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DEI: latest legal and corporate challenges

The brake has been set. The phrase refers to the fact that Big Tech has begun to cut back on some of the diversity, equity and inclusion (DEI) programs that were implemented shortly after the murder of George Floyd. Recently, Zoom announced that fired his DEI team. Google and Meta have they began to reduce definancing in their DEI programs and capital for Black founders continues to decline. Lawsuits have been filed against DEI programs, forcing companies to hide their inclusion efforts, while several billionaires they argue in X on whether DEI initiatives are discriminatory or not.

It's clear that this year will be a turning point for DEI, especially as states continue to ban affirmative action measures, plus the presidential election is right around the corner. Here are some stories to read to stay up to date on developments related to the current DEI backlash from technology.

Lawsuit between AAER and Fearless Fund

In August 2023, the American Alliance for Equal Rights (AAER), founded by Edward Blum, the man who helped repeal affirmative action in education, filed a lawsuit against the venture fund Fearless Fund for offering business grants to black women. The AAER alleged that the grant discriminates against white and Asian American founders. The Fund and AAER are battling the case in court, and the Fearless Fund is currently prohibited from making grants to any more Black women.

En InstagramArian Simone, CEO of the Fund, said the lawsuit has hurt the fund financially, as it lost millions in potential commitments and faced staff cuts, low liquidity, expensive legal bills and threatening letters. However, the impact of the lawsuit could be much deeper than simply affecting one fund and could have knock-on effects throughout the ecosystem.

But Fearless Fund is not the only defendant. The Small Business Administration, the Minority Business Development Agency, and even smaller businesses like Hello Alice are being attacked and sued for trying to implement various grant schemes.

What critics say about DEI

Anti-DEI rhetoric has increased dramatically. Many big names in business, such as Elon Musk, Peter Thiel, and Y Combinator founder Paul Graham, have shared anti-DEI sentiments, while only a few, such as Mark Cuban, have expressed support. This divide will last and grow deeper as billionaires continue to exert their power (and influence) to make their opinions heard.

At the same time, there are many who are indeed trying to change and be more inclusive. However, change takes time and some of the promises made have not been fulfilled.

How US governments handle DEI

California passed a bill last year that will soon require venture capital companies of the state reveal the diversity of the founders they support. Some herald the bill as a breakthrough in a notoriously opaque industry.

However, California is not the only state seeking to address diversity. Massachusetts is seeking to pass a bill that would extend labor laws to the hazardous industry. New York City venture firms met informally to create an alliance to support greater diversity. There is enthusiasm around these initiatives, but also some doubts.

Rep. Emanuel Cleaver, co-chair of the Congressional Black Caucus, has been trying to pass a bill in Congress that would make donation spending more transparent. He ran into a problem and said that some educational institutions in the nation have been openly “nasty” to him and his efforts.

DEI has become a focus of attention in “red” states, as many have decided to ban affirmative action measures. Many technology centers They are actually simply blue cities, that is, cities with a more liberal tendency, within red states or with a more conservative tendency. These include Tulsa, Atlanta, Miami and Austin, and all are at the forefront of helping make technology more accessible to people outside the Bay Area. But will their rulers put a dagger in all that progress?

Governor Ron DeSantis, for example, is a leader in passing anti-DEI measures. From book bans to speech restrictions, he is also one of the few governors targeting ESG investing, proposing a measure that could affect various fund managers in the state of Florida.

At the national level, the Congressional Black Caucus (CBC) has dedicated itself to finding out more about what is happening in technology. Recently, he wrote letters to OpenAI and the Department of Labor to see how the tech industry seeks to support Black talent during this time.

Funding for Black founders has continued to decline since 2020, and last year was no different.

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