to
| be made clear.
| Closi wrote:
| So you can deliberately disclose confidential information for the
| explicit purpose of helping others to 'unknowingly' insider trade
| for 4 years... and the punishment is only to pay less than a
| month of revenue three years later?
|
| Wow.
| anm89 wrote:
| total insanity.
|
| it always makes me think, people get excited about these
| complicated political schemes to deal with wealth inequality,
| but I don't see a 10th of that level of excitement to just stop
| people from being handed 100 million dollar government
| privileges like this one in the first place
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(page generated 2021-09-14 23:02 UTC)