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.
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.
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.
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.
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….”
“…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….”
A number of companies have emerged in recent years aiming to resurrect the airship, an early technology that was abandoned in favor of airplanes and helicopters.
Flying Whales in France, Hybrid Air Vehicles in the U.K., Lockheed Martin and billionaire Sergey Brin all have airship projects in development, particularly focused on carrying cargo. None have yet started servicing customers.
Buoyant wants to be the first.
The startup graduated from Y Combinator this year with the goal of building small unmanned airships to move middle-mile cargo. Think depot-to-depot delivery, rather than depot-to-home. The two founders, Ben Claman and Joe Figura, say they can cut the cost of delivery in half, relative to flights performed by small planes or helicopters. And they say they’ll succeed where others have stalled by staying small — instead of building massive, multi-hundred-foot airships that need a lot of capital to build and a lot of gas to lift, Buoyant’s final vehicle will only be around 60 feet long.
Claman and Figura are two MIT hardware engineers who cut their teeth building spacecraft and antennas. Both had worked on projects with previous employers that involved providing low-cost connectivity to remote places, like Alaska (Claman also grew up there).
Image Credits: Buoyant. Buoyant founders Joe Figura and Ben Claman.
“What [Joe and I] were talking about when we were working at these companies was how hard it is to get actual goods to these places, not just the internet,” Claman said. “In these places, people are shopping online, they’re getting things sent to them. They sometimes have to wait weeks or months for them to arrive.”
Claman added when the company started YC, they had imagined building an airship that’s closer to their existing prototype — a small craft capable of doing last-mile deliveries for Amazon, for example.
“We’ve talked to a bunch of companies, and it seemed like from talking to them, that rural middle-mile is a much bigger problem than rural last-mile. Let’s say you have 5,000 people living in a community, you can basically subcontract the postal service to one of those people to do the last-mile delivery. … But getting the parcels from your main hub to that place is actually really challenging and really, really expensive.”
To solve that problem, Buoyant developed a “hybrid” battery electric airship, meaning that it generates around 70% of its lift using lighter-than-air gas — in this case, helium. The remaining 30% of the lift comes from its tilt-rotor architecture. This hybrid design is what Buoyant says solves the notoriously difficult problem of dropping off cargo – difficult because as airships offload weight, they risk shooting back up into the air. The tilt-rotor allows the airship to operate closer to a helicopter during takeoff and landing.
But where helicopters need to be capable of lifting their weight — anywhere from 1,500 to 10,000 pounds of carbon fiber and stainless steel — Buoyant’s airship will only need to lift the weight of the payload itself and its airframe. Not only do Buoyant’s founders say this saves on capital costs, but they’re developing the ship to eventually run autonomously, so the company won’t have to use pilots.
Buoyant has built and flown four prototype airships. The most recent sub-scale ship that went to air is 20 feet long, with airspeeds of up to 35 miles per hour and a payload capacity of 10 pounds, but the ultimate aim is to build an airship that’s capable of delivering up to 650 pounds of cargo at a cruise speed of around 60 miles per hour.
The airship has been operating under a Part 107 license. Before the company can start serving customers, it will need to achieve two certifications: a type certification verifying the airworthiness of the craft and operator certifications for the groups flying them. “Both require a lot of flight hours, which will be our main development activity,” Figura said on HackerNews.
Looking ahead, the company is planning to continue iterating its flight control system and doing a field demo with the sub-scale prototype in the coming months. Buoyant wants to build a full-scale version next year, which Claman said they will likely manufacture in-house.
These next few steps will be crucial for Buoyant to turn letters of intent worth $5 million that it has signed with several potential customers — including from an Alaskan regional air carrier — into official contracts.
Buoyant also has two pilot programs in the pipeline: one with the sub-scale prototype this fall, and the second with the full-scale ship in a year’s time, both with logistics/parcel delivery companies.
“People were building blimps before computers, people were building blimps before they really understood aerodynamics, so we have some advantage there on just the length of time that people have been building airships,” Claman added. “There’s a lot of data out there. It’s not like airship development has stopped. People have been developing airships continuously, basically, over 100 years.”
Rocket launch startup Astra has received a key license from the Federal Aviation Administration, giving the green light for the company’s first commercial orbital launch at the end of the month.
Astra CEO Chris Kemp tweeted the news on Thursday, adding that the launch operator license through the FAA is valid through 2026. The new license is a modification of the company’s previous launch license and applicable to the current version of the company’s rocket, a company spokesperson told TechCrunch.
— Chris Kemp (@Kemp) August 19, 2021
The license, posted on the FAA’s website, authorizes Astra to conduct flights of its Rocket v3 launch vehicle from the company’s launch pad at the Pacific Spaceport Complex in Kodiak, Alaska. It expires on March 9, 2026. It clears the way for Astra to conduct a demonstration mission for the U.S. Space Force on August 27, as well as a second launch planned for some time later this year.
This is proving to be a big year for Astra. In addition to conducting its first commercial orbital launch on August 27, the company also starting trading on the Nasdaq under the ticker symbol “ASTR.” The company made its debut after merging with special purpose acquisition company Holicity at a pro-forma enterprise value of $2.1 billion.
Earlier this summer, Astra also acquired space-propulsion company Apollo Fusion. The acquisition gives a possible hint into how Astra is thinking about future launches, as electric propulsion systems are useful for moving objects from lower to higher orbits.
Archer Aviation is seeking $1 billion in damages from Wisk Aero, according to court filings Tuesday, significantly escalating the ongoing legal battle between the two air taxi rivals.
Wisk “deployed a knowingly false extra-judicial smear campaign that projected stand-alone defamatory statements about Archer to the world,” the filing says. On this basis, Archer claims that this “smear campaign” has negatively impacted its ability to access capital and has impaired business relationships, resulting in damages “likely to exceed $1 billion.”
The two companies have been locked in a heated legal battle for much of this year. The dispute started in April, when Wisk filed a suit with the U.S. District Court for the Northern District of California claiming that Archer had misappropriated its trade secrets related to Wisk’s debut eVTOL aircraft, Cora. Wisk further alleged that a former employee, Jing Xue, downloaded thousands of proprietary files from his work computer prior to joining Archer.
This is not the first time that Archer has hit back against the accusations in court. First it filed a motion to dismiss the suit in early June, and later that month alleged in a separate court document that Archer’s design was well-established prior to Wisk’s having filed any patents with the U.S. Patent and Trademark Office.
Archer unveiled a prototype of its Maker aircraft in February, the same month that it announced (to much fanfare) it was going public via a merger with blank-check firm Atlas Crest Investment Corp. for a pro-forma enterprise value of $2.7 billion. Late last month Archer slashed its valuation by $1 billion in a “strategic reset” of the transaction terms with the SPAC. While this is the same amount Archer is seeking in damages, a company spokesperson told TechCrunch that is just coincidental.
In addition, the spokesperson added that the planned merger remains on track. Speaking to the suit, they said, “We have no plans to drop our counter-claim regardless of any moves Wisk may make.”
A Wisk spokesperson said “Archer’s counterclaim is ludicrous and its troubles are purely self-inflicted,” and characterized the filing as “full of distortions and distractions from the serious patent and trade secret misappropriation claims it faces.” The spokesperson added that Wisk intends to continue its case against Archer.
Joby Aviation is now public, 12 years after JoeBen Bevirt founded the company at his ranch in the Santa Cruz mountains. The air taxi developer began trading on the New York Stock Exchange on Wednesday under the ticker symbol “JOBY,” after completing a merger with special purpose acquisition company Reinvent Technology Partners.
As of 10:00 AM ET, the price per share was at $11.01, up 9.8% from its prior-day closing amount.
Joby’s post-transaction valuation now stands at $4.5 billion, the largest in the industry. It also now has the highest cash balance. All told, Joby has around $1.6 billion in total capital to take its air taxi operations to commercialization in 2024. That includes $835 million of private-investment-in-public-equity, as well as more than $500 million of capital on the balance sheet.
RTP reported to the Securities and Exchange Commission that around 63% of the 69 million ordinary shares were redeemed prior to the public trading debut, giving Joby access to $255 million out of the $690 million of cash held in trust from the blank-check firm.
We have been working for over a decade to get our technology ready for market and are excited to take this moment to celebrate our achievements so far. #nyse #experiencesquare #eVTOL @NYSE pic.twitter.com/XlpxXiA1Pa
— Joby Aviation (@jobyaviation) August 11, 2021
It’s a sizable amount, but creating an entirely new form of transportation is a capital-intensive business. Joby’s executive chairman Paul Sciarra told TechCrunch he thinks $1.6 billion will be enough to prepare the company for launch.
“We think that’s enough to execute on the things that matter over the next few years, and those are […] one, ensuring that we execute on the certification program; two, showing we can demonstrate our ability to repeatedly manufacturing these aircraft in a certifiable way; and then third and finally, the opportunity to lay the groundwork for commercial launch,” Sciarra said.
Joby is developing a five-seat electric vertical take-off and landing aircraft, which it unveiled to much anticipation in February. The company, which has backing from Toyota and JetBlue, has released a slew of announcements in recent months as it geared up for the public listing.
“A lot of people talk about us as a secretive company,” Bevirt said in an interview with TechCrunch. “We’re not actually a secretive company, we just choose to do the work and then show our work, rather than talking about it and then doing it.”
Joby’s merger with blank-check firm Reinvent, headed by LinkedIn co-founder Reid Hoffman, was announced in February. The transaction includes a few provisions to ensure longer-term collaboration, including a lock-up on founder shares for up to five years, as well as vesting provision with earnout not realized until the price per share reaches $50 – a $30 billion market cap.
SPACs are not a new instrument for going public, but they have gained a widespread presence in the transportation space, particularly amongst eVTOL startups looking to secure amounts of capital. Archer Aviation was the first developer to announce it would merge with a blank-check firm, followed by Joby, Lilium and Vertical Aerospace. But there are signs that the investment bubble may be starting to deflate: late last month, Archer cut its valuation by $1 billion in a “strategic reset” of the transaction terms with Atlas Crest Investment Corp.
Such turbulence is not uncommon in markets populated by pre-revenue companies. But despite now being a public company — and having shareholders to answer to — Sciarra said Joby’s task remains unchanged. “We can’t control the markets,” he said. “[Joby] is a company that’s been executing quietly for a very long time on things that matter. I think it’s going to be incumbent upon us to do the same as we make this transition to a public company: tell folks what we’re going to do, and then go out and do them. That, quarter by quarter, is what builds credibility, what combats skepticism, and what gives investors and frankly, the broader public, confidence that this is a company that means what it says.”
One way to frame the fate of air taxis is whether they will be more like autonomous vehicles or electric vehicles. The AV space circa five years ago was filled with companies setting ambitious expectations about when true self-driving cars would be on the roads, only to have multiple companies collapse or sell under the weight of overshot expectations.
But Sciarra suggested that a better analogy to the eVTOL industry as it currently stands is the early days of electric vehicles. He pointed out that Joby’s aircraft is designed to conform to existing safety and certification standards, with a trained pilot onboard, similar to how helicopters and planes operate today. “We didn’t want to compound the technical risk of developing a new aircraft with the technical and regulatory risk of developing full autonomy from day one.”
“We think about our approach as a little bit more Tesla versus, say, Waymo,” he added.
German electric aircraft startup Lilium is negotiating the terms for a 220-aircraft, $1 billion order with one of Brazil’s largest domestic airlines, the companies said Monday. Should the deal with Azul move forward, it would mark the largest order in Lilium’s history and its first foray into South American markets.
“A term sheet has been signed and we will move towards a final agreement in the coming months,” a Lilium spokesperson told TechCrunch.
The 220 aircraft would fly as part of a new, co-branded airline network that would operate in Brazil. Should the two companies come to an agreement, Azul would operate and maintain the fleet of the flagship 7-seater aircraft, and Lilium would provide custom spare parts, including replacement batteries, and an aircraft health monitoring platform.
Deliveries would commence in 2025, a year after Lilium has said it plans to begin commercial operations in Europe and the United States. These timelines are dependent upon Lilium receiving key certification approvals from each country’s requisite aerospace regulator. Azul said in a statement it would “support Lilium with the necessary regulatory approval processes in Brazil” as part of the agreement.
Even if a deal is reached, it would likely be subject to Lilium hitting certain performance standards and benchmarks, similar to the conditions of Archer Aviation’s $1 billion order with United Airlines. Still, orders of this value are seen as a positive signal to markets and investors that an electric vertical take-off and landing aircraft is more than smoke and mirrors.
Also like Archer, Lilium is planning on taking the SPAC route to going public. The company in March announced its intention to merge with Qell Acquisition Corp. and list on Nasdaq under ticker symbol “LILM.” SPACs have become a popular vehicle for public listing across the transportation sector, but they’ve become especially popular with capital-intensive eVTOL startups.
The merger may be necessary for the company’s continued operations. According to the German news website Welt, Lilium added a risk warning to its 2019 balance sheet noting that it will run out of money in December 2022 should the SPAC merger not be completed.
Electric air taxi startup Lilium has tapped German manufacturer Customcells to supply batteries for its flagship seven-seater Lilium Jet.
The battery IP is the result of “multiple players,” a Lilium spokesperson told TechCrunch, but the manufacturing will be the sole job of Customcells. While Lilium declined to specify the number of battery systems as part of the agreement, it confirmed that Customcells will be manufacturing guaranteed capacity until 2026.
Customcells specializes in high-performance lithium-ion batteries for the aerospace, automotive and maritime industries. The manufacturer recently announced a new joint venture with luxury sports car maker Porsche AG, dubbed Cellforce Group, for the low-volume production of batteries for racing cars and performance vehicles.
This is just the latest partnership Lilium has announced in recent months as it prepares to shift into component and vehicle testing. The Munich-based eVTOL company has developed an international network of partnerships with suppliers like Japanese company Toray Industries for carbon fiber composite; Spanish aerospace supplier Aciturri for the jet’s airframe; and Palantir Technologies, one of its investors, for software services. In June, Lilium added aerospace manufacturing giant Honeywell to its roster for the jet’s flight control and avionics system.
Lilium’s decision to outsource major components to established manufacturers is a departure from many of the other leading eVTOL developers, like Joby Aviation, which have chosen to keep much of the engineering and production in-house. The strategy has a few advantages. For one, Lilium doesn’t have to spend millions – possibly hundreds of millions over time – in manufacturing facilities, or production and testing equipment. But the key advantage, Lilium executives suggest, may lie with the certification process.
Like other eVTOL manufacturers, the Lilium Jet must receive regulatory approval from the European Union Aviation Safety Agency and the Federal Aviation Administration in order to operate commercially in the EU and U.S., respectively. Lilium, in line with other major would-be players in the industry, has set an ambitious target of 2024 for commencing commercial operations. Established aerospace suppliers may use components that have already achieved a minimum performance standard recognized by regulators, which could save time in the certification process.
“Collaborating with experts, aerospace partners, is a deliberate choice for us,” Lilium’s chief program officer, Yves Yemsi, told TechCrunch earlier this year. “It will help us to reduce our time to market and still be safe.”