Financially troubled startup helped power Trump campaign

11/18/2020

San Francisko, Nov. 18: US President Donald Trump's 2020 reelection campaign was powered by a cellphone app that allowed staff to monitor the movements of his millions of supporters, and offered intimate access to their social networks.

While the campaign may be winding down, the data strategy is very much alive, and the digital details the app collected can be put to multiple other uses—to fundraise for the president's future political ventures, stoke Trump's base, or even build an audience for a new media empire.

The app lets Trump's team communicate directly with the 2.8 million people who downloaded it— more than any other app in a US presidential campaign—and if they gave permission, with their entire contact list as well.

Once installed, it can track their behaviour on the app and in the physical world, push out headlines, sync with mass texting operations, sell MAGA merchandise, fundraise and log attendance at the president's rallies, according to the app's privacy policy and user interface.

Yet the enterprise software company that built a tool to propel Trump's mass movement is in financial distress and has been sustained at key points by the administration and the president's campaign, according to interviews with former employees, financial filings and court documents.

Austin-based Phunware Inc., whose stock is trading for pennies, recently agreed to pay Uber USD 4.5 million as part of a settlement over claims of fraudulent advertising and earlier this year risked being delisted from the Nasdaq. In April, the company got a USD 2.9 million loan under the Coronavirus Aid, Relief and Economic Security Act as it was building the Trump campaign app.

Campaign watchdogs and former employees alike marvel at how a struggling startup known more for building apps for hospitals and a Manhattan-based astrologer became a juggernaut in Trump's reelection bid, facilitating an ongoing data and fundraising effort that threw the company a financial lifeline.

Even after major media outlets called the election for his Democratic opponent Joe Biden, the app kept pushing out content supporting Trump's bid.

“We all know why Joe Biden is rushing to falsely pose as the winner, and why his media allies are trying so hard to help him: they don't want the truth to be exposed,” read a statement attributed to Trump posted earlier this month.

“I will not rest until the American People have the honest vote count they deserve.” On Tuesday, the app pushed out fresh content defending the campaign's vote-counting litigation in Georgia.

Last week, the app posted a fundraising appeal asking for donations to Trump's newly formed Election Defense Fund, which will send most of the money raised to a new political action committee Trump formed called Save America. That PAC has few spending restrictions and could pay for lavish personal expenses or give money to other candidates.

While activity on the app has slowed recently, the enriched data it gathered on the president's supporters—which can include everything from their contacts to their IP address to their location data—can serve many purposes going forward, said Adav Noti, a former Federal Election Commission attorney who works for the nonpartisan Campaign Legal Center.

Congress and the FEC have not set rules governing how campaigns can use people's personal data and or limits on the number of entities to whom the campaign can sell its list, he added.

“I'm assuming that what he is going to do is transfer the assets of the campaign,” Noti said. “You can definitely buy the data and the campaign can sell it to you, the trickier question is how much do you have to pay for it.” Phunware declined to respond to questions about the app, the company's financial status, its internal culture and its relationship to the campaign.

“Phunware has absolutely no role in the constitutional processes tied to US elections at any level ... and also has no role in the content created or used by our customers specific to our mobile software or enterprise cloud platform for mobile,” CEO Alan Knitowski said in an email.

A senior Trump campaign official declined to answer questions about possible future uses for the rich supporter data the campaign collected via digital platforms, including the Phunware app.

“The data is owned by the campaign and limited whatever hit their servers,” said the official who spoke on condition of anonymity to discuss campaign specifics.

As Phunware has hit challenging Financial Times in recent years, it has shed employees, clients and investors, 10 of whom agreed to speak with The Associated Press, some on condition of anonymity because they signed non-disclosure agreements or feared retaliation.

Phunware sued its client Uber in 2017, accusing the ride-sharing company of failing to pay its invoices, according to court records.

But after Uber filed suit against Phunware, alleging the software company committed fraud by among other things, allowing ads for the ride-sharing app to show up on porn sites, former employees said the startup looked for new ways to diversify its revenue stream.- AP

 

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