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Yesterday — January 20th 2020Your RSS feeds

Google takes on AWS and Azure in India with Airtel cloud deal

By Manish Singh

Google has inked a deal with India’s third-largest telecom operator as the American giant looks to grow its cloud customer base in the key overseas market that is increasingly emerging as a new cloud battleground for AWS and Microsoft .

Google Cloud announced on Monday that the new partnership, effective starting today, enables Airtel to offer G Suite to small and medium-sized businesses as part of the telco’s ICT portfolio.

Airtel, which has amassed over 325 million subscribers in India, said it currently serves 2,500 large businesses and over 500,000 small and medium-sized businesses and startups in the country. The companies did not share details of their financial arrangement.

In a statement, Thomas Kurian, chief executive of Google Cloud, said, “the combination of G Suite’s collaboration and productivity tools with Airtel’s digital business offerings will help accelerate digital innovations for thousands of Indian businesses.”

The move follows Reliance Jio, India’s largest telecom operator, striking a similar deal with Microsoft to sell cloud services to small businesses. The two announced a 10-year partnership to “serve millions of customers.”

AWS, which leads the cloud market, interestingly does not maintain any similar deals with a telecom operator — though it did in the past. Deals with carriers, which were very common a decade ago as tech giants looked to acquire new users in India, illustrates the phase of the cloud adoption in the nation.

Nearly half a billion people in India came online last decade. And slowly, small businesses and merchants are also beginning to use digital tools, storage services, and accept online payments. According to a report by lobby group Nasscom, India’s cloud market is estimated to be worth more than $7 billion in three years.

Like in many other markets, Amazon, Microsoft, and Google are locked in an intense battle to win cloud customers in India. All of them offer near identical features and are often willing to pay out a potential client’s remainder credit to the rival to convince them to switch, industry executives have told TechCrunch.

Before yesterdayYour RSS feeds

TechCrunch’s Top 10 investigative reports from 2019

By Josh Constine

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

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

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

Image: Bryce Durbin/TechCrunch

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

Facebook pays teens to spy on their data

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

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

Protecting The WannaCry Kill Switch

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

The dangers of Elon Musk’s tunnel

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

Bing image search is full of child abuse

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

Expelled despite exculpatory data

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

Burned by an educational laptop

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

Giphy fails to block child abuse imagery

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

Airbnb’s weakness on anti-discrimination

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

Expired emails let terrorists tweet propaganda

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

Porn & gambling apps slip past Apple

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

Bonus: HQ Trivia employees fired for trying to remove CEO

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

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

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

By Alex Wilhelm

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

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

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

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

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

What about tech-ish startups?

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

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

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

Where FaZe Clan sees the future of gaming and entertainment

By Jonathan Shieber

Lee Trink has spent nearly his entire career in the entertainment business. The former president of Capitol Records is now the head of FaZe Clan, an esports juggernaut that is one of the most recognizable names in the wildly popular phenomenon of competitive gaming.

Trink sees FaZe Clan as the voice of a new generation of consumers who are finding their voice and their identity through gaming — and it’s a voice that’s increasingly speaking volumes in the entertainment industry through a clutch of competitive esports teams, a clothing and lifestyle brand and a network of creators who feed the appetites of millions of young gamers.

As the company struggles with a lawsuit brought by one of its most famous players, Trink is looking to the future — and setting his sights on new markets and new games as he consolidates FaZe Clan’s role as the voice of a new generation.

“The teams and social media output that we create is all marketing,” he says. “It’s not that we have an overall marketing strategy that we then populate with all of these opportunities. We’re not maximizing all of our brands.”

Microsoft announces global Teams ad push as it combats Slack for the heart of enterprise comms

By Alex Wilhelm

The long-running contest between Microsoft and its Teams service and Slack’s eponymous application continued this morning, with Redmond announcing what it describes as its first “global” advertising push for its enterprise communication service.

Slack, a recent technology IPO, exploded in the back half of last decade, accreting huge revenues while burrowing into the tech stacks of the startup world. The former startup’s success continued as it increasingly targeted larger companies; it’s easier to stack revenue in enterprise-scale chunks than it is by onboarding upstarts.

Enterprise productivity software, of course, is a large percentage of Microsoft’s bread and butter. And as Slack rose — and Microsoft decided against buying the then-nascent rival — the larger company invested in its competing Teams service. Notably, today’s ad push is not the first advertising salvo between the two companies. Slack owns that record, having welcomed Microsoft to its niche in a print ad that isn’t aging particularly well.

Slack and Teams are competing through public usage announcements. Most recently, Teams announced that it has 20 million daily active users (DAUs); Slack’s most recent number is 12 million. Slack, however, has touted how active its DAUs are, implying that it isn’t entirely sure that Microsoft’s figures line up to its own. Still, the rising gap between their numbers is notable.

Microsoft’s new ad campaign is yet another chapter in the ongoing Slack vs. Teams. The ad push itself is only so important. What matters more is that Microsoft is choosing to expend some of its limited public attention bandwidth on Teams over other options.

Stock

While Teams is merely part of the greater Office 365 world that Microsoft has been building for some time, Slack’s product is its business. And since its direct listing, some air has come out of its shares.

Slack’s share price has fallen from the mid-$30s after it debuted to the low-$20s today. I’ve explored that repricing and found that, far from the public markets repudiating Slack’s equity, the company was merely mispriced in its early trading life. The company’s revenue multiple has come down since its first days as a public entity, but remains rich; investors are still pricing Slack like an outstanding company.

Ahead, Slack and Microsoft will continue to trade competing DAU figures. The question becomes how far Slack’s brand can carry it against Microsoft’s enterprise heft.

Twitch’s loss of top streamers impacts hours watched and streamed in Q4 2019, report says

By Sarah Perez

The loss of several big-name streamers is finally taking its toll on Twitch, according to a new report from StreamLabs and Newzoo out today. In August 2019, top streamer Tyler “Ninja” Blevins, announced his intention to leave Twitch for Microsoft Mixer. Several others have since defected as well, including competitive gamer Michael “Shroud” Grzesiek who went to Mixer in October, Jack “CouRage” Dunlop who left in November for YouTube Live, and Jeremy “Disguised Toast” Wang who also left in November, but went to Facebook Gaming.

The loss of Ninja hadn’t impacted the amount of time Twitch users spent watching content on the platform as of Q3 2019, but the total hours streamed had slightly dipped. As of Q4 2019, however, Twitch’s momentum began to slow.

While the Amazon-owned streaming site is still by far the leader in terms of hours of content both watched and streamed compared with rivals with a market share of 75.1%, the number of hours watched on Twitch declined from Q3 to Q4 2019 by 9.8%.

This resulted in the lowest number of hours watched on the platform (2299.6M) since Q3 2018 (2283.9M).

That being said, Twitch overall is still growing on a year-over-year basis, with a 12% increase in hours watched on the platform in 2019 compared with 2018.

The high-profile losses are also now impacting the hours streamed on Twitch, the report found.

The platform in Q4 2019 saw the lowest number of hours streamed (82.7M) since Q2 2018 (86M). Again, the trend on a year-over-year basis is still climbing upwards, with a 16.1% increase in hours streamed in 2019 versus 2018.

Twitch saw declines in the number of unique channels streaming over the course of 2019, too, dropping from 5.6 million in Q1 2019 — the highest ever — to 3.7 million by Q4.

Concurrent viewers declined on a quarterly basis by 9.4%. This is the lowest average concurrent viewership figure since Q3 2018. On an annual basis, however, concurrent viewership was still up by 12.3%. The average number of viewers per channel was stable and has increased by 12.5% since Q1 2018.

YouTube Gaming Live, meanwhile, became the only platform to see increases in hours watched, streamed and concurrent viewership in Q4 2019.

CourageJD’s move to YouTube Gaming Live has helped to boost Google’s platform, but the increases can also be attributed to YouTube’s broadcast of top esports events and influencer moments.

The total number of hours watched on YouTube Gaming Live grew 46% from Q1 to Q4 2019 to reach 909.1M — making that the largest percentage increase among gaming sites. Hours streamed remained stable, closing the year at 12.3M. Unique channels increased 4.8% on a quarterly basis but declined 24.6% from Q1 2019.

YouTube Gaming Live’s biggest jump was in concurrent viewers, which grew by a sizable 33.8% in Q4 — making it the only platform to see an increase in average concurrent viewership in the quarter. Average viewers per channel also increased by 21% quarter-over-quarter — even though the number of unique streaming channels grew by 4.8%, which usually means a drop in average viewers per channel would occur.

YouTube Gaming Live closed the year with 22.1% market share.

Ninja’s move to Mixer has encouraged other streamers to start broadcasting on the platform, but despite that deal and the one with Shroud, the number of hours watched declined 8.5% quarter-over-quarter from 90.2 million in Q3 2019 to 82.5 million in Q4 2019. But year-over-year, Mixer’s hours watched have more than doubled.

Ninja and Shroud have helped to boost the number of hours streamed on Mixer, more than doubling the number of hours in Q3. But in Q4, the number of hours streamed dropped 12.9% from 32.6 million to 28.4 million.

However, 80.3 million hours of content was streamed in 2019 versus just 35.2 million hours in 2018.

There was also a 7.5% decrease in the number of Mixer channels in Q4 (3.9 million to 3.6 million), but a 78% increased in 2019 compared with 2018. Mixer now has triple the number of unique channels streaming, compared with YouTube Gaming Live.

Average concurrent viewership on Mixer declined 8% from Q3 to Q4, but was up 55.1% year-over-year. Average viewers per channel remained stable.

Mixer closed the year with a 2.7% market share.

The report doesn’t include Facebook Gaming live streaming data. But it does note there was a 400% increase in the number of live streams in 2019, from 504,173 live streams in Q1 to 2,525,863 in Q4, based on Facebook Gaming streamers who used the Streamlabs’ OBS product. Additionally, the number of total hours streamed increased by 275% from 438,835 in Q1 to 1,648,557 in Q4.

Also in Q4, several live streamers made the switch to Facebook, including Disguised Toast, as noted above, as well as Zero and Corinna Kopf. This could have also contributed to the momentum in the quarter, as well as launches of charity live streaming tools, and the arrival of the Facebook Gaming app in Thailand and Latin America.

For the year, the most-watched publisher was Riot Games, due to League of Legends and Teamfight Tactics. Epic Games (Fortnite) trailed by only 25.1 million hours. The latter saw a 29% decline, year-over-year, in terms of hours watched, while the former grew just 3.6%.

Similarly, League of Legends was the No. 1 game streamed on Twitch in 2019, followed by Fornite then Grand Theft Auto V. Fornite topped YouTube Gaming Live and Mixer.

While none of the streamers’ defections from Twitch have been significant enough to force the platform from its No. 1 position, it has created a healthier competitive landscape among streaming services. But in reality, it’s still too soon to see what long-term impacts the moves will have on Twitch and whether or not its rivals can continue their momentum in 2020.

Wipro Ventures announces $150M Fund II to invest in enterprise startups

By Manish Singh

Wipro Ventures, the investment arm of one of India’s largest IT companies by market capitalization, said on Thursday it has raised $150 million for its second fund as it looks to invest in more enterprise startups and venture capitalist funds.

As with its $100 million maiden fund in 2015, Wipro Ventures will use its second fund to invest in early and mid-stage startups worldwide that are building enterprise solutions in cybersecurity, analytics, cloud infrastructure, test automation and AI, said Biplab Adhya and Venu Pemmaraju, managing partners at Wipro Ventures, in an interview with TechCrunch.

Through its maiden fund, Wipro Ventures invested in 16 startups and five VC funds. Adhya said two of its portfolio startups — including Demisto, which sold to Palo Alto for $560 million — have seen an exit, while others are showing good signs.

“We are pleased with the traction these startups are showing and the value we have added to Wipro, and we look forward to continuing this journey,” he said.

Adhya said Wipro Ventures looks to be a long-term investor in a startup. In addition to often participating in a startup’s follow-on financial rounds, it tends to stay with a startup until its IPO, he said.

Of the 16 startups Wipro Ventures has invested in to date, 11 are based in the U.S., four in Israel and one in India. Adhya said geography tends not to play a crucial role when investing in a startup, and he is open to ideas from anywhere in the world.

A corporate giant showing interest in picking stake in private equity firms is not a new phenomenon. Leaving aside the American giants such as Google, Microsoft and Facebook, all of which operate investment arms, Indian IT giants have also been at it for years.

HCL and Infosys, two other IT giants in India, have also invested in — or outright acquired — dozens of startups in recent years. A 2017 CB Insights report showed that Wipro and Infosys, which runs Innovation Fund, alone had invested in 28 firms and acquired eight startups.

Adhya said Wipro Ventures is now investing in six to eight startups each year.

One of the benefits of taking money from a corporate giant is sometimes getting access to their other customers. And that appears to be true of Wipro. More than 100 of Wipro’s global customers have deployed solutions from its portfolio startups, Adhya said.

In a statement, Rishi Bhargava, a founder of Demisto, explained the benefit. “Within the first year of our partnership, Wipro and Demisto were working together on dozens of Fortune 1000 opportunities and closing a majority of them.

“It’s exciting to see Wipro Ventures continue to enhance the startup ecosystem with new capital while helping companies boost their bottom line,” he added.

Here is the first stable release of Microsoft’s new Edge browser

By Frederic Lardinois

Right on schedule, Microsoft today released the first stable version of its new Chromium-based Edge browser, just over a year after it first announced that it would stop developing its own browser engine and go with what has, for better or worse, become the industry standard.

You can now download the stable version for Windows 7, 8 and 10, as well as macOS, directly. If you are on Windows 10, you can also wait for the automatic update to kick in, but that may take a while.

Since all of the development has happened in the open, with various pre-release channels, there are no surprises in this release. Some of the most interesting forward-looking features like Collections, Microsoft’s new take on bookmarking, are still only available in the more experimental pre-release channels. That will quickly change, though, since Edge is now on a six-week release cycle.

 

As I’ve said throughout the development cycle, Edge is a competent Chrome challenger and I have no hesitations to recommend it to anybody who is looking for a browser alternative. It’s still missing a few features, most importantly the ability to sync your browser history and extensions between devices. I’ve never found that to be much of a roadblock to using Edge as my main browser, but your mileage may vary.

Like all modern browsers, Edge features various options for protecting you from online trackers, support for extensions (both from the Chrome Web Store and Microsoft’s own extension repository), reader mode, the ability to switch profiles and pretty much everything else you would expect.

What it doesn’t have yet is a killer feature or something that really makes it stand out from the rest. While Microsoft seems quite excited about Collections, I admit that it’s not something I’ve found all that useful for my own workflow. But the team now has a stable platform in place to start innovating on, so we’ll likely see a stronger focus on new features going forward.

With Firefox going through its own renaissance, the Edge team may have trouble convincing people that they should switch back to a Microsoft browser, no matter how good it is. For most users, switching browsers isn’t a casual thing, after all.

Either way, if you were hesitant to try out the new Edge, now it the time to give it a shot. The easiest way to do so is to download the update directly. If you’re on Windows 10, the new Edge will replace the old Edge over time through the usual Windows OS update channel, but Microsoft is making this a very gradual rollout that it expects to last several months (and once it’s installed, it will update independently, outside of the Windows Update system).

Enterprise users get a choice for how and when they want to make the move, of course, which Microsoft detailed here and here.

Amazon to invest $1 billion to help digitize small businesses in India

By Manish Singh

India welcomed Jeff Bezos this week with an antitrust probe. On top of that, thousands of small merchants who typically compete with one another are beginning to gather across the country to hold a protest against the alleged predatory practices by the e-commerce giant. But Amazon founder and chief executive’s love for one of the company’s most important overseas markets remains untainted.

At a conference in New Delhi on Wednesday, Bezos and Amit Agarwal, the head of Amazon India, announced that the American giant is pumping $1 billion into India operations to help small and medium-sized businesses in the country come online. This is in addition to about $5.5 billion the company has invested in the country.

Bezos said the company is also eyeing making exports of locally produced goods from India — in line with New Delhi’s Make in India program that encourages companies to manufacture locally in the nation — to be of $10 billion in size on Amazon platform by 2025.

“Over the next five years, Amazon will invest an incremental $1 billion to digitize micro and small businesses in cities, towns, and villages across India, helping them reach more customers than ever before,” said Bezos in a statement.

“This initiative will use Amazon’s global footprint to create $10 billion in India exports by 2025. Our hope is that this investment will bring millions more people into the future prosperity of India and at the same time expose the world to the ‘Make in India’ products that represent India’s rich, diverse culture,” he added.

Nearly half a billion people in India came online for the first time in the last decade. But most small businesses such as mom-and-pop stores that dot tens of thousands of cities, towns, and villages of India are still offline. Google, Facebook, and Microsoft have also launched tools in recent years to help these businesses build presence on the web and accept digital payments.

Amazon opened its conference, titled Amazon SMBhav (Hindi for possible), with videos of poor merchants and craftsmen in India who have expanded their businesses after signing up on the e-commerce platform.

An Amazon executive said the company has amassed over 500,000 sellers in India and thousands of merchants have boosted their businesses by beginning to sell on 12 Amazon marketplaces across the globe.

But just 10 miles from the conference venue, dozens of merchants had a different Amazon story to tell.

Dozens of merchants gathered in New Delhi on Wednesday to protest against alleged predatory practices by Amazon. (Image: Manish Singh / TechCrunch)

Confederation of All India Traders (CAIT), a trade group that represents more than 60 million merchants in the country, said it was organizing protests in 300 cities in India. A representative of the trade group said they want to publicize the alleged predatory pricing and other anti-competitive practices employed by Amazon and Flipkart .

Bezos and Agarwal did not address the protests or the antitrust probe.

At stake is one of the world’s largest untapped markets. India’s e-commerce market is projected to grow to $150 billion in the next three years, according to a report by Nasscom and PwC India.

“I predict that the 21st century is going to be the Indian century,” said Bezos at the conference. “The most important alliance is going to be the alliance between India and the U.S., the world’s oldest democracy and the world’s largest democracy.”

On Monday, India’s Competition Commission opened an antitrust probe into Amazon and Walmart -owned Flipkart to find whether the two e-commerce giants have exclusive arrangements with smartphone vendors and are giving preferential treatment to some sellers.

The probe is the latest regulatory setback for Amazon and Flipkart, which sold majority stake to Walmart for $16 billion in 2018, in India. Last year, the U.S. senators criticized New Delhi after it restricted foreign companies from selling inventory from their own subsidiaries. The move forced Amazon and Flipkart to abruptly pull hundreds of thousands of goods from their marketplaces.

A CAIT spokesperson told TechCrunch that its member merchants were pleased with India’s antitrust watchdog’s move. The new round of protests today are one of several the trade group has organized in recent years. Last month, thousands of protestors expressed similar concerns against the e-commerce players.

“Amazon, Jeff Bezos, Flipkart, go back!” some protesters chanted today. Sumit Agarwal, National Secretary of CAIT, told TechCrunch in an interview that “deep discounting” on products on Amazon is impeding the growth of small merchants and a government intervention is urgently needed.

According to industry estimates, e-commerce accounts for about 3% of retail sales in the country.

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

By Alex Wilhelm

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

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

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

Keeping score

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

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

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

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

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

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

And so on.

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

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

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

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

2019 naughty list

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

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

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

Such was 2019. On to 2020!

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

In the shadow of Amazon and Microsoft, Seattle startups are having a moment

By Kate Clark

Venture capital investment exploded across a number of geographies in 2019 despite the constant threat of an economic downturn.

San Francisco, of course, remains the startup epicenter of the world, shutting out all other geographies when it comes to capital invested. Still, other regions continue to grow, raking in more capital this year than ever.

In Utah, a new hotbed for startups, companies like Weave, Divvy and MX Technology raised a collective $370 million from private market investors. In the Northeast, New York City experienced record-breaking deal volume with median deal sizes climbing steadily. Boston is closing out the decade with at least 10 deals larger than $100 million announced this year alone. And in the lovely Pacific Northwest, home to tech heavyweights Amazon and Microsoft, Seattle is experiencing an uptick in VC interest in what could be a sign the town is finally reaching its full potential.

Seattle startups raised a total of $3.5 billion in VC funding across roughly 375 deals this year, according to data collected by PitchBook. That’s up from $3 billion in 2018 across 346 deals and a meager $1.7 billion in 2017 across 348 deals. Much of Seattle’s recent growth can be attributed to a few fast-growing businesses.

Convoy, the digital freight network that connects truckers with shippers, closed a $400 million round last month bringing its valuation to $2.75 billion. The deal was remarkable for a number of reasons. Firstly, it was the largest venture round for a Seattle-based company in a decade, PitchBook claims. And it pushed Convoy to the top of the list of the most valuable companies in the city, surpassing OfferUp, which raised a sizable Series D in 2018 at a $1.4 billion valuation.

Convoy has managed to attract a slew of high-profile investors, including Amazon’s Jeff Bezos, Salesforce CEO Marc Benioff and even U2’s Bono and the Edge. Since it was founded in 2015, the business has raised a total of more than $668 million.

Remitly, another Seattle-headquartered business, has helped bolster Seattle’s startup ecosystem. The fintech company focused on international money transfer raised a $135 million Series E led by Generation Investment Management, and $85 million in debt from Barclays, Bridge Bank, Goldman Sachs and Silicon Valley Bank earlier this year. Owl Rock Capital, Princeville Global,  Prudential Financial, Schroder & Co Bank AG and Top Tier Capital Partners, and previous investors DN Capital, Naspers’ PayU and Stripes Group also participated in the equity round, which valued Remitly at nearly $1 billion.

Up-and-coming startups, including co-working space provider The Riveter, real estate business Modus and same-day delivery service Dolly, have recently attracted investment too.

A number of other factors have contributed to Seattle’s long-awaited rise in venture activity. Top-performing companies like Stripe, Airbnb and Dropbox have established engineering offices in Seattle, as has Uber, Twitter, Facebook, Disney and many others. This, of course, has attracted copious engineers, a key ingredient to building a successful tech hub. Plus, the pipeline of engineers provided by the nearby University of Washington (shout-out to my alma mater) means there’s no shortage of brainiacs.

There’s long been plenty of smart people in Seattle, mostly working at Microsoft and Amazon, however. The issue has been a shortage of entrepreneurs, or those willing to exit a well-paying gig in favor of a risky venture. Fortunately for Seattle venture capitalists, new efforts have been made to entice corporate workers to the startup universe. Pioneer Square Labs, which I profiled earlier this year, is a prime example of this movement. On a mission to champion Seattle’s unique entrepreneurial DNA, Pioneer Square Labs cropped up in 2015 to create, launch and fund technology companies headquartered in the Pacific Northwest.

Boundless CEO Xiao Wang at TechCrunch Disrupt 2017

Operating under the startup studio model, PSL’s team of former founders and venture capitalists, including Rover and Mighty AI founder Greg Gottesman, collaborate to craft and incubate startup ideas, then recruit a founding CEO from their network of entrepreneurs to lead the business. Seattle is home to two of the most valuable businesses in the world, but it has not created as many founders as anticipated. PSL hopes that by removing some of the risk, it can encourage prospective founders, like Boundless CEO Xiao Wang, a former senior product manager at Amazon, to build.

“The studio model lends itself really well to people who are 99% there, thinking ‘damn, I want to start a company,’ ” PSL co-founder Ben Gilbert said in March. “These are people that are incredible entrepreneurs but if not for the studio as a catalyst, they may not have [left].”

Boundless is one of several successful PSL spin-outs. The business, which helps families navigate the convoluted green card process, raised a $7.8 million Series A led by Foundry Group earlier this year, with participation from existing investors Trilogy Equity Partners, PSL, Two Sigma Ventures and Founders’ Co-Op.

Years-old institutional funds like Seattle’s Madrona Venture Group have done their part to bolster the Seattle startup community too. Madrona raised a $100 million Acceleration Fund earlier this year, and although it plans to look beyond its backyard for its newest deals, the firm continues to be one of the largest supporters of Pacific Northwest upstarts. Founded in 1995, Madrona’s portfolio includes Amazon, Mighty AI, UiPath, Branch and more.

Voyager Capital, another Seattle-based VC, also raised another $100 million this year to invest in the PNW. Maveron, a venture capital fund co-founded by Starbucks mastermind Howard Schultz, closed on another $180 million to invest in early-stage consumer startups in May. And new efforts like Flying Fish Partners have been busy deploying capital to promising local companies.

There’s a lot more to say about all this. Like the growing role of deep-pocketed angel investors in Seattle have in expanding the startup ecosystem, or the non-local investors, like Silicon Valley’s best, who’ve funneled cash into Seattle’s talent. In short, Seattle deal activity is finally climbing thanks to top talent, new accelerator models and several refueled venture funds. Now we wait to see how the Seattle startup community leverages this growth period and what startups emerge on top.

While other tech giants fund housing initiatives, Amazon is opening a homeless shelter — inside its HQ

By Connie Loizos

As big tech gets bigger, industry leaders have begun making more noise about helping homeless populations, particularly in those regions where high salaries have driven up the cost of living to heights not seen before. Last January, for example, Facebook and the Chan Zuckerberg Initiative, among other participants, formed a group called the Partnership for the Bay’s Future that said it was going to commit hundreds of millions of dollars to expand affordable housing and strengthen “low-income tenant protections” in the five main counties in and around San Francisco. Microsoft meanwhile made a similar pledge in January of last year, promising $500 million to increase housing options in Seattle where low- and middle-income workers are being priced out of Seattle and its surrounding suburbs.

Amazon has made similar pledges in the past, with CEO Jeff Bezos pledging $2 billion to combat homelessness and to fund a network of “Montessori-inspired preschools in underserved communities,” as he said in a statement posted on Twitter at the time, in September 2018.

Now, however, Amazon is taking an approach that immediately raises the bar for its rivals in tech: it’s opening up a space in its Seattle headquarters to a homeless shelter, one that’s expected to become the largest family shelter in the state of Washington.

Business Insider reported the news earlier today, and it says the space will be able to accommodate 275 people each night and that it will offer individual, private rooms for families who are allowed to bring pets. It will also feature an industrial kitchen that’s expected to produce 600,000 meals per year.

The space is scheduled to open in the first quarter of the new year, and is part of a partnership Amazon has enjoyed for years with a nonprofit called Mary’s Place that has been operating a shelter out of a Travelodge hotel on Amazon’s campus since 2016. The new space, which BI says will have enough beds and blankets for 400 families each year, isn’t just owned by Amazon but the company has offered to pay for the nonprofit’s utilities, maintenance, and security for the next 10 years or as long as Mary’s Place needs it.

BI notes that the shelter will make a mere dent in Seattle’s homeless population, which includes 12,500 people in King County, where Seattle is located, but it’s still notable, not least because of the company’s willingness to house the shelter in its own headquarters.

It’s a move that no other tech company of which we’re aware has taken. The decision also underscores other cities’ equivocation over where their own, growing homeless populations should receive support. In just one memorable instance, after San Francisco Mayor London Breed last March floated an idea of turning a parking lot along the city’s Embarcadero into a center that would provide health and housing services and stays for up to 200 of the city’s 7,000-plus homeless residents, neighboring residents launched a campaign to squash the proposal. It was later passed anyway.

Vox noted in report about Microsoft’s $500 million pledge last year that many of these corporate efforts tend to elicit two types of reactions: admiration for the companies’ efforts — or frustration over the publicity these initiatives receive. After all, it’s hard to forget that Amazon paid no federal tax in the U.S. in 2018 on more than $11 billion in profit before taxes. The company also threatened in 2018 to stop construction in Seattle if the city passed a tax on major businesses that would have raised money for affordable housing.

Whether Amazon — one of the most valuable companies in the world, with a current $915 billion market cap — is doing its fair share is certainly worthy of exploring in an ongoing way. The same is true of every tech company that’s ‘eating the world.’

Still, a homeless shelter at the heart of a company like Amazon is worth acknowledging — and perhaps emulating — too.

“It’s not one entity that’s going to solve this,” Marty Hartman, the executive director of Mary’s Place, tells BI. “It’s not on corporations. It’s not on congregations. It’s not on government. It’s not on foundations. It’s all of us working together.”

Pictured above: A view of the new Mary’s Place Family Center from the street, courtesy of Amazon.

Xbox Series X is Microsoft’s next-gen console, arriving late-2020

By Brian Heater

If you didn’t watch last night’s Game Awards, you may of missed it. But Xbox Series X is the company’s  next generation console, and will be arriving in late 2020. Thankfully, Microsoft has kindly catalogued all of the images, media and even a little information online. Oh, and we’ll almost certainly be hearing a LOT more about the Xbox Series X before it arrives holidays 2020.

Xbox Head Phil Spencer has a pretty long break down over on the the official blog. But let’s start with the obvious here. The Series X looks…different. Surely the meme makers are already working overtime on this one, but to my mind, it looks a more traditional PC or maybe even a router.

It’s tall (around three times as tall as its predecessor), it’s rectangular, it’s black. It’s fairly minimalist. A lot of people seem to be comparing it to a refrigerator, which, fine. Honestly, I think it’s got that working for it. Surely plenty of people are looking for something that more seamlessly blends in with its surroundings.

The last few generations have found consoles transforming from specialty items into catchall media players, and there’s something to be said for a product that can sit on your shelf, largely undetected. Notably, the blocky design means that the console can be oriented either vertically or horizontally, depending on your spacing needs.

The latest version of the Xbox Wireless Controller arrives alongside the new system, because, well, you’re going to need something to control it with. It’s a bit smaller than the previous version, “refined to accommodate an even wider range of people,” per Spencer.

The buttons are largely in tact, with the addition of a Share button for taking screenshots and game clips. The new controllers ship with the system and will be capable with both the Xbox One and Windows 10 systems.

Speaking of older systems, the Series X is set up to support backward compatibility for all older systems, along with Xbox One accessories. Per Spencer,

Building on our compatibility promise, with Xbox Series X we’re also investing in consumer-friendly pathways to game ownership across generations.

Leading the way with our first-party titles including Halo Infinite in 2020, we’re committed to ensuring that games from Xbox Game Studios support cross-generation entitlements and that your Achievements and game saves are shared across devices.

Spec information is still pretty light for this first pass, but Spencer promises 4K playback at 60FPS (with potentially up to 120FPS) and support for both Variable Refresh Rate (VRR) and 8K capability.

Powered by our custom-designed processor leveraging the latest Zen 2 and next generation RDNA architecture from our partners at AMD, Xbox Series X will deliver hardware accelerated ray tracing and a new level of performance never before seen in a console. Additionally, our patented Variable Rate Shading (VRS) technology will allow developers to get even more out of the Xbox Series X GPU and our next-generation SSD will virtually eliminate load times and bring players into their gaming worlds faster than ever before.

The Series X will also, naturally, have an eye on cloud gaming, in addition to native hardware. Tonight’s unveil also featured a sneak preview of the upcoming Ninja Theory title, Senua’s Saga: Hellblade II.

Chatbots spotlight machine learning’s trillion-dollar potential

By Walter Thompson
Gustavo Parés Contributor
Gustavo Parés is CEO of NDS Cognitive Labs, a leader in cognitive computing and AI business solutions. A Professor at Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM), he's partnered with Microsoft, IBM and Google to deliver digital transformation and cognitive technology services.

The global industry potential of artificial intelligence is well-documented, yet the vision of this AI future is uncertain.

AI and automation trends are generating significant debate among economists and governments, particularly around employment impact and uncertain social outcomes. The mainstream attention is warranted. According to PwC, AI “could contribute up to $15.7 trillion to the global economy in 2030, more than the current output of China and India combined.”

AI is at a crossroads, and its long-term outlook is still hotly debated. Despite social media giants, automotive companies and numerous other industries investing hundreds of billions of dollars in AI, many automation technologies are not yet directly generating revenue and instead are forecasted to become profitable in the coming decades. This creates additional uncertainty of AI’s true market potential. The realistic potential value of AI is unknown, yet, as the technology advances, the ultimate impact could be of great consequence to virtually every economy.

There are many reasons to view AI’s future from an optimistic lens, however: chatbots provide significant evidence for AI’s positive impact on both business growth and employment markets. Today, chatbots are increasingly capable of mimicking human interactions and conversations to assist business-to-business, business-to-consumer, business-to-government, advertising audiences and other diverse groups. The evolution of the cognitive computer science behind conversational chatbots is perhaps one of the best examples of AI technologies driving revenue. Further, chatbot technology shows some of the greatest promise for augmenting, rather than replacing human workers.

AI is driving value while augmenting human workers

Chatbots are delivering real revenue today for some of the world’s leading financial services (Bank of America), retail (Levi’s), and technology companies (Zendesk) . We’re seeing more consumers taking the next step in a transaction or even making a purchase decision based off conversations with chatbots. Beyond driving sales, chatbots have numerous applications to a wide range of organizations. Nonprofits, NGOs, and even political campaigns find value in deploying chatbots to help handle the influx of inquiries from stakeholders and relevant audiences.

Rather than these chatbots replacing human workers, organizations are finding chatbots to be a helpful and value-creating opportunity that frees employees to focus on more strategic tasks. Apple’s Siri, Amazon Alexa and Microsoft Cortana aren’t replacing executive assistants today, but these technologies are all capable of supporting the executive assistant function in the workplace.

Gartner predicts AI augmentation, defined as a “human-centered partnership model of people and AI working together to enhance cognitive performance,” could generate $2.9 trillion of business value by 2021. Many industries see potential for chatbots to augment functions like sales, customer support and IT, enabling workers to create value in more strategic ways. Bain & Company finds chatbots to be among the most notable examples of artificial intelligence and automation in practice: “Companies use AI applications to understand industry trends, manage their workforce, address problems, power chatbots and personalize content to enable self-service.”

Clearly, the implications of scaled, human-like engagement are stunning in their capacity to carry out tasks. A chatbot’s ability to simultaneously hold tens of thousands of conversations — pulling from many millions of data points — is comparable to what a human customer service rep could accomplish in more than 1,000 years of nonstop work. Scaling customer service via AI allows service professionals to focus on big picture and more complex issues, and it provides rich data on customer interactions. We anticipate seeing more companies look to build better customer service experiences through chatbots, as Google and Salesforce announced in April.

The transformative impact of chatbots across industries

From our research and work with leading global companies, it’s clear that enterprises are finding that chatbots bring about tremendous value while supporting both people employment and long-term business growth opportunities today. Ultimately, chatbots are on track to showcase some of the most optimistic examples of AI augmentation. Consider three examples:

BMW says ‘ja’ to Android Auto

By Frederic Lardinois

BMW today announced that it is finally bringing Android Auto to its vehicles, starting in July 2020. With that, it will join Apple’s CarPlay in the company’s vehicles.

The first live demo of Android Auto in a BMW will happen at CES 2020 next month. After that, it will become available as an update to drivers in 20 countries with cars that feature the BMW OS 7.0. BMW will support Android Auto over a wireless connection, though, which somewhat limits its comparability.

Only two years ago, the company said that it wasn’t interested in supporting Android Auto. At the time, Dieter May, who was then the senior VP for Digital Services and Business Model, explicitly told me that the company wanted to focus on its first-party apps in order to retain full control over the in-car interface and that he wasn’t interested in seeing Android Auto in BMWs. May has since left the company, though it’s also worth noting that Android Auto itself has become significantly more polished over the course of the last two years.

“The Google Assistant on Android Auto makes it easy to get directions, keep in touch and stay productive. Many of our customers have pointed out the importance to them of having Android Auto inside a BMW for using a number of familiar Android smartphone features safely without being distracted from the road, in addition to BMW’s own functions and services,” said Peter Henrich, senior vice president Product Management BMW, in today’s announcement.

With this, BMW will also finally offer support for the Google Assistant after early bets on Alexa, Cortana and the BMW Assistant (which itself is built on top of Microsoft’s AI stack). The company has long said it wants to offer support for all popular digital assistants. For the Google Assistant, the only way to make that work, at least for the time being, is Android Auto.

In BMWs, Android Auto will see integrations into the car’s digital cockpit, in addition to BMW’s Info Display and the heads-up display (for directions). That’s a pretty deep integration, which goes beyond what most car manufacturers feature today.

“We are excited to work with BMW to bring wireless Android Auto to their customers worldwide next year,” said Patrick Brady, vice president of engineering at Google. “The seamless connection from Android smartphones to BMW vehicles allows customers to hit the road faster while maintaining access to all of their favorite apps and services in a safer experience.”

Eaze and Wayv founder explains how to raise money for cannabis startups

By Matt Burns

Keith McCarty could have retired after Microsoft bought Yammer. Instead, he founded Eaze to address cannabis delivery.

He lead the company through its B round and then stepped back, but last year, he founded Wayv, a new cannabis startup to address an even more significant challenge for the industry: supply chain logistics. So far, it’s raised $5 million and is currently seeking its Series A. Fundraising is hard for any entrepreneur, but McCarty’s experience sets him apart from most cannabis industry founders.

The company is now the first complete payment solution in the cannabis industry, allowing money to travel throughout the ecosystem in the fastest, safest way while remaining compliant with all of California’s regulations.

We spoke at length about this ability and along the way, chatted about the cannabis startup landscape.

McCarty has been in the industry for about five years, founding Eaze in 2014 and later leaving after raising a $13 million B round. At the time, startups generally didn’t seek venture funding and McCarty helped the company become one of the first to do so. Now founder and CEO of a new cannabis startup, he’s at it again.

Microsoft announces public preview of Microsoft Teams for Linux

By Ron Miller

Today, Microsoft announced a public preview of Microsoft Teams for Linux, the first Office 365 tool that’s available for the open source operating system.

The hope is that by making it available for preview, the company can get feedback from the community and improve it before it becomes generally available. “Starting today, Microsoft Teams is available for Linux users in public preview, enabling high quality collaboration experiences for the open source community at work and in educational institutions,” the company wrote in the blog post announcing the release.

The goal here ultimately is to help get Teams into the hands of more customers by expanding the platforms it runs on. “Most of our customers have devices running on a variety of different platforms such as Windows 10, Linux and others. We are committed to supporting mixed environments across our cloud and productivity offerings, and with this announcement, we are pleased to extend the Teams experience to Linux users,” the company wrote in the blog post.

This announcement significant for a couple of reasons. For starters, Microsoft has had a complicated history with Linux and open source, although in recent years under Satya Nadella it has embraced open source. This shows that Microsoft is willing to put its tools wherever customers need them, regardless of the platform or operating system.

Secondly, since it marks the first Office 365 app on Linux, if there is positive feedback, it could open the door for more apps on the platform down the road.

The announcement also comes against the backdrop of the company’s on-going battles with Slack for enterprise collaboration platform users. In July, Microsoft announced 13 million daily active users on Teams. Meanwhile, Slack has 12 million DAUs. It’s worth noting that Slack has been available on Linux for almost two years.

China Roundup: Y Combinator’s short-lived China dream

By Rita Liao

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. Last week, we looked at how Alibaba and Tencent fared in the last quarter; the talk in Silicon Valley and Beijing this week is on Y Combinator’s sudden retreat from China. We will also discuss the enduring food delivery war in the country later.

Brief adventure in the East

The storied Silicon Valley accelerator Y Combinator announced the closure of its China unit just a little over a year after it entered the country. In a vague statement posted on its official blog, the organization said the decision came amid a change in leadership. Sam Altman, its former president who hired legendary artificial intelligence scientist Lu Qi to initiate the China operation, recently left his high-profile role to join research outfit OpenAI. With that, YC has since refocused its energy to support “local and international startups from our headquarters in Silicon Valley.”

What was untold is the insurmountable challenge that multinationals face in their attempt to win in a wildly different market. Lu Qi, who wore management hats at Baidu and Microsoft before joining YC, was clearly aware of the obstacles when he said in an interview (in Chinese) in May that “multinational corporations in China have almost been wiped out. They almost never successfully land in China.” The prescription, he believes, is to build a local team that’s given full autonomy to make decisions around products, operations, and the business.

A former executive at an American company’s China branch, who asked to remain anonymous, argued that Lu Qi’s one-man effort can’t be enough to beat the curse of multinationals’ path in China. “All I can say is: Lu has taken a detour. Going independent is the best decision. When it comes to whether Chinese startups are suited for mentorship, or whether incubators bring value to China, these are separate questions.”

What’s curious is that YC China seemed to have been given a meaningful level of freedom before the split. “Thanks to Sam Altman and the U.S. team, who agreed with my view and supported with much preparation, YC China is not only able to enjoy key resources from YC U.S. but can also operate at a completely independent capacity,” Lu said in the May interview.

Moving on, the old YC China team will join Lu Qi to fund new companies under a newly minted program, MiraclePlus, announced YC China via a Wechat post (in Chinese). The initiative has set up its own fund, team, entity and operational team. The deep ties that Lu has fostered with YC will continue to benefit his new portfolio, which will receive “support” from the YC headquarters, though neither party elaborated on what that means.

Alibaba’s food delivery nemesis

The food delivery war in China is still dragging on two years after the major consolidation that left the market with two major players. Meituan, the local services company backed by Tencent, has managed to attain an expanding share against Alibaba-owned Ele.me. According to third-party data (in Chinese) provided by Trustdata, Meituan accounted for 65.1% of China’s overall food delivery orders during the second quarter, steadily rising from just under 60% a year ago. Ele.me, on the other hand, has lost nearly 10% of the market, slumping to 27.4% from 36% a year ago.

In terms of monetization, Meituan generated 15.6 billion yuan ($2.2 billion) in revenue from its food delivery segment in the quarter ended September 30. That dwarfs Ele.me, which racked up 6.8 billion yuan ($970 million) during the same period. Both are growing north of 30% year-over-year.

meituan dianping

Source: Meituan

This may not be all that surprising given Alibaba has arguably more imminent battles to fight. The e-commerce leader has been consumed by the rise of Pinduoduo, which has launched an assault on China’s low-tier cities with its ultra-cheap products and social-driven online shopping experience. Meituan, on the other hand, is fixated on beefing up its main turf of on-demand neighborhood services after divesting its costly bike-sharing endeavor. 

When both contestants have the capital to burn through — as they have demonstrated through heavily subsidizing customers and restaurants — the race comes down to which has greater control of user traffic. Meituan holds a competitive edge thanks to its merger with Dianping, a leading restaurant review app akin to Yelp, back in 2015. Dianping today operates as a standalone brand but its food app is deeply integrated with Meituan’s delivery services. For example, hundreds of millions of users are able to place Meituan-powered food delivery orders straight from Dianping.

Alibaba and Meituan used to be on more friendly terms just a few years ago. In 2011, the e-commerce giant participated in Meituan’s $50 million Series B financing. Before long, the two clashed over control of the company. Alibaba is known to impose a heavy hand on its portfolio companies by taking up majority stakes and reshuffling the company with new executives. That’s because Alibaba believes that “only when you operate can you generate synergies and really create exponential value,” said vice chairman Joe Tsai in an interview. Whereas if you just make a financial investment, you’re counting an internal rate of return. You’re not creating real value.”

Ele.me lived through that transformation. As of September, Alibaba has reportedly (in Chinese) completed replacing Ele.me’s management with its pool of appointed personnel. Ele.me’s founder Zhang Xuhao left the company with billions of yuan in cash and joined a venture capital firm (in Chinese).

Meituan’s founder Wang Xing had more unfettered pursuits. In a later financing round, he refused to accept Alibaba’s condition for portfolio companies to eschew Tencent investments, a strategy of the giant to hobble its archrival. That botched the partnership and Alibaba has since been gradually offloading its Meituan shares but still held onto small amounts, according to Wang in 2017, “to create trouble” for Meituan going forward.

Making sense of a multi-cloud, hybrid world at KubeCon

By Ron Miller

More than 12,000 attendees gathered this week in San Diego to discuss all things containers, Kubernetes and cloud-native at KubeCon.

Kubernetes, the container orchestration tool, turned five this year, and the technology appears to be reaching a maturity phase where it accelerates beyond early adopters to reach a more mainstream group of larger business users.

That’s not to say that there isn’t plenty of work to be done, or that most enterprise companies have completely bought in, but it’s clearly reached a point where containerization is on the table. If you think about it, the whole cloud-native ethos makes sense for the current state of computing and how large companies tend to operate.

If this week’s conference showed us anything, it’s an acknowledgment that it’s a multi-cloud, hybrid world. That means most companies are working with multiple public cloud vendors, while managing a hybrid environment that includes those vendors — as well as existing legacy tools that are probably still on-premises — and they want a single way to manage all of this.

The promise of Kubernetes and cloud-native technologies, in general, is that it gives these companies a way to thread this particular needle, or at least that’s the theory.

Kubernetes to the rescue

Photo: Ron Miller/TechCrunch

If you were to look at the Kubernetes hype cycle, we are probably right about at the peak where many think Kubernetes can solve every computing problem they might have. That’s probably asking too much, but cloud-native approaches have a lot of promise.

Craig McLuckie, VP of R&D for cloud-native apps at VMware, was one of the original developers of Kubernetes at Google in 2014. VMware thought enough of the importance of cloud-native technologies that it bought his former company, Heptio, for $550 million last year.

As we head into this phase of pushing Kubernetes and related tech into larger companies, McLuckie acknowledges it creates a set of new challenges. “We are at this crossing the chasm moment where you look at the way the world is — and you look at the opportunity of what the world might become — and a big part of what motivated me to join VMware is that it’s successfully proven its ability to help enterprise organizations navigate their way through these disruptive changes,” McLuckie told TechCrunch.

He says that Kubernetes does actually solve this fundamental management problem companies face in this multi-cloud, hybrid world. “At the end of the day, Kubernetes is an abstraction. It’s just a way of organizing your infrastructure and making it accessible to the people that need to consume it.

“And I think it’s a fundamentally better abstraction than we have access to today. It has some very nice properties. It is pretty consistent in every environment that you might want to operate, so it really makes your on-prem software feel like it’s operating in the public cloud,” he explained.

Simplifying a complex world

One of the reasons Kubernetes and cloud-native technologies are gaining in popularity is because the technology allows companies to think about hardware differently. There is a big difference between virtual machines and containers, says Joe Fernandes, VP of product for Red Hat cloud platform.

“Sometimes people conflate containers as another form of virtualization, but with virtualization, you’re virtualizing hardware, and the virtual machines that you’re creating are like an actual machine with its own operating system. With containers, you’re virtualizing the process,” he said.

He said that this means it’s not coupled with the hardware. The only thing it needs to worry about is making sure it can run Linux, and Linux runs everywhere, which explains how containers make it easier to manage across different types of infrastructure. “It’s more efficient, more affordable, and ultimately, cloud-native allows folks to drive more automation,” he said.

Bringing it into the enterprise

Photo: Ron Miller/TechCrunch

It’s one thing to convince early adopters to change the way they work, but as this technology enters the mainstream. Gabe Monroy, partner program manager at Microsoft says to carry this technology to the next level, we have to change the way we talk about it.

Microsoft adds Māori to translator as New Zealand pushes to revitalize the language

By Devin Coldewey

The benefits of machine translation are easy to see and experience for ourselves, but those practical applications are only one part of what makes the technology valuable. Microsoft and the government of New Zealand are demonstrating the potential of translation tech to help preserve and hopefully breathe new life into the Māori language.

Te reo Māori, as it is called in full, is of course the language of New Zealand’s largest indigenous community. But as is common elsewhere as well, the tongue has fallen into obscurity as generations of Māori have assimilated into the dominant culture of their colonizers.

Māori people make up about 15 percent of the population, and only a quarter of them speak the language, making for a grand total of 3 percent that speak te reo Māori. The country is hoping to reverse the trend by pushing Māori language education broadly and taking steps to keep it relevant.

Microsoft and New Zealand’s Te Taura Whiri i te Reo Māori, or Māori Language Commission, have been working together for years to make sure that the company’s software is inclusive of this vanishing language. The latest event in that partnership is the inclusion of Māori into Microsoft’s Translator service, meaning it can now be automatically translated into any of the other 60 supported languages and vice versa.

That’s a strong force for inclusion and education, of course, since automatic translation tools are a great way to engage with content, check work, explore previously untranslated documents, and so on.

Creating an accurate translation model is difficult for any language, and the key is generally to have a large corpus of documents to compare. So a necessary part of the development, and certainly something the Commission helped with, was putting together that corpus and doing the necessary quality checks to make sure translations were correct. With few speakers of the language this would be a more difficult process than, say, creating a French-German translator.

One of the speakers who helped, Te Taka Keegan from the University of Waikato, said (from this Microsoft blog post):

The development of this Māori language tool would not have been possible without many people working towards a common goal over many years. We hope our work doesn’t simply help revitalize and normalize te reo Māori for future generations of New Zealanders, but enables it to be shared, learned and valued around the world. It’s very important for me that the technology we use reflects and reinforces our cultural heritage, and language is the heart of that.

Languages are dying out left and right, and although we can’t prevent that entirely, we can use technology to help make sure that they are both recorded and capable of being used alongside the dwindling number of active languages.

The Māori translation program is part of Microsoft’s AI for Cultural Heritage program.

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