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China Roundup: Tencent’s new US gaming studio and WeChat’s new paywall

By Rita Liao

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.

The spotlight this week is back on Tencent, which has made some interesting moves in gaming and content publishing. There will be no roundup next week as China observes the Lunar New Year, but the battle only intensifies for the country’s internet giants, particularly short-video rivals Douyin (TikTok’s Chinese version) and Kuaishou, which will be vying for user time over the big annual holiday. We will surely cover that when we return.

‘Honor of Kings’ creator hiring for U.S. studio

Tencent’s storied gaming studio TiMi is looking to accelerate international expansion by tripling its headcount in the U.S. in 2020, the studio told TechCrunch this week, though it refused to reveal the exact size of its North American office. Eleven-year-old TiMi currently has a team working out of Los Angeles on global business and plans to grow it into a full development studio that “helps us understand Western players and gives us a stronger global perspective,” said the studio’s international business director Vincent Gao.

Gao borrowed the Chinese expression “riding the wind and breaking the wave” to characterize TiMi’s global strategy. The wind, he said, “refers to the ever-growing desire for quality by mobile gamers.” Breaking the wave, on the other hand, entails TiMi applying new development tools to building high-budget, high-quality AAA mobile games.

The studio is credited for producing one of the world’s most-played mobile games, Honor of Kings, a mobile multiplayer online battle arena (MOBA) game, and taking it overseas under the title Arena of Valor. Although Arena of Valor didn’t quite take off in Western markets, it has done well in Southeast Asia in part thanks to Tencent’s publishing partnership with the region’s internet giant Garena.

Honor of Kings and a few other Tencent games have leveraged the massive WeChat and QQ messengers to acquire users. That raises the question of whether Tencent can replicate its success in overseas markets where its social apps are largely absent. But TiMi contended that these platforms are not essential to a game’s success. “TiMi didn’t succeed in China because of WeChat and QQ. It’s not hard to find examples of games that didn’t succeed even with [support from] WeChat and QQ.”

Call of Duty: Mobile is developed by Tencent and published by Activision Blizzard (Image: Call of Duty: Mobile via Twitter) 

When it comes to making money, TiMi has from the outset been a strong proponent of game-as-a-service whereby it continues to pump out fresh content after the initial download. Gao believes the model will gain further traction in 2020 as it attracts old-school game developers, which were accustomed to pay-to-play, to follow suit.

All eyes are now on TiMi’s next big move, the mobile version of Activision Blizzard’s Call of Duty. Tencent, given its experience in China’s mobile-first market, appears well-suited to make the mobile transition for the well-loved console shooter. Developed by Tencent and published by Blizzard, in which Tencent owns a minority stake, in September, Call of Duty: Mobile had a spectacular start, recording more worldwide downloads in a single quarter than any mobile game except Pokémon GO, which saw its peak in Q3 2016, according to app analytics company Sensor Tower.

The pedigreed studio has in recent times faced more internal competition from its siblings inside Tencent, particularly the Lightspeed Quantum studio, which is behind the successful mobile version of PlayerUnknown’s Battlegrounds (PUBG). While Tencent actively fosters internal rivalry between departments, Gao stressed that TiMi has received abundant support from Tencent on the likes of publishing, business development and legal matters.

WeChat erects a paywall – with Apple tax

Ever since WeChat rolled out its content publishing function — a Facebook Page equivalent named the Official Account — back in 2012, articles posted through the social networking platform have been free to read. That’s finally changing.

This week, WeChat announced that it began allowing a selected group of authors to put their articles behind a paywall in a trial period. The launch is significant not only because it can inspire creators by helping them eke out additional revenues, but it’s also a reminder of WeChat’s occasionally fraught relationship with Apple.

WeChat launched its long-awaited paywall for articles published on its platform 

Let’s rewind to 2017 when WeChat, in a much-anticipated move, added a “tipping” feature to articles published on Official Account. The function was meant to boost user engagement and incentivize writers off the back of the popularity of online tipping in China. On live streaming platforms, for instance, users consume content for free but many voluntarily send hosts tips and virtual gifts worth from a few yuan to the hundreds.

WeChat said at the time that all transfers from tipping would go toward the authors, but Apple thought otherwise, claiming that such tips amounted to “in-app purchases” and thus entitled it to a 30% cut from every transaction, or what is widely known as the “Apple tax.”

WeChat disabled tipping following the clash over the terms but reintroduced the feature in 2018 after reaching consensus with Apple. The function has been up and running since then and neither WeChat nor Apple charged from the transfers, a spokesperson from WeChat confirmed with TechCrunch.

If the behemoths’ settlement over tipping was a concession on Apple’s end, Tencent has budged on paywalls this time.

Unlike tipping, the new paywall feature entitles Apple to its standard 30% cut of in-app transactions. That means transfers for paid content will go through Apple’s in-app purchase (IAP) system rather than WeChat’s own payments tool, as is the case with tipping. It also appears that only users with a Chinese Apple account are able to pay for WeChat articles. TechCrunch’s attempt to purchase a post using a U.S. Apple account was rejected by WeChat on account of the transaction “incurring risks or not paying with RMB.”

The launch is certainly a boon to creators who enjoy a substantial following, although many of them have already explored third-party platforms for alternative commercial possibilities beyond the advertising and tipping options that WeChat enables. Zhishi Xingqiu, the “Knowledge Planet”, for instance, is widely used by WeChat creators to charge for value-added services such as providing readers with exclusive industry reports. Xiaoe-tong, or “Smart Little Goose”, is a popular tool for content stars to roll out paid lessons.

Not everyone is bullish on the new paywall. One potential drawback is it will drive down traffic and discourage advertisers. Others voice concerns that the paid feature is vulnerable to exploitation by clickbait creators. On that end, WeChat has restricted the application to the function only to accounts that are over three months old, have published at least three original articles and have seen no serious violations of WeChat rules.

TechCrunch’s Top 10 investigative reports from 2019

By Josh Constine

Facebook spying on teens, Twitter accounts hijacked by terrorists, and sexual abuse imagery found on Bing and Giphy were amongst the ugly truths revealed by TechCrunch’s investigating reporting in 2019. The tech industry needs more watchdogs than ever as its size enlargens the impact of safety failures and the abuse of power. Whether through malice, naivety, or greed, there was plenty of wrongdoing to sniff out.

Led by our security expert Zack Whittaker, TechCrunch undertook more long-form investigations this year to tackle these growing issues. Our coverage of fundraises, product launches, and glamorous exits only tell half the story. As perhaps the biggest and longest running news outlet dedicated to startups (and the giants they become), we’re responsible for keeping these companies honest and pushing for a more ethical and transparent approach to technology.

If you have a tip potentially worthy of an investigation, contact TechCrunch at tips@techcrunch.com or by using our anonymous tip line’s form.

Image: Bryce Durbin/TechCrunch

Here are our top 10 investigations from 2019, and their impact:

Facebook pays teens to spy on their data

Josh Constine’s landmark investigation discovered that Facebook was paying teens and adults $20 in gift cards per month to install a VPN that sent Facebook all their sensitive mobile data for market research purposes. The laundry list of problems with Facebook Research included not informing 187,000 users the data would go to Facebook until they signed up for “Project Atlas”, not receiving proper parental consent for over 4300 minors, and threatening legal action if a user spoke publicly about the program. The program also abused Apple’s enterprise certificate program designed only for distribution of employee-only apps within companies to avoid the App Store review process.

The fallout was enormous. Lawmakers wrote angry letters to Facebook. TechCrunch soon discovered a similar market research program from Google called Screenwise Meter that the company promptly shut down. Apple punished both Google and Facebook by shutting down all their employee-only apps for a day, causing office disruptions since Facebookers couldn’t access their shuttle schedule or lunch menu. Facebook tried to claim the program was above board, but finally succumbed to the backlash and shut down Facebook Research and all paid data collection programs for users under 18. Most importantly, the investigation led Facebook to shut down its Onavo app, which offered a VPN but in reality sucked in tons of mobile usage data to figure out which competitors to copy. Onavo helped Facebook realize it should acquire messaging rival WhatsApp for $19 billion, and it’s now at the center of anti-trust investigations into the company. TechCrunch’s reporting weakened Facebook’s exploitative market surveillance, pitted tech’s giants against each other, and raised the bar for transparency and ethics in data collection.

Protecting The WannaCry Kill Switch

Zack Whittaker’s profile of the heroes who helped save the internet from the fast-spreading WannaCry ransomware reveals the precarious nature of cybersecurity. The gripping tale documenting Marcus Hutchins’ benevolent work establishing the WannaCry kill switch may have contributed to a judge’s decision to sentence him to just one year of supervised release instead of 10 years in prison for an unrelated charge of creating malware as a teenager.

The dangers of Elon Musk’s tunnel

TechCrunch contributor Mark Harris’ investigation discovered inadequate emergency exits and more problems with Elon Musk’s plan for his Boring Company to build a Washington D.C.-to-Baltimore tunnel. Consulting fire safety and tunnel engineering experts, Harris build a strong case for why state and local governments should be suspicious of technology disrupters cutting corners in public infrastructure.

Bing image search is full of child abuse

Josh Constine’s investigation exposed how Bing’s image search results both showed child sexual abuse imagery, but also suggested search terms to innocent users that would surface this illegal material. A tip led Constine to commission a report by anti-abuse startup AntiToxin (now L1ght), forcing Microsoft to commit to UK regulators that it would make significant changes to stop this from happening. However, a follow-up investigation by the New York Times citing TechCrunch’s report revealed Bing had made little progress.

Expelled despite exculpatory data

Zack Whittaker’s investigation surfaced contradictory evidence in a case of alleged grade tampering by Tufts student Tiffany Filler who was questionably expelled. The article casts significant doubt on the accusations, and that could help the student get a fair shot at future academic or professional endeavors.

Burned by an educational laptop

Natasha Lomas’ chronicle of troubles at educational computer hardware startup pi-top, including a device malfunction that injured a U.S. student. An internal email revealed the student had suffered a “a very nasty finger burn” from a pi-top 3 laptop designed to be disassembled. Reliability issues swelled and layoffs ensued. The report highlights how startups operating in the physical world, especially around sensitive populations like students, must make safety a top priority.

Giphy fails to block child abuse imagery

Sarah Perez and Zack Whittaker teamed up with child protection startup L1ght to expose Giphy’s negligence in blocking sexual abuse imagery. The report revealed how criminals used the site to share illegal imagery, which was then accidentally indexed by search engines. TechCrunch’s investigation demonstrated that it’s not just public tech giants who need to be more vigilant about their content.

Airbnb’s weakness on anti-discrimination

Megan Rose Dickey explored a botched case of discrimination policy enforcement by Airbnb when a blind and deaf traveler’s reservation was cancelled because they have a guide dog. Airbnb tried to just “educate” the host who was accused of discrimination instead of levying any real punishment until Dickey’s reporting pushed it to suspend them for a month. The investigation reveals the lengths Airbnb goes to in order to protect its money-generating hosts, and how policy problems could mar its IPO.

Expired emails let terrorists tweet propaganda

Zack Whittaker discovered that Islamic State propaganda was being spread through hijacked Twitter accounts. His investigation revealed that if the email address associated with a Twitter account expired, attackers could re-register it to gain access and then receive password resets sent from Twitter. The article revealed the savvy but not necessarily sophisticated ways terrorist groups are exploiting big tech’s security shortcomings, and identified a dangerous loophole for all sites to close.

Porn & gambling apps slip past Apple

Josh Constine found dozens of pornography and real-money gambling apps had broken Apple’s rules but avoided App Store review by abusing its enterprise certificate program — many based in China. The report revealed the weak and easily defrauded requirements to receive an enterprise certificate. Seven months later, Apple revealed a spike in porn and gambling app takedown requests from China. The investigation could push Apple to tighten its enterprise certificate policies, and proved the company has plenty of its own problems to handle despite CEO Tim Cook’s frequent jabs at the policies of other tech giants.

Bonus: HQ Trivia employees fired for trying to remove CEO

This Game Of Thrones-worthy tale was too intriguing to leave out, even if the impact was more of a warning to all startup executives. Josh Constine’s look inside gaming startup HQ Trivia revealed a saga of employee revolt in response to its CEO’s ineptitude and inaction as the company nose-dived. Employees who organized a petition to the board to remove the CEO were fired, leading to further talent departures and stagnation. The investigation served to remind startup executives that they are responsible to their employees, who can exert power through collective action or their exodus.

If you have a tip for Josh Constine, you can reach him via encrypted Signal or text at (585)750-5674, joshc at TechCrunch dot com, or through Twitter DMs

Week in Review: Forget cord cutting, here comes the stream slashing

By Lucas Matney

Hey everyone, welcome back to Week in Review where I dive deep into a bit of news from the week or just share some thoughts and go over some of the more interesting stories of the week.

If you’re reading this on the TechCrunch site, you can get this in your inbox here, and follow my tweets here.


The big story

“Cord cutting” might still be a major trend for those walking away from cable subscriptions in favor of online streaming services, but the world of online subscription TV is nearly saturated and as 2020 prepares to inundate us with more services, it’s likely growing time for consumers to stop adding services and start prioritizing.

NBCUniversal delivered some more details this week on its Peacock network and earlier this month we heard more about the mobile-only streaming network Quibi . These launches will come along in the spring, arriving just months after the high-profile launches on Apple TV+ and Disney+. Adding four high-spend streaming platforms in a short time frame could rattle the cages of consumers that have been bumbling along with only a couple streaming service subscriptions.

NBCUniversal’s Peacock seems to walk the line between both worlds, leveraging Comcast subscribers without seeming to invest heavily in original content for the service. Their strategy is pinned on the attractiveness of their existing content library which they’re promoting heavily on both free and paid plans. There could be something here, it feels like a marked return to the early Hulu playbook, which could very well be played out.

I still don’t know what to think of Quibi. They are dropping plenty of cash but spending your way into building a Gen Z network seems like a tall order. They’ve already nabbed a big partnership with T Mobile which seems promising when considering their broader industry adoption and yet it still seems like Snapchat Discover Prime. I’ll withhold judgment until launch but other mobile-first video networks have had less than stellar receptions.

Side note: At this point in the streaming video product life cycle, I would imagine cracking down on password-sharing is going to start being a more attractive option for streaming service operators.

We’ll see how this all shakes out, but it’s getting crowded.

Trends of the week

Here are a few big news items from big companies, with green links to all the sweet, sweet added context:

  • Visa buys Plaid for $5.2 billion
    The biggest acquisition of the week was the very bold purchase of Plaid by Visa. Visa paid up double the banking API startup’s last private valuation. Read more here.
  • Google acquires Pointy
    Google has announced a couple deals in the past few weeks. This week, we heard that they had acquired the Dublin startup Pointy, which builds hardware and software to help physical retailers track product inventory levels. Read more about it in our coverage.
  • Alphabet is a $1 trillion company
    In the current age of big tech, there’s an elite club for public companies worth more than $1 trillion in market cap. This week, Alphabet joined its ranks. Read more here.

Extra Crunch

Our premium subscription business had another great week of content. My colleague Darrell Etherington talked a bit about the next frontier of early-stage space investments.

Space Angels’ Chad Anderson on entering a new decade in the ‘entrepreneurial space age’

“Space as an investment target is trending upwards in the VC community, but specialist firm Space Angels has been focused on the sector longer than most. The network of angel investors just published its most recent quarterly overview of activity in the space startup industry, revealing that investors put nearly $6 billion in capital into space companies across 2019.…”

Sign up for more newsletters, including my colleague Darrell Etherington’s new space-focused newsletter Max Q, here.

This Week in Apps: App trends from 2019, Pinterest tops Snapchat, Disney+ hits No. 1 in Q4

By Sarah Perez

Welcome back to This Week in Apps, the Extra Crunch series that recaps the latest OS news, the applications they support and the money that flows through it all.

The app industry is as hot as ever with a record 204 billion downloads in 2019 and $120 billion in consumer spending in 2019, according to App Annie’s recently released “State of Mobile” annual report. People are now spending 3 hours and 40 minutes per day using apps, rivaling TV. Apps aren’t just a way to pass idle hours — they’re a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus.

In this Extra Crunch series, we help you to keep up with the latest news from the world of apps, delivered on a weekly basis.

This week, we dig into App Annie’s new “State of Mobile 2019” report and other app trends. We’re also seeing big gains for TikTok in 2019 and Disney+ in Q4. Both Apple and Google announced acquisitions this week that have implications for the mobile industry, as well.

As Alphabet crests the $1T mark, SaaS stocks reach all-time highs of their own

By Alex Wilhelm

Continuing our irregular surveys of the public markets, two things happened this week that are worth our time. First, a third domestic technology company — Alphabet — passed the $1 trillion market capitalization threshold. And, second, software as a service (SaaS) stocks reached record highs on the public markets after retreating over last summer.

The two milestones, only modestly related events, indicate how temperate the public waters are for technology companies today, a fact that should extend warmth into the private market where startups, and their venture capital backers, work.

The happenings are good news for technology startups for a number of reasons, including that major tech players have never had as much wealth in hand with which to buy smaller companies, and strong SaaS valuations help both smaller startups fundraise, and their larger brethren possibly exit.

Indeed, the stridently good valuations that major tech companies and their smaller siblings enjoy today should be just the sort of market conditions under which unicorns want to debut. We’ll continue to make this point so long as the public markets continue to rise, pricing tech companies that have already floated higher like the cliche’s own tide.

But while Alphabet, Microsoft and Apple are worth $3.68 trillion as a trio, and SaaS stocks are now worth 12.3x times their revenue (using enterprise value instead of market cap, for those keeping score at home), not every private, venture-backed company will necessarily benefit from public investor largesse.

What about tech-ish startups?

How much the current public-market tech valuation expansion will help companies that are increasingly sorted into the tech-enabled bucket isn’t clear; some companies that went public in 2019 were quickly spit up by investors unwilling to support valuations that matched or rose above their final private valuations. SmileDirectClub was one such offering.

The dividing line between what counts as tech — often fuzzy — appears to be slicing along gross margin lines, and the repeatability of business. The higher margin, and more recurring a company is, the more it’s worth. This market reality is why SaaS stocks’ recent return to form is not a surprise.

For Casper and One Medical, the first two venture-backed IPO hopefuls of the year, the more tech-ish they can appear between now and pricing the better. Because technology companies today are valued so highly, perhaps even a faint dusting of tech will save their valuations as they cross the chasm between private and adult.

Foxconn and Fiat Chrysler partner to develop EVs and an ‘internet of vehicles’ business

By Kirsten Korosec

Foxconn Technology Group, the Taiwanese electronics giant best known for its iPhone manufacturing contract, is forming a joint venture with Fiat Chrysler Automobiles to build electric vehicles in China.

The joint venture was disclosed in a regulatory filing. Nikkei was first to report the joint venture.

According to the filing, each party will own 50% of the venture to develop and manufacture electric vehicles and engage in an IOV, what Foxconn parent company Hon Hai calls the “internet of vehicles” business. Hon Hai’s direct shareholding in the subsidiary will not exceed 40%, the filing says.

The venture will initially focus on making electric vehicles for China. But these vehicles could be exported at a later date, according to Foxconn.

The wording in the regulatory filing suggests these will be new vehicles that are designed and built from the ground up and not a project to electrify any of the vehicles in FCA’s current portfolio.

The venture could give FCA a better path to capturing more business in China, the world’s largest market for electric vehicles.

Foxconn has invested in other electric vehicle ventures before, although this appears to be the first tie-up in which the company will develop and build the product. EV startup Byton was originally started as Future Mobility Corporation as a joint venture between Harmony Auto, Tencent and Foxconn. And Foxconn is also an investor in XPeng Motors, the Chinese electric vehicle startup that recently raised a fresh injection of $400 million in capital and has taken on Xiaomi  as a strategic investor.

Apple buys edge-based AI startup Xnor.ai for a reported $200M

By Devin Coldewey

Xnor.ai, spun off in 2017 from the nonprofit Allen Institute for AI (AI2), has been acquired by Apple for about $200 million. A source close to the company corroborated a report this morning from GeekWire to that effect.

Apple confirmed the reports with its standard statement for this sort of quiet acquisition: “Apple buys smaller technology companies from time to time and we generally do not discuss our purpose or plans.” (I’ve asked for clarification just in case.)

Xnor.ai began as a process for making machine learning algorithms highly efficient — so efficient that they could run on even the lowest tier of hardware out there, things like embedded electronics in security cameras that use only a modicum of power. Yet using Xnor’s algorithms they could accomplish tasks like object recognition, which in other circumstances might require a powerful processor or connection to the cloud.

CEO Ali Farhadi and his founding team put the company together at AI2 and spun it out just before the organization formally launched its incubator program. It raised $2.7M in early 2017 and $12M in 2018, both rounds led by Seattle’s Madrona Venture Group, and has steadily grown its local operations and areas of business.

The $200M acquisition price is only approximate, the source indicated, but even if the final number were less by half that would be a big return for Madrona and other investors.

The company will likely move to Apple’s Seattle offices; GeekWire, visiting the Xnor.ai offices (in inclement weather, no less), reported that a move was clearly underway. AI2 confirmed that Farhadi is no longer working there, but he will retain his faculty position at the University of Washington.

An acquisition by Apple makes perfect sense when one thinks of how that company has been directing its efforts towards edge computing. With a chip dedicated to executing machine learning workflows in a variety of situations, Apple clearly intends for its devices to operate independent of the cloud for such tasks as facial recognition, natural language processing, and augmented reality. It’s as much for performance as privacy purposes.

Its camera software especially makes extensive use of machine learning algorithms for both capturing and processing images, a compute-heavy task that could potentially be made much lighter with the inclusion of Xnor’s economizing techniques. The future of photography is code, after all — so the more of it you can execute, and the less time and power it takes to do so, the better.

 

It could also indicate new forays in the smart home, toward which with HomePod Apple has made some tentative steps. But Xnor’s technology is highly adaptable and as such rather difficult to predict as far as what it enables for such a vast company as Apple.

Mobileye takes aim at Waymo

By Kirsten Korosec

Mobileye has built a multi-billion-dollar business supplying automakers with computer vision technology that powers advanced driver assistance systems. It’s a business that last year generated nearly $1 billion in sales for the company. Today, 54 million vehicles on the road are using Mobileye’s computer vision technology.

In 2018, the company made what many considered a bold and risky move when it expanded its focus beyond being a mere supplier to becoming a robotaxi operator. The upshot: Mobileye wants to compete directly with the likes of Waymo and other big players aiming to deploy commercial robotaxi services.

TechCrunch sat down with Amnon Shashua, Mobileye’s president and CEO and Intel senior vice president, to find out why and how — yep, acquisitions are in the future — the company will hit its mark.

Tech’s biggest companies are worth ~$5T as 2019’s epic stock market run wraps

By Alex Wilhelm

Look, this is the last post I’m writing in 2019 and I’m tired. But I can’t let the year close without taking stock of how well tech stocks did this year. It was bonkers.

So let’s mark the year’s conclusion with some notes for our future selves. Yes, we know that the Nasdaq has been setting new records and SaaS had a good year. But we need to dig in and get the numbers out so that we can look back and remember.

Let’s cap off this year the way it deserves to be remembered, as a kick-ass trip ’round the sun for your local, public technology company.

Keeping score

We’ll start with the indices that we care about:

  • The tech-heavy Nasdaq Composite rose 35% in 2019
  • The SaaS-heavy Bessemer Cloud Index rose 41% this year

Next, the highest-value U.S.-based technology companies:

  • Microsoft was up around 55% in 2019
  • Apple managed an 86% gain in the year
  • Not be left out, Facebook rose 57%
  • Amazon posted its own gain of 23% in 2019
  • Alphabet managed to grow by 29%, as well

Now let’s turn to some companies that we care about, even if they are smaller than the Big Five:

  • Salesforce? Up 19% this year
  • Adobe was up 46% in 2019, which was astounding
  • Intel picked up 28% in the year, making it no slouch
  • Even Oracle managed to gain 17% in 2019

And so on.

The technology industry’s epic run has been so strong that The Wall Street Journal noted this morning that, powered by tech companies, U.S. stocks “are poised for their best annual performance in six years.” The Journal highlighted the performance of Apple and Microsoft in particular for helping drive the boom. I wonder why.

How long will we live in the neighborhood of Nasdaq 9,000? How long can two tech companies be worth more than $1 trillion at the same time? How long can the biggest tech companies be worth a combined $4.93 trillion (I remember when $3 trillion for the Big Five was news, and I recall when the group reach a collective value of $4 trillion).1

But the worst trade in recent years has been the pessimists’ gambit. No matter what, stocks have kept going up, short-term hiccoughs and other missteps aside.

For nearly everyone, that is. While tech stocks in general did very well, some names that we all know did not. Let’s close on those reminders that a rising tide lifts only most boats.

2019 naughty list

Several of the most lackluster public tech companies were 2019 technology IPOs, interestingly enough. Who didn’t do well? Uber earns a spot on the naughty list for not only being underwater from its IPO price, but also from its final private valuations. And as you guessed, Lyft is down from its IPO price as well, which is not good.

Some 2019 IPOs did well in the middle of the year, but fell a little flat as the year came to a close. Pinterest, Beyond Meat and Zoom meet that criteria, for example. And some SaaS companies struggled, even if we think they will reach $1 billion in revenue in time.

But it was mostly a party. The public markets were good, and tech stocks were great. This helped create another 100+ unicorns in the year.

Such was 2019. On to 2020!

  1. In time, those numbers will look small. But sitting here on December 31, 2019, they appear huge and towering and, it must be said, somewhat perilously stacked.

Just how good was 2019 for wireless headphones? Very, very good.

By Brian Heater

Companies sold a lot of wireless headphones in 2019. You already knew that though, right? What you probably didn’t know was precisely how many constitutes the aforementioned “lot.” New numbers from Canalys shed a light on those successes. The research firm’s classification of audio products is a little wonky, but it drives the point home nonetheless.

In their terms, we’re talking specifically about “true wireless stereo” products under the umbrella of “smart personal audio devices” — in other words, wireless headphones. Taken as a whole, the category (which also includes tethered wireless earbuds and over/on ear wireless headphones) hit 96.7 million shipments in Q3, making a 53 percent year over year growth. For the fourth quarter (including the holidays), the number is expected to break 100 million, pushing things to around 350 million for the full year.

The “true wireless stereo” segment (fully wireless earbuds) saw a 183% growth for the quarter, overtaking wireless earphones and wireless headphones in the process. Another not surprising thing: Apple led the pack, far and away. The company controls 43% of the market, per the firm. Xiaomi and Samsung are a distant second and third, respectively, at 7% and 6%, respectively. And Apple’s numbers will likely continue to look pretty good with the warm reception of the AirPods Pro.

The market is likely to get even more interesting in 2020 with the arrival of new products from giants like Google and Microsoft, coupled with an increased presence of low cost alternatives. But Apple’s stranglehold, particularly among iOS users, will be a tough one to break.

Wearable band shipments grew globally, driven by Xiaomi

By Brian Heater

Apple may dominate the wearable conversation here in the States, but things look a fair bit different on the other side of the world. In Asia, Xiaomi is the giant in the room. According to new numbers form Canalys, the Chinese manufacturer was the key driver in global growth.

Wearable band shipments grew 65%, year over year for Q3. Xiaomi continues to top the list, with an even more impressive 74% versus this time last year. That puts gives the company 27% of the total global wearable band market — its highest number since 2015.

Low prices have been the key to the company’s success, which have helped grow shipments in China by 60% overall. The company’s strategy has also rubbed off on competitors like Samsung and Fitbit (soon to be counted among Google’s numbers), which have sought to offer low cost devices in order to appeal to those users, particularly in Asia.

Huawei saw substantial growth for the quarter, as well, at 243% year over year, courtesy of strong sales in its native China. Those numbers helped the company hold onto third place globally, just ahead of Fitbit.

Even Apple is offering up lower cost devices by keeping older model Apple Watches around, hitting the $200 price point The company’s new, premium devices continue to dominate, however. The Series 5 comprise upwards of 60% of the company’s global shipments for the quarter.

Apple and Spotify’s podcasts come to Echo devices in the US

By Sarah Perez

Amazon Alexa can now play podcasts from Apple, making Amazon’s line of Echo devices the first third-party clients to support the Apple Podcasts service, without using AirPlay. Before, this level of support was limited to Apple’s HomePod. According to Amazon, the addition brings Apple’s library of over 800,000 podcasts to Alexa devices. It also allows customers to set Apple Podcasts as their preferred podcast service.

The move is the latest in a series of partnerships between the two rivals, which also included the launch of the Apple TV app on Amazon’s Fire TV platform, as well as the launch of Apple Music on Echo devices and Fire TV. Amazon, in response, has expanded its assortment of Apple inventory to include Apple TV, iPad, iPhone, Apple Watch, and more.

To get started, Apple users who want to stream from Apple Podcasts will first need to link their Apple ID in the Alexa app. Customers can then ask Alexa to play or resume the podcasts they want to hear. Other player commands, like “next” or “fast forward,” work, too. And as you move between devices, your progress within each episode will also sync, which means you can start listening on Alexa then pick where you left off on your iPhone.

In the Alexa app’s Settings, users will also be able to specify Apple Podcasts as their default player which means any time they ask Alexa for a podcast without indicating a source, it will stream from the Apple Podcasts service.

Not to be outdone, Spotify also today announced its support for streaming podcasts on Alexa in the U.S.

Spotify says that now, both Free and Premium U.S. customers will be able to ask Alexa for podcasts as well as set Spotify as their default player.

However, Alexa’s support for Spotify podcasts was actually announced in September alongside other news at Amazon’s annual Alexa event in Seattle, so it’s less of a surprise than the Apple addition.

At the time, Amazon said it was adding support for Spotify’s podcast library in the U.S., which would bring “hundreds of thousands” of podcasts to Alexa devices. That also includes Spotify’s numerous exclusive podcasts — something that will give Echo users a reason to set Spotify as their default, perhaps.

Shortly after that announcement, Spotify said its free service would also now stream to Alexa devices, instead of only its paid service for Premium subscribers.

 

This Week in Apps: Apple Arcade’s new franchise, Fortnite takes on Google Play, the Disney+ app footprint

By Sarah Perez

Welcome back to This Week in Apps, the Extra Crunch series that recaps the latest OS news, the applications they support and the money that flows through it all.

The app industry is as hot as ever, with 194 billion downloads last year and more than $100 billion in consumer spending. People spend 90% of their mobile time in apps and more time using their mobile devices than watching TV. Apps aren’t just a way to waste idle hours — they’re big business, and one that often seems to change overnight.

In this Extra Crunch series, we help you to keep up with the latest news from the world of apps.

This week, we’re taking a look at Apple Arcade’s new gaming franchise, Fortnite maker Epic Games calling out the Google Play Store for its monopolistic practices, Android’s new AR features, Disney+’s one-month app footprint, and more.

Headlines

Apple Arcade scores a big sports game franchise, “Ultimate Rivals”

Apple Arcade launched in September offering over 100 games for $4.99 per month. Since launch, the service stays fresh by adding new releases on a regular basis. This week, Apple touted one of Arcade’s biggest wins to date — an all-new sports franchise from Bit Fry Game Studios, called “Ultimate Rivals.” The new game brings together athletes from across hockey, basketball, football, baseball, and soccer to play in a licensed video game that’s a first for the mobile gaming industry. The debut title in the franchise, out now on Apple Arcade, is “Ultimate Rivals: The Rink,” which lets players choose from over 50 athletes to compete in two-on-two hockey matches.

For example, you could pit Alex Ovechkin and Alex Morgan against De’Aaron Fox and Jose Altuve or Skylar Diggins-Smith and Wayne Gretzky, Apple says.

The game was made possible by Bit Fry’s groundbreaking licensing deals with nine pro sports organizations,  the NHL, NHL Players’ Association (NHLPA), NBA, National Basketball Players Association (NBPA), MLB, MLB Players Association (MLBPA), NFL Players Association (NFLPA), Women’s National Basketball Players Association (WNBPA), the USWNTPA, as well as Wayne Gretzky.

Next spring, the Bit Fry will launch “Ultimate Rivals: The Court” as the next title in the series.

The franchise is a big win for Apple Arcade, which doesn’t yet have many sports-themed titles. In fact, with the addition of “Ultimate Rivals,” it now has only a half dozen. And because of the numerous pro sports deals, the game has the potential to appeal to a wider audience.

Fornite tries to bypass the Google Play Store’s 30% cut

MUBI’s production effort nets it a Sundance selection as the company goes cashflow positive

By Darrell Etherington

Streaming services are popping up like weeds these days, but MUBI has been at it basically since streaming video first emerged as a business. Founded in 2007, MUBI focuses on curated, independent film from international artists and creators, and the company has recently further differentiated itself from its competitors by becoming a distributor and production house – while also going cash-flow positive-during its most recent quarter.

The MUBI story is a rare example of a startup maintaining clear and consistent focus over a long, storied history and achieving sustainable growth in the process. MUBI CEO Efe Cakarel told me at Disrupt Berlin that the company will be cash-flow positive this quarter, and that its revenue has grown at a rate of 72% year-over-year for the past three years running.

That’s a significant achievement and a rarity for just about any startup, but it’s particularly difficult and challenging in the context of the video streaming industry. It’s fairly standard practice among the larger players in the space to spend, spend and then spend some more.

Netflix, for instance, expects to have spent around $15 billion on new content over the course of this past year, while Apple has spent over $6 billion on new shows and films.

Despite swimming with deep-pocketed sharks, MUBI has not only seen a ton of growth over the years, but it has also branched out into original content itself, first by securing distribution rights and then later by getting into producing films and shows of its own.

MUBI has been distributing films, including theatrical releases, and now it’s also joining up to produce its first films, including Farewell Amor, which was just selected to be part of the 2020 Sundance Film Festival; Port Authority, which had a debut at Cannes earlier this year; Maniac Cop, an original TV series from Nicolas Winding Refn, the director of Drive.

The company has also made major expansions into Asia, including a launch in India with a dedicated service showcasing Indian cinema.

Daily Crunch: Apple adds new iPhone parental controls

By Anthony Ha

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. The iPhone’s new parental controls can limit who kids can call, text and FaceTime and when

With the release of iOS 13.3, parents will for the first time be able to set limits over who kids can talk to and text with during certain hours of the day. These limits will apply across phone calls, Messages and FaceTime.

In practice, this means parents could stop their child from texting friends late at night or during the school day. It also allows parents to manage the child’s iCloud contacts remotely.

2. Pear, whose seed-stage bets are followed closely, just raised $160 million for its third fund

That’s more than twice the $75 million that the firm raised for its second fund in 2016 and triple the $50 million it raised for its debut fund back in 2013.

3. Uber guarantees space for skis and snowboards with Uber Ski feature

Starting on December 17 in select cities, an Uber Ski icon will pop up on the app, allowing passengers to order a ride with confirmed extra space or a ski/snowboarding rack. Nundu Janakiram, Uber’s head of rider experience, said to expect more features like this.

4. Accel and Index back Tines, as the cybersecurity startup adds another $11M to its Series A

Founded in February 2018 by ex-eBay, PayPal and DocuSign security engineer Eoin Hinchy, Tines automates many of the repetitive manual tasks faced by security analysts so they can focus on other high-priority work.

5. How Station F is boosting the French tech ecosystem

Three years after unveiling Station F at Disrupt, its director, Roxanne Varza, came back to our stage to provide an update on the world’s biggest startup campus, where there are now 1,000 companies at work.

6. Hyperproof wants to make it easier to comply with GDPR and other regulations

As companies try to figure out how to comply with regulations like GDPR, ISO or Sarbanes Oxley, Hyperproof is launching a new product to workflows that will allow them to gain compliance in a more organized way.

7. Introducing ‘Dear Sophie,’ an advice column for US-bound immigrant employees

Dear Sophie is a collaborative forum hosted by Extra Crunch and curated by Sophie Alcorn, who is certified as a specialist attorney in immigration and nationality law by the State Bar of California Board of Legal Specialization.

Apple: Use only our special cloth to clean the $1,000 coating on our $5,000 Pro Display

By Devin Coldewey

If you thought the saga of the $7,000 Apple Pro Display XDR couldn’t get any more ridiculous, prepare yourself for the proverbial cherry on top: The company insists that you only use the single special cleaning cloth that comes with the monitor. If you lose it, you’re advised to order another.

Apple, already under fire from longtime users for the ever-increasing price of its products, attracted considerable ire and ridicule when it announced the high-end monitor in June. Of course there are many expensive displays out there — it was more the fact that Apple was selling the display for $5,000, the stand separately for $999, and an optional “nano-texture” coating for an additional grand.

Just wait till you see how much the Mac Pro that goes with it costs.

 

Technically it’s not actually a “coating” but an extremely small-scale etching of the surface that supposedly produces improved image quality without some of the drawbacks of a full-matte coating. “Typical matte displays have a coating added to their surface that scatters light. However, these coatings lower contrast while producing unwanted haze and sparkle,” the product description reads. Not so with nano-texture.

Unfortunately, the unique nature of the glass necessitates special care when cleaning.

“Use only the dry polishing cloth that comes with your display,” reads the support page How to clean your Apple Pro Display XDR. “Never use any other cloths to clean the nano-texture glass. If you lose the included polishing cloth, you can contact Apple to order a replacement polishing cloth.” (No price is listed, so I’ve asked Apple for more information.)

Obviously if you’re cleaning an expensive screen you don’t want to do it with Windex and wadded-up newspaper. But it’s not clear what differentiates Apple’s cloth from an ordinary microfiber wipe.

Do the nano-scale ridges shred ordinary mortal cloth and get fibers caught in their interstices? Can the nano-texture be damaged by anything of insufficient softness?

Apple seems to be presuming a certain amount of courage on the part of consumers, who must pay a great deal for something that not only provides an uncertain benefit (even Apple admits that the display without the coating is “engineered for extremely low reflectivity”) but seems susceptible to damage from even the lightest mishandling.

No doubt the Pro Display XDR is a beautiful display, and naturally only those who feel it is worth the price will buy one. But no one likes to have to baby their gadgets, and Apple’s devices have also gotten more fragile and less readily repairable. The company’s special cloth may be a small, even silly thing, but it’s part of a large and worrying trend.

The iPhone’s new parental controls can limit who kids can call, text and FaceTime and when

By Sarah Perez

An update to Apple’s iOS operating system, out today, will give parents a new set of tools to fight back against kids’ iPhone addiction. With the release of iOS 13.3, parents will for the first time be able to set limits over who kids can talk to and text with during certain hours of the day. These limits will apply across phone calls, Messages and FaceTime. Parents also can apply a different set of limitations on calls and messaging during the child’s permitted screen time and their downtime hours.

In a new Communication Limits section of Apple’s Screen Time in Settings, iPhone users can set limits based on their contacts. During allowed screen time, users can be contacted by everyone or only by people in their contacts, to prevent unknown contacts from reaching them. And during downtime, they can opt to either be contacted by everyone or only by designated contacts.

And if this is set up under Screen Time’s Parental Controls, parents get to choose who can contact their children and when and vice versa. During downtime, parents can also designate which particular contacts the child can message and call — like only mom or dad, for example.

In practice, this means parents could stop the child from texting friends late at night or during the school day, by scheduling Downtime to run. (To clarify, Downtime doesn’t necessarily mean “night time” — it’s just any time you only want designated apps to be available, and only calls to get through.)

The feature also allows parents to manage the child’s iCloud contacts remotely, which makes it easier for parents to share important numbers with their child. But it also puts parents in full control of the contact list, so only they can edit it.

These new Communication Limits are part of Apple’s larger Screen Time system, which was introduced with iOS 12 last year. The system allows iPhone owners to schedule time away from their screen, set time limits on apps, view usage and activity reports and more.

Many parents have already leveraged these controls to more strictly limit how their children used their devices, including by setting limits on individual apps they wanted to block, like games, as well as by configuring “downtime” hours.

In addition, parents could set times when the child’s device could not be used at all.

Apple isn’t the only tech company that’s been rethinking how to address consumers’ often dysfunctional relationship with technology. Google also introduced its own set of “digital well-being” controls and tools for Android, and even Facebook and Instagram have rewritten parts their software and algorithms with a focus on new metrics like “time well spent,” for example.

While Apple’s Screen Time may have worked well for younger kids, teens quickly found and shared loopholes and workarounds, much to parents’ chagrin.

Time will tell if teens come up with a hack to get their iMessages sent under the new parental control system, too.

VSCO acquires video editing startup Rylo

By Kate Clark

The photo-sharing app behind the 2019 meme craze “VSCO girls” has acquired Rylo, a video editing startup founded by the original developer of Instagram’s Hyperlapse.

A spokesperson for VSCO, an 8-year-old subscription-based business on track to surpass 4 million paying users, declined to disclose the terms of the deal. Rylo had raised roughly $38 million in venture capital funding, reaching a valuation of $120.25 million with a $20 million Series B announced in October 2018, according to data collected by PitchBook.

San Francisco-based Rylo was backed by a number of institutional investors, including Sequoia Capital, Alumni Ventures Group, Icon Ventures and Accel—a Silicon Valley venture capital fund and key stakeholder in Oakland-based VSCO.

Founded in 2015, Rylo is best known for its 360° camera capable of creating cinematic video in 5.8k resolution. The device previously retailed for nearly $500 but now sells for as low as $250 on BestBuy.com. Under VSCO’s ownership, Rylo will focus exclusively on building out its mobile video editing tools for mobile. The company tells us it will not continue to manufacture and sell its signature device but will continue to honor the warranty on previously sold cameras.

Rylo was launched by Alex Karpenko and Chris Cunningham. Karpenko, Rylo’s chief executive officer, previously founded Luma Camera in 2011, a video-capture, stabilization and sharing app acquired by Instagram in 2013. The deal marked Instagram’s first-ever acquisition; the app was subsequently shut down, with Karpenko joining Instagram’s team as a software engineer. Karpenko became key developer of Hyperlapse, Instagram’s time-lapse video app.

Cunningham, for his part, focused on iLife, Aperture and iPhoto for iOS as an engineer at Apple from 2008 to 2013. Cunningham eventually exited Apple for Facebook-owned Instagram, where he worked as an iOS engineer focused on Instagram Direct.

VSCO, led by co-founder and chief executive officer Joel Flory, charges users $19.99 per year for access to a full-suite of mobile photo-editing tools, exclusive photo filters, tutorials and more. In a recent interview with TechCrunch, Flory outlined ambitions to expand beyond photo-sharing and editing to video and illustration. The company’s latest deal, its first since its 2015 acquisitions of Moving Sciences and Artifact Uprising, confirms its intent to grow the business and carve out new revenue streams.

“We’ve seen video editing double on VSCO and DSCO, our GIF creation tool remains one of our most popular features,” Flory writes in a company blog post. “It’s clear that our users want more video tools and new ways to tell their stories through creative self-expression.”

This Week in Apps: Honey’s $4B exit, a new plan for iOS 14, Apple’s new developer resource

By Sarah Perez

Welcome back to This Week in Apps, the Extra Crunch series that recaps the latest OS news, the applications they support, and the money that flows through it all. What are developers talking about? What do app publishers and marketers need to know? How are politics impacting the App Store and app businesses? And which apps are everyone using?

This week, we’re looking at several major stories, including the whopping $4 billion PayPal just spent on browser extension and mobile app maker, Honey, as well as the release of the Apple Developer app, a new plan for iOS 14, Google Stadia’s launch, AR gaming’s next big hit (or flop?), e-commerce app trends, Microsoft’s exit from voice assistant mobile apps, and so much more.

Plus, did you hear the one about the developer who got kicked out from his developer account by Apple, leaving his apps abandoned?

Headlines

Apple to overhaul iOS development strategy after buggy iOS 13 launch

apple ios 13Apple’s iOS 13 release was one of its worst, in terms of bugs and glitches. Now Apple is making an internal change to how it approaches software development in an effort to address the problem. According to Bloomberg, Apple’s Software chief Craig Federighi and other execs announced its plans at an internal meeting. The new process will involve having unfinished and buggy features disabled by default in daily builds. Testers will then have to optionally enable the features in order to try them. While this change focuses on making internal builds of the OS more usable (or “livable”), Apple hopes that over time it will improve the overall quality of its software as it will give testers the ability to really understand what’s supposed to now be working, but isn’t. The testing changes will also apply to iPadOS, watchOS, tvOS, and macOS, the report said.

Apple launches the Apple Developer App

Apple rebranded and expanded its existing WWDC app to become a new Apple Developer app that can stay with its 23 million registered developers year-round. Instead of only including information about the developer event itself, the app will expand to include other relevant resources — like technical and design articles, developer news and updates, videos and more. It also will offer a way for developers to enroll in the Apple Developer program and maintain their membership. Apple says it found many developers were more inclined to open an app than an email, and by centralizing this information in one place, it could more efficiently and seamlessly deliver new information and other resources to its community.

PayPal buys Honey for $4 billion

PayPal has made its biggest-ever acquisition for browser extension and mobile app maker, Honey. TechCrunch exclusively broke the news of the nearly all-cash deal, noting that Honey currently has 17 million monthly actives. But PayPal was interested in more than the user base — it wanted the tech. The company plans to insert itself ahead of the checkout screen by getting involved with the online shopping and research process, where customers visit sites and look for deals. Honey’s offer-finding features from its mobile app will also become part of PayPal and Venmo’s apps in the future.

Cloud gaming expands with Google Stadia launch

Cloud-based gaming could benefit from the growing investment in 5G. Google Stadia, which launched this week, is a big bet on 5G in that regard. Though the early reviews were middling, Google believes the next generation of gaming will involve continuous, cross-device play, including on mobile devices. This trend was already apparent with the successes of cross-platform games like Fortnite, Minecraft, Roblox, and PUBG, for example. Meanwhile, console makers like Microsoft are working to build out their own cloud infrastructure to compete. (Microsoft’s xCloud launches in May 2020.) Google could have a head start, even if Stadia today feels more like a beta than a finished product. But one question that still arises is whether Google is serious about gaming, or only sees Stadia as a content engine for YouTube?

Microsoft kills Cortana mobile apps

Microsoft this week belatedly realized it can’t compete with the built-in advantages that Siri and Google Assistant offer users, like dedicated buttons, hands-free voice commands, workflow building and more. The company decided to shut down its Cortana mobile applications on iOS and Android in a number of markets, including Great Britain, Australia, Germany, Mexico, China, Spain, Canada, and India. Any bets on when the U.S. makes that list?

SF Symbols expands

Apple expands and updates its ‘Everyone Can Code’ program

By Sarah Perez

Apple announced today an expansion of its program designed to get more students coding. The company says it has redesigned the “Everyone Can Code” curriculum with a focus on introducing more elementary and middle school students to coding, while also adding more resources for teachers, a new student guide, and refreshed Swift Coding Club materials. It’s also adding thousands of free coding sessions at Apple Stores in December, to celebrate Computer Science Education Week.

The updated curriculum is meant to make coding more approachable, Apple explains, by offering activities that are more closely connected to the students’ everyday lives. It also includes a new guide to Swift Playgrounds called Everyone Can Code Puzzles, where students can experiment with concepts and apply their understanding across over 40 hours of activities.

The guide comes with a teacher companion, which includes the solutions, assessment strategies, accessibility resources, and more.

The curriculum is also now optimized for VoiceOver, includes closed-captioned videos, and videos in American Sign Language.

In another expansion, Apple has integrated its Everyone Can Create project guides into the new curriculum. Launched last year on Apple Books, Everyone Can Create has served to get teachers to integrate things like drawing, music, filmmaking and photography into their classroom, by way of Apple technology.

Related this news, Apple says it’s increasing the number of Today at Apple coding sessions from December 1 through 15, 2019 in order to celebrate Computer Science Education Week.

The free, interactive sessions are meant to inspire young coders with block-based coding using robots, while more advanced coders use Swift Playgrounds to learn coding concepts or to code an AR project.

Some stores will also offer preschool-aged coding sessions in the new Coding Lab with Helpsters, the little monsters who star in the new Apple TV+ show, from the makers of Sesame Street. Other sessions will involve Apple Distinguished Educators, Apple Entrepreneur Camp innovators, developers, and artists. A Develop in Swift curriculum will continue to be available for high school and college students, Apple noted.

And for the seventh consecutive year, Apple will support the Hour of Code with a new Hour of Code Facilitator Guide that will help teachers and parents host sessions using Swift Playgrounds.

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