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Apple’s dangerous path

By Lucas Matney

Hello friends, and welcome back to Week in Review.

Last week, we dove into the truly bizarre machinations of the NFT market. This week, we’re talking about something that’s a little bit more impactful on the current state of the web — Apple’s NeuralHash kerfuffle.

If you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny


the big thing

In the past month, Apple did something it generally has done an exceptional job avoiding — the company made what seemed to be an entirely unforced error.

In early August — seemingly out of nowhere** — the company announced that by the end of the year they would be rolling out a technology called NeuralHash that actively scanned the libraries of all iCloud Photos users, seeking out image hashes that matched known images of child sexual abuse material (CSAM). For obvious reasons, the on-device scanning could not be opted out of.

This announcement was not coordinated with other major consumer tech giants, Apple pushed forward on the announcement alone.

Researchers and advocacy groups had almost unilaterally negative feedback for the effort, raising concerns that this could create new abuse channels for actors like governments to detect on-device information that they regarded as objectionable. As my colleague Zach noted in a recent story, “The Electronic Frontier Foundation said this week it had amassed more than 25,000 signatures from consumers. On top of that, close to 100 policy and rights groups, including the American Civil Liberties Union, also called on Apple to abandon plans to roll out the technology.”

(The announcement also reportedly generated some controversy inside of Apple.)

The issue — of course — wasn’t that Apple was looking at find ways that prevented the proliferation of CSAM while making as few device security concessions as possible. The issue was that Apple was unilaterally making a massive choice that would affect billions of customers (while likely pushing competitors towards similar solutions), and was doing so without external public input about possible ramifications or necessary safeguards.

A long story short, over the past month researchers discovered Apple’s NeuralHash wasn’t as air tight as hoped and the company announced Friday that it was delaying the rollout “to take additional time over the coming months to collect input and make improvements before releasing these critically important child safety features.”

Having spent several years in the tech media, I will say that the only reason to release news on a Friday morning ahead of a long weekend is to ensure that the announcement is read and seen by as few people as possible, and it’s clear why they’d want that. It’s a major embarrassment for Apple, and as with any delayed rollout like this, it’s a sign that their internal teams weren’t adequately prepared and lacked the ideological diversity to gauge the scope of the issue that they were tackling. This isn’t really a dig at Apple’s team building this so much as it’s a dig on Apple trying to solve a problem like this inside the Apple Park vacuum while adhering to its annual iOS release schedule.

illustration of key over cloud icon

Image Credits: Bryce Durbin / TechCrunch /

Apple is increasingly looking to make privacy a key selling point for the iOS ecosystem, and as a result of this productization, has pushed development of privacy-centric features towards the same secrecy its surface-level design changes command. In June, Apple announced iCloud+ and raised some eyebrows when they shared that certain new privacy-centric features would only be available to iPhone users who paid for additional subscription services.

You obviously can’t tap public opinion for every product update, but perhaps wide-ranging and trail-blazing security and privacy features should be treated a bit differently than the average product update. Apple’s lack of engagement with research and advocacy groups on NeuralHash was pretty egregious and certainly raises some questions about whether the company fully respects how the choices they make for iOS affect the broader internet.

Delaying the feature’s rollout is a good thing, but let’s all hope they take that time to reflect more broadly as well.

** Though the announcement was a surprise to many, Apple’s development of this feature wasn’t coming completely out of nowhere. Those at the top of Apple likely felt that the winds of global tech regulation might be shifting towards outright bans of some methods of encryption in some of its biggest markets.

Back in October of 2020, then United States AG Bill Barr joined representatives from the UK, New Zealand, Australia, Canada, India and Japan in signing a letter raising major concerns about how implementations of encryption tech posed “significant challenges to public safety, including to highly vulnerable members of our societies like sexually exploited children.” The letter effectively called on tech industry companies to get creative in how they tackled this problem.


other things

Here are the TechCrunch news stories that especially caught my eye this week:

LinkedIn kills Stories
You may be shocked to hear that LinkedIn even had a Stories-like product on their platform, but if you did already know that they were testing Stories, you likely won’t be so surprised to hear that the test didn’t pan out too well. The company announced this week that they’ll be suspending the feature at the end of the month. RIP.

FAA grounds Virgin Galactic over questions about Branson flight
While all appeared to go swimmingly for Richard Branson’s trip to space last month, the FAA has some questions regarding why the flight seemed to unexpectedly veer so far off the cleared route. The FAA is preventing the company from further launches until they find out what the deal is.

Apple buys a classical music streaming service
While Spotify makes news every month or two for spending a massive amount acquiring a popular podcast, Apple seems to have eyes on a different market for Apple Music, announcing this week that they’re bringing the classical music streaming service Primephonic onto the Apple Music team.

TikTok parent company buys a VR startup
It isn’t a huge secret that ByteDance and Facebook have been trying to copy each other’s success at times, but many probably weren’t expecting TikTok’s parent company to wander into the virtual reality game. The Chinese company bought the startup Pico which makes consumer VR headsets for China and enterprise VR products for North American customers.

Twitter tests an anti-abuse ‘Safety Mode’
The same features that make Twitter an incredibly cool product for some users can also make the experience awful for others, a realization that Twitter has seemingly been very slow to make. Their latest solution is more individual user controls, which Twitter is testing out with a new “safety mode” which pairs algorithmic intelligence with new user inputs.


extra things

Some of my favorite reads from our Extra Crunch subscription service this week:

Our favorite startups from YC’s Demo Day, Part 1 
“Y Combinator kicked off its fourth-ever virtual Demo Day today, revealing the first half of its nearly 400-company batch. The presentation, YC’s biggest yet, offers a snapshot into where innovation is heading, from not-so-simple seaweed to a Clearco for creators….”

…Part 2
“…Yesterday, the TechCrunch team covered the first half of this batch, as well as the startups with one-minute pitches that stood out to us. We even podcasted about it! Today, we’re doing it all over again. Here’s our full list of all startups that presented on the record today, and below, you’ll find our votes for the best Y Combinator pitches of Day Two. The ones that, as people who sift through a few hundred pitches a day, made us go ‘oh wait, what’s this?’

All the reasons why you should launch a credit card
“… if your company somehow hasn’t yet found its way to launch a debit or credit card, we have good news: It’s easier than ever to do so and there’s actual money to be made. Just know that if you do, you’ve got plenty of competition and that actual customer usage will probably depend on how sticky your service is and how valuable the rewards are that you offer to your most active users….”


Thanks for reading, and again, if you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny

Lucas Matney

Australia’s TechnologyOne acquires UK-based higher-ed platform Scientia for $16.6M

By Mike Butcher

TechnologyOne, an Australian SaaS enterprise, has agreed to acquire UK-based higher education software provider Scientia for £12 million /$16.6 million in cash.
 
TechnologyOne claims to have 75% of Higher Education institutions in Australia using its software, while Scientia claims 50% market share in the UK.

The acquisition includes an initial payment of £6m and further payments.
 
Adrian Di Marco, TechnologyOne founder and Executive Chairman said: “This is our company’s first international acquisition and it demonstrates our deep commitment to serving the higher education sector and the UK market. The unique IP and market-leading functionality of Scientia’s product supports our vision of delivering enterprise software that is incredibly easy to use.”

Commenting, Michelle Gillespie, Registrar and Director of Student Administration and Library Services at Swinburne University of Technology said: “The one thing that students care most about is their timetable. Being able to fully integrate a schedule into the full student experience is very important, and an exciting step for those universities – like Swinburne – that use TechnologyOne’s student management system.”

Report: India may be next in line to mandate changes to Apple’s in-app payment rules

By Ingrid Lunden

Summer is still technically in session, but a snowball is slowly developing in the world of apps, and specifically the world of in-app payments. A report in Reuters today says that the Competition Commission of India, the country’s monopoly regulator, will soon be looking at an antitrust suit filed against Apple over how it mandates that app developers use Apple’s own in-app payment system — thereby giving Apple a cut of those payments — when publishers charge users for subscriptions and other items in their apps.

The suit, filed by an Indian non-profit called “Together We Fight Society”, said in a statement to Reuters that it was representing consumer and startup interests in its complaint.

The move would be the latest in what has become a string of challenges from national regulators against app store operators — specifically Apple but also others like Google and WeChat — over how they wield their positions to enforce market practices that critics have argued are anti-competitive. Other countries that have in recent weeks reached settlements, passed laws, or are about to introduce laws include Japan, South Korea, Australia, the U.S. and the European Union.

And in India specifically, the regulator is currently working through a similar investigation as it relates to in-app payments in Android apps, which Google mandates use its proprietary payment system. Google and Android dominate the Indian smartphone market, with the operating system active on 98% of the 520 million devices in use in the country as of the end of 2020.

It will be interesting to watch whether more countries wade in as a result of these developments. Ultimately, it could force app store operators, to avoid further and deeper regulatory scrutiny, to adopt new and more flexible universal policies.

In the meantime, we are seeing changes happen on a country-by-country basis.

Just yesterday, Apple reached a settlement in Japan that will let publishers of “reader” apps (those for using or consuming media like books and news, music, files in the cloud and more) to redirect users to external sites to provide alternatives to Apple’s proprietary in-app payment provision. Although it’s not as seamless as paying within the app, redirecting previously was typically not allowed, and in doing so the publishers can avoid Apple’s cut.

South Korean legislators earlier this week approved a measure that will make it illegal for Apple and Google to make a commission by forcing developers to use their proprietary payment systems.

And last week, Apple also made some movements in the U.S. around allowing alternative forms of payments, but relatively speaking the concessions were somewhat indirect: app publishers can refer to alternative, direct payment options in apps now, but not actually offer them. (Not yet at least.)

Some developers and consumers have been arguing for years that Apple’s strict policies should open up more. Apple however has long said in its defense that it mandates certain developer policies to build better overall user experiences, and for reasons of security. But, as app technology has evolved, and consumer habits have changed, critics believe that this position needs to be reconsidered.

One factor in Apple’s defense in India specifically might be the company’s position in the market. Android absolutely dominates India when it comes to smartphones and mobile services, with Apple actually a very small part of the ecosystem.

As of the end of 2020, it accounted for just 2% of the 520 million smartphones in use in the country, according to figures from Counterpoint Research quoted by Reuters. That figure had doubled in the last five years, but it’s a long way from a majority, or even significant minority.

The antitrust filing in India has yet to be filed formally, but Reuters notes that the wording leans on the fact that anti-competitive practices in payments systems make it less viable for many publishers to exist at all, since the economics simply do not add up:

“The existence of the 30% commission means that some app developers will never make it to the market,” Reuters noted from the filing. “This could also result in consumer harm.”

Reuters notes that the CCI will be reviewing the case in the coming weeks before deciding whether it should run a deeper investigation or dismiss it. It typically does not publish filings during this period.

Apple lowers commissions on in-app purchases for news publishers who participate in Apple News

By Sarah Perez

Apple today is launching a new program that will allow subscription news organizations that participate in the Apple News app and meet certain requirements to lower their commission rate to 15% on qualifying in-app purchases taking place inside their apps on the App Store. Typically, Apple’s model for subscription-based apps involves a standard 30% commission during their first year on the App Store, which then drops to 15% in year two. But the new Apple News Partner Program, announced today, will now make 15% the commission rate for participants starting on day one.

There are a few caveats to this condition, and they benefit Apple. To qualify, the news publisher must maintain a presence on Apple News and they have to provide their content in the Apple News Format (ANF). The latter is the JavaScript Object Notation (JSON) format that’s used to create articles for Apple News which are optimized for Mac, iPhone and other Apple mobile devices. Typically, this involves a bit of setup to translate news articles from a publisher’s website or from their CMS (content management system) to the supported JSON format. For WordPress and other popular CMS’s, there are also plugins available to make this process easier.

Meanwhile, for publishers headquartered outside one of the four existing Apple News markets — the U.S., U.K., Australia or Canada — they can instead satisfy the program’s obligations by providing Apple with an RSS feed.

On the App Store, the partner app qualifying for the 15% commission must be used to deliver “original, professionally authored” news content, and they must offer their auto-renewable subscriptions using Apple’s in-app purchase system.

Image Credits: Apple

While there is some initial work involved in establishing the publisher’s connection to Apple News, it’s worth noting that most major publishers already participate on Apple’s platform. That means they won’t have to do any additional work beyond what they’re already doing in order to transition over to the reduced commission for their apps. However, the program also serves as a way to push news organizations to continue to participate in the Apple News ecosystem, as it will make more financial sense to do so across their broader business.

That will likely be an area of contention for publishers, who would probably prefer that the reduced App Store commission didn’t come with strings attached.

Some publishers already worry that they’re giving up too much control over their business by tying themselves to the Apple News ecosystem. Last year, for example, The New York Times announced it would exit its partnership with Apple News, saying that Apple didn’t allow it to have as direct a relationship with readers as it wanted, and it would rather drive readers to its own app and website.

Apple, however, would argue that it doesn’t stand in the way of publishers’ businesses — it lets them paywall their content and keep 100% of the ad revenue from the ads they sell. (If they can’t sell it all or would prefer Apple to do so on their behalf, they then split the commission with Apple, keeping 70% of revenues instead.) In addition, for the company’s Apple News+ subscription service — where the subscription revenue split is much higher — it could be argued that it’s “found money.” That is, Apple markets the service to customers the publisher hadn’t been able to attract on its own anyway.

The launch of the new Apple News Partner program comes amid regulatory scrutiny over how Apple manages its App Store business and more recently, proposed legislation aiming to address alleged anticompetitive issues both in the U.S. and in major App Store markets, like South Korea.

Sensing this shift in the market, Apple had already been working to provide itself cover from antitrust complaints and lawsuits — like the one underway now with Epic Games — by adjusting its App Store commissions. Last year, it launched the App Store Small Business Program, which also lowered commissions on in-app purchases from 30% to 15% — but only for developers earning up to $1 million in revenues.

This program may have helped smaller publishers, but it was clear some major publishers still weren’t satisfied. After the reduced commissions for small businesses were announced in November, the publisher trade organization Digital Content Next (DCN) — a representative for the AP, The New York Times, NPR, ESPN, Vox, The Washington Post, Meredith, Bloomberg, NBCU, The Financial Times, and others — joined the advocacy group and lobbying organization the Coalition for App Fairness (CAF) the very next month.

These publishers, who had previously written to Apple CEO Tim Cook to demand lower commissions — had other complaints about the revenue share beyond just the size of the split. They also didn’t want to be required to use Apple’s services for in-app purchases for their subscriptions, saying this “Apple tax” forces them to raise their prices for consumers.

It remains to be seen how these publishers will now react to the launch of the Apple News Partner program.

While it gives them a way to lower their App Store fees, it doesn’t address their broader complaints against Apple’s platform and its rules. If anything, it ties the lower fees to a program that locks them in further to the Apple ecosystem.

Apple, in a gesture of goodwill, also said today it would recommit support to three leading media non-profits, Common Sense Media, the News Literacy Project, and Osservatorio Permanente Giovani-Editori. These non-profits offer nonpartisan, independent media literacy programs, which Apple views as key to its larger mission to empower people to become smart and active news readers. Apple also said it would later announce further media literacy projects from other organizations. The company would not disclose the size of its commitment from a financial standpoint however, or discuss how much it has sent such organizations in the past.

“Providing Apple News customers with access to trusted information from our publishing partners has been our priority from day one,” said Eddy Cue, Apple’s senior vice president of Services, in a statement. “For more than a decade, Apple has offered our customers many ways to access and enjoy news content across our products and services. We have hundreds of news apps from dozens of countries around the world available in the App Store, and created Apple News Format to offer publishers a tool to showcase their content and provide a great experience for millions of Apple News users,” he added.

More details about the program and the application form will be available at the News Partner Program website.

UK names John Edwards as its choice for next data protection chief as gov’t eyes watering down privacy standards

By Natasha Lomas

The UK government has named the person it wants to take over as its chief data protection watchdog, with sitting commissioner Elizabeth Denham overdue to vacate the post: The Department of Digital, Culture, Media and Sport (DCMS) today said its preferred replacement is New Zealand’s privacy commissioner, John Edwards.

Edwards, who has a legal background, has spent more than seven years heading up the Office of the Privacy Commissioner In New Zealand — in addition to other roles with public bodies in his home country.

He is perhaps best known to the wider world for his verbose Twitter presence and for taking a public dislike to Facebook: In the wake of the 2018 Cambridge Analytica data misuse scandal Edwards publicly announced that he was deleting his account with the social media — accusing Facebook of not complying with the country’s privacy laws.

An anti-‘Big Tech’ stance aligns with the UK government’s agenda to tame the tech giants as it works to bring in safety-focused legislation for digital platforms and reforms of competition rules that take account of platform power.

Official announcement

Government announces preferred candidate for Information Commissioner – https://t.co/2fri3ROyhm https://t.co/i8b4OBcwzC

— John Edwards (@JCE_PC) August 26, 2021

If confirmed in the role — the DCMS committee has to approve Edwards’ appointment; plus there’s a ceremonial nod needed from the Queen — he will be joining the regulatory body at a crucial moment as digital minister Oliver Dowden has signalled the beginnings of a planned divergence from the European Union’s data protection regime, post-Brexit, by Boris Johnson’s government.

Dial back the clock five years and prior digital minister, Matt Hancock, was defending the EU’s General Data Protection Regulation (GDPR) as a “decent piece of legislation” — and suggesting to parliament that there would be little room for the UK to diverge in data protection post-Brexit.

But Hancock is now out of government (aptly enough after a data leak showed him breaching social distancing rules by kissing his aide inside a government building), and the government mood music around data has changed key to something far more brash — with sitting digital minister Dowden framing unfettered (i.e. deregulated) data-mining as “a great opportunity” for the post-Brexit UK.

For months, now, ministers have been eyeing how to rework the UK’s current (legascy) EU-based data protection framework — to, essentially, reduce user rights in favor of soundbites heavy on claims of slashing ‘red tape’ and turbocharging data-driven ‘innovation’. Of course the government isn’t saying the quiet part out loud; its press releases talk about using “the power of data to drive growth and create jobs while keeping high data protection standards”. But those standards are being reframed as a fig leaf to enable a new era of data capture and sharing by default.

Dowden has said that the emergency data-sharing which was waived through during the pandemic — when the government used the pressing public health emergency to justify handing NHS data to a raft of tech giantsshould be the ‘new normal’ for a post-Brexit UK. So, tl;dr, get used to living in a regulatory crisis.

A special taskforce, which was commissioned by the prime minister to investigate how the UK could reshape its data policies outside the EU, also issued a report this summer — in which it recommended scrapping some elements of the UK’s GDPR altogether — branding the regime “prescriptive and inflexible”; and advocating for changes to “free up data for innovation and in the public interest”, as it put it, including pushing for revisions related to AI and “growth sectors”.

The government is now preparing to reveal how it intends to act on its appetite to ‘reform’ (read: reduce) domestic privacy standards — with proposals for overhauling the data protection regime incoming next month.

Speaking to the Telegraph for a paywalled article published yesterday, Dowden trailed one change that he said he wants to make which appears to target consent requirements — with the minister suggesting the government will remove the legal requirement to gain consent to, for example, track and profile website visitors — all the while framing it as a pro-consumer move; a way to do away with “endless” cookie banners.

Only cookies that pose a ‘high risk’ to privacy would still require consent notices, per the report — whatever that means.

Oliver Dowden, the UK Minister for Digital, Culture, Media and Sport, says that the UK will break away from GDPR, and will no longer require cookie warnings, other than those posing a 'high risk'.https://t.co/2ucnppHrIm pic.twitter.com/RRUdpJumYa

— dan barker (@danbarker) August 25, 2021

“There’s an awful lot of needless bureaucracy and box ticking and actually we should be looking at how we can focus on protecting people’s privacy but in as light a touch way as possible,” the digital minister also told the Telegraph.

The draft of this Great British ‘light touch’ data protection framework will emerge next month, so all the detail is still to be set out. But the overarching point is that the government intends to redefine UK citizens’ privacy rights, using meaningless soundbites — with Dowden touting a plan for “common sense” privacy rules — to cover up the fact that it intends to reduce the UK’s currently world class privacy standards and replace them with worse protections for data.

If you live in the UK, how much privacy and data protection you get will depend upon how much ‘innovation’ ministers want to ‘turbocharge’ today — so, yes, be afraid.

It will then fall to Edwards — once/if approved in post as head of the ICO — to nod any deregulation through in his capacity as the post-Brexit information commissioner.

We can speculate that the government hopes to slip through the devilish detail of how it will torch citizens’ privacy rights behind flashy, distraction rhetoric about ‘taking action against Big Tech’. But time will tell.

Data protection experts are already warning of a regulatory stooge.

While the Telegraph suggests Edwards is seen by government as an ideal candidate to ensure the ICO takes a “more open and transparent and collaborative approach” in its future dealings with business.

In a particularly eyebrow raising detail, the newspaper goes on to report that government is exploring the idea of requiring the ICO to carry out “economic impact assessments” — to, in the words of Dowden, ensure that “it understands what the cost is on business” before introducing new guidance or codes of practice.

All too soon, UK citizens may find that — in the ‘sunny post-Brexit uplands’ — they are afforded exactly as much privacy as the market deems acceptable to give them. And that Brexit actually means watching your fundamental rights being traded away.

In a statement responding to Edwards’ nomination, Denham, the outgoing information commissioner, appeared to offer some lightly coded words of warning for government, writing [emphasis ours]: “Data driven innovation stands to bring enormous benefits to the UK economy and to our society, but the digital opportunity before us today will only be realised where people continue to trust their data will be used fairly and transparently, both here in the UK and when shared overseas.”

The lurking iceberg for government is of course that if wades in and rips up a carefully balanced, gold standard privacy regime on a soundbite-centric whim — replacing a pan-European standard with ‘anything goes’ rules of its/the market’s choosing — it’s setting the UK up for a post-Brexit future of domestic data misuse scandals.

You only have to look at the dire parade of data breaches over in the US to glimpse what’s coming down the pipe if data protection standards are allowed to slip. The government publicly bashing the privacy sector for adhering to lax standards it deregulated could soon be the new ‘get popcorn’ moment for UK policy watchers…

UK citizens will surely soon learn of unfair and unethical uses of their data under the ‘light touch’ data protection regime — i.e. when they read about it in the newspaper.

Such an approach will indeed be setting the country on a path where mistrust of digital services becomes the new normal. And that of course will be horrible for digital business over the longer run. But Dowden appears to lack even a surface understanding of Internet basics.

The UK is also of course setting itself on a direct collision course with the EU if it goes ahead and lowers data protection standards.

This is because its current data adequacy deal with the bloc — which allows for EU citizens’ data to continue flowing freely to the UK is precariously placed — was granted only on the basis that the UK was, at the time it was inked, still aligned with the GDPR.

So Dowden’s rush to rip up protections for people’s data presents a clear risk to the “significant safeguards” needed to maintain EU adequacy.

Back in June, when the Commission signed off on the UK’s adequacy deal, it clearly warned that “if anything changes on the UK side, we will intervene”. Moreover, the adequacy deal is also the first with a baked in sunset clause — meaning it will automatically expire in four years.

So even if the Commission avoids taking proactive action over slipping privacy standards in the UK there is a hard deadline — in 2025 — when the EU’s executive will be bound to look again in detail at exactly what Dowden & Co. have wrought. And it probably won’t be pretty.

The longer term UK ‘plan’ (if we can put it that way) appears to be to replace domestic economic reliance on EU data flows — by seeking out other jurisdictions that may be friendly to a privacy-light regime governing what can be done with people’s information.

Hence — also today — DCMS trumpeted an intention to secure what it billed as “new multi-billion pound global data partnerships” — saying it will prioritize striking ‘data adequacy’ “partnerships” with the US, Australia, the Republic of Korea, Singapore, and the Dubai International Finance Centre and Colombia.

Future partnerships with India, Brazil, Kenya and Indonesia will also be prioritized, it added — with the government department cheerfully glossing over the fact it’s UK citizens’ own privacy that is being deprioritized here.

“Estimates suggest there is as much as £11 billion worth of trade that goes unrealised around the world due to barriers associated with data transfers,” DCMS writes in an ebullient press release.

As it stands, the EU is of course the UK’s largest trading partner. And statistics from the House of Commons library on the UK’s trade with the EU — which you won’t find cited in the DCMS release — underline quite how tiny this potential Brexit ‘data bonanza’ is, given that UK exports to the EU stood at £294 billion in 2019 (43% of all UK exports).

So even the government’s ‘economic’ case to water down citizens’ privacy rights looks to be puffed up with the same kind of misleadingly vacuous nonsense as ministers’ reframing of a post-Brexit UK as ‘Global Britain’.

Everyone hates cookies banners, sure, but that’s a case for strengthening not weakening people’s privacy — for making non-tracking the default setting online and outlawing manipulative dark patterns so that Internet users don’t constantly have to affirm they want their information protected. Instead the UK may be poised to get rid of annoying cookie consent ‘friction’ by allowing a free for all on people’s data.

 

Mushroom-based meat alternative startup Fable Food raises $6.5M AUD, will launch in the US

By Catherine Shu

Sydney, Australia-based Fable Food is the latest plant-based food startup to announce funding. The company, which uses mushrooms in its meat alternatives, has raised $6.5 million AUD (about $4.8 million USD) in a seed round led by Blackbird Ventures, the Australian venture capital firm whose portfolio also includes Canva, Culture Amp and SafetyCulture. Other participants included agriculture and food tech venture firm AgFunder, sustainability-focused Aera VC and Better Bite Ventures, along with Singapore-based produce importer Ban Choon Marketing and former Sequoia Capital partner Warren Hogarth.

Fable is preparing to launch in the United States by the end of this year. In Australia, its products are available at retailers like Woolworths, Coles and Harris Farm Markets, along with restaurants including Grill’d, which recently started serving its Meaty Mushroom Burger Pattie at 136 locations. Fable’s products are also available at restaurants in Singapore and the United Kingdom.

The startup was founded in 2019 by fine dining chef turned chemical engineer and mycologist (mushroom scientist) Jim Fuller, organic mushroom farmer Chris McLoghlin and Michael Fox, whose previous startup was Shoes of Prey.

Fox, Fable’s chief executive officer, told TechCrunch in an email that after being a vegetarian for six years, he recently became a vegan “for a mix of health, environmental and ethical reasons.”

“Talking to my friends and family, a lot of people want to reduce their meat consumption for the same reasons but they find it challenging because they love the taste and texture of meat and giving it up is hard,” Fox said. He wanted to find a way to make it easier for people to transition to plant-based foods, and spoke to several chefs who suggested using mushrooms as a base ingredient. Then Fox met Fuller and McLoghlin, who were in the process of developing meat alternatives using mushrooms.

“When we met, we realized we shared the same values and goals and had complementary skill sets,” said Fox. “We shared a common desire to help end industrial agriculture and wanted to make our food system more ethical, healthy, sustainable and lower its greenhouse gas emissions.”

Fable’s first products include a substitute for pulled pork, braised beef and beef brisket (Fuller grew up in Texas eating slow-cooked meats and wanted to recreate the experience), along with a line of ready-made meals. The company uses shiitake mushrooms, which Fox explained are “very flavorful with their natural umami flavors, they are a slow-growing mushroom so they naturally have the fleshy fibers that give the meaty bite you typically get from animal proteins, and have the right chemical composition that when cooked allow us to taste flavors that are found in animal products.”

Fable's ready-made meals

Fable’s ready-made meals. Image Credits: Fable

Fuller serves as Fable’s chief science officer and the startup leverages his experience as a chef/chemical engineer/mycologist to create the right combinations of flavor, aroma and texture while keeping processing and ingredients to a minimum. For example, its braised beef alternative is made with shiitake mushrooms, seven other ingredients and salt and pepper.

Fable also announced today it has appointed Dan Joyce, who was previously safety and compliance software company SafetyCulture’s general manager of Europe, the Middle East and Africa, as chief growth officer to head global sales and marketing. It will launch in the U.S. through a combination of partnerships with restaurants and meal kit companies.

Other startups that use mushrooms as basis for meat alternatives include Meati and AtLast. Fox said a main difference is that those two startups ferment mycelium, or the root structure of fungi, instead of using mushrooms, which are the fruiting body of fungi.

Fable’s new funding will be used for research and development, expanding its production and manufacturing capacity in Australia and other countries. The company is keeping its product pipeline under wraps for now, but Fox said it plans to develop mushroom-based substitutes for pork, chicken, lamb and other animal proteins.

Industrial cybersecurity startup Nozomi Networks secures $100M in pre-IPO funding

By Carly Page

Nozomi Networks, an industry cybersecurity startup that aims to shield critical infrastructure from cyberattacks, has raised $100 million in pre-IPO funding. 

The Series D funding round was led by Triangle Peak Partners, and also includes investment from a number of equipment, security, service provider and go-to-market companies including Honeywell Ventures, Keysight Technologies and Porsche Digital. 

This funding comes at a critical time for the company. Cyberattacks on industrial control systems (ICS) — the devices necessary for the continued running of power plants, water supplies, and other critical infrastructure — increased both in frequency and severity during the pandemic. Look no further than May and June, which saw ransomware attacks target the IT networks of Colonial Pipeline and meat manufacturing giant JBS, forcing the companies to shut down their industrial operations.

Nozomi Networks, which competes with Dragos and Claroty, claims its industrial cybersecurity solution, which works to secure ICS devices by detecting threats before they hit, aims to prevent such attacks from happening. It provides real-time visibility to help organizations manage cyber risk and improve resilience for industrial operations.

The technology currently supports more than a quarter of a million devices in sectors such as critical infrastructure, energy, manufacturing, mining, transportation, and utilities, with Nozomi Networks doubling its customer base in 2020 and seeing a 5,000% increase in the number of devices its solutions monitor. 

The company will use its latest investment, which comes less than two years after it secured $30 million in Series C funding, to scale product development efforts as well as its go-to-market approach globally. 

Specifically, Nozomi Networks said it plans to grow its sales, marketing, and partner enablement efforts, and upgrade its products to address new challenges in both the OT and IoT visibility and security markets. 

Employee engagement platform Culture Amp raises $100M at a $1.5B valuation

By Catherine Shu

Culture Amp was founded in 2009 to let companies conduct anonymous employee surveys, but since then, its focus has expanded to helping employers turn the data they collect into action. The company announced today it has raised $100 million in Series F funding, led by returning investors Sequoia Capital India and TDM Growth Partners. The round bumps Culture Amp’s valuation to $1.5 billion, more than double what it was after the company’s Series D in 2019.

New investor Salesforce Ventures, along with existing backers Felicis Ventures, Blackbird Ventures, Index Ventures, Sapphire Ventures, Skip Capital, Grok Ventures and Global Founders Capital also participated in the round.

Culture Amp is now used by more than 4,000 organizations with a total of 25 million employees. Its clients range in size from about 20 to 30 people to more than 150,000 employees, and include Salesforce, Unilever, PwC, KIND, SoulCycle and BigCommerce.

From its start as a survey platform, Culture Amp has grown to encompass analytics for managers, like turnover prediction and team goal tracking. It also has a sizable online community where users can connect and book workshops, including ones run by diversity, equity and inclusion experts. Culture Amp recently held a virtual version of Culture First, its annual event, with over 20,000 participants.

Founder and chief executive officer Didier Elzinga told TechCrunch that he sees Culture Amp’s Series F as a “validation of the HR space in general.”

“I think for a long time, the HR space and HR tech space have been viewed as not that interesting or important, but what we see now is that people are the most important thing that most companies have, so what can we do to craft their experiences,” he added. “I think it’s a really interesting step for the space as a whole, for an organization like Culture Amp to have made it to this level of revenue, fundraising and valuation.”

The company still has most of its funds from its Series E, but the new round will allow it to “work at a whole other level of scale,” Elzinga said. Culture Amp launched in Australia, and about two-thirds of its revenue comes from the United States. It is also growing in Europe, so some of its new funding will be used on its dual data centers. Elzinga added that the raise also gives Culture Amp a warchest to spend on acquisitions.

Over the past year and a half, employers have dealt with two major issues: a remote workforce coping with the COVID-19 pandemic and growing calls for diversity, equity and inclusion.

Culture Amp saw more employers addressing DEI in surveys; for example, the number of companies who asked employees questions like do they “build teams that are diverse” increased about 30% in 2020. Clients have access to surveys created with behavioral psychologists, including ones designed to see if women, people of color or people who use English as a second language are feeling disengaged and, if so, how to help them.

To understand the pandemic’s impact, the platform introduced well-being templates, asking if employees are feeling overwhelmed, how they feel about messaging from company leaders and gauging their willingness to return to the office.

Surveys are answered anonymously and data is aggregated to protect the privacy of individual employees. To help companies act on the results they get, Culture Amp provides what it calls an “Inspiration Engine,” or practices that have worked for other companies.

Since Culture Amp works with a large group of employers, it is able to create benchmarks by industry, size and region. This allows companies to see how their employee engagement compares to others in the same space.

Another feature, Skills Coach, is based on behavioral science research and helps managers develop “soft skills” through two-minute interactive exercises that are delivered by Slack or email.

“The experience that employees have is the thing we want to up level, but the way we want to do it and what we’re focused on is lifting managers’ capability to delivery that employee experience,” Elzinga said. Skills Coach was designed to fit into busy workdays and its usage has tripled over the past year, he added.

“We think that for all the progress we have made, we’re still at the beginning of actually delivering on that employee experience,” he added. “I think the last two years have shown us how important mental well-being is, how important diversity and inclusion is, and how important it is for leaders to truly listen to their people and then to act on that and follow up.”

Other employee feedback platforms include Lattice, Glint and Qualtrics. Elzinga said the main way Culture Amp differentiates is its team of “People Scientists,” or organizational and behavioral psychologists who design surveys, work in its product team as analysts and serve as consultants for clients.

“We see ourselves at the point now where we have enough data that we can start to do primary research on a lot of these issues and we’re looking at how can the data we are developing help inform the space in general, not just ‘here’s what our customers are doing,’ but research that shows how this correlates to that in a situation,” said Elzinga. “The people science component is a hugely important to us.”

In a statement about its investment in Culture Amp, TDM Growth Partners co-founder Hamish Corlett said, “Organizations are living in a world of unprecedented change, and the last 12 months have only accelerated this. We have seen first hand the power that Culture Amp’s unrivaled data set and unique insights have inside boardrooms globally, and we expect this only to amplify in the coming years.”

Percent raises $5M, aiming to become the ‘Stripe for donations’ to good causes

By Mike Butcher

What with the planet collapsing and democracy under constant attack from all quarters – you know, just the usual – one or two members of the global population have, idly or not, wondered if the private sector might want to step up? I mean, as well as shooting billionaires into space. At the same time, even! Luckily, many businesses want to do better. But there are one or two hurdles. Incorporating “purpose” into their digital offering, such as donating to a non-profit at the end of a moving documentary, is harder than it looks. Businesses don’t have the capacity to build in donation software; they can’t continually verify and audit good causes; and processing donations is fraught with legal complications, compliance, and regulatory risk. What is to be done?

Pennies is one organization that bills itself as the digital equivalent of the traditional charity collection box. However, perhaps what we need is… drum roll… an API?

Step forward Percent. Founded in 2017, Percent provides an API allowing firms to customers to donate to good causes, matching a donation made when making a payment, or rounding up a financial transaction, for instance.

It’s now closed a $5M venture round led by Morpheus Ventures, allowing it to expand in the US, as well as its existing presence in the UK and Australia. The UK’s Nationwide Building Society – also an early investor and customer of the product – is a co-investor in the round.

The company says its API-first platform takes care of auditing and compliance processes to prevent fraud and money-laundering whilst also parsing tax-efficient disbursements of funds into 200 countries worldwide. It says 7 million non-profit causes have been added to the platform and it’s vetted the potential recipients of donations.

Henry Ludlam, Founder, and CEO of Percent, said: “Percent was founded to become the global API-first infrastructure behind all giving. This will be the foundation for a better, fairer future of capitalism in which every financial transaction has social and environmental good built into it.”

In an interview I asked him if the pandemic had accelerated the opportunity: “Because of COVID, suddenly now we have brands that are really desperate to build purpose into their business in a way that they just weren’t doing 18 months ago. It’s really been an amazing shift. We’ve just seen a huge shift in what consumers expect from businesses. Consumers expect businesses to build purpose into what they do now.”

He said that the product could be even built into – surprise! – streaming services: “Say you’ve seen a documentary. And at the end of the documentary, you feel particularly moved, like you watched a David Attenborough or something like that. You could then actually be able to quickly and easily build donations into the end of it. So using our API, it would pull up a list of nonprofits, so right there and then the customer could make a donation. We’re also working with a crypto platform where you can round down your transactions and donate to any nonprofit as well. There’s loads of really cool stuff we are working on which is coming out soon.”
 
Kristian Blaszczynski, Managing Partner of Morpheus Ventures, said: “With the events of the last several years, it has become more apparent that aligning brands with purpose is driving consumer behavior and spend. However, today, the process of donating to non-profits is incredibly archaic, manual, and inefficient… Percent’s API-first platform abstracts away all of these complexities and automates the processes, allowing businesses to align closer to their stakeholders and focus on their core business.”

Percent could well be pushing at an open door. Kantar Research says that only 22% of people could name a brand they thought was doing a good job addressing issues such as climate change, plastic waste, and water pollution. On the flip side, 95% of businesses think that “purpose” is at the heart of what they do. The disparity could not be more stark.

Is Percent the stripe for donations? We’re about to find out.

Employment Hero gets $140M AUD Series E led by Insight Partners, grows valuation to $800M AUD

By Catherine Shu

A photo of Employment Hero co-founders Ben Thompson and Dave Tong

Employment Hero co-founders Ben Thompson and Dave Tong. Image Credits: Employment Hero

Four months after announcing its last round, Employment Hero has closed another $140 million AUD (about $103 million USD) in funding. The Series E was led by Insight Partners, the venture capital firm known for its ScaleUp program to help tech companies accelerate their growth.

Employment Hero is an automated human resources, payroll and benefits platform for SMEs. Founded in Sydney in 2014, the company is now expanding into Southeast Asian and Western European markets. Its previous funding announcement was a $45 million AUD Series D announced in March, led by online job platform SEEK, at the company’s previous valuation of about $250 million AUD.

Now Employment Hero has bumped up its valuation $800 million in less than six months by reaching 133% year-on- recurring revenue growth. Co-founded by Ben Thompson, its chief executive officer, and chief technology officer Dave Tong, Employment Hero is used by 6,000 businesses, with a total of 250,000 employees. Over the past 12 months, the company says $14 billion in gross wages was processed through the platform.

“We always thought Insight Partners would be a great partner,” Thompson told TechCrunch. “We had been speaking with them for years, so when they asked if we would consider raising, we agreed it was definitely worth exploring. As it turned out all the stars were aligned, and we reached a deal that made sense and allowed us to keep scaling without having to switch back into capital-raising mode.”

Over the past year, Employment Hero grew its headcount by 65% to 325 full-time employees and now has a permanent remote-first work model. The new capital will be used to hire for its engineering teams and for the company’s continuing international expansion.

Employment Hero began entering new markets in October 2020, launching localized versions of the platform in New Zealand, the United Kingdom, Malaysia and Singapore.

Thompson said Employment Hero will continue focusing on Malaysia and Singapore until the end of this year, while looking at ways to cross-promote SEEK’s products and services in Asia. After that, it plans to localize Employment Hero for Indonesia, Thailand, the Philippines, Hong Kong and Vietnam.

To localize the platform, Employment Hero starts with employment contracts, policies, leave rules and pay rules. Then it integrates with tax authorities and pension funds, before focusing on local benefits providers to get discounts on nondiscretionary expenses for users, like health insurance and mortgages.

During the pandemic, Thompson said Employment Hero’s teams shifted their focus to help companies adapt to a distributed workforce. Some of the services it launched include Global Teams, a professional employer organization (PEO) solution that pushes job openings to more than 1,700 career boards and helps companies onboard and manage remote workers. Employment Hero is also working with recruitment agencies that will help employers find remote workers.

Thompson said, “while it’s still early days for Global Teams, it’s definitely popular,” with dozens of companies in Australia, the United Kingdom and New Zealand using it to employ people in 21 countries.

Employment Hero’s Remote Work Report, released in June, found that 94% of respondents want to continue working remotely at least one day a week, up from 2% a year ago. Meanwhile, 74% of employers surveyed told Employment Hero that they plan to keep flexible working arrangements after COVID restrictions are lifted, up from 64% in 2020.

“We are seeing employers embrace remote work as a competitive advantage because it broadens their available talent pool and helps retain and engage their employees,” Thompson said. “Employers are now asking, how should we do things differently if we want to continue working remotely forever? This requires real intention and education, but it’s a whole lot better than losing great employees by forcing them back to the office five days a week.”

In a statement about the investment, Insight Partners managing director Rachel Geller said, “We have been following Employment Hero’s journey for four years and have seen the impressive and consistent growth experience by the company. Its customer-centric solutions have been embraced globally by the small and medium business community and we are looking forward to supporting them through this next phase of their expansion journey.”

Go1 raises $200M at a $1B+ valuation to boost its curated enterprise learning platform

By Ingrid Lunden

Online learning continues to see a huge boost of attention and use in the wake of the Covid-19 pandemic, and today a startup building tools specifically for enterprises to deliver on their internal education remits is announcing a big round of funding that points to the startup’s own growth and ambitions.

Go1, which provides curated online learning materials and tools to businesses, with “playlists” that tap content from multiple publishers and silos, has closed a round of $200 million, a Series D that the Australian company’s CEO and co-founder confirmed values the startup at over $1 billion.

Barnes added that the funding will be used to expand further in existing markets — based out of Brisbane, Australia, Go1 has offices in London, the U.S., Singapore and Malaysia, so it wants to go deeper into Europe more broadly and into more of Asia Pacific, he said. Go1 will also continue expanding its suite of services in the wider areas of learning and development training, he added.

Today, it already offers a host of analytics and AI tech to chart how well that content is used and to further personalize materials, so the idea will be to expand on that more.

SoftBank’s Vision Fund 2, AirTree Ventures and Salesforce Ventures co-led this Series D, with Blue Cloud Ventures, Larsen Ventures, Madrona Venture Group, Microsoft’s M12, SEEK, TEN13, and Tiger Global also participating. (To be clear it appears that there were reports about this Series D closing but no details on the value, the investors, nor confirmation from the company.)

The funding represents a major capital infusion for the startup: prior to this it had only raised about $80 million over the last six years, with the last round, a more modest Series C of $40 million, closed 14 months ago.

But it also comes on the heels of impressive growth. Incubated at Y Combinator and based out of Brisbane, Australia, the company currently works with some 3.5 million users and over 1,600 enterprises globally, with companies like Microsoft, TikTok, the University of Oxford, Suzuki, Asahi and Thrifty, as well as many smaller businesses, among its customers. On average, an individual, when actively engaging on Go1, spends between two and six hours per month using the platform, and Barnes told me that its user base has grown by more than 300 percent in the last year.

But in a tech world now full of options for online learning content — both for K-12 as well as business users — what is perhaps more interesting is the startup’s approach.

Currently, Go1 has some 150,000 pieces of content available in its library, but it has not created any of that itself. The material comes from some 1,000 publishers and creators, a figure that is growing weekly, said Barnes, and includes not just your standard names in online education like Pearson, EdX, Coursera and Skillsoft, but also Blinkist and the Harvard Business Review.

The point of Go1 is to make it easier for businesses to access and use all these materials without having to negotiate separate deals with the various rights holders, or for users to have to negotiate multiple apps or sites to use it.

Somewhat akin to a streaming service like Spotify, Go1 acts not just as a distributor/aggregator to access that content, but as a channel for those providers, who receive royalties based on how much their content is consumed. (And individual rights holders can also negotiate how some or all of their content is accessed, in the event that they have paywalls that they do not want to break down in specific areas.)

The Spotify analogy goes beyond the company’s business model: Barnes pointed out that it too calls its curated bundles — which it creates itself, or lets customers create themselves — “playlists.”

“We started the business six years ago because no one else was doing this, yet there was such a desire to bring together that diversity of content and make it easily available,” he said.

The challenge for employers is not just navigating the user experience of juggling multiple sites (which Go1 solves with these curated playlists), but also building learning that is still cohesive and easy to manage, regardless of which department or employee is doing the training.

“How do I create something for the broad diversity of skills for our workforce?” is how Barnes described it to me. This is what the company addresses with the platform, he added, not only making it easier to create training for different people, but to help them find, and to suggest, relevant content that will interest those users by offering as big a selection as possible. “We help people find the needle in the haystack,” he said.

Where the analogy stops, it seems, is in how Go1 interfaces with the rest of the corporate learning market.

I asked Barnes if he saw companies like Success Factors as competitors, but in reality, Go1’s ethos is to integrate into whatever education or training platform a company might already use, be it SAP, Workday, Salesforce or Microsoft-based platforms, or something else altogether.

Borrowing another media comparison, Barnes notes that he sees Go1 as occupying the “Netflix” button on a remote: regardless of the manufacturer or pay-TV provider, you still have a way to get your Netflix fix; and so, too, is the hope for Go1 in corporate learning and development training.

This also means that while platforms are not rivals, others also aggregating content might well be: that likely makes for an interesting relationship with Microsoft, given that it owns LinkedIn, which has LinkedIn Learning, which also aggregates content from across a wide range of publishers.

It seems that while Microsoft has slowly created more integrations with LinkedIn over the years since it’s acquired it, this is one area where it’s also been okay with working with one of its competitors.

“Our team worked closely with Go1 on a Microsoft Teams integration to enable more enterprises to maintain corporate training remotely,” said Jeff Teper, Microsoft Corporate Vice President, Teams, OneDrive, SharePoint, said in a statement. “As many companies navigate in-person work scenarios, a plan for hybrid engagement is critical. Employees and students can access one of the world’s largest libraries of online learning resources with Go1 in Microsoft Teams. Companies can also onboard new talent and ensure essential trainings are provided regardless of employee location.”

One way that Go1 is looking to grow is in how it is used by the individuals that learn or train on its platform.

Another reason Barnes and his co-founders — Vu Tran (head of growth), Chris Eigeland (CRO), and Chris Hood (CTO) — started Go1, he said, was because of a pain point one of them directly encountered. Tran was doing his training to become a doctor at the time, and he found it very frustrating that he had re-do hand washing training each time he started a new rotation.

“There was no way to re-share that he’d already done that,” Barnes said. Go1 is trying to double down on that, increasing the ability for its users to “own” those credentials and certifications and re-use them in subsequent places, even when they change jobs. (Again… not unlike exporting a Spotify playlist, which you can also do.)

It seems that I am not the only one who sees a lot of Spotify resonance in Go1.

“When people think about music, they often think of Spotify and access to unlimited music for one subscription. We believe Go1 is the emerging category leader in providing a similar experience for corporate learning. Powered by AI and machine learning, Go1’s platform provides an intuitive experience, and creates an opportunity for individuals to expand their professional development goals and explore the resources to help achieve them,” said Nagraj Kashyap, managing partner at SoftBank Investment Advisers, in a statement.

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