Over the past two years, the U.S. government has tried to rein in how major tech companies use the personal data they've gathered on their customers. At the same time, government agencies are themselves seeking to harness those troves of data, Axios' Sara Fischer and Scott Rosenberg write.

Why it matters: Tech platforms use personal information to target ads, whereas the government can use it to prevent and solve crimes, deliver benefits to citizens — or (illegally) target political dissent.

Driving the news: A new report from the Wall Street Journal details the ways in which family DNA testing sites like FamilyTreeDNA are pressured by the FBI to hand over customer data to help solve criminal cases using DNA.

• The trend has privacy experts worried about the potential implications of the government having access to large pools of genetic data, even though many people whose data is included never agreed to its use for that purpose.

The FBI has particular interest in data from genetic and social media sites, because it could help solve crimes and protect the public.

• For example, the FBI is "soliciting proposals from outside vendors for a contract to pull vast quantities of public data" from Facebook, Twitter Inc. and other social media companies,“ the Wall Street Journal reports.
• The request is meant to help the agency surveil social behavior to "mitigate multifaceted threats, while ensuring all privacy and civil liberties compliance requirements are met."
• Meanwhile, the Trump administration has also urged social media platforms to cooperate with the government in efforts to flag individual users as potential mass shooters.

Other agencies have their eyes on big data troves as well.

• Earlier this year, settlement talks between Facebook and the Department of Housing and Urban Development broke down over an advertising discrimination lawsuit when, according to a Facebook spokesperson, HUD "insisted on access to sensitive information — like user data — without adequate safeguards."
• HUD presumably wanted access to the data to ensure advertising discrimination wasn't occurring on the platform, but it's unclear whether the agency needed user data to be able to support that investigation.

Investigations of specific crimes are the most common situations that pit the government's law enforcement needs against tech companies' privacy rules.

• Two years ago, the government and Apple fought to a standstill over encryption following the San Bernardino shooting.
• Apple refused to give the FBI the passcode to a shooter's cellphone to open the device. Apple took the battle to court, but the conflict fizzled after the FBI figured out a way to access the phone without Apple's help.

Experience demonstrates that gathering stockpiles of data holds a magnetic attraction for government.

• In the post-9/11 era, the National Security Agency began a long and controversial program, widely seen as extra-legal, to broadly monitor phone and other telecommunications messages.

Be smart: History shows that when governments acquire vast stocks of personal data on their citizens, it's very tempting for them to use that information for political purposes or personal vendettas.

The big picture: Privacy experts fear that we're going to keep making mistakes and improvising through crises since we haven't had a broad debate over setting boundaries around government access to personal data collected by tech companies.

A collection of consumer groups has written a letter to California lawmakers urging them to keep the strong protections in a state law due to take effect next year.

Why it matters: The California law, if left largely as is, could usher in a range of new consumer protections. However, direct marketers and tech companies, working through various entities, have been seeking to water down the law.

The latest: A coalition of 10 consumer groups has written to California State Senate leader Toni Atkins encouraging legislators to explore the background of the Nonprofit Alliance, a group that has been pushing to have the law weakened.

"We are asking that the Nonprofit Alliance release their financial information; explain their ties to corporate donors; and clarify their leadership, mission, and membership," the groups wrote in a letter.

Among those signing the letter:

• ACLU of California, Center for Digital Democracy
• Campaign for a Commercial-Free Childhood
• Consumer Action
• Common Sense
• Privacy Rights Clearinghouse

The big picture: The threat of the California law has been the biggest impetus pushing Congress to take federal action. Any weakening of California's law could reduce the pressure on Congress to act.

Sphero's purchase of LittleBits is just the latest sign of companies large and small trying to navigate a tough market for educational toys.

Driving the news: Sphero announced Friday it was acquiring LittleBits for an undisclosed price, with Sphero head Paul Berberian to become CEO of the combined company and LittleBits CEO Ayah Bdeir moving on "to pursue her next adventure."

While the companies did not disclose financials, it's clear this wasn't a home run for LittleBits investors, who probably will only recoup their investment if Sphero is quite successful.

What they're saying: "This isn't Google buying some big company for cash. This is more of 'We are continuing the journey together,'" Berberian said in an interview.

The two companies had shared a common investor in Foundry Group and had talked about a deal on and off for several years, he said.

While both companies learned many of the same lessons, Berberian said that Sphero, as an older startup, was "probably a couple years ahead" of where LittleBits was.

"We graduated high school and they were still in tenth grade."

What's next: Buying LittleBits will allow the combined company to offer a more complete set of educational tech to schools, Berberian said. It should also ease the company's path to reaching profitability "in the 2020 timeframe."

But, he added: "The big winners are the kids and the teachers. They are going to get a company that now has a size that it can invest deeply into the experiences."

House Financial Services Committee Chairwoman Maxine Waters said Sunday she remains concerned with Facebook's plans to spearhead the creation of a new cryptocurrency. Her statement follows a meeting with Swiss officials; Facebook has said the currency will debut next year and be run by an independent foundation based in Switzerland.

"While I appreciate the time that the Swiss government officials took to meet with us, my concerns remain with allowing a large tech company to create a privately controlled, alternative global currency,” Waters said in a statement, per Reuters.

Why it matters: Regulators and consumer groups around the globe have expressed a host of concerns over Facebook's plan, especially considering Facebook's controversy-littered privacy record.

On Tap

• VMware's VMworld takes place this week in San Francisco.

Trading Places

• Qualcomm's interim CFO David Wise is leaving. He had been at the company for 23 years in various roles, but had only been CFO since April after its former chief left to take up the CFO spot at Intel. Qualcomm named Akash Palkhiwala, senior VP of finance, as its new interim CEO.

ICYMI

• Amazon's Audible unit is being sued by publishers over a feature that adds a computer-generated text translation to audiobooks. (Bloomberg)
• Riot Games has reached an agreement to settle a class-action lawsuit over gender discrimination and sexual harassment claims. (IGN)
• VMware is buying Pivotal and Carbon Black in separate multibillion-dollar transactions. (Axios)

You haven't lived until you've seen the shadow of a jogging millipede.