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Facebook’s dodgy defaults face more scrutiny in Europe

By Natasha Lomas

Italy’s Competition and Markets Authority has launched proceedings against Facebook for failing to fully inform users about the commercial uses it makes of their data.

At the same time, a German court has today upheld a consumer group’s right to challenge the tech giant over data and privacy issues in the national courts.

Lack of transparency

The Italian authority’s action, which could result in a fine of €5 million for Facebook, follows an earlier decision by the regulator, in November 2018 — when it found the company had not been dealing plainly with users about the underlying value exchange involved in signing up to the “free” service, and fined Facebook €5 million for failing to properly inform users how their information would be used commercially.

In a press notice about its latest action, the watchdog notes Facebook has removed a claim from its homepage — which had stated that the service “is free and always will be” — but finds users are still not being informed, “with clarity and immediacy” about how the tech giant monetizes their data.

The Authority had prohibited Facebook from continuing what it dubs “deceptive practice” and ordered it to publish an amending declaration on its homepage in Italy, as well as on the Facebook app and on the personal page of each registered Italian user.

In a statement responding to the watchdog’s latest action, a Facebook spokesperson told us:

We are reviewing the Authority decision. We made changes last year — including to our Terms of Service — to further clarify how Facebook makes money. These changes were part of our ongoing commitment to give people more transparency and control over their information.

Last year Italy’s data protection agency also fined Facebook $1.1 million — in that case for privacy violations attached to the Cambridge Analytics data misuse scandal.

Dodgy defaults

In separate but related news, a ruling by a German court today found that Facebook can continue to use the advertising slogan that its service is “free and always will be” — on the grounds that it does not require users to hand over monetary payments in exchange for using the service.

A local consumer rights group, vzbv, had sought to challenge Facebook’s use of the slogan — arguing it’s misleading, given the platform’s harvesting of user data for targeted ads. But the court disagreed.

However, that was only one of a number of data protection complaints filed by the group — 26 in all. And the Berlin court found in its favor on a number of other fronts.

Significantly, vzbv has won the right to bring data protection-related legal challenges within Germany even with the pan-EU General Data Protection Regulation in force — opening the door to strategic litigation by consumer advocacy bodies and privacy rights groups in what is a very pro-privacy market.

This looks interesting because one of Facebook’s favored legal arguments in a bid to derail privacy challenges at an EU Member State level has been to argue those courts lack jurisdiction — given that its European HQ is sited in Ireland (and GDPR includes provision for a one-stop shop mechanism that pushes cross-border complaints to a lead regulator).

But this ruling looks like it will make it tougher for Facebook to funnel all data and privacy complaints via the heavily backlogged Irish regulator — which has, for example, been sitting on a GDPR complaint over forced consent by adtech giants (including Facebook) since May 2018.

The Berlin court also agreed with vzbv’s argument that Facebook’s privacy settings and T&Cs violate laws around consent — such as a location service being already activated in the Facebook mobile app; and a pre-ticked setting that made users’ profiles indexable by search engines by default

The court also agreed that certain pre-formulated conditions in Facebook’s T&C do not meet the required legal standard — such as a requirement that users agree to their name and profile picture being used “for commercial, sponsored or related content,” and another stipulation that users agree in advance to all future changes to the policy.

Commenting in a statement, Heiko Dünkel from the law enforcement team at vzbv, said: “It is not the first time that Facebook has been convicted of careless handling of its users’ data. The Chamber of Justice has made it clear that consumer advice centers can take action against violations of the GDPR.”

We’ve reached out to Facebook for a response.

London’s Met Police switches on live facial recognition, flying in face of human rights concerns

By Natasha Lomas

While EU lawmakers are mulling a temporary ban on the use of facial recognition to safeguard individuals’ rights, as part of risk-focused plan to regulate AI, London’s Met Police has today forged ahead with deploying the privacy hostile technology — flipping the switch on operational use of live facial recognition in the UK capital.

The deployment comes after a multi-year period of trials by the Met and police in South Wales.

The Met says its use of the controversial technology will be targeted to “specific locations… where intelligence suggests we are most likely to locate serious offenders”.

“Each deployment will have a bespoke ‘watch list’, made up of images of wanted individuals, predominantly those wanted for serious and violent offences,” it adds.

It also claims cameras will be “clearly signposted”, adding that officers will be “deployed to the operation will hand out leaflets about the activity”.

“At a deployment, cameras will be focused on a small, targeted area to scan passers-by,” it writes. “The technology, which is a standalone system, is not linked to any other imaging system, such as CCTV, body worn video or ANPR.”

The biometric system is being provided to the Met by Japanese IT and electronics giant, NEC.

In a press statement, assistant commissioner Nick Ephgrave claimed the force is taking a balanced approach to using the controversial tech.

“We all want to live and work in a city which is safe: the public rightly expect us to use widely available technology to stop criminals. Equally I have to be sure that we have the right safeguards and transparency in place to ensure that we protect people’s privacy and human rights. I believe our careful and considered deployment of live facial recognition strikes that balance,” he said.

London has seen a rise in violent crime in recent years, with murder rates hitting a ten-year peak last year.

The surge in violent crime has been linked to cuts to policing services — although the new Conservative government has pledged to reverse cuts enacted by earlier Tory administrations.

The Met says its hope for the AI-powered tech is will help it tackle serious crime, including serious violence, gun and knife crime, child sexual exploitation and “help protect the vulnerable”.

However its phrasing is not a little ironic, given that facial recognition systems can be prone to racial bias, for example, owing to factors such as bias in data-sets used to train AI algorithms.

So in fact there’s a risk that police-use of facial recognition could further harm vulnerable groups who already face a disproportionate risk of inequality and discrimination.

Yet the Met’s PR doesn’t mention the risk of the AI tech automating bias.

Instead it makes pains to couch the technology as “additional tool” to assist its officers.

“This is not a case of technology taking over from traditional policing; this is a system which simply gives police officers a ‘prompt’, suggesting “that person over there may be the person you’re looking for”, it is always the decision of an officer whether or not to engage with someone,” it adds.

While the use of a new tech tool may start with small deployments, as is being touting here, the history of software development underlines how potential to scale is readily baked in.

A ‘targeted’ small-scale launch also prepares the ground for London’s police force to push for wider public acceptance of a highly controversial and rights-hostile technology via a gradual building out process. Aka surveillance creep.

On the flip side, the text of the draft of an EU proposal for regulating AI which leaked last week — floating the idea of a temporary ban on facial recognition in public places — noted that a ban would “safeguard the rights of individuals”. Although it’s not yet clear whether the Commission will favor such a blanket measure, even temporarily.

UK rights groups have reacted with alarm to the Met’s decision to ignore concerns about facial recognition.

Liberty accused the force of ignoring the conclusion of a report it commissioned during an earlier trial of the tech — which it says concluded the Met had failed to consider human rights impacts.

It also suggested such use would not meet key legal requirements.

“Human rights law requires that any interference with individuals’ rights be in accordance with the law, pursue a legitimate aim, and be ‘necessary in a democratic society’,” the report notes, suggesting the Met earlier trials of facial recognition tech “would be held unlawful if challenged before the courts”.

When the Met trialled #FacialRecognition tech, it commissioned an independent review of its use.

Its conclusions:

❌The Met failed to consider the human rights impact of the tech
❌Its use was unlikely to pass the key legal test of being "necessary in a democratic society"

— Liberty (@libertyhq) January 24, 2020

A petition set up by Liberty to demand a stop to facial recognition in public places has passed 21,000 signatures.

Discussing the legal framework around facial recognition and law enforcement last week, Dr Michael Veale, a lecturer in digital rights and regulation at UCL, told us that in his view the EU’s data protection framework, GDPR, forbids facial recognition by private companies “in a surveillance context without member states actively legislating an exemption into the law using their powers to derogate”.

A UK man who challenged a Welsh police force’s trial of facial recognition has a pending appeal after losing the first round of a human rights challenge. Although in that case the challenge pertains to police use of the tech — rather than, as in the Met’s case, a private company (NEC) providing the service to the police.

Meet the B2B videoconferencing startup that’s gone crazy for online dating

By Natasha Lomas

Founder Andreas Kröpfl has spent almost a decade hard-grafting in the b2b unified communications space, building a videoconferencing business with a patented single-stream system and a claim of no ‘drop-offs’ thanks to “unique low-bandwidth technology”.

His Austria-based startup’s current web-based videoconferencing system, eyeson (née Visocon), which launched in 2018, has had some nice traction since launch, as he tells it, garnering a few million customers and getting a nomination nod as a Gartner Cool Vendor last year.

Eyeson’s website touts ‘no hassle, no, lag, no downloads’ video calls. Pricing options for the target b2b users run the gamut from freelance pro to full-blown enterprise. While the business itself has pulled in a smidge less than $7M in investor funding over the years.

But when TechCrunch came across Kröpfl last December, pitching hard in startup alley at Disrupt Berlin, he was most keen to talk about something else entirely: Video dating.

That’s because last summer the team decided to branch out by building their own video dating app, reusing their core streaming tech for a consumer-focused social experiment. And after a period of internal beta testing — which hopefully wasn’t too awkward within a small (up-til-then) b2b-focused team — they launched an experimental dating app in November in India.

The app, called Ahoi, is now generating 100,000 video calls and 250,000 swipes per day, says Kröpfl.

This is where he breaks into a giggle. The traction has been crazy, he says. 

In the staid world of business videoconferencing you can imagine eyeson’s team eyeing the booming growth of certain consumer-focused video products rather enviously.

Per Kröpfl, they had certainly noticed different desires among their existing users — which pushed them to experiment. “We saw that private people like the simple fun features (GIF reactions, …) and that business meetings were more focused on ‘drop-off’ [rates] and business features,” he tells us. “To improve both in one product was not working any more. So eyeson goes business plus SaaS.”

“Cloning eyeson but make it social,” is how he sums up the experiment. 

Ahoi is very evidently an MVP at this stage. It also looks like a pretty brave and/or foolish (depending on your view) full-bore plunge into video dating, with nothing so sophisticated as a privacy screen to prevent any, er, unwanted blushes… (Whereas safety screening is an element we’ve recently seen elsewhere in the category — see: Blindlee.)

There’s also seemingly no way for users to specify the gender they wish to talk to.

Instead, Ahoi users state interests by selecting emoji stickers — such as a car, cat, tennis racket, games console or globetrotter. And, well, it goes without saying that even if you like cars a lot you’re unlikely to change your sexual orientation over the category.

There are no generic emoji that could be used to specify a sexual interest in men or women. But, er, there’s a horse…

Such limits may explain why Ahoi is generating so many early swipes — and rather fewer actual calls — in that the activity sums to (mostly) men looking for women to videochat with and being matched with, er, men.

And frustration, sexual or otherwise, probably isn’t the greatest service to try and sell.

Still, Kröpfl reckons they’ve landed on a winning formula that makes handy reuse of their core videoconferencing tech — letting them growth hack in a totally new category. Swipe right to video date.

“People are disappointed by perfect profiles on Tinder and the reality when meeting people,” he posits. “Wasted time. Especially women do not want to be stalked by men pretending to be someone else. We solve both by a real live conversation where only after a call both can decide to be connected or never see each other again.”

Notably, marketing around the app does talk rather fuzzily about it being a way to “find new pals”.

So while Kröpfl frames the experiment as dating, the reality of the product is more ‘open to options’. Think of it as a bit like Chatroulette — just with slightly more control (in that you have a few seconds to decide if you don’t want to talk to the next in-app match).

The very short countdown timer (you get just five seconds to opt out of a matched video chat) is very likely generating a fair number of unintended calls. Though such high velocity matching might appeal to a certain kind of speed dating addict.

Kröpfl says Ahoi has been seeing up to 20,000 new users added daily. They’re bullishly targeting 3M+ users this year, and already toying with ideas for turning video dates into a money spinner by offering stuff like premium subscriptions and/or video ads. He says the plan is to turn Ahoi into a business “step by step”.

“Everyone loves to make his profile better,” he suggests, floating monetization options down the line. Quality filtering for a fee is another possibility (“everyone is annoyed by being connected to the wrong people”).

They picked India for the test launch because it has a lot of people on the same timezone, a large active mobile user-base and cheap marketing is still “easily possible”. He also says that dating apps seemed popular there, in their experience. (Albeit, the team presumably didn’t have a great deal of relevant experience in this category — given Ahoi is an experiment.)

The intent is also to open Ahoi up to other markets in time too, once they get more accustomed to dealing with all the traffic. Kröpfl notes they had to briefly take the app off the store last month, as they worked on adding more server capability.

“It is very early and we were not prepared for this usage,” he says, admitting they’ve been “struggling to work on early feedbacks”. “We had to make it invisible temporarily — to improve server capacity and stability.”

The contrast in pace of uptake between the stolid (but revenue-generating) world of business meeting-fuelled videoconferencing and catnip consumer dating — which is money-sucking unless or until you can hit a critical mass of usage and get the chance to try applying monetization strategies — does sound like it’s been rather irresistible to Kröpfl.

Asked what it feels like to go from one category to the other he says “crazy, surprised and thrilling”, adding: “It is somehow also frustrating when all the intense b2b work is not as closely interesting to people as Ahoi is. But amazing that it is possible thanks to an extremely focused and experienced team. I love it.” 

TechCrunch’s Manish Singh agreed to brave the local video dating app waters in India to check Ahoi out for us.

He reported back not having seen any women using the app. Which we imagine might be a problem for Ahoi’s longer term prospects — at least in that market.

“I spoke with one guy, who said his friend told him about the app. He said he joined to talk to girls but so far, he is only getting matched with boys,” said Singh. “I saw several names appear on the app, but all of them were boys, too.”

He told us he was left wondering “why people are on these apps, and why they have so much free time on a weekday”.

For ‘people’ it seems safe to conclude that most of Ahoi’s early adopters are men. As the Wall Street Journal reported back in 2018, India’s women are famously cool on dating apps — in that they’re mostly not on them. (We asked Kröpfl about Ahoi’s gender breakdown but he didn’t immediately get back to us on that. Update: We’re told the app’s male to female ratio is 85:15. “India is challenging,” Kröpfl admits.)

That market quirk means those female users who are on dating apps tend to get bombarded with messages from all the lonely heart guys with not much to swipe. Which, in turn, could make a video dating app like Ahoi an unattractive prospect to female users — if there’s any risk at all of being inundated with video chats.

And even if there are enough in-app controls to prevent unwelcome inundation by default, women also might not feel like they want their profile to be seen by scores of men simply by merit of being signed up to an app — as seems inevitable if the gender balance is so skewed.

Add to that, if the local perception among single women is that men on dating apps are generally a turn-off — because they’re too eager/forward — then jumping into any unmoderated video chat is probably not the kind of safe space these women are looking for.

No matter, Kröpfl and his team are clearly having far too much fun growth hacking in an unfamiliar, high velocity consumer category to sweat the detail. 

What’s driving Ahoi’s growth right now? “Performance marketing mainly,” he says, pointing also to “viral engagement by sharing and liking profiles”.

Notably, there are a lot of reviews of Ahoi on Google Play already — an unusual amount for such an early app. Many of them appear to be five star write-ups from accounts with European-sounding names and a sometimes robotic grasp of language.

“Eventhough Ahoi has been developed recently, it had high quality for user about calling, making friends and widing your knowlegde [sic],” writes one reviewer with atrocious spelling whose account is attached to the name ‘Dustin Stephens.’

“Talking with like minded people and same favor will creat a fun and interesting atmosphere. Ahoi will manage for you to call like condition above,” says another apparently happy but not entirely clear user, going by the name ‘Elisa Herring’.

There’s also a ‘Madeleine Mcghin’, whose profile uses a photo of the similarly named child who infamously disappeared during a holiday in Portugal in 2007. “My experience with this app was awesome,” this individual writes. “It gives me the option to find new people in every country.”

Another less instantly tasteless five-star reviewer, ‘Stefania Lucchini’, leaves a more surreal form of praise. “A good app and it will bring you extra income, I would say it’s a great opportunity to have AHOI and be a part of it but it’s that it will automatically ban you even if you don’t show it. Marketing. body part, there are still 5 stars for me,” she (or, well, ‘it’) writes.

Among the plethora of dubious five-star reviews a couple of one-star dunks stand out — not least because they come from accounts with names that sound like they might actually come from India. “Waste u r time,” says one of these, who uses the name Prajal Pradhan.

This pithy drop-kick has been given a full 72 thumbs-up by other Play Store users.

NASA reveals the payloads for the first commercial Moon cargo deliveries

By Darrell Etherington

NASA has finalized the payloads for its first cargo deliveries scheduled to be carried by commercial lunar landers, vehicles created by companies the agency selected to take part in its Commercial Lunar Payload Services (CLPS) program. In total, there are 16 payloads, which consist of a number of different science experiments and technology experiments, that will be carried by landers built by Astrobotic and Intuitive Machines. Both of these landers are scheduled to launch next year, carrying their cargo to the Moon’s surface and helping prepare the way for NASA’s mission to return humans to the Moon by 2024.

Astrobotic’s Peregrine is set to launch aboard a rocket provided by the United Launch Alliance (ULA), while Intuitive Machines’ Nova-C lander will make its own lunar trip aboard a SpaceX Falcon 9 rocket. Both landers will carry two of the payloads on the list, including a Laser Retro-Reflector Array (LRA) that is basically a mirror-based precision location device for situating the lander itself; and a Navigation Doppler Lidar for Precise Velocity and Range Sensing (NDL) – a laser-based sensor that can provide precision navigation during descent and touchdown. Both of these payloads are being developed by NASA to ensure safe, controlled and specifically targeted landing of spacecraft on the Moon’s surface, and their use here be crucial in building robust lunar landing systems to support Artemis through the return of human astronauts to the Moon and beyond.

Besides those two payloads, everything else on either lander is unique to one vehicle or the other. Astrobotic is carrying more, but its Peregrine lander can hold more cargo – its payload capacity tops out at around 585 lbs, whereas the Nova-C can carry a maximum of 220 lbs. The full list of what each lander will have on board is available below, as detailed by NASA.

Overall, NASA has 14 total contractors that could potentially provide lunar payload delivery services through its CLPS program. That basically amounts to a list of approved vendors, who then bid on whatever contracts the agency has available for this specific need. Other companies on the CLPS list include Blue Origin, Lockheed Martin, SpaceX and more. Starting with these two landers next year, NASA hopes to fly around two missions per year each year through the CLPS program.

Astrobotic Payloads

  • Surface Exosphere Alterations by Landers (SEAL): SEAL will investigate the chemical response of lunar regolith to the thermal, physical and chemical disturbances generated during a landing, and evaluate contaminants injected into the regolith by the landing itself. It will give scientists insight into the how a spacecraft landing might affect the composition of samples collected nearby. It is being developed at NASA Goddard.
  • Photovoltaic Investigation on Lunar Surface (PILS): PILS is a technology demonstration that is based on an International Space Station test platform for validating solar cells that convert light to electricity. It will demonstrate advanced photovoltaic high-voltage use for lunar surface solar arrays useful for longer mission durations. It is being developed at Glenn Research Center in Cleveland.
  • Linear Energy Transfer Spectrometer (LETS): The LETS radiation sensor will collect information about the lunar radiation environment and relies on flight-proven hardware that flew in space on the Orion spacecraft’s inaugural uncrewed flight in 2014. It is being developed at NASA Johnson.
  • Near-Infrared Volatile Spectrometer System (NIRVSS): NIRVSS will measure surface and subsurface hydration, carbon dioxide and methane – all resources that could potentially be mined from the Moon — while also mapping surface temperature and changes at the landing site. It is being developed at Ames Research Center in Silicon Valley, California.
  • Mass Spectrometer Observing Lunar Operations (MSolo): MSolo will identify low-molecular weight volatiles. It can be installed to either measure the lunar exosphere or the spacecraft outgassing and contamination. Data gathered from MSolo will help determine the composition and concentration of potentially accessible resources. It is being developed at Kennedy Space Center in Florida.
  • PROSPECT Ion-Trap Mass Spectrometer (PITMS) for Lunar Surface Volatiles: PITMS will characterize the lunar exosphere after descent and landing and throughout the lunar day to understand the release and movement of volatiles. It was previously developed for ESA’s (European Space Agency) Rosetta mission and is being modified for this mission by NASA Goddard and ESA.
  • Neutron Spectrometer System (NSS): NSS will search for indications of water-ice near the lunar surface by measuring how much hydrogen-bearing materials are at the landing site as well as determine the overall bulk composition of the regolith there. NSS is being developed at NASA Ames.
  • Neutron Measurements at the Lunar Surface (NMLS): NMLS will use a neutron spectrometer to determine the amount of neutron radiation at the Moon’s surface, and also observe and detect the presence of water or other rare elements. The data will help inform scientists’ understanding of the radiation environment on the Moon. It’s based on an instrument that currently operates on the space station and is being developed at Marshall Space Flight Center in Huntsville, Alabama.
  • Fluxgate Magnetometer (MAG): MAG will characterize certain magnetic fields to improve understanding of energy and particle pathways at the lunar surface. NASA Goddard is the lead development center for the MAG payload.

Intuitive Machines Payloads

  • Lunar Node 1 Navigation Demonstrator (LN-1): LN-1 is a CubeSat-sized experiment that will demonstrate autonomous navigation to support future surface and orbital operations. It has flown on the space station and is being developed at NASA Marshall.
  • Stereo Cameras for Lunar Plume-Surface Studies (SCALPSS): SCALPSS will capture video and still image data of the lander’s plume as the plume starts to impact the lunar surface until after engine shut off, which is critical for future lunar and Mars vehicle designs. It is being developed at NASA Langley, and also leverages camera technology used on the Mars 2020 rover.
  • Low-frequency Radio Observations for the Near Side Lunar Surface (ROLSES): ROLSES will use a low-frequency radio receiver system to determine photoelectron sheath density and scale height. These measurements will aide future exploration missions by demonstrating if there will be an effect on the antenna response or larger lunar radio observatories with antennas on the lunar surface. In addition, the ROLSES measurements will confirm how well a lunar surface-based radio observatory could observe and image solar radio bursts. It is being developed at NASA Goddard.

TikTok inks licensing deal with Merlin to use music from independent labels in videos and new Resso streaming service

By Ingrid Lunden

TikTok, the fast-growing user-generated video app from China’s Bytedance, has been building a new music streaming service to compete against the likes of Spotify, Apple Music and Amazon Music. And today it’s announcing a deal that helps pave the way for a global launch of it. It has inked a licensing deal with Merlin, the global agency that represents tens of thousands of independent music labels and hundreds of thousands of artists, for music from those labels to be used legally on the TikTok platform anywhere that the app is available.

The news is significant because this is the first major music licensing deal signed by TikTok as part of its wider efforts in the music industry. That includes both its mainstay short-form videos — where music plays a key role (the app, before it was acquired by Bytedance, was even called ‘Musically’) — as well as new music streaming services.

Specifically, a source close to TikTok has confirmed to TechCrunch that this Merlin deal covers its upcoming music subscription service Resso.

Resso was long rumoured and eventually spotted in the wild at the end of last year when Bytedance tested the app in India and Indonesia. Bytedance owns the Resso trademark, so it’s a good bet that it will make its way to more markets soon. (Possibly with features that differentiate this later entrant from others in the market? Recall Bytedance acquired an AI-based music startup called Jukedeck last year.)

“Independent artists and labels are such a crucial part of music creation and consumption on TikTok,” said Ole Obermann, global head of music for Bytedance and TikTok, in a statement. “We’re excited to partner with Merlin to bring their family of labels to the TikTok community. The breadth and diversity of the catalogue presents our users with an even larger canvas from which to create, while giving independent artists the opportunity to connect with TikTok’s diverse community.”

Music is a fundamental part of the TikTok experience, and this deal covers everything that’s there today — videos created by TikTok users, sponsored videos created for marketing — as well as whatever is coming up around the corner.

A music streaming app, which TikTok has reportedly been gearing up to launch for some time, is one way that the company could help generate revenue. Despite being one of the most popular apps of 2019, monetisation has largely eluded the company up to now.

One reason why monetising can’t happen is because of the lack of deals at the other end of the chain. As of December, TikTok had yet to sign any deals with the “majors” — Sony Music, Warner Music and Universal Music — and from what we understand Merlin is the first big deal of its kind of the company. However, there are signs that more such agreements may be coming soon. Obermann, who was hired away from Warner Music last year, in turn hired another former Warner colleague, Tracy Gardner, who now leads label licensing for the company. And just yesterday, the company opened an office in Los Angeles, the heart of the music industry.

The move to bring more licensed music usage to TikTok (and other Bytedance apps) is significant for other reasons, too.

On one hand, it’s about labels trying to evolve with the times, collecting revenues wherever audiences happen to be, whether that is in short-form user-generated video, in advertising that runs alongside that, or in a new music service capitalising on the new vogue for streamed media.

“This partnership with TikTok is very significant for us,” said Jeremy Sirota, CEO, Merlin, in a statement. “We are seeing a new generation of music services and a new era of music-related consumption, much of it driven by the global demand for independent music. Merlin members are increasingly using TikTok for their marketing campaigns, and today’s partnership ensures that they and their artists can also build new and incremental revenue streams.”

One the other hand, the deal is significant also because it underscores how TikTok is increasingly working to legitimise itself in the wider tech and media marketplace.

While Bytedance’s acquisition of TikTok continues to face regulatory scrutiny, the company has been working on ways to assert its independence from China’s control, which has included many clarifications about where its content is hosted (not China! it says) and even a search for a new US-based CEO. On another front, more licensing deals should also help the company with the many legal and PR issues that have been hanging over it concerning how it pays out when music is used in its popular app.

Dfinity launches an open-source platform aimed at the social networking giants

By Mike Butcher

When Dfinity raised $102 million in funding in 2018 at a $2 billion valuation in a round jointly led by Andreessen Horowitz and Polychain Capital, it was thought of as a step change in the world of blockchain technology. In an area that was  synonymous generating a lot of headlines around cryptocurrency speculation, this was a shift in focus, looking instead at the architecture behind Bitcoin, Ethereum, and the rest, and how it could be used for more than just “mining”, distributing and using new financial instruments — with a major, mainstream VC backing the idea, no less.

Dfinity launched with a very lofty goal: to build what it called the “Internet Computer”: a decentralized and non-proprietary network to run the next generation of mega-applications. It dubbed this public network “Cloud 3.0”.

Now, looks like this Cloud is now about to break.

In Davos this week, Dfinity launched the Bronze edition of its Internet Computer, a limited release that takes the startup one step closer to its full commercial release, expected later this year.

And to prove out the concept of how an application would run on its new network, Dfinity today demonstrated an open social network called LinkedUp.

The start-up has rather cheekily called this “an open version of LinkedIn,” the Microsoft-owned social network for professional. Unlike LikedIn, LinkedUp — which runs on any browser, is not owned or controlled by a corporate entity.

LinkedUp is built on Dfinity’s co-called Internet Computer, its name for the platform it is building to distribute the next generation of software and open internet services.

The software is hosted directly on the internet on a Switzerland-based independent data center, but in the concept of the Internet Computer, it could be hosted at your house or mine: the compute power to run the application — LinkedUp, in this case — is coming not from Amazon AWS, Google Cloud or Microsoft Azure, and is instead based on the distributed architecture that Dfinity is building.

Specifically, Dfinity notes that when enterprises and developers run their web apps and enterprise systems on the Internet Computer, the content is decentralised across a minimum of four or a maximum of an unlimited number of nodes in Dfinity’s global network of independent data centers.

And while the company initially was described as a blockchain-based system, that’s also had some refinement. A spokesperson describes the Internet Computer as a “next-generation distributed computing system — similar to its Mainframe, Client Server, and Public Cloud predecessors” that is based on cryptography.

“While DFINITY is not building a traditional blockchain/smart contract platform, it uses advanced cryptography in its consensus layer [of the Internet Computer stack] to ensure apps and workloads have the same security guarantees as Bitcoin or Ethereum,” the spokesperson added, “but its network of independent data centres ensures the speed and scale required by corporates and entrepreneurs.” The Internet Computer also has governance tokens to ensure the ownership of the technology is distributed, he said.

LinkedUp is a test case for all of this, and so Dfinity is open-sourcing LinkedUp for developers to create other types of open internet services on the structure it has built.

This ‘open social network for professional profiles’ suggests that, on Difinity’s model, one could create an ‘Open WhatsApp’, ‘Open eBay’, ‘Open Salesforce’, or ‘Open Facebook’.

(Good news, since LinkedIn might not be so happy about a lookalike service with a name and layout that also looks very familiar, where it to go much further as a commercial endeavor. “While we can’t comment specifically on any proposed trademark, LinkedIn does monitor and take action as necessary to protect our trademarks,” a spokesperson said.)

“Big tech has hijacked the internet and stifled innovation by owning the proprietary infrastructure and user relationships,” said Dominic Williams, Founder and Chief Scientist at Dfinity in a statement. “As a result, a handful of for-profit companies have created a monopolistic and closed internet. The Internet Computer provides a means to rebuild internet services in open form.”

So perhaps what we should be calling this is not LinkedUp, but more a new sort of “Linux for the cloud”.

Dfinity claims the application was built by “1.5 engineers in three weeks,” thus demonstrating how easy the infrastructure is to use.

The tools include a Canister Software Developer Kit and a simple programming language called Motoko that is optimized for Dfinity’s Internet Computer.

“The Internet Computer is conceived as an alternative to the $3.8 trillion dollar legacy IT stack, and empower the next-generation of developers to build a new breed of tamper-proof enterprise software systems and open internet services. We are democratizing software development,” Williams said. “The Bronze release of the Internet Computer provides developers and enterprises a glimpse into the infinite possibilities of building on the Internet Computer — which also reflects the strength of the Dfinity team we have built so far.”

Dfinity says its “Internet Computer Protocol” allows for a new type of software called autonomous software, which can guarantee permanent APIs that cannot be revoked. When all these open internet services (e.g., open versions of WhatsApp, Facebook, eBay, Salesforce, etc) are combined with other open software and services it creates “mutual network effects” where everyone benefits.

We quizzed Dfinity a little more on all this and asked whether this was an actual launch.

A spokesperson told us: “Since our first major milestone of launching a terminal-based SDK and new programming language called Motoko — by the co-creator of WebAssembly — on 1 November, DFINITY has released 13 new public versions of the SDK, to our second major milestone [at WEF Davos] of demoing a decentralized web app called LinkedUp on the Internet Computer running on an independent data center in Switzerland. Subsequent milestones towards the public launch of the Internet Computer will involve (1) on-boarding a global network of independent data centers, (2) fully tested economic system, and (3) fully tested Network Nervous Systems for configuration and upgrades.”

It also looks like Dfinity will not be raising more money just yet.

But the question is how they plan to woo people to it? “Dfinity has been working with a select group of Fortune 500 companies, strategic consultancies, systems integrators, venture capitalists, and universities,” the company said.

We are not sure that will quite suffice to take out Facebook, LinkedIn and all the other tech giants, but we’re fascinated to see how this plays out.

Language platform Busuu acquires video tutor startup, now plans IPO

By Mike Butcher

Language-learning platform Busuu, which has fast expanded to take on traditional giants like Duolingo, says it has acquired the live video tutoring company Verbling for an undisclosed amount, other than calling it a “double-digit million dollar acquisition.”

As a result, Busuu will now use the Verbling platform to expand into the live video tutoring space for its consumer users and corporate clients.

Busuu says it recently surpassed 100 million users globally, makes it one of the world’s fastest-growing edtech companies. It says it reached cash flow break-even last year, and plans to generate more than $40 million in revenues in 2020.

CEO and co-founder Bernhard Niesner said “we also plan to go public in the future.”

Speaking to TechCrunch, he said: “We are operating in the massive $60 billion global language learning market, with digital language learning only representing a tiny 10% market share right now. This digital part will grow fast due to wider consumer adoption driven by better learning outcomes, expected to reach $17 billion market value in 2027. Getting access to the capital markets would allow us to accelerate our growth, expand into other learning areas and build a truly globally leading, multi-billion-dollar, digital learning business.”

The new Verbling-based “Busuu live” will be a combination of their AI-powered learning content, interaction with other learners plus 1-1 live tutoring with professional teachers.

“We are also excited to leverage our 4 billion data points from our learners to provide useful information to our new 10,000+ live teachers about their students. So whenever a teacher starts a live lesson, they will have access to relevant information about the progress of their students within Busuu, so they can fully adapt their lessons to the individual needs of their learners.”

Busuu was originally founded in Madrid in 2008 and in 2012 moved to London, but now plans to open an office back in its “home town.”

Niesner said: “The London hiring market has become increasingly more competitive over the last couple of years (also due to Brexit, competition from Facebook and Google etc.), while the Spanish startup ecosystem has made tremendous progress.”

Verbling was founded in San Francisco in 2011 by the Swedish co-founders Mikael Bernstein (CEO) and Gustav Rydstedt (CTO) who met while studying at Stanford University. After attending the Y Combinator program, Verbling raised more than $4.4 million from Learn Capital, DFJ and Bullpen Capital. The platform has more than 10,000 pre-vetted live teachers and offers interactive 1-1 lessons in nearly 60 languages.

Mikael Bernstein, co-founder and CEO, Verbling said: “We are very excited to be joining forces with Busuu’s talented and experienced team, combining our world-class tutors with Busuu’s AI-powered platform will enable language learners across the globe to reach proficiency even faster.”

Following the acquisition, Verbling’s team members, including co-founders Mikael Bernstein (CEO) and Gustav Rydstedt (CTO), will join Busuu.

For context, the main publicly listed language learning business is Rosetta Stone, but they belong to the old version of language learning and have not yet done their shift to mobile, although they might survive that. There are expectations that both Duolingo and VIPKids (the Chinese English learning unicorn) will go public soon.

Dear Sophie: I live in Europe but want to move my startup to the US

By Walter Thompson
Sophie Alcorn Contributor
Sophie Alcorn is the founder of Alcorn Immigration Law in Silicon Valley and 2019 Global Law Experts Awards’ “Law Firm of the Year in California for Entrepreneur Immigration Services.” She connects people with the businesses and opportunities that expand their lives.

“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. Sophie is the founder of Alcorn Immigration Law, the fastest-growing immigration law firm in Silicon Valley and 2019 Global Law Experts Awards’ “Law Firm of the Year in California for Entrepreneur Immigration Services.”

Extra Crunch subscribers enjoy full access to “Dear Sophie” — use promo code ALCORN to purchase a one or two-year subscription for 50% off.


Dear Sophie: I live in Germany, but I am a Hungarian citizen. I’m worried that I won’t qualify for an O-1A visa because I’m definitely not famous or a genius. I want to move my startup to America so we can access investors and the North American market. Because I am Hungarian and not German, I don’t qualify for an E-2 investor visa. Is there any way I can pull off moving to the States and growing my company over the next two to three years? 

— Hopeful in Hamburg

Dear Hopeful: You are not alone! If your dream is to move to the United States, you can definitely make it happen through your existing company in Germany. It’s going to take some basic planning and then a little bit of time to lay the groundwork. I’ll walk you through the basic requirements so that you can get an idea of what’s ahead of you, but if you need individual specific legal advice, you should ask an attorney. For now, I hope this helps.

The first thing the United States government will want to see is that you have a registered company here. It could be any type of company, even an LLC in California. However, startup investors usually prefer a Delaware C corporation. If you don’t yet have a company registered in Germany because you are very early stage, then you could also consider having the Delaware corporation be the parent company of any future legal entities in Europe. Talk to a corporate attorney about the right choice for you.

From the immigration perspective, all of this is necessary because of the main requirements of the L-1A visa for intracompany transferees. These requirements demand that a U.S. and foreign company have a qualifying relationship for an employee transfer, such as a parent/subsidiary, a branch or an affiliation.

Boeing partners with Tactical Robotics to develop VTOL tech

By Darrell Etherington

Boeing has signed a new agreement with Israel-based Tactical Robotics, an exploratory deal that will see the two companies work together jointly on “developing, producing and marketing” aircraft with vertical take-off and landing (VTOL) capabilities based on Tactical Robotics’ “Fancraft” enclosed rotor technology.

Already, the Urban Aeronautics-owned Tactical Robotics has developed “Cormorant,” an autonomous flying car vehicle that has the footprint of roughly a Humvee, but that can take off and land vertically thanks to its Fancraft rotors. Unlike open rotors, these are placed inside ducts, which provide advantages both in terms of directing airflow and providing enhanced safety for anyone around the vehicle because they’re mostly covered. This new arrangement between the two companies will begin with exploring options for Cormorant in terms of production and deployment for potential applications, including disaster response.

The overall deal between Boeing and Tactical Robotics could be much broader-reaching, however, and includes development and exploration of both piloted and autonomous VTOL aircraft. This is yet another example of how the VTOL industry is heating up in terms of partnership, investments and productization.

TriggerMesh scores $3M seed from Index and Crane to help enterprises embrace ‘serverless’

By Steve O'Hear

TriggerMesh, a startup building on top of the open source Kubernetes software to help enterprises go “serverless” across apps running in the cloud and traditional data centers, has raised $3 million in seed funding.

The round is led Index Ventures and Crane Venture Partners. TriggerMesh says the investment will be used to scale the company and grow its development team in order to offer what it bills as the industry’s first “cloud native integration platform for the serverless era”.

Founded by two prominent names in the open source community — Sebastien Goasguen (CEO) and Mark Hinkle (CMO), based in Geneva and North Carolina, respectively — TriggerMesh’s platform will enable organizations to build enterprise-grade applications that span multiple cloud and data center environments, therefore helping to address what the startup says is a growing pain point as serverless architectures become more prevalent.

TriggerMesh’s platform and serverless cloud bus is said to facilitate “application flow orchestration” to consume events from any data center application or cloud event source and trigger serverless functions.

“As cloud-native applications use a greater number of serverless offerings in the cloud, TriggerMesh provides a declarative API and a set of tools to define event flows and functions that compose modern applications,” explains the company.

One feature TriggerMesh is specifically talking up and very relevant to legacy enterprises is its integration functionality with on-premise software. Via its wares, it says it is easy to connect SaaS, serverless cloud offerings and on-premises applications to provide scalable cloud-native applications at a low cost and quickly.

“There are huge numbers of disconnected applications that are unable to fully benefit from cloud computing and increased network connectivity,” noted Scott Sage, co-founder and partner at Crane Venture Partners, in a statement. “Most companies have some combination of cloud and on-premises applications and with more applications around, often from different vendors, the need for integration has never been greater. We see TriggerMesh’s solution as the ideal fit for this need which made them a compelling investment”.

UK watchdog sets out ‘age appropriate’ design code for online services to keep kids’ privacy safe

By Natasha Lomas

The UK’s data protection watchdog has today published a set of design standards for Internet services which are intended to help protect the privacy and safety of children online.

The Information Commissioner’s Office (ICO) has been working on the Age Appropriate Design Code since the 2018 update of domestic data protection law — as part of a government push to create ‘world-leading’ standards for children when they’re online.

UK lawmakers have grown increasingly concerned about the ‘datafication’ of children when they go online and may be too young to legally consent to being tracked and profiled under existing European data protection law.

The ICO’s code is comprised of 15 standards of what it calls “age appropriate design” — which the regulator says reflects a “risk-based approach”, including stipulating that setting should be set by default to ‘high privacy’; that only the minimum amount of data needed to provide the service should be collected and retained; and that children’s data should not be shared unless there’s a reason to do so that’s in their best interests.

Profiling should also be off by default. While the code also takes aim at dark pattern UI designs that seek to manipulate user actions against their own interests, saying “nudge techniques” should not be used to “lead or encourage children to provide unnecessary personal data or weaken or turn off their privacy protections”.

“The focus is on providing default settings which ensures that children have the best possible access to online services whilst minimising data collection and use, by default,” the regulator writes in an executive summary.

While the age appropriate design code is focused on protecting children it is applies to a very broad range of online services — with the regulator noting that “the majority of online services that children use are covered” and also stipulating “this code applies if children are likely to use your service” [emphasis ours].

This means it could be applied to anything from games, to social media platforms to fitness apps to educational websites and on-demand streaming services — if they’re available to UK users.

“We consider that for a service to be ‘likely’ to be accessed [by children], the possibility of this happening needs to be more probable than not. This recognises the intention of Parliament to cover services that children use in reality, but does not extend the definition to cover all services that children could possibly access,” the ICO adds.

Here are the 15 standards in full as the regulator describes them:

  1. Best interests of the child: The best interests of the child should be a primary consideration when you design and develop online services likely to be accessed by a child.
  2. Data protection impact assessments: Undertake a DPIA to assess and mitigate risks to the rights and freedoms of children who are likely to access your service, which arise from your data processing. Take into account differing ages, capacities and development needs and ensure that your DPIA builds in compliance
    with this code.
  3. Age appropriate application: Take a risk-based approach to recognising the age of individual users and ensure you effectively apply the standards in this code to child users. Either establish age with a level of certainty that is appropriate to the risks to the rights and freedoms of children that arise from your data processing, or apply the standards in this code to all your users instead.
  4. Transparency: The privacy information you provide to users, and other published terms, policies and community standards, must be concise, prominent and in clear language suited to the age of the child. Provide additional specific ‘bite-sized’ explanations about how you use personal data at the point that use is activated.
  5. Detrimental use of data: Do not use children’s personal data in ways that have been shown to be detrimental to their wellbeing, or that go against industry codes of practice, other regulatory provisions or Government advice.
  6. Policies and community standards: Uphold your own published terms, policies and community standards (including but not limited to privacy policies, age restriction, behaviour rules and content policies).
  7. Default settings: Settings must be ‘high privacy’ by default (unless you can demonstrate a compelling reason for a different default setting, taking account of the best interests of the child).
  8. Data minimisation: Collect and retain only the minimum amount of personal data you need to provide the elements of your service in which a child is actively and knowingly engaged. Give children separate choices over which elements they wish to activate.
  9. Data sharing: Do not disclose children’s data unless you can demonstrate a compelling reason to do so, taking account of the best interests of the child.
  10. Geolocation: Switch geolocation options off by default (unless you can demonstrate a compelling reason for geolocation to be switched on by default, taking account of the best interests of the child). Provide an obvious sign for children when location tracking is active. Options which make a child’s location visible to others must default back to ‘off’ at the end of each session.
  11. Parental controls: If you provide parental controls, give the child age appropriate information about this. If your online service allows a parent or carer to monitor their child’s online activity or track their location, provide an obvious sign to the child when they are being monitored.
  12. Profiling: Switch options which use profiling ‘off’ by default (unless you can demonstrate a compelling reason for profiling to be on by default, taking account of the best interests of the child). Only allow profiling if you have appropriate measures in place to protect the child from any harmful effects (in particular, being fed content that is detrimental to their health or wellbeing).
  13. Nudge techniques: Do not use nudge techniques to lead or encourage children to provide unnecessary personal data or weaken or turn off their privacy protections.
  14. Connected toys and devices: If you provide a connected toy or device ensure you include effective tools to enable conformance to this code.
  15. Online tools: Provide prominent and accessible tools to help children exercise their data protection rights and report concerns.

The Age Appropriate Design Code also defines children as under the age of 18 — which offers a higher bar than current UK data protection law which, for example, puts only a 13-year-age limit for children to be legally able to give their consent to being tracked online.

So — assuming (very wildly) — that Internet services were to suddenly decide to follow the code to the letter, setting trackers off by default and not nudging users to weaken privacy-protecting defaults by manipulating them to give up more data, the code could — in theory — raise the level of privacy both children and adults typically get online.

However it’s not legally binding — so there’s a pretty fat chance of that.

Although the regulator does make a point of noting that the standards in the code are backed by existing data protection laws, which it does regulate and can legally enforceable (and which include clear principles like ‘privacy by design and default’) — pointing out it has powers to take action against law breakers, including “tough sanctions” such as orders to stop processing data and fines of up to 4% of a company’s global turnover.

So, in a way, the regulator appears to be saying: ‘Are you feeling lucky data punk?’

The code also still has to be laid before parliament for approval for a period of 40 sitting days — with the ICO saying it will come into force 21 days after that, assuming no objections. Then there’s a further 12 month transition period after it comes into force — to “give online services time to conform”. So there’s a fair bit of slack built in before any action may be taken to tackle flagrant nose-thumbers.

Last April the UK government published a white paper setting out its proposals for regulating a range of online harms — including seeking to address concern about inappropriate material that’s available on the Internet being accessed by children.

The ICO’s Age Appropriate Design Code is intended to support that effort. So there’s also a chance that some of the same sorts of stipulations could be baked into the planned online harms bill.

“This is not, and will not be, ‘law’. It is just a code of practice,” said Neil Brown, an Internet, telecoms and tech lawyer at Decoded Legal, discussing the likely impact of the suggested standards. “It shows the direction of the ICO’s thinking, and its expectations, and the ICO has to have regard to it when it takes enforcement action but it’s not something with which an organisation needs to comply as such. They need to comply with the law, which is the GDPR [General Data Protection Regulation] and the DPA [Data Protection Act] 2018.

“The code of practice sits under the DPA 2018, so companies which are within the scope of that are likely to want to understand what it says. The DPA 2018 and the UK GDPR (the version of the GDPR which will be in place after Brexit) covers controllers established in the UK, as well as overseas controllers which target services to people in the UK or monitor the behaviour of people in the UK. Merely making a service available to people in the UK should not be sufficient.”

“Overall, this is consistent with the general direction of travel for online services, and the perception that more needs to be done to protect children online,” Brown also told us.

“Right now, online services should be working out how to comply with the GDPR, the ePrivacy rules, and any other applicable laws. The obligation to comply with those laws does not change because of today’s code of practice. Rather, the code of practice shows the ICO’s thinking on what compliance might look like (and, possibly, goldplates some of the requirements of the law too).”

Organizations that choose to take note of the code — and are in a position to be able to demonstrate they’ve followed its standards — stand a better chance of persuading the regulator they’ve complied with relevant privacy laws, per Brown.

“Conversely, if they want to say that they comply with the law but not with the code, that is (legally) possible, but might be more of a struggle in terms of engagement with the ICO,” he added.

Zooming back out, the government said last fall that it’s committed to publishing draft online harms legislation for pre-legislative scrutiny “at pace”.

But at the same time it dropped a controversial plan included in a 2017 piece of digital legislation which would have made age checks for accessing online pornography mandatory — saying it wanted to focus on a developing “the most comprehensive approach possible to protecting children”, i.e. via the online harms bill.

How comprehensive the touted ‘child protections’ will end up being remains to be seen.

Brown suggests age verification could come through as a “general requirement”, given the age verification component of the Digital Economy Act 2017 was dropped — and “the government has said that these will be swept up in the broader online harms piece”.

The government has also been consulting with tech companies on possible ways to implement age verification online.

However the difficulties of regulating perpetually iterating Internet services — many of which are also operated by companies based outside the UK — have been writ large for years. (And are now mired in geopolitics.)

While the enforcement of existing European digital privacy laws remains, to put it politely, a work in progress

Tencent to grow gaming empire with $148M acquisition of Conan publisher Funcom in Norway

By Ingrid Lunden

Tencent, one of the world’s biggest videogaming companies by revenue, today made another move to help cement that position. The Chinese firm has made an offer to fully acquire Funcom, the games developer behind Conan Exiles (and others in the Conan franchise), Dune and some 28 other titles. The deal, when approved, would value the Oslo-based company at $148 million (NOK 1.33 billion) and give the company a much-needed cash injection to follow through on longer-term strategy around its next generation of games.

Funcom is traded publicly on the Oslo Stock Exchange, and the board has already recommended the offer, which is being made at NOK 17 per share, or around 27% higher than its closing share price the day before (Tuesday).

The news is being made with some interesting timing. Today, Tencent competes against the likes of Sony, Microsoft and Nintendo in terms of mass-market, gaming revenues. But just earlier this week, it was reported that ByteDance — the publisher behind breakout social media app TikTok — was readying its own foray into the world of gaming.

That would set up another level of rivalry between the two companies, since Tencent also has a massive interest in the social media space, specifically by way of its messaging app WeChat . While many consumers will have multiple apps, when it comes down to it, spending money in one represents a constraint on spending money in another.

Today, Tencent is one of the world’s biggest video game companies: in its last reported quarter (Q3 in November), Tencent said that it make RMB28.6 billion ($4.1 billion) in online gaming revenue, with smartphone games accounting for RMB24.3 billion of that.

Acquisitions and controlling stakes form a key part of the company’s growth strategy in gaming. Among its very biggest deals, Tencent paid $8.6 billion for a majority stake in Finland’s Supercell back in 2016. It also has a range of controlling stakes in Riot Games, Epic, Ubisoft, Paradox, Frontier and Miniclip. These companies, in turn, also are making deals: just earlier this month it was reported (and sources have also told us) that Miniclip acquired Israel’s Ilyon Games (of Bubble Shooter fame) for $100 million.

Turning back to Funcom, Tencent was already an investor in the company: it took a 29% stake in it in September 2019 in a secondary deal, buying out KGJ Capital (which had previously been the biggest shareholder).

“Tencent has a reputation for being a responsible long-term investor, and for its renowned operational capabilities in online games,” said Funcom CEO Rui Casais at the time. “The insight, experience, and knowledge that Tencent will bring is of great value to us and we look forward to working closely with them as we continue to develop great games and build a successful future for Funcom.”

In retrospect, this was laying the groundwork and relationships for a bigger deal just months down the line. 

“We have a great relationship with Tencent as our largest shareholder and we are very excited to be part of the Tencent team,” Casais said in a statement today. “We will continue to develop great games that people all over the world will play, and believe that the support of Tencent will take Funcom to the next level. Tencent will provide Funcom with operational leverage and insights from its vast knowledge as the leading company in the game space.”

The rationale for Funcom is that the company had already determined that it needed further investment in order to follow through on its longer-term strategy.

According to a statement issued before it recommended the offer, the company is continuing to build out the “Open World Survival segment” using the Games-as-a-Service business model (where you pay to fuel up with more credits); and is building an ambitious Dune project set to launch in two years.

“Such increased focus would require a redirection of resources from other initiatives, the most significant being the co-op shooter game, initially scheduled for release during 2020 that has been impacted by scope changes due to external/market pressures with increasingly strong competition and internal delays,” the board writes, and if it goes ahead with its strategy, “It is likely that the Company will need additional financing to supplement the revenue generated from current operations.”

Ophelia Brown’s Blossom Capital raises new $185M European early-stage fund

By Steve O'Hear

Blossom Capital, the early-stage VC firm co-founded by ex-Index Ventures and LocalGlobe VC Ophelia Brown, is announcing a second fund, less than 12 months since fund one was closed.

The new fund, which is described as “heavily oversubscribed,” sits at $185 million. That’s up from $85 million first time around.

Blossom’s remit remains broadly the same: to be the lead investor in European tech startups at Series A, along with doing some seed deals, too. In particular, the VC will continue to focus on finance, design, marketplaces, travel, developer-focused tools, infrastructure and “API-first” companies.

Its differentiator is pitched as so-called “high conviction” investing, which sees it back fewer companies by writing larger cheques, along with claiming to have close ties to U.S. top tier investors ready to back portfolios at the next stage.

And whilst a “bridge to the valley” is a well worn claim by multiple European VCs, Blossom’s track record so far bares this is out somewhat, even if it nascent. Of the firm’s portfolio, travel booking platform Duffel has received two follow-on investment rounds led by Benchmark and Index Ventures; cybersecurity automation platform Tines received follow-on investment led by Accel Partners; and payments unicorn Checkout.com is also backed by Insight Partners.

In addition, I understand that about half of Blossom’s LPs are in the U.S., and that all of the firm’s original LPs invested in this second fund, which Brown concedes was a lot easier to raise than the first. That’s presumably down to the up round valuations Blossom is already able to tout.

Citing benchmark data from Cambridge Associates and Preqin, Blossom says it sits in the top 5% of funds of 2018/2019 vintage in the U.S. and EU. Although, less than a year old, I would stress that it is still very early days.

More broadly, Brown and Blossom’s other partners — Imran Gohry, Louise Samet and Mike Hudack — argue that the most successful European companies historically are those that were able to attract U.S. investors but that companies no longer need to relocate to the U.S. to seize the opportunity.

“When we looked at the data it was very clear at the growth stage that, outside of Index and Accel, the most successful European outcomes were driven by the combination of European early-stage investors and top-tier U.S. growth investors,” explained Blossom Capital partner, Imran Ghory, in a statement. “From day one we prioritised building those relationships, both to share knowledge but also provide a bridge for European founders to access the best growth capital as they scale”.

LumApps raises $70M Series C led by Goldman Sachs

By Steve O'Hear

LumApps, the cloud-based social intranet for the enterprise, has closed $70 million in Series C funding. Leading the round is Goldman Sachs Growth, with participation from Bpifrance via its Growth Fund Large Venture.

Others participating include Idinvest Partners, Iris Capital, and Famille C (the family office of Courtin-Clarins). The round brings the total raised by the French company to around $100 million.

Founded in Paris back in 2012, before launching today’s proposition in 2015, LumApps has developed what it describes as a “social intranet” for enterprises to enable employees to better informed, connect and collaborate. The SaaS integrates with other enterprise software such as G Suite, Microsoft Office 365 and Microsoft SharePoint, to centralize access to corporate content, business applications and social features under a single platform. The central premise is to help companies “break down silos” and streamline internal communication.

LumApps customers include Airbus, Veolia, Valeo, Air Liquide, Colgate-Palmolive, The Economist, Schibsted, EA, Logitech, Toto, and Japan Airlines, and the company claims to have achieved year-on-year revenue growth of 100%.

“Our dream was to enable access to useful information in one click, from one place and for everyone,” LumApps founder and CEO Sébastien Ricard told TechCrunch when the company raised its Series B early last year. “We wanted to build a solution that bridged [an] intranet and social network, with the latest new technologies. A place that users will love.”

Since then, LumApps has added several new offices and has seven worldwide: Lyon, Paris, London, New York, Austin, San Francisco, and Tokyo. Armed with additional funding, the company will continue adding significant headcount, hiring across engineering, product, sales and marketing. There are also plans to expand to Canada, more of Asia Pacific, and Germany.

“We’re actually looking at hiring 200 people minimum,” Ricard tells me. “We’re growing fast and have ambitious plans to take the product to new heights, including fulfilling our vision of making LumApps a personal assistant powered by AI. This will require a significant investment in top engineering/AI talent globally”.

Asked to elaborate on what machine learning and AI could bring to a social intranet, Ricard says the vision is to make LumApps a personal assistant for all communications and workflows in the enterprise.

“We see a future where this personal assistant can make predictive suggestions based on historical data and actions. Applying AI to prompt authors with suggested content, flagging important items that demand attention, and auto-archiving old content, are a few examples. Managing the massive troves of content and data companies have today is critical”.

Ricard also sees AI playing a big role in data security. “Employees have a high-degree of control with regard to data sharing and AI can help manage what employees can share in the workplace. This is more long-term but it’s where we’re headed,” he says.

“In the short-term, we’re making investments in automating as many workflows as possible with the goal of reducing or eliminating administrative tasks that keep employees from more productive tasks, including team collaboration and knowledge sharing”.

Meanwhile, LumApps says it may also use part of the Series C for M&A activity. “We’re growing fast and we’re looking at different areas for expansion opportunities,” Ricard says. “This includes retail and manufacturing and some business functions like HR, marketing and communications. We don’t have concrete plans to acquire any companies at the moment but we are keeping our options open as acquiring best-in-breed technologies often makes more sense from a business perspective than building it yourself”.

Adblock Plus’s Till Faida on the shifting shape of ad blocking

By Natasha Lomas

Publishers hate ad blockers, but millions of internet users embrace them — and many browsers even bake it in as a feature, including Google’s own Chrome. At the same time, growing numbers of publishers are walling off free content for visitors who hard-block ads, even asking users directly to be whitelisted.

It’s a fight for attention from two very different sides.

Some form of ad blocking is here to stay, so long as advertisements are irritating and the adtech industry remains deaf to genuine privacy reform. Although the nature of the ad-blocking business is generally closer to filtering than blocking, where is it headed?

We chatted with Till Faida, co-founder and CEO of eyeo, maker of Adblock Plus (ABP), to take the temperature of an evolving space that’s never been a stranger to controversy — including fresh calls for his company to face antitrust scrutiny.

Glovo exits the Middle East and drops two LatAm markets in latest food delivery crunch

By Natasha Lomas

The new year isn’t even a month old and the food delivery crunch is already taking big bites. Spain’s Glovo has today announced it’s exiting four markets — which it says is part of a goal of pushing for profitability by 2021.

Also today, Uber confirmed rumors late last year by announcing it’s offloading its Indian Eats business to local rival Zomato — which will see it take a 9.99% stake in the Indian startup.

In other recent news Latin America focused on-demand delivery app Rappi announced 6% staff layoffs.

On-demand food delivery apps may be great at filling the bellies of hungry consumers fast but startups in this space have yet to figure out how to deliver push-button convenience without haemorrhaging money at scale.

So the question even some investors are asking is how they can make their model profitable?

Middle East exit

The four markets Glovo is leaving are Turkey, Egypt, Uruguay and Puerto Rico.

The exits mean its app footprint is shrinking to 22 markets, still with a focus on South America, South West Europe, and Eastern Europe and Africa.

Interestingly, Glovo is here essentially saying goodbye to the Middle East — despite its recent late stage financing round being led by Abu Dhabi state investment company, Mubadala. (It told us last month that regional expansion was not part of Mubadala’s investment thesis.)

Commenting on the exits in a statement, Glovo co-founder and CEO, Oscar Pierre, said: “This has been a very tough decision to take but our strategy has always been to focus on markets where we can grow and establish ourselves among the top two delivery players while providing a first-class user experience and value for our Glovers, customers and partners.”

Last month Pierre told us the Middle East looks too competitive for Glovo to expand further.

In the event it’s opted for a full exit — given both Egypt and Turkey are being dropped (despite the latter being touted as one of Glovo’s fastest growing markets just over a year ago, at the time of its Series D).

“Leaving these four markets will help us to further strengthen our leadership position in South West and Eastern Europe, LatAm and other African markets, and reach our profitability targets by early 2021,” Pierre added.

Glovo said its app will continue to function in the four markets “for a few weeks” after today — adding that it’s offering “support and advice to couriers, customers and partners throughout this transition”.

“I want to place on record our thanks to all of our Glovers, customers and partners in the markets from which we’re withdrawing for their hard work, dedication, commitment and ongoing support,” Pierre added.

The exits sum to Glovo withdrawing from eight out of a total 306 cities.

It also said the eight cities collectively generated 1.7% of its gross sales in 2019 — so it’s signalling the move doesn’t amount to a major revenue hit.

The startup disclosed a $166M Series E raise last month — which pushed the business past a unicorn valuation. Pierre told us then that the new financing would be used to achieve profitability “as early as 2021”, foreshadowing today’s announcement of a clutch of market exits.

Glovo has said its goal is to become the leading or second delivery platform in all the markets where it operates — underlining the challenges of turning a profit in such a hyper competitive, thin margin space which also involves major logistical complexities with so many moving parts (and people) involved in each transaction.

As food delivery players reconfigure their regional footprints — via market exits and consolidation — better financed platforms will be hoping they’ll be left standing with a profitable business to shout about (and the chance to grow again by gobbling up less profitable rivals or else be consumed themselves). So something of a new race is on.

Back in November in an on-stage interview at TechCrunch Disrupt Berlin, Uber Eats and Glovo discussed the challenges of turning a profit — with Glovo co-founder Sacha Michaud telling us he expects further consolidation in the on-demand delivery space. (Though the pair claimed there had been no acquisition talks between Uber and Glovo.)

Michaud said then that Glovo is profitable on a per unit economics basis in “some countries” — but admitted it “varies a lot country by country”.

Spain and Southern Europe are the best markets for Glovo, he also told us, confirming it generates operating profit there. “Latin America will become operation profitable next year,” he predicted.

Glovo’s exit from Egypt actually marks the end of a second act in the market.

The startup first announced it was pulling the plug on Egypt in April 2019 — but returned last summer, at the behest of its investor Delivery Hero (a rival food delivery startup which has a stake in Glovo), according to Michaud’s explanation on stage.

However there was also an intervention by Egypt’s competition watchdog. And local press reported the watchdog had ordered Glovo to resume operations — accusing it and its investor of colluding to restrict competition in the market (Delivery Hero having previously acquired Egyptian food delivery rival, Otlob).

What the watchdog makes of today’s announcement of a final bow out could thus be an interesting wrinkle.

Asked about Egypt, a Glovo spokesperson told us: “Egypt has been a very complex market for us, we were sad to leave the first time and excited to return when we did so last summer. However, our strategy has always been to be among the top two delivery players in every market we enter and have a clear path to profitability. Unfortunately, in Egypt there is not a clear path to profitability.”

Whither profitability?

So what does a clear path to profitability in the on-demand delivery space look like?

Market maturity/density appears to be key, with Glovo only operating in one city apiece in the other two markets it’s leaving, Uruguay and Puerto Rico, for example — compared to hundreds across its best markets, Spain and Italy, where it’s operating out of the red.

This suggests that other markets in South America — where Glovo similarly has just a toe-hold, of a single or handful of cities, and less time on the ground, such as Honduras or Panama — could be vulnerable to further future exits as the company reconfigures to try to hit full profitability in just around a year’s time.

But there are likely lots of factors involved in making the unit economics stack up so it’s tricky to predict.

Food delivered on-demand makes up the majority of Glovo’s orders per market but its app also touts being able to deliver ‘anything’ — from groceries to pharmaceuticals to the house keys you left at home — which it claims as a differentiating factor vs rival food-delivery-only apps.

A degree of variety also looks to be a key ingredient in becoming a sustainable on-demand delivery business — as scale and cross selling appear to where the unit economics can work.

Groceries are certainly a growing focus for Glovo which has been investing in setting up networks of dark supermarkets to support fast delivery of convenience style groceries as well as ready-to-eat food — thereby expanding opportunities for cross-selling to its convenience-loving food junkies at the point of appetite-driven (but likely loss-making) lunch and dinner orders.

Last year Michaud told us that market “maturity” supports profitability. “At the end of the day the more orders we have the better the whole ecosystem works,” he said.

While Uber Eats’ general manager for Northern and Eastern Europe, Charity Safford, also pointed to “scale” as the secret sauce for still elusive profits.

“Where we start to see more and more trips happening this is definitely where we see the unit economics improving — so our job is really to figure out all of the use cases we can put into people’s hands to get that application used as much as possible,” she said.

It’s instructive that Uber is shifting towards a ‘superapp’ model — revealing its intent last year to fold previously separate lines of business, such as rides and Eats, into a single one-stop-shop app which it began rolling out last year. So it’s also able to deliver or serve an increasing number of things (and/or services).

The tech giant has also been testing subscription passes which combine access to a range of its offerings under one regular payment. While Glovo launched a ‘Prime’ monthly subscription offering unlimited deliveries of anything its couriers can bike around for a fixed monthly cost back in 2018.

When it comes to the quest for on-demand profitability all roads so seem to lead to trying to become the bit of Amazon’s business that Amazon hasn’t already built out and swiped.

African fintech firm Flutterwave raises $35M, partners with Worldpay

By Jake Bright

San Francisco and Lagos-based fintech startup Flutterwave has raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.

With the funding, Flutterwave will invest in technology and business development to grow market share in existing operating countries, CEO Olugbenga Agboola — aka GB — told TechCrunch.

The company will also expand capabilities to offer more services around its payment products.

More than payments

“We don’t just want to be a payment technology company, we have sector expertise around education, travel, gaming, e-commerce, fintech companies. They all use our expertise,” said GB.

That means Flutterwave will provide more solutions around the broader needs of its clients.

The Nigerian-founded startup’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad.

Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Booking.com and e-commerce company Jumia.

In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data.

Flutterwave did the payment integration for U.S. pop-star Cardi B’s 2019 performances in Nigeria and Ghana. Those are two of the countries in which the startup operates, in addition to South Africa, Uganda, Kenya, Tanzania, Zambia, the U.K. and Rwanda.

Flutterwave Cardi B Nigeria“We want to scale in all those markets and be the payment processor of choice,” GB said.

The company will hire more business development staff and expand its developer team to create more sector expertise, according to GB.

“Our business goes beyond payments. People don’t want to just make payments, they want to do something,” he said. And Fluterwave aims to offer more capabilities toward what those clients want to do in Africa.

GB Flutterwave disrupt

Olugbenga Agboola, aka GB

“If you are a charity that wants to raise money for cancer research in Ghana, or you want to sell online, or you’re Cardi B…who wants to do concerts in Africa…we want to be able to set up payments, write the code and create the platform for those needs,” GB explained.

That also means Flutterwave, which built its early client base across global companies, aims to serve smaller African businesses, including startups. Current customers include African-founded tech companies, such as moto ride-hail venture Max.ng.

Worldpay partnership

The new round makes Flutterwave the payment provider for Worldpay in Africa.

“With this partnership, any Worldpay merchant in Europe or the U.S. can accept any African payment. If someone goes to pay Netflix with an African card, it just works,” GB said.

In 2019, Worldpay was acquired for a reported $35 billion by FIS, a U.S. financial services provider. At the time of the purchase, it was projected the two companies would generate revenues of $12 billion annually, yet neither has notable presence in Africa.

Therein lies the benefit of collaborating with Flutterwave.

FIS’s Head of Ventures Joon Cho confirmed the partnership with TechCrunch. FIS also backed Flutterwave’s $35 million Series B. US VC firms Greycroft and eVentures led the round, with participation of Visa, Green Visor and African fund CRE Venture Capital.

Flutterwave’s latest funding brings the company’s total investment to $55 million and follows a year in which the fintech venture announced a series of weighty partnerships.

In July 2019, the startup joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.

The Alipay collaboration followed one between Flutterwave and Visa to launch a consumer payment product for Africa, called GetBarter.

Flutterwave and African fintech

Flutterwave’s $35 million round and latest partnership are among the reasons the startup has become a standout in Africa’s digital-finance landscape.

As a sector, fintech gains the bulk of dealflow and the majority of startup capital flowing to African startups annually. VC to Africa totaled $1.35 billion in 2019, according to WeeTracker’s latest stats.

While a number of payment startups and products have scaled — see Paga in Nigeria and M-Pesa in Kenya — the majority of the continent’s fintech companies are P2P in focus and segregated to one or two markets.

Flutterwave’s platform has served the increased B2B business payment needs spurred by the decade of growth and reform that has occurred in Africa’s core economies.

The value the startup has created is underscored not just by transactional volume the company generates, but the partnerships it has attracted.

A growing list of the masters of the payment universe — Visa, Alipay, Worldpay — have shown they need Flutterwave to do finance in Africa.

Stasher, the luggage storage app for travelers, raises $2.5M additional funding

By Steve O'Hear

Stasher, the luggage storage app for travelers, has raised $2.5 million in additional funding. Leading the round is Venture Friends, along with various angels, including Johan Svanstrom, former president of Expedia-owned Hotels.com.

Launched in 2015, and now calling itself a “sharing economy solution” to luggage storage, the Stasher marketplace and app connects travelers, event attendees and vacation rental guests with local shops and hotels that can store their luggage on a short to medium-term basis.

Insurance is included with each booking, and items stored at a StasherPoint are covered for damage, loss and theft up to the value of £1,000.

Meanwhile, the revenue share for hosts is roughly 50% of the storage fee. The idea is that brick and mortar shops can access an additional revenue stream, thanks to the so-called sharing economy.

More broadly, the problem Stasher wants to solve is that having to carry around luggage can often stop you enjoying part of your day when traveling, time that is otherwise wasted. “If you’ve ever been forced out of your Airbnb at 10am, you may be familiar with the issue,” co-founder Anthony Collias told me back in 2018.

To that end, the Stasher network has grown a lot since then, and now has a presence in 250 cities, up from 20. This has included bringing the luggage storage app to the U.S. and Australia.

This has seen the startup partner with the likes of Klook, Sonder, Marriott and Hotels.com, along with brands such as Premier Inn, Expedia, Holiday Express, OYO and Accor.

Berlin’s Home pulls in €11M Series A for its landlord and tenant solution

By Steve O'Hear

Home, the Berlin-based startup that set out offering an app to help landlords manage rentals but has since pivoted to solve the landlord-tenant problem more directly, has raised €11 million in Series A funding.

Backing the round is Capnamic, EQT Ventures, FJ Labs and Redalpine, whilst the new capital will be used for “product innovation”, particularly on the tenant side. In addition, Home plans to bring its offering to new cities.

“[We] started with an app for landlords, which tracked rent payments etc., but Home is now a managed marketplace for landlords and tenants,” Home co-founder and CEO Thilo Konzok tells me.

“Home now acts as both the tenant and the landlord. Landlords get an instant offer and sign a contract with Home. A digital lock is fitted at the apartment and the landlord then simply gets rent – no maintenance stresses, financial risks etc”.

The idea of essentially becoming a full-stack landlord (my words, not Konzok’s) is so that property owners don’t need to become experts in renting apartments, understanding legislation, maintenance and knowing what rent to charge.

“Tenants also have a far better, more transparent experience,” argues the Home CEO. This includes the ability to visit and book apartments themselves, thanks to Home’s use of smart locks. “If they need anything, they can reach Home 24/7 via the app,” he adds.

The proposition is currently available in Berlin, Munich and Hamburg, and appears to be proving popular. Konzok says that every month more than 1,100 landlords request an offer from Home. To be able to accept more of these requests, the company will expand into new cities throughout 2020. Specifically, this should see seven more German cities by April 2020 and one international city in October 2020.

Adds Jörg Binnenbrücker, Managing Partner at Capnamic: “When we first met Thilo and Moritz we were impressed by their vision of creating a new asset class and form of ownership. Capnamic is excited to have found the best team to bring this new housing experience to everyone and capture a massive market opportunity”.

Challenger business bank Qonto raises $115 million round led by Tencent and DST Global

By Romain Dillet

French startup Qonto has raised a $115 million Series C funding round led by Tencent and DST Global. Today’s news comes a few days after another French fintech startup, Lydia, raised some money from Tencent.

Existing investors Valar and Alven are also participating in today’s funding round. TransferWise co-founder Taavet Hinrikus and Adyen CFO Ingo Uytdehaage are also joining the round. Qonto says it represents the largest funding round for a French fintech company.

Qonto is a challenger bank, or a neobank, but for B2B use cases. Instead of attracting millions of customers like N26 or Monzo, Qonto is serving small and medium companies as well as freelancers in Europe.

According to the startup, business banking in Europe is broken. The company thinks it can provide a much better user experience with an online and mobile-first product.

The company has managed to attract 65,000 companies over the past two years and a half. The product is currently live in France, Italy, Spain and Germany. In 2019 alone, Qonto managed €10 billion in transaction volume.

With today’s funding round, the company plans to double down on its existing markets, develop new features that make the platform work better in each country based on local needs and hire more people. The team should grow from 200 to 300 employees within a year.

Qonto obtained a payment institution license in June 2018 and has developed its own core banking infrastructure. Around 50% of the company’s user base is currently using Qonto’s own core banking system. Others are still relying on a third-party partner.

Moving from one back end to another requires some input from customers, which explains why there are still some customers using the legacy infrastructure. Over the coming months, Qonto plans to launch new payment features that should convince more users to switch to Qonto’s back end.

Even more important, Qonto plans to obtain a credit institution license, which could open up a ton of possibilities when it comes to features and revenue streams. The company says that it should have its new license by the end of the year.

For instance, you could imagine being able to get a credit card, apply for an overdraft and get a small loan with Qonto.

Compared to traditional banks, Qonto lets you open a bank account more easily. After signing up, Qonto offers a modern interface with your activity. You can export your transactions in no time, manage your expenses and get real-time notifications. Qonto also integrates with popular accounting tools.

When it comes to payment methods, Qonto gives you a French IBAN as well as debit cards. You can order physical or virtual cards whenever you want, customize limits and freeze a card. Qonto also supports direct debit and checks. Like many software-as-a-service products, you can also manage multiple user accounts and customize permission levels.

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