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Lack of big tech GDPR decisions looms large in EU watchdog’s annual report

By Natasha Lomas

The lead European Union privacy regulator for most of big tech has put out its annual report which shows another major bump in complaints filed under the bloc’s updated data protection framework, underlining the ongoing appetite EU citizens have for applying their rights.

But what the report doesn’t show is any firm enforcement of EU data protection rules vis-a-vis big tech.

The report leans heavily on stats to illustrate the volume of work piling up on desks in Dublin. But it’s light on decisions on highly anticipated cross-border cases involving tech giants including Apple, Facebook, Google, LinkedIn and Twitter.

The General Data Protection Regulation (GDPR) began being applied across the EU in May 2018 — so is fast approaching its second birthday. Yet its file of enforcements where tech giants are concerned remains very light — even for companies with a global reputation for ripping away people’s privacy.

This despite Ireland having a large number of open cross-border investigations into the data practices of platform and adtech giants — some of which originated from complaints filed right at the moment GDPR came into force.

In the report the Irish Data Protection Commission (DPC) notes it opened a further six statutory inquiries in relation to “multinational technology companies’ compliance with the GDPR” — bringing the total number of major probes to 21. So its ‘big case’ file continues to stack up. (It’s added at least two more since then, with a probe of Tinder and another into Google’s location tracking opened just this month.)

The report is a lot less keen to trumpet the fact that decisions on cross-border cases to date remains a big fat zero.

Though, just last week, the DPC made a point of publicly raising “concerns” about Facebook’s approach to assessing the data protection impacts of a forthcoming product in light of GDPR requirements to do so — an intervention that resulted in a delay to the regional launch of Facebook’s Dating product.

This discrepancy (cross-border cases: 21 – Irish DPC decisions: 0), plus rising anger from civil rights groups, privacy experts, consumer protection organizations and ordinary EU citizens over the paucity of flagship enforcement around key privacy complaints is clearly piling pressure on the regulator. (Other examples of big tech GDPR enforcement do exist. Well, France’s CNIL is one.)

In its defence the DPC does have a horrifying case load. As illustrated by other stats its keen to spotlight — such as saying it received a total of 7,215 complaints in 2019; a 75% increase on the total number (4,113) received in 2018. A full 6,904 of which were dealt with under the GDPR (while 311 complaints were filed under the Data Protection Acts 1988 and 2003).

There were also 6,069 data security breaches notified to it, per the report — representing a 71% increase on the total number (3,542) recorded last year.

While a full 457 cross-border processing complaints were received in Dublin via the GDPR’s One-Stop-Shop mechanism. (This is the device the Commission came up with for the ‘lead regulator’ approach that’s baked into GDPR and which has landed Ireland in the regulatory hot seat. tl;dr other data protection agencies are passing Dublin A LOT of paperwork.)

The DPC necessarily has to do back and forth on cross border cases, as it liaises with other interested regulators. All of which, you can imagine, creates a rich opportunity for lawyered up tech giants to inject extra friction into the oversight process — by asking to review and query everything. [Insert the sound of a can being hoofed down the road]

Meanwhile the agency that’s supposed to regulate most of big tech (and plenty else) — which writes in the annual report that it increased its full time staff from 110 to 140 last year — did not get all the funding it asked for from the Irish government.

So it also has the hard cap of its own budget to reckon with (just €15.3M in 2019) vs — for example — Google’s parent Alphabet’s $46.1BN in full year 2019 revenue. So, er, do the math.

Nonetheless the pressure is firmly now on Ireland for major GDPR enforcements to flow.

One year of major enforcement inaction could be filed under ‘bedding in’; but two years in without any major decisions would not be a good look. (It has previously said the first decisions will come early this year — so seems to be hoping to have something to show for GDPR’s 2nd birthday.)

Some of the high profile complaints crying out for regulatory action include behavioral ads serviced via real-time bidding programmatic advertising (which the UK data watchdog has admitted for half a year is rampantly unlawful); cookie consent banners (which remain a Swiss Cheese of non-compliance); and adtech platforms cynically forcing consent from users by requiring they agree to being microtargeted with ads to access the (‘free’) service. (Thing is GDPR stipulates that consent as a legal basis must be freely given and can’t be bundled with other stuff, so… )

Full disclosure: TechCrunch’s parent company, Verizon Media (née Oath), is also under ongoing investigation by the DPC — which is looking at whether it meets GDPR’s transparency requirements under Articles 12-14 of the regulation.

Seeking to put a positive spin on 2019’s total lack of a big tech privacy reckoning, commissioner Helen Dixon writes in the report: “2020 is going to be an important year. We await the judgment of the CJEU in the SCCs data transfer case; the first draft decisions on big tech investigations will be brought by the DPC through the consultation process with other EU data protection authorities, and academics and the media will continue the outstanding work they are doing in shining a spotlight on poor personal data practices.”

In further remarks to the media Dixon said: “At the Data Protection Commission, we have been busy during 2019 issuing guidance to organisations, resolving individuals’ complaints, progressing larger-scale investigations, reviewing data breaches, exercising our corrective powers, cooperating with our EU and global counterparts and engaging in litigation to ensure a definitive approach to the application of the law in certain areas.

“Much more remains to be done in terms of both guiding on proportionate and correct application of this principles-based law and enforcing the law as appropriate. But a good start is half the battle and the DPC is pleased at the foundations that have been laid in 2019. We are already expanding our team of 140 to meet the demands of 2020 and beyond.”

One notable date this year also falls when GDPR turns two — because a Commission review of how the regulation is functioning is looming in May.

That’s one deadline that may help to concentrate minds on issuing decisions.

Per the DPC report, the largest category of complaints it received last year fell under ‘access request’ issues — whereby data controllers are failing to give up (all) people’s data when asked — which amounted to 29% of the total; followed by disclosure (19%); fair processing (16%); e-marketing complaints (8%); and right to erasure (5%).

On the security front, the vast bulk of notifications received by the DPC related to unauthorised disclosure of data (aka breaches) — with a total across the private and public sector of 5,188 vs just 108 for hacking (though the second largest category was actually lost or stolen paper, with 345).

There were also 161 notification of phishing; 131 notification of unauthorized access; 24 notifications of malware; and 17 of ransomeware.

Facebook backs Indian education startup Unacademy

By Manish Singh

Unacademy, one of India’s fastest growing education startups, has just received the backing of a major technology giant: Facebook.

The social juggernaut has participated in the four-year-old Indian startup’s Series E financing round, sources familiar with the matter told TechCrunch.

General Atlantic is leading the round, the size of which is about $100 million, the sources said. It wasn’t immediately clear to us exactly how big of a check Facebook has cut, but a source said it was under $20 million. The round values the startup, which had raised $90 million prior to the ongoing round, at over $350 million, the source said.

Unacademy is aimed at students who are preparing for competitive exams to get into a college and those who are pursuing graduation-level courses. It allows students to watch live classes from educators and later engage in sessions to review topics in more detail.

A year ago, the startup launched a subscription service that offers students access to all live classes. Gaurav Munjal, co-founder and chief executive of Unacademy, tweeted earlier this month that the subscription service had become a $30 million ARR business.

This is the second time Facebook is investing in an Indian startup. Last year, it participated in social commerce Meesho’s $125 million financing round led by Prosus Ventures.

Facebook and Unacademy did not respond to a request for comment.

Ajit Mohan, VP and managing director of Facebook India, told TechCrunch in an interview last year that the company was open to engaging with startups that are building solutions for the Indian market.

“Wherever we believe there is opportunity beyond the work we do today, we are open to exploring further investment deals,” he said.

Indian newspaper Mint first reported in December that Unacademy was in talks with General Atlantic and GGV Capital to raise as much as $100 million. TechCrunch understands that GGV Capital, which earlier this month invested in edtech startup Vedantu, is not participating in Unacademy’s funding round.

Vedantu and Unacademy compete with Byju’s, an Indian startup that counts General Atlantic as an investor and is valued at $8 billion. Chan Zuckerberg Initiative has invested in Byju’s, but has sold at least some of its stake, according to a regulatory filing analyzed by business outlet Entrackr.

As India’s startup ecosystem begins to mature, it has started to attract corporate giants. Google, Amazon and Twitter also have made investments in Indian startups. While Twitter has backed social platform ShareChat, Google has invested in hyperlocal concierge app Dunzo.

Facebook prototypes tabbed News Feed with Most Recent & Seen

By Josh Constine

Facebook may make it easier to escape its ranking algorithm and explore the News Feed in different formats. Facebook has internally prototyped a tabbed version of the News Feed for mobile that includes the standard Most Relevant feed, the existing Most Recent feed of reverse chronological posts that was previously buried as a sidebar bookmark and an Already Seen feed of posts you’ve previously viewed that historically was only available on desktop via the largely unknown URL facebook.com/seen.

The tabbed feed is currently unlaunched, but If Facebook officially rolls it, it could make the social network feel more dynamic and alive since it’d be easier to access Most Recent to view what’s happening in real time. It could also help users track down an important post they lost that they might want to learn from or comment on. The tabbed interface would be the biggest change to News Feed since 2013 when Facebook announced but later scrapped the launch of a multi-feed with side bar options for just exploring Music, Photos, Close Friends, and more.

The tabbed News Feed prototype was spotted in the Facebook for Android code by master reverse engineering specialist Jane Manchun Wong who’s provided tips on core of new features to TechCrunch in the past. She was able to generate these screenshots that show the tabs for Relevant, Recent, and Seen above the News Feed. Tapping these reveals a Sort Your News Feed configuration window where you can choose between the feeds, see descriptions from them, or dive into the existing News Feed preferences about who you block or see first.

CEO Mark Zuckerberg reveals the later-scrapped multi-feed

When asked by TechCrunch, a Facebook spokesperson confirmed this is something it’s considering testing externally, but it’s just internally available for now. It’s exploring whether the tabbed interface would make Most Recent and Seen easier to access. “You can already view your Facebook News Feed chronologically. We’re testing ways to make it easier to find, as well as sort by posts you’ve already seen” the spokesperson tells TechCrunch, and the company also tweeted.

Offering quicker ways to sort the feed could keep users scrolling longer. If they encounter a few boring posts chosen by the algorithm, want to see what friends are doing right now, or want to enjoy posts they already interacted with, a tabbed interface would give them an instant alternative beyond closing the app. While likely not the motive of this experiment, increasing time spent across these feeds could boost Facebook’s ad views at a time when it’s been hammered by Wall Street for slowing profit growth.

To many, Facebook’s algorithm can feel like an inscrutable black box that decides their content destiny. Feed it the wrong signals with pity Likes or guilty-pleasure video views and it can get confused about what you want. Facebook may finally deem us mature enough to have readily available controls over what we see.

Facebook asks for a moat of regulations it already meets

By Josh Constine

It’s suspiciously convenient that Facebook already fulfills most of the regulatory requirements it’s asking governments to lay on the rest of the tech industry. Facebook CEO Mark Zuckerberg is in Brussels lobbying the European Union’s regulators as they form new laws to govern artificial intelligence, content moderation, and more. But if they follow Facebook’s suggestions, they might reinforce the social network’s power rather than keep it in check by hamstringing companies with fewer resources.

We already saw this happen with GDPR. The idea was to strengthen privacy and weaken exploitative data collection that tech giants like Facebook and Google depend on for their business models. The result was the Facebook and Google actually gained or only slightly lost EU market share while all other adtech vfendors got wrecked by the regulation, according to WhoTracksMe.

GDPR went into effect in May 2018, hurting other ad tech vendors’ EU market share much worse than Google and Facebook. Image credit: WhoTracksMe

Tech giants like Facebook have the profits lawyers, lobbyists, engineers, designers, scale, and steady cash flow to navigate regulatory changes. Unless new laws are squarely targeted at the abuses or dominance of these large companies, their collateral damage can loom large. Rather than spend time and money they don’t have in order to comply, some smaller competitors will fold, scale back, or sell out.

But at least in the case of GDPR, everyone had to add new transparency and opt out features. If Facebook’s slate of requests goes through, it will sail forward largely unpeturbed while rivals and upstarts scramble to get up to speed. I made this argument in March 2018 in my post “Regulation could protect Facebook, not punish it”. Then GDPR did exactly that.

Google gained market share and Facebook only lost a little in the EU following GDPR. Everyone else faired worse. Image via WhoTracksMe

That doesn’t mean these safeguards aren’t sensible for everyone to follow. But regulators need to consider what Facebook isn’t suggesting if it wants to address its scope and brazenness, and what timelines or penalties would be feasible for smaller players.

If we take a quick look at what Facebook is proposing, it becomes obvious that it’s self-servingly suggesting what it’s already accomplished:

  • User-friendly channels for reporting content – Every post and entity on Facebook can already be flagged by users with an explanation of why
  • External oversight of policies or enforcement – Facebook is finalizing its independent Oversight Board right now
  • Periodic public reporting of enforcement data – Facebook publishes a twice-yearly report about enforcement of its Community Standards
  • Publishing their content standards – Facebook publishes its standards and notes updates to them
  • Consulting with stakeholders when making significant changes – Facebook consults a Safety Advisory Board and will have its new Oversight Board
  • Creating a channel for users to appeal a company’s content removal decisions – Facebook’s Oversight Board will review content removal appeals
  • Incentives to meet specific targets such as keeping the prevalence of violating content below some agreed threshold – Facebook already touts how 99% of child nudity content and 80% of hate speech removed was detected proactively, and that it deletes 99% of ISIS and Al Qaeda content

gettyimages 961424292

Facebook CEO Mark Zuckerberg arrives at the European Parliament, prior to his audition on the data privacy scandal on May 22, 2018 at the European Union headquarters in Brussels. (Photo by JOHN THYS / AFP) (Photo credit should read JOHN THYS/AFP/Getty Images)

Finally, Facebook asks that the rules for what content should be prohibited on the internet “recognize user preferences and the variation among internet services, can be enforced at scale, and allow for flexibility across language, trends and context”. That’s a lot of leeway. Facebook already allows different content in different geographies to comply with local laws, lets Groups self-police themselves more than the News Feed, and Zuckerberg has voiced support for customizable filters on objectionable content with defaults set by local majorities.

“…Can be enforced at scale” is a last push for laws that wouldn’t require tons of human moderators to enforce that might further drag down Facebook’s share price. ‘100 billion piece of content come in per day, so don’t make us look at it all.’ Investments in safety for elections, content, and cybersecurity already dragged Facebook’s profits down from growth of 61% year-over-year in 2019 to just 7% in 2019.

To be clear, it’s great that Facebook is doing any of this already. Little is formally required. If the company was as evil as some make it out to be, it wouldn’t be doing any of this.

Then again, Facebook earned $18 billion in profit in 2019 off our data while repeatedly proving it hasn’t adequately protected it. The $5 billion fine and settlement with FTC where Facebook has pledged to build more around privacy and transparency shows it’s still playing catch up given its role as a ubiquitous communications utility.

There’s plenty more for EU and hopefully US regulators to investigate. Should Facebook pay a tax on the use of AI? How does it treat and pay its human content moderators? Would requiring users be allowed to export their interoperable friends list promote much-needed competition in social networking that could let the market compel Facebook to act better?

As the EU internal market commissioner Thierry Breton told reporters following Zuckerberg’s meetings with regulators, “It’s not for us to adapt to those companies, but for them to adapt to us.”

Unemployment is the top risk of AI. I think a tax on its use by big companies could help pay for job retraining the world will desperately need

— Josh Constine (@JoshConstine) February 17, 2020

Facebook pushes EU for dilute and fuzzy internet content rules

By Natasha Lomas

Facebook founder Mark Zuckerberg is in Europe this week — attending a security conference in Germany over the weekend where he spoke about the kind of regulation he’d like applied to his platform ahead of a slate of planned meetings with digital heavyweights at the European Commission.

“I do think that there should be regulation on harmful content,” said Zuckerberg during a Q&A session at the Munich Security Conference, per Reuters, making a pitch for bespoke regulation.

He went on to suggest “there’s a question about which framework you use”, telling delegates: “Right now there are two frameworks that I think people have for existing industries — there’s like newspapers and existing media, and then there’s the telco-type model, which is ‘the data just flows through you’, but you’re not going to hold a telco responsible if someone says something harmful on a phone line.”

“I actually think where we should be is somewhere in between,” he added, making his plea for Internet platforms to be a special case.

At the conference he also said Facebook now employs 35,000 people to review content on its platform and implement security measures — including suspending around 1 million fake accounts per day, a stat he professed himself “proud” of.

The Facebook chief is due to meet with key commissioners covering the digital sphere this week, including competition chief and digital EVP Margrethe Vestager, internal market commissioner Thierry Breton and Věra Jourová, who is leading policymaking around online disinformation.

The timing of his trip is clearly linked to digital policymaking in Brussels — with the Commission due to set out its thinking around the regulation of artificial intelligence this week. (A leaked draft last month suggested policymaker are eyeing risk-based rules to wrap around AI.)

More widely, the Commission is wrestling with how to respond to a range of problematic online content — from terrorism to disinformation and election interference — which also puts Facebook’s 2BN+ social media empire squarely in regulators’ sights.

Another policymaking plan — a forthcoming Digital Service Act (DSA) — is slated to upgrade liability rules around Internet platforms.

The detail of the DSA has yet to be publicly laid out but any move to rethink platform liabilities could present a disruptive risk for a content distributing giant such as Facebook.

Going into meetings with key commissioners Zuckerberg made his preference for being considered a ‘special’ case clear — saying he wants his platform to be regulated not like the media businesses which his empire has financially disrupted; nor like a dumbpipe telco.

On the latter it’s clear — even to Facebook — that the days of Zuckerberg being able to trot out his erstwhile mantra that ‘we’re just a technology platform’, and wash his hands of tricky content stuff, are long gone.

Russia’s 2016 foray into digital campaigning in the US elections and sundry content horrors/scandals before and since have put paid to that — from nation-state backed fake news campaigns to livestreamed suicides and mass murder.

Facebook has been forced to increase its investment in content moderation. Meanwhile it announced a News section launch last year — saying it would hand pick publishers content to show in a dedicated tab.

The ‘we’re just a platform’ line hasn’t been working for years. And EU policymakers are preparing to do something about that.

With regulation looming Facebook is now directing its lobbying energies onto trying to shape a policymaking debate — calling for what it dubs “the ‘right’ regulation”.

Here the Facebook chief looks to be applying a similar playbook as the Google’s CEO, Sundar Pichai — who recently tripped to Brussels to push for AI rules so dilute they’d act as a tech enabler.

In a blog post published today Facebook pulls its latest policy lever: Putting out a white paper which poses a series of questions intended to frame the debate at a key moment of public discussion around digital policymaking.

Top of this list is a push to foreground focus on free speech, with Facebook questioning “how can content regulation best achieve the goal of reducing harmful speech while preserving free expression?” — before suggesting more of the same: (Free, to its business) user-generated policing of its platform.

Another suggestion it sets out which aligns with existing Facebook moves to steer regulation in a direction it’s comfortable with is for an appeals channel to be created for users to appeal content removal or non-removal. Which of course entirely aligns with a content decision review body Facebook is in the process of setting up — but which is not in fact independent of Facebook.

Facebook is also lobbying in the white paper to be able to throw platform levers to meet a threshold of ‘acceptable vileness’ — i.e. it wants a proportion of law-violating content to be sanctioned by regulators — with the tech giant suggesting: “Companies could be incentivized to meet specific targets such as keeping the prevalence of violating content below some agreed threshold.”

It’s also pushing for the fuzziest and most dilute definition of “harmful content” possible. On this Facebook argues that existing (national) speech laws — such as, presumably, Germany’s Network Enforcement Act (aka the NetzDG law) which already covers online hate speech in that market — should not apply to Internet content platforms, as it claims moderating this type of content is “fundamentally different”.

“Governments should create rules to address this complexity — that recognize user preferences and the variation among internet services, can be enforced at scale, and allow for flexibility across language, trends and context,” it writes — lobbying for maximum possible leeway to be baked into the coming rules.

“The development of regulatory solutions should involve not just lawmakers, private companies and civil society, but also those who use online platforms,” Facebook’s VP of content policy, Monika Bickert, also writes in the blog.

“If designed well, new frameworks for regulating harmful content can contribute to the internet’s continued success by articulating clear ways for government, companies, and civil society to share responsibilities and work together. Designed poorly, these efforts risk unintended consequences that might make people less safe online, stifle expression and slow innovation,” she adds, ticking off more of the tech giant’s usual talking points at the point policymakers start discussing putting hard limits on its ad business.

Google ends its free Wi-Fi program Station

By Manish Singh

Google said on Monday that it is winding down Google Station, a program that rolled out free Wi-Fi in more than 400 railway stations in India and “thousands” of other public places in several additional pockets of the world. The company worked with a number of partners on the program.

Caesar Sengupta, VP of Payments and Next Billion Users at Google, said the program, launched in 2015, helped millions of users surf the internet — a first for many — and not worry about the amount of data they consumed. But as mobile data prices got cheaper in many markets, including India, Google Station was no longer as necessary, he said. The company plans to discontinue the program this year.

Additionally, it had become difficult for Google to find a sustainable business model to scale the program, the company said, which in recent years expanded Station to Indonesia, Mexico, Thailand, Nigeria, Philippines, Brazil and Vietnam. The company launched the program in South Africa just three months ago.

Over the years, Google also explored ways to monetize the Google Station program. The company, for instance, began showing an ad when a user signed in to connect to its internet service.

In an interview early last year, Gulzar Azad, who spearheads connectivity efforts for Google in India, told me that the company was thinking about ways to scale Station to more markets, but noted that as far as deployment at Indian railway stations was concerned, Google had reached its goal (to serve 400 railway stations).

A year after Google announced its efforts to offer free Wi-Fi in India, the country’s richest man, Mukesh Ambani, launched his telecom network Reliance Jio. Jio offered customers the bulk of 4G data at no charge for an extended period of time, forcing other telecom operators to slash their tariffs.

The move ushered millions of Indians to the internet, access to which was too expensive for many, for the first time. In a separate interview, I asked Azad if Google Station’s relevance had somewhat diminished because of Reliance Jio’s entrance. At the time, he said plenty of people were still signing up for the company’s program and that they were continuing to show a great appetite to consume voluminous data.

Google works with a number of companies to enable free Wi-Fi for users in public places. In India, for instance, Google has built the software stack, while RailTel, a state-owned telecom infrastructure provider, delivers the free internet line.

RailTel delivers Wi-Fi in more than 5,600 railway stations, and over the years has developed the capability to offer its own software stack. “We are working with our partners to transition existing sites so they can remain useful resources for the community,” said Sengupta.

TechCrunch has reached out to a RailTel spokesperson to check whether the company plans to keep offering Wi-Fi in the 400 odd railway stations where it worked with Google. Update: RailTel will continue to service free Wi-Fi in all those railway stations. “We sincerely value the support we received from Google in this journey,” the spokesperson added.

“The challenge of varying technical requirements and infrastructure among our partners across countries has also made it difficult for Station to scale and be sustainable, especially for our partners. And when we evaluate where we can truly make an impact in the future, we see greater need and bigger opportunities in making building products and features tailored to work better for the next billion user markets,” said Sengupta.

Google isn’t the only tech giant that has worked to offer free internet to users in developing markets. Facebook’s successor to Internet.org — the program that was banned in India for violating net neutrality regulations — launched in the country in 2017.

6 strategic stages of seed fundraising in 2020

By Danny Crichton

Seed fundraising is rarely easy, but it certainly used to be a lot less complicated than it is today. In a simpler world, a seed investor (or maybe two) would lead a round, which meant that they would write the terms of the deal in a term sheet and then pass that document to their friends to flesh out the funds and eventually close the round. That universe of investors was small and (unfortunately) often cliquish, but everyone sort of knew each other and founders always knew at least who to start with in these early fundraises.

That world is long since gone, particularly at the seed stage. Now there are thousands of people who write checks into the earliest startup venture rounds, making it increasingly challenging for founders to find the right investors. “Pre-seed,” “seed,” “post-seed,” “seed extension,” “pre-Series A” and more terms get batted about, none of which are all that specific about what kinds of startups these investors actually invest in.

Worse, obvious metrics in the past that helped stack-rank investors — like size of potential check — have come to matter far less. In their place are more nuanced metrics like the ability to accelerate a deal to its closing. Today, your greatest lead investor may be the one who ends up writing the smallest check.

Given how much the landscape has changed, I wanted to do two things for founders thinking through a seed fundraise. First, I want to talk about how to strategize around a seed fundraise today, given the radical changes in the market over the past few years. Second, I want to talk about a couple of the archetypes of startup stages you see in the market today and discuss how to handle each of them.

This article focuses on “conventional” seed fundraising and doesn’t get into a bunch of alternative models of VC that I intend to explore in the coming weeks. If you thought traditional seed investing is complicated, wait until you see what the alternatives look like. The upshot, though, is that founders with the right strategy have more choices than ever, and, ultimately, that means there are more efficient ways to use capital to get the desired outcome for your startup.

Thinking through a seed fundraise strategy

Let’s get some preliminaries out of the way. This discussion assumes that you are a startup, looking to fundraise a seed round of some kind (i.e. you’re not looking to bootstrap your company) and that you are looking to close some sort of conventional venture capital round (i.e. not debt, but equity).

The problem with most seed fundraising advice is that it isn’t tailored to the specific stage of the startup under discussion. As I see it, there are now roughly six stages for startups before they reach scale. Those stages are:

7-month-old Simsim secures $16M for its social commerce in India

By Manish Singh

Simsim, a social commerce startup in India, said on Friday it has raised $16 million in seven months of its existence as it attempts to replicate the offline retail experience in the digital world with help from influencers.

The Gurgaon-based startup said it raised $16 million across Seed, Series A, and Series B financing rounds from Accel Partners, Shunwei Capital, and Good Capital. (The most recent round, Series B, was of $8 million in size.)

“Despite e-commerce players bandying out major discounts, most of the sales in India are still happening in brick-and-mortar stores. There is a simple reason for that: Trust,” explained Amit Bagaria, co-founder of Simsim, in an interview with TechCrunch.

The vast majority of Indians are still not comfortable with reading descriptions — and that too in English, he said.

Simsim is taking a different approach to tackle this opportunity. On its app, users watch short-videos produced in local languages by influencers who apply beauty products or try out dresses and explain the ins-and-outs of the products. Below the video, the items appear as they are being discussed and users can tap on them to proceed with the purchase.

“Videos help in education users about the category. So many of them may not have used face masks, for instance. But it becomes easier when the community influencer is able to show them how to apply it,” said Rohan Malhotra, Managing Partner at Good Capital, in an interview with TechCrunch.

Influencers typically sell a range of items and users can follow them to browse through the past catalog and stay on top of future sales, said Bagaria, who previously worked at the e-commerce venture of financial services firm Paytm .

“This interactiveness is enabling Simsim to mimic the offline stores experience,” said Malhotra, who is one of the earliest investors in Meesho, also a social commerce startup that last year received backing from Facebook and Prosus Ventures.

“The beauty to me of social commerce is that you’re not changing consumer behavior. People are used to consuming on WhatsApp — and it’s working for Meesho. Over here, you are getting the touch and feel experience and are able to mentally picture the items much clearer,” he said.

Simsim handles the inventories, which it sources from manufacturers and brands, and it works with a number of logistics players to deliver the products.

“Several Indian cities and towns are some of the biggest production hubs of various high-quality items. But these people have not been able to efficiently sell online or grow their network in the offline world. On Simsim, they are able to work with influencers and market their products,” said Bagaria.

The platform today works with more than 1,200 influencers, who get a commission for each item they sell, said Bagaria, who plans to grow this figure to 100,000 in the coming years.

Even as Simsim, which has been open to users for six months, is still in its nascent stage, it is beginning to show some growth. It has amassed over a million users, most of whom live in small cities and towns, and it is selling thousands of items each day, said Bagaria.

He said the platform, which currently supports Hindi, Tamil, Bengali, and English, will add more than a dozen additional languages by the end of the year. In about a month, Simsim also plans to start showing live videos, where influencers will be able to answer queries from users.

A handful of startups have emerged in India in recent years that are attempting to rethink the e-commerce market in the nation. Amazon and Walmart, both of which have poured billions of dollars in India, have taken a notice too. Both of them have added support for Hindi in the last two years and have made several more tweaks to their platforms to expand their reach.

Flip raises $4M to pounce on the growing sector of employee messaging

By Mike Butcher

By now we’re all familiar with text messaging groups for multi-person co-ordination. I’ve lost count of how many WhatsApp, Telegram and Facebook messenger groups I’m on! Other apps like Threema have started to be used in a business context and startups like Staffbase have decided to become full-blown ‘workforce messaging’ platforms. The thinking now amongst investors is that messaging is about to explode in all sorts of verticals and that it’s a rich seam to mine.

In that vein, Flip, a Stuttgart, Germany-based employee messenger app, has now raised €3.6M ($4M) from LEA Partners and Cavalry Ventures, together with Plug and Play Ventures and Business Angels such as Jürgen Hambrecht (Chairman of the Supervisory Board BASF), Prof. Dr. Kurt Lauk (Chairman of the Supervisory Board Magna International), Florian Buzin (Founder Starface) and Andreas Burike (HR Business Angel). The capital raised will be invested primarily in the expansion of the team and the development of further markets.

Founded in 2018, the start-up offers companies a platform that connects and informs employees across all levels in a legally compliant manner.

That last part is important. The application is based on a GDPR-compliant data and employee protection concept, which was validated jointly with experts and works councils of several DAX companies. It also integrates with many existing corporate IT infrastructures.

The startup has now secured customers including Porsche, Bauhaus, Edeka, Junge IG Metall and Wüstenrot & Württembergische. Parts of the Sparkasse and Volksbank are also among the customer base. It also counts Deutsche Telekom as a partner.

Flip founder and CEO, Benedikt Ilg, said in a statement: “Flip is the easiest solution for internal communication in companies of all sizes.”

Bernhard Janke from LEA Partners said: “As a young company, Flip has been able to attract prestigious clients. The lean solution can be integrated into existing IT systems and existing communication processes, even in large organizations. With the financing round, we want to further expand the team and product and thus support the founders in their vision of making digital workforce engagement accessible to all companies.”

Claude Ritter of Cavalry Ventures said: “We are convinced that Flip is setting new standards in this still young market with its safe, lightweight and extremely powerful product”.

Facebook Dating launch blocked in Europe after it fails to show privacy workings

By Natasha Lomas

Facebook has been left red-faced after being forced to call off the launch date of its dating service in Europe because it failed to give its lead EU data regulator enough advanced warning — including failing to demonstrate it had performed a legally required assessment of privacy risks.

Late yesterday Ireland’s Independent.ie newspaper reported that the Irish Data Protection Commission (DPC) had sent agents to Facebook’s Dublin office seeking documentation that Facebook had failed to provide — using inspection and document seizure powers set out in Section 130 of the country’s Data Protection Act.

In a statement on its website the DPC said Facebook first contacted it about the rollout of the dating feature in the EU on February 3.

“We were very concerned that this was the first that we’d heard from Facebook Ireland about this new feature, considering that it was their intention to roll it out tomorrow, 13 February,” the regulator writes. “Our concerns were further compounded by the fact that no information/documentation was provided to us on 3 February in relation to the Data Protection Impact Assessment [DPIA] or the decision-making processes that were undertaken by Facebook Ireland.”

Facebook announced its plan to get into the dating game all the way back in May 2018, trailing its Tinder-encroaching idea to bake a dating feature for non-friends into its social network at its F8 developer conference.

It went on to test launch the product in Colombia a few months later. And since then it’s been gradually adding more countries in South American and Asia. It also launched in the US last fall — soon after it was fined $5BN by the FTC for historical privacy lapses.

At the time of its US launch Facebook said dating would arrive in Europe by early 2020. It just didn’t think to keep its lead EU privacy regulator in the loop — despite the DPC having multiple (ongoing) investigations into other Facebook-owned products at this stage.

Which is either extremely careless or, well, an intentional fuck you to privacy oversight of its data-mining activities. (Among multiple probes being carried out under Europe’s General Data Protection Regulation, the DPC is looking into Facebook’s claimed legal basis for processing people’s data under the Facebook T&Cs, for example.)

The DPC’s statement confirms that its agents visited Facebook’s Dublin office on February 10 to carry out an inspection — in order to “expedite the procurement of the relevant documentation”.

Which is a nice way of the DPC saying Facebook spent a whole week still not sending it the required information.

“Facebook Ireland informed us last night that they have postponed the roll-out of this feature,” the DPC’s statement goes on.

Which is a nice way of saying Facebook fucked up and is being made to put a product rollout it’s been planning for at least half a year on ice.

The DPC’s head of communications, Graham Doyle, confirmed the enforcement action, telling us: “We’re currently reviewing all the documentation that we gathered as part of the inspection on Monday and we have posed further questions to Facebook and are awaiting the reply.”

“Contained in the documentation we gathered on Monday was a DPIA,” he added.

This begs the question why Facebook didn’t send the DPIA to the DPC on February 3 — unless of course this document did not actually exist on that date…

We’ve reached out to Facebook for comment and to ask when it carried out the DPIA.

We’ve also asked the DPC to confirm its next steps. The regulator could ask Facebook to make changes to how the product functions in Europe if it’s not satisfied it complies with EU laws.

Under GDPR there’s a requirement for data controllers to bake privacy by design and default into products which are handling people’s information. And a dating product clearly is.

While a DPIA — which is a process whereby planned processing of personal data is assessed to consider the impact on the rights and freedoms of individuals — is a requirement under the GDPR when, for example, individual profiling is taking place or there’s processing of sensitive data on a large scale.

Again, the launch of a dating product on a platform such as Facebook — which has hundreds of millions of regional users — would be a clear-cut case for such an assessment to be carried out ahead of any launch.

Fiddler Labs, SRI and Berkeley experts open up the black box of machine learning at TC Sessions: Robotics+AI

By Devin Coldewey

As AI permeates the home, work, and public life, it’s increasingly important to be able to understand why and how it makes its decisions. Explainable AI isn’t just a matter of hitting a switch, though; Experts from UC Berkeley, SRI, and Fiddler Labs will discuss how we should go about it on stage at TC Sessions: Robotics+AI on March 3.

What does explainability really mean? Do we need to start from scratch? How do we avoid exposing proprietary data and methods? Will there be a performance hit? Whose responsibility will it be, and who will ensure it is done properly?

On our panel addressing these questions and more will be two experts, one each from academia and private industry.

Trevor Darrell is a professor at Berkeley’s Computer Science department who helps lead many of the university’s AI-related labs and projects, especially those concerned with the next generation of smart transportation. His research group focuses on perception and human-AI interaction, and he previously led a computer vision group at MIT.

Krishna Gade has passed in his time through Facebook, Pinterest, Twitter and Microsoft, and has seen firsthand how AI is developed privately — and how biases and flawed processes can lead to troubling results. He co-founded Fiddler as an effort to address problems of fairness and transparency by providing an explainable AI framework for enterprise.

Moderating and taking part in the discussion will be SRI International’s Karen Myers, director of the research outfit’s Artificial Intelligence Center and an AI developer herself focused on collaboration, automation, and multi-agent systems.

Save $50 on tickets when you book today. Ticket prices go up at the door and are selling fast. We have two (yes two) Startup Demo Packages Left – book your package now and get your startup in front of 1000+ of today’s leading industry minds. Packages come with 4 tickets – book here.

Will Apple, Facebook or Microsoft be the future of augmented reality?

By Walter Thompson

Apple is seen by some as critical to the future of augmented reality, despite limited traction for ARKit so far and its absence from smartglasses (again, so far). Yet Facebook, Microsoft and others are arguably more important to where the market is today.

While there are more AR platforms than just these companies, they represent the top of the pyramid for three different types of AR roadmap. And while startup insurgents could make a huge difference, big platforms can exert disproportionate influence on the future of tech markets. Let’s see what this could mean for the future of AR.

 

Facebook: The messaging play

Facebook has talked about its long-term potential to launch smartglasses, but in 2020, its primary presence in the AR market is as a mobile AR platform (note: Facebook is also a VR market leader with Oculus). Although there are other ways to define them, mobile AR platforms can be thought of as three broad types:

  1. messaging-based (e.g. Facebook Messenger, Instagram, TikTok, Snapchat, Line)
  2. OS-based (e.g. Apple ARKit, Google ARCore)
  3. web-based (e.g. 8th Wall, Torch, others)

Elon Musk tweets out #DeleteFacebook, saying ‘it’s lame’

By Connie Loizos

Facebook receives plenty of pointed criticism from numerous corners, including for refusing to police political speech on Facebook, its seemingly endless string of privacy breaches and its apparent coziness with the Trump administration.

One of the platform’s most prominent critics, somewhat unexpectedly, is comic, writer and actor Sacha Baron Cohen. Indeed, his powerful speech to the Anti-Defamation League in November, characterizing Facebook as the “greatest propaganda machine in history,” quickly went viral. (We republished it here.)

Cohen isn’t done railing against Zuckerberg, however. Last Wednesday, he tweeted in frustration, “We don’t let 1 person control the water for 2.5 billion people. We don’t let 1 person control electricity for 2.5 billion people. Why do we let 1 man control the information seen by 2.5 billion people? Facebook needs to be regulated by governments, not ruled by an emperor!”

We don’t let 1 person control the water for 2.5 billion people.

We don’t let 1 person control electricity for 2.5 billion people.

Why do we let 1 man control the information seen by 2.5 billion people?

Facebook needs to be regulated by governments, not ruled by an emperor! pic.twitter.com/o4hNRFNpgt

— Sacha Baron Cohen (@SachaBaronCohen) February 5, 2020

On Saturday morning, Tesla founder Elon Musk responded to Cohen, himself tweeting “#DeleteFacebook it’s lame.”

#DeleteFacebook It’s lame

— Elon Musk (@elonmusk) February 8, 2020

It was short, sweet and to the point (and presumably buoyed Cohen).

One might imagine that Musk, who has always spoken his mind, has been emboldened of late thanks to the skyrocketing value of Tesla. But Musk has long been a critic of Facebook, tweeting in 2018 after deleting his companies’ Facebook pages that he doesn’t “like Facebook. Gives me the willies. Sorry.”

Musk and Zuckerberg have butted heads in the past over the future of artificial intelligence, too. In 2014, Musk reportedly met with Zuckerberg, researchers from Facebook’s AI lab and two other Facebook executives at Zuckerberg’s Palo Alto home in an effort to convince Musk that he was wrong about the potential dangers of AI. Musk wasn’t persuaded, calling Zuckerberg’s understanding of the future of AI “limited” in 2017.

Facebook’s Twitter account compromised, hacker group claims credit

By Alex Wilhelm

There’s this brilliant feeling on Fridays if you’re a reporter when you think that all the things you have to write about are complete. You kickstart some work for Monday. Maybe you tighten up a to-do list. Hell, you might even read some email.

But then on Fridays like today, something eye-catching happens and the Great Content Gods demand written sacrifice and here we are.

Facebook’s Twitter main page and Messenger were temporarily vandalized by a person or persons claiming to be from the OurMine hacker collective. The action, and the group, should sound slightly familiar as it hacked a bunch of sports-related Twitter accounts just this January.

Trawling the TechCrunch archives turns up the OurMine name more times than I reckoned it would. For example, OurMine also hacked the Twitter account of Niantic’s CEO back in 2016. Later that year, OurMind also hacked several media-related Twitter accounts. Hell, OurMine actually hacked TC once — a fact that this episode brought to my attention.

TechCrunch has reached out to Facebook for comment on the compromise. We’re not expecting to hear back anything of substance but, if we do, we’ll update this post. Twitter provided public comment regarding the hack, saying that it “locked the compromised accounts and are working closely with our partners at Facebook to restore them” when it noticed the matter.

What was posted? The following, per a screenshot taken by TechCrunch’s security sage Zack Whittaker:

lol, what is this, 2016? pic.twitter.com/G59Z5gnZfp

— Zack Whittaker (@zackwhittaker) February 7, 2020

As you can see from the screenshot, the tweet appears to have been posted via Khoros. Khoros, in case you also didn’t know, sells software to help companies use social media to interact with customers and users. So, perhaps the Folks With Time On Their Hands got in that way. Either way it was taken down quickly. (Khoros is based in Austin and has raised no known venture capital, per Crunchbase.)

And with that, Friday really is a go.

Twitter-backed ShareChat eyes fantasy sports in India

By Manish Singh

The growing market of fantasy sports in India may soon have a new and odd entrant: ShareChat .

The local social networking app, which in August last year raised $100 million in a financing round led by Twitter, has developed a fantasy sports app and has been quietly testing it for six months, two sources familiar with the matter told TechCrunch.

ShareChat’s fantasy sports app, called Jeet11, allows betting on cricket and football matches and has already amassed more than 120,000 registered users, the sources said. The app, or its website, does not disclose its association with ShareChat.

A ShareChat spokesperson confirmed the existence of the app and said the startup was testing the product.

Jeet11 is not available for download on the Google Play Store due to the Android maker’s guidelines on betting apps, so ShareChat has been distributing it through Xiaomi’s GetApps app store and the Jeet11 website, and has been promoting it on Instagram. It is also available as a web app.

Fantasy sports, a quite popular business in many markets, has gained some traction in India in recent years. Dream11, backed by gaming giant Tencent, claimed to have more than 65 million users early last year. It has raised about $100 million to date and is already valued north of $1 billion.

Bangalore-based MPL, which counts Sequoia Capital India as an investor and has raised more than $40 million, appointed Virat Kohli, the captain of the Indian cricket team, as its brand ambassador last year.

In the last two years, scores of startups have emerged to grab a slice of the market, and the vast majority of them are focused on cricket. Cricket is the most popular sport in India, just ask Disney’s Hotstar, which claimed to have more than 100 million daily active users during the cricket season last year.

Or ask Facebook, which unsuccessfully bid $600 million to secure streaming rights of the IPL cricket tournament. It has since grabbed rights to some cricket content and appointed the Hotstar chief as its India head.

So it comes as no surprise that many sports betting apps have signed cricketers as their brand ambassador. Hala-Play has roped in Hardik Pandya and Krunal Pandya, while Chennai-based Fantain Sports has appointed Suresh Raina.

But despite the growing popularity of fantasy sports apps, where users pick players and bet real money on their performances, the niche is still sketchy in many markets that consider it betting. In fact, Twitter itself restricts promotion of fantasy sports services in many markets across the world.

In India, too, several states, including Assam, Arunachal Pradesh, Odisha, Sikkim and Telangana, have banned fantasy sports betting. Jeet11 currently requires users to confirm that they don’t live in any of the restricted states before signing up for the service.

“It doesn’t help matters either that the fantasy sports business’ attempts at legitimacy involve trying to be seen as video games — a cursory glance at a speakers panel for any Indian video game developer event is evidence of this — rather than riding on its own merits,” said Rishi Alwani, a long-time analyst of Indian gaming market and publisher of news outlet the Mako Reactor.

An executive who works at one of the top fantasy sports startups in India, speaking on the condition of anonymity, said that despite handing out cash rewards to thousands of users each day, it is still challenging to retain customers after the conclusion of any popular cricket tournament. “And that’s after you have somehow convinced them to visit your website or download the app,” he said.

For ShareChat, which has been exploring ways to monetize its 60 million-plus users and posted a loss of about $58 million on no revenue in the financial year ending March 31, that’s anything but music to the ears. In recent months, the startup, which serves users in more than a dozen local languages, has been experimenting with ads.

Netflix begins streaming in AV1 on Android

By Manish Singh

Netflix announced this week that it has started to stream titles in AV1 on Android in what could significantly help the two-year-old media codec gain wider adoption.

The world’s biggest streaming giant said on Wednesday that by switching from Google’s VP9 — which it previously used on Android — to AV1, its compression efficiency has gone up by 20%.

At the moment, only “select titles” are available to stream in AV1 for subscribers “who wish to reduce their cellular data usage by enabling the ‘Save Data’ feature,” the American firm said.

Netflix hasn’t shared much about the benefit AV1 will provide to customers, but the new media codec’s acceptance nonetheless sends a message by itself.

Tech giants, including Google, have spent years developing and improving media codecs as consumption of data skyrocketed and low-cost devices began to sell like hotcakes. But they just can’t seem to settle on one media codec and universally support it.

Think of Safari and YouTube, for instance. You can’t stream YouTube videos in 4K resolution on Safari, because Apple’s browser does not support Google’s VP9. And Google does not support HEVC for 4K videos on YouTube.

AV1 is supposed to be the savior media codec that gets universal support. It’s royalty-free and it works atop of open-source dav1d decoder that has been built by VideoLAN, best known for its widely popular media player VLC and FFmpeg communities. It is sponsored by the Alliance for Open Media.

Who are the members of Alliance for Open Media? Nearly all the big guys: Apple, Google, Amazon, Netflix, Nvidia, ARM, Facebook, Microsoft, Mozilla, Samsung and Tencent, among others.

But that’s not to say there aren’t roadblocks in the adoption of AV1. Compared to HEVC — the format that AV1 is supposed to replace in popularity — encoding in AV1 was noticeably slower a year ago, as per some benchmark tests.

Adoption of AV1 by various browsers, according to analytics firm StatCounter. Safari is yet to support it.

Netflix’s announcement suggests that things have improved. The streaming giant said its goal is to support AV1 on all of its platforms. “In the spirit of making AV1 widely available, we are sponsoring an open-source effort to optimize 10-bit performance further and make these gains available to all,” it said in a blog post.

Google and Facebook turn their backs on undersea cable to China

By Danny Crichton

Google and Facebook seem to have resigned themselves to losing part of the longest and highest profile internet cable they have invested in to date. In a filing with the Federal Communications Commission last week, the two companies requested permission to activate the Pacific Light Cable Network (PLCN) between the US and the Philippines and Taiwan, leaving its controversial Hong Kong and Chinese sections dormant.

Globally, around 380 submarine cables carry over 99.5 percent of all transoceanic data traffic. Every time you visit a foreign website or send an email abroad, you are using a fiber-optic cable on the seabed. Satellites, even large planned networks like SpaceX’s Starlink system, cannot move data as quickly and cheaply as underwater cables.

When it was announced in 2017, the 13,000-kilometer PLCN was touted as the first subsea cable directly connecting Hong Kong and the United States, allowing Google and Facebook to connect speedily and securely with data centers in Asia and unlock new markets. The 120 terabit-per-second cable was due to begin commercial operation in the summer of 2018. 

“PLCN will help connect US businesses and internet users with a strong and growing internet community in Asia,” they wrote. “PLCN will interconnect … with many of the existing and planned regional and international cables, thus providing additional transmission options in the event of disruptions to other systems, whether natural or manmade.”

Instead, it has been PLCN itself that has been disrupted, by an ongoing regulatory battle in the US that has become politicized by trade and technology spats with China.

Team Telecom, a shadowy US national security unit comprised of representatives from the departments of Defense, Homeland Security, and Justice (including the FBI), is tasked with protecting America’s telecommunications systems, including international fiber optic cables. Its regulatory processes can be tortuously slow. Team Telecom took nearly seven years to decide whether to allow China Mobile, a state-owned company, access to the US telecoms market, before coming down against it in 2018 on the grounds of “substantial and serious national security and law enforcement risks.”

Although subsidiaries of Google and Facebook have been the public face of PLCN in filings to the FCC, four of the six fiber-optic pairs in the cable actually belong to a company called Pacific Light Data Communication (PLDC). When the project was first planned, PLDC was controlled by Wei Junkang, a Hong Kong businessman who had made his fortune in steel and real estate.

“It is just one of those moments where it is more difficult to land a cable, no matter who the Chinese partner is, because of the political situation.” – NYU professor Nicole Starosielski

In December 2017, Wei sold most of his stake in PLDC to Dr Peng Telecom & Media Group, a private broadband provider based in Beijing. That sent alarm bells ringing in Washington, according to a report in the Wall Street Journal last year. While Dr Peng is not itself state-owned or controlled, it works closely with Huawei, a telecoms company the Trump administration has accused of espionage and trade secret theft. Dr Peng has also worked on Chinese government projects, including a surveillance network for the Beijing police.  

PLCN has been legal limbo ever since, with Google complaining bitterly to the FCC about the expense of the ongoing uncertainty. In 2018, it wrote, “[any further holdup] would impose significant economic costs. Depending on the length of the delay, the financial viability of the project could be at risk.”

Google and Facebook finally secured special permission to lay the cable in US waters last year, and to construct, connect and temporarily test a cable landing station in Los Angeles. But while the network itself is now essentially complete, Team Telecom has yet to make a decision on whether data can start to flow through it. 

In the past, Team Telecom has permitted submarine cables, even from China, to land in the US, as long as the companies operating them signed what are called network security agreements. These agreements typically require network operations to be based in the US, using an approved list of equipment and staffed by security-screened personnel. Operators are obliged to block security threats from foreign powers, while complying with lawful surveillance requests from the US government.

In 2017, for example, Team Telecom gave the green light to the New Cross Pacific (NCP) cable directly connecting China and the US, despite it being part-owned by China Mobile, the state-owned company it later denied US access to on national security grounds.

“Normally there wouldn’t be so much fuss over a cable to China,” says Nicole Starosielski, a professor at New York University and author of The Undersea Network. “We’ve had cables to China for a long time and all of these networks interconnect, so even if they don’t land directly in China, they’re only a hop away. It is just one of those moments where it is more difficult to land a cable, no matter who the Chinese partner is, because of the political situation.”

In September, Senator Rick Scott (R-FL), who sits on Senate committees for technology, communications and homeland security, sent a letter to FCC Chairman Ajit Pai urging him to block PLCN. “[PLCN] threatens the freedom of Hong Kong and our national security,” wrote Scott. “This project is backed by a Chinese partner, Dr Peng Telecom & Media Group Co., and would ultimately provide a direct link from China into Hong Kong … China has repeatedly shown it cannot be trusted … We cannot allow China expanded access to critical American information, even if funded by US companies.”

Google and Facebook saw the writing on the wall. On January 29 last week, representatives from the two companies – but not PLDC – met with FCC officials to propose a new approach. A filing, made the same day, requests permission to operate just the two PLCN fiber pairs owned by the American companies: Google’s link to Taiwan, and Facebook’s to the Philippines. 

“[Google] and [Facebook] are not aware of any national security issues associated with operation of US-Taiwan and US-Philippine segments,” reads the application. “For clarity, the [request] would not authorize any commercial traffic on the PLCN system to or from Hong Kong, nor any operation of the PLCN system by PLDC.”

The filling goes on to describe how each fiber pair has its own terminating equipment, with Google’s and Facebook’s connections arriving at Los Angeles in cages that are inaccessible to the other companies. “PLDC is contractually prohibited from using its participation interest in the system to interfere with the ownership or rights of use of the other parties,” it notes.

Neither company would comment directly on the new filing. A Google spokesperson told TechCrunch, “We have been working through established channels in order to obtain cable landing licenses for various undersea cables, and we will continue to abide by the decisions made by designated agencies in the locations where we operate.” 

A Facebook spokesperson said, “We are continuing to navigate through all the appropriate channels on licensing and permitting for a jointly-owned subsea cable between the US and Asia to provide fast and secure internet access to more people on both continents.”

“I think stripping out the controversial [Hong Kong] link will work,” says Starosielski. “But whenever one of these projects either gets thwarted, it sends a very strong message. If even Google and Facebook can’t get a cable through, there aren’t going to be a ton of other companies advancing new cable systems between the US and China now.”

Ironically, that means that US data to and from China will continue to flow over the NCP cable controlled by China Mobile – the only company that Team Telecom and the FCC have ever turned down on national security grounds.

Facebook’s use of Onavo spyware faces questions in EU antitrust probe — report

By Natasha Lomas

Facebook’s use of the Onavo spyware VPN app it acquired in 2013 — and used to inform its 2014 purchase of the then rival WhatsApp messaging platform — is on the radar of Europe’s antitrust regulator, per a report in the Wall Street Journal.

The newspaper reports that the Commission has requested a large volume of internal documents as part of a preliminary investigation into Facebook’s data practices which was announced in December.

The WSJ cites people familiar with the matter who told it the regulator’s enquiry is focused on allegations Facebook sought to identify and crush potential rivals and thereby stifle competition by leveraging its access to user data.

Facebook announced it was shutting down Onavo a year ago — in the face of rising controversial about its use of the VPN tool as a data-gathering business intelligence dragnet that’s both hostile to user privacy and raises major questions about anti-competitive practices.

As recently as 2018 Facebook was still actively pushing Onavo at users of its main social networking app — marketing it under a ‘Protect’ banner intended to convince users that the tool would help them protect their information.

In fact the VPN allowed Facebook to monitor their activity across third party apps — enabling the tech giant to spot emerging trends across the larger mobile ecosystem. (So, as we’ve said before, ‘Protect Facebook’s business’ would have been a more accurate label for the tool.)

By the end of 2018 further details about how Facebook had used Onavo as a key intelligence lever in major acquisitions emerged when a UK parliamentary committee obtained a cache of internal documents related to a US court case brought by a third party developer which filed suit alleging unfair treatment on its app platform.

UK parliamentarians concluded that Facebook used Onavo to conduct global surveys of the usage of mobile apps by customers, apparently without their knowledge — using the intel to assess not just how many people had downloaded apps but how often they used them, which in turn helped the tech giant to decide which companies to acquire and which to treat as a threat.

The parliamentary committee went on to call for competition and data protection authorities to investigate Facebook’s business practices.

So it’s not surprising that Europe’s competition commission should also be digging into how Facebook used Onavo. The Commission also been reviewing changes Facebook made to its developer APIs which affected what information it made available, per the WSJ’s sources.

Internal documents published by the UK parliament also highlighted developer access issues — such as Facebook’s practice of whitelisting certain favored developers’ access to user data, raising questions about user consent to the sharing of their data — as well as fairness vis-a-vis non-whitelisted developers.

According to the newspaper’s report the regulator has requested a wide array of internal Facebook documents as part of its preliminary investigation, including emails, chat logs and presentations. It says Facebook’s lawyers have pushed back — seeking to narrow the discovery process by arguing that the request for info is so broad it would produce millions of documents and could reveal Facebook employees’ personal data.

Some of the WSJ’s sources also told it the Commission has withdrawn the original order and intends to issue a narrower request.

We’ve reached out to Facebook and the competition regulator for comment.

Back in 2017 the European Commission fined Facebook $122M for providing incorrect or misleading information at the time of the WhatsApp acquisition. Facebook had given regulator assurances that user accounts could not be linked across the two services — which cleared the way for it to be allowed to acquire WhatsApp — only for the company to u-turn in 2016 by saying it would be linking user data.

In addition to investigating Facebook’s data practices over potential antitrust concerns, the EU’s competition regulator is also looking into Google’s data practices — announcing a preliminary probe in December.

Messenger Kids adds expanded parental controls, details how much kids’ data Facebook collects

By Sarah Perez

Facebook’s messaging app for families with children, Messenger Kids, is being updated today with new tools and features to give parents more oversight and control over their kids’ chats. Now, parents will be able to see who a child is chatting with and how often, view recent photos and videos sent through chat, access the child’s reported and block list, remotely log out of the app on other devices and download the child’s chats, images and videos, both sent and received. The company is also introducing a new blocking mechanism and has updated the app’s Privacy Policy to include additional information about data collection, use and deletion practices.

The Messenger Kids app was first introduced in late 2017, as a way to give kids a way to message friends and family with parental oversight. It arrived at a time when kids were already embracing messaging — but were often doing so on less controlled platforms, like Kik, which attracted predators. Messenger Kids instead allows the child’s parents to determine who the child can chat with and when, through built-in parental controls.

In our household, for example, it became a convenient tool for chatting with relatives, like grandparents, aunts, uncles, and cousins, as well as few trusted friends, whose parents I knew well.

But when it came time to review the chats, a lot of scrolling back was involved.

The new Messenger Kids features will help with the oversight aspects for those parents who allow their kids to online chat. That decision, of course, is a personal one. Some parents don’t want their kids to have smartphones and outright ban apps, particularly ones that allow interactions. Others, myself included, believe that teaching kids to navigate the online world is part of your parental responsibility. And despite Facebook’s reputation, there aren’t other chat apps offering these sort of parental controls — or the convenience of being able to add everyone in your family to a child’s chat list with ease. (After all, Grandma and grandpa are already on Facebook and Messenger, but getting them to download new apps remains difficult.)

In the updated app, parents will be able to see who a child has been chatting with, and whether that’s text or video chat, over the past 30 days. This can save parents’ time, as they may not feel the need to review chat with trusted family members, for instance, so can redirect their focus their energy on reviewing the chats with friends. A log of images will help parents to see if all images and videos being sent and received are appropriate, and remove them or block them if not.

Parents can also now see if a child has blocked or reported a user in the app, or if they’ve unblocked them. This could be useful for identifying those problematic friends — the kind who sometimes cause trouble, but are later forgiven, then unblocked. (Anyone who’s dealt with tween-age drama can attest to the fact that there’s always one in every group!) By gaining access to this information, parents can sit down with te child to talk about when to take that step and block someone, and when a disagreement with a friend can instead be worked out. These are decisions that a child will have to make on their own one day, so being able to use this as a teaching moment is useful.

With the update, unblocking is supported and parents are still able to review chats with blocked contacts. However, blocked contacts will remain visible to one another and will stay in shared group chats. They just aren’t able to message one-on-one. Kids are warned if they return to or are added to chats with blocked contacts. (If parents want a full block, they can just remove the blocked contact from the child’s contact list, as before.)

Remote device logout lets you make sure the child is logged out of Messenger Kids on devices you can’t physically access and control — like a misplaced phone. And the option to download the child’s information, similar to Facebook’s feature, lets you download a copy of everything — messages, images, and videos. This could be a way to preserve their chat history when the child outgrows the app.

The Messenger Kids’ privacy policy was updated, as well, to better detail the information being collected. The app also attempts to explain this in plain language to the kids, using cute photos. In reality, parents should read the policy for themselves and make a decision, accordingly.

The app collects a lot of information — including names, profile photos, demographic details (gender and birthday), a child’s connection to parents, contacts’ information (like most frequent contacts), app usage information, device attributes and unique identifiers, data from device settings (like time zones or access to camera and photos), network information, and information provided from things like bug reports or feedback/contact forms.

To some extent, this information is needed to help the app properly operate or to alert parents about a child’s activities. But the policy includes less transparent language about the collected information being used to “evaluate, troubleshoot, improve, create, and develop our products” or being shared with other Facebook Companies. There’s a lot of wiggle room there for extensive data collection on Facebook’s part. Service providers offering technical infrastructure and support, like a content delivery network or customer service, may also gain access to collected information, but must adhere to “strict data confidentiality and security obligations,” the policy claims, without offering further details on what those are.

Despite its lengthiness, the policy leaves plenty of room for Facebook to collect private information and share it. If you have a Facebook account, you’ve already agreed to this sort of “deal with the devil” for yourself, in order to benefit from Facebook’s free service. But parents need to strongly consider if they’re comfortable making the same decision for their children.

The policy also describes things Facebook plans to roll out later, when Messenger Kids is updated to support older kids. As kids enter tween to teen years, parents may want to loosen the reigns a bit. The new policy will cover those changes, as well.

It’s unfortunate that the easiest tool, and the one with the best parental controls, is coming from Facebook. The market is ripe for a disruptor in the kids’ space, but there’s not enough money in that, apparently. Facebook, of course, sees the potential of getting kids hooked early and can invest in a product that isn’t directly monetized. Few companies can afford to do this, but Apple would be the best to take Facebook on in this area.

Apple’s iMessage is a large, secure and private platform — but it lacks these advanced parental controls, as well as the other bells and whistles (like built-in AR filters) that makes the Messenger Kids app fun. Critically, it doesn’t work across non-Apple devices, which will always be a limiter when it comes to finding an app that the extended family can use together.

To be clear, there is no way to stop Facebook from vacuuming up the child’s information except to delete the child’s Messenger Kids Account through the Facebook Help Center. So consider your choices wisely.

Africa Roundup: Trump’s Nigeria ban, Paga’s acquisition and raises, Flutterwave’s $35M and Sendy’s $20M

By Jake Bright

The first month of the new year saw Africa enter the fray of U.S. politics. The Trump administration announced last week it would halt immigration from Nigeria — Africa’s most populous nation with the continent’s largest economy and leading tech sector.

The presidential proclamation stops short of a full travel ban on the country of 200 million, but it suspends immigrant visas for Nigerians seeking citizenship and permanent resident status in the U.S.

The latest regulations are said not to apply to non-immigrant, temporary visas for tourist, business and medical visits.

The new policy follows Trump’s 2017 travel ban on predominantly Muslim countries. The primary reason for the latest restrictions, according to the Department of Homeland Security, was that the countries did not “meet the Department’s stronger security standards.”

Nigeria’s population is roughly 45 percent Muslim and the country has faced problems with terrorism, largely related to Boko Haram in its northeastern territory.

Restricting immigration to the U.S. from Nigeria, in particular, could impact commercial tech relations between the two countries.

Nigeria is the U.S.’s second largest African trading partner and the U.S. is the largest foreign investor in Nigeria.

Increasingly, the nature of the business relationship between the two countries is shifting to tech. Nigeria is steadily becoming Africa’s capital for VC, startups, rising founders and the entry of Silicon Valley companies.

Recent reporting by VC firm Partech shows Nigeria has become the number one country in Africa for venture investment. Much of that funding comes from American sources. The U.S. is arguably Nigeria’s strongest partner on tech and Nigeria, Silicon Valley’s chosen gateway for entering Africa. Examples include Visa’s 2019 investment in Nigerian fintech companies Flutterwave and Interswitch and Facebook and Google’s expansion in Nigeria.

On the ban’s impact, “U.S. companies will suffer and Nigerian companies will suffer,” Bosun Tijani, CEO of Lagos based incubator CcHub, told TechCrunch .

Nigerian entrepreneur Iyinoluwa Aboyeji, who co-founded two tech companies — Flutterwave and Andela — with operations in the U.S. and Lagos, posted his thoughts on the latest restrictions on social media.

“Just had an interesting dinner convo about this visa ban with Nigerian tech professionals in the U.S. Sad… but silver lining is all the amazing and experienced Nigerian talent in U.S. tech companies who will now head on home,” he tweeted.

Notable market moves in African tech last month included an acquisition, global expansion and a couple big raises.

Nigerian digital payments startup Paga acquired Apposit, a software development company based in Ethiopia, for an undisclosed amount.

The Lagos-based venture also announced it would launch its payment products in Mexico this year and in Ethiopia imminently, CEO Tayo Oviosu told TechCrunch

The moves come a little over a year after Paga raised a $10 million Series B round and Oviosu announced the company’s intent to expand globally while speaking at Disrupt San Francisco.

Paga will leverage Apposit — which is U.S. incorporated but operates in Addis Ababa — to support that expansion into East Africa and Latin America.

Paga has created a multi-channel network to transfer money, pay bills, and buy goods digitally. The company has 14 million customers in Nigeria who can transfer funds from one of Paga’s 24,411 agents or through the startup’s mobile apps.

With the acquisition, Paga absorbs Apposit’s tech capabilities and team of 63 engineers. The company will direct its boosted capabilities and total workforce of 530 to support its expansion.

On the raise side, San Francisco and Lagos-based fintech startup Flutterwave (previously mentioned) raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.

FIS also joined the round, led by US VC firms Greycroft and eVentures, with the participation of Visa and African fund CRE Venture Capital .

The company will use the funding to expand capabilities to provide more solutions around the broader needs of its clients. Uber, Booking.com and Jumia are among the big names that use Flutterwave to process payments.

Last month, Africa’s logistics startup space gained another multi-million-dollar round with global backing. Kenyan company Sendy, an on-demand platform that connects clients to drivers and vehicles for goods delivery, raised a $20 million Series B led by Atlantica Ventures. Toyota Tsusho Corporation, a trade and investment arm of Japanese automotive company Toyota, also joined the round.

Sendy’s raise came within six months of Nigerian trucking logistics startup Kobo360’s $20 million Series A backed by Goldman Sachs. In November, East African on-demand delivery venture Lori Systems hauled in $30 million supported by Chinese investors.

The company plans to use its raise for new developer hires, to improve the tech of its platform, and toward expansion in West Africa in 2020.

Sendy’s $20 million round also includes an R&D arrangement with Toyota Tsusho Corporation to optimize trucks for the West African market, Sendy CEO Mesh Alloys told TechCrunch.

More Africa-related stories @TechCrunch

African tech around the ‘net

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