Monthly Archives: September 2021

News: Is it so bad to take money from Chinese venture funds?

• September 10, 2021
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China is the second-largest source of venture capital in the world, and Chinese investors can bring value to foreign startups, but you need to study their expertise and how it can be useful for you.

China is becoming a superpower in the tech industry. According to Straits Times, China is the only place in the world where it takes less than six years for a startup to become a unicorn — it takes seven years in the U.S., eight years in the U.K. and 11 years in Germany. Despite geopolitical tensions and recent amendments in CFIUS, it is hard to ignore China.

When I joined Runa Capital almost a year ago, my task was to help our portfolio companies enter the Chinese market, find the right partners and raise funding from Chinese investors. And almost on every call with our startups, colleagues from Runa or other global VCs, I heard: Is it a good idea to raise from a Chinese VC? Is it OK to co-invest with Chinese investors? I was surprised to learn that there is little research answering such questions, as there is a lack of adequate information in English about Chinese investments.

So as a Mandarin-speaking specialist, I decided to fill this gap by conducting a study based on Chinese VC database ITjuzi (the Chinese version of Crunchbase) with the help of our powerful data science resources developed by Danil Okhlopkov.

Below, I will try to answer the following questions using statistics and a case-based approach:

• How much do Chinese funds invest abroad?
• What is the current trend?
• Can Chinese investors bring any value to Western startups?
• Who are the most active Chinese investors abroad?
• In which areas can Chinese funds bring the most value?
• What value can Chinese investors bring?
• When is it better to invite a Chinese investor?

Chinese investors are interested in Western startups

After studying data from ITjuzi, we estimated that Chinese funds invested around $250 billion in 2020 (three times higher than the figure in Crunchbase). This figure puts Chinese VC investments only 30% lower than investments by U.S. funds, but three times that of U.K. funds and 12.5 times more than German funds.

Fig. 1 — Comparison of investment from different countries in 2020, $bn. Source: Crunchbase, ITjuzi. Image Credits: Denis Kalinin

However, only 15% of investments in 2020 and 17% of investments in the first half of 2021 were in companies outside China, significantly lower than in 2019. This appears to be because during COVID, China’s economy recovered much faster than other countries’, so many Chinese investors preferred to redirect their capital flows to the domestic market.

On the other hand, there is great potential for overseas investments to rebound as soon as the borders reopen and the global economy starts to recover.

Fig. 2 — Dynamics of Chinese investments. $bn. Source: Crunchbase, ITjuzi. Image Credits: Denis Kalinin

We can also see that Chinese investors are eyeing European startups favorably, which is related to U.S.-China geopolitical tensions as well as the fact that the European VC market is becoming mature.

News: What we expect from next week’s Apple event

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We’ve been scouring the latest rumors and leaks and playing all of The Mamas and The Papas songs forward and backward to get the best possible picture of what we’re in store for with next Tuesday’s “California Streaming’” event. The invites, which went out a week in advance, don’t appear to give the game away

We’ve been scouring the latest rumors and leaks and playing all of The Mamas and The Papas songs forward and backward to get the best possible picture of what we’re in store for with next Tuesday’s “California Streaming’” event.

The invites, which went out a week in advance, don’t appear to give the game away here. There was some extremely cool AR trickery, accessible through Safari on mobile, which could point to some fancy camera upgrades, though augmented reality has become a bit of a staple on these invites.

The California Streaming title, meanwhile, seems likely to be more of a nod to the all-virtual nature of the event, rather than anything to do with, say, Apple TV (of course, we’ve been one-more-thinged in the past). And as for that lovely shot of the Sierras — that could well be a nod to macOS, though the company has moved onto Monterey. It seems just as likely to be a reference to the aforementioned title.

The biggest, simplest and most important answer to the question of what to expect is a new iPhone. Last year’s models saw a notable delay due to COVID-19-related supply chain bottlenecking. Supply chain problems have persisted, of course, but by all accounts, the company appears to be back on track with its pre-pandemic release cycle.

The iPhone 12’s biggest upgrade was, of course, the long-awaited addition of 5G. That, coupled with the delay, led Apple to some pretty massive sales quarters amid a broader stalling of the overall mobile market. While other manufacturers have skipped the number out of superstitious concerns, Apple seems firmly on board with iPhone 13 (even as renders of its successor, the iPhone 14 have reportedly already leaked).

Image Credits: Getty Images / Qi Heng/VCG

Recent reports suggest that the iPhone 13 will arrive in four different configurations — much like its predecessor. So: the iPhone 13, 13 Mini, 13 Pro and 13 Pro Max. The screen sizes should remain the same: 5.4, 6.1 (x2) and 6.7 inches. A separate report, meanwhile, suggests that we’ll see additional colors, with the full lineup being black, white, blue, purple, pink (rather than green) and Product (Red). But, keep in mind that offering different color availabilities in different markets isn’t entirely out of the question.

Unsurprisingly, camera upgrades appear to be the biggest news here. Word from analyst Ming-Chi Kuo is that last year’s Pro Max model specs will graduate to the rest of the line (including, potentially, lidar). A ProRes video mode is said to be following the addition of ProRAW to further advance the handset’s bonafides as a semi-pro video shooting rig. Cinematic Video, meanwhile, is said to bring a Portrait-mode-style effect to video. Kuo has also suggested that the devices will be getting a feature based on the Qualcomm X60 that allows for emergency satellite calls — reportedly only available in select markets.

Of course, the phone will also be getting Apple’s latest chip, the A15, said to be coupled with 120 Hz ProMotion display. Apple could also be bringing an always-on feature to the screen, hopefully with minimal impact on battery life. Looks-wise we anticipate it will be more or less the same as its predecessor, albeit with a somewhat smaller camera notch up front — though not to the point of the fake Ted Lasso iPhone. The camera bump around back, meanwhile, is said to be getting larger, perhaps offering an improved telephoto lens.

Oh, and apparently they’ll be more expensive than the iPhone 12 — clearly not one of the new features Apple is going to be actively promoting.

Image Credits: Apple

The Apple Watch 7 seems destined to be the other big news of the event. Apple’s massively popular wearable is reportedly set to get more massive, with a larger display, resulting in a slightly larger case size, from 40 mm and 44 mm to 41 mm and 45 mm. The overall size won’t be too large a change, however, as the company is said to be reducing its bezels this go-round.

Perhaps the most exciting rumor around the Watch is the addition of significant battery life. That’s long felt like a blind spot for the product, compared to competing smartwatches — particularly after Apple significantly improved sleep tracking. Most aren’t anticipating major new health features for the Watch this outing, which is a bit of a surprise here, given that health and fitness have been a major cornerstone for Apple.

Image Credits: TechCrunch

AirPods 3 seem like a reasonably good bet. The latest version of the company’s entry-level earbuds (and their case) are said to be getting a more Pro-style redesign, along with a new chip that’s designed to improve battery life. Active noise cancelation and replaceable tips are apparently not going to make an appearance to maintain the distinction between the two models.

With the company’s rangewide upgrade to its own silicon chugging along, don’t be surprised if we see a number of new Macs. Rumors suggest a new MacBook Pro, Mac Mini and a larger, 27-inch version of its ARM-powered iMac.

The event kicks off Tuesday, September 14 at 10 a.m. PDT/1 p.m. EDT. We’ll be here, bringing you the news as it arrives.

News: Is India’s BNPL 2.0 set to disrupt B2B?

• September 10, 2021
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A specific vertical of BNPL products is gaining traction: one targeted toward small and medium enterprises (SMEs), also known as “SME BNPL.”

Both as a term and as a financial product, “buy now, pay later” has become mainstream in the past few years. BNPL has evolved to assume various forms today, from small-ticket offerings by fintechs on consumer checkout platforms and marketplaces, to closed-loop products offered on marketplaces such as Amazon Pay Later (which they are now extending for outside use as well). You can also see some variants offered by companies that want to expand the scope of consumption and consumer credit.

Globally, BNPL has seen the most growth in the consumer segment and has driven retail consumption and lending over the past few years. Consumer BNPL offerings are a good alternative to credit cards, especially for people who do not have a credit history and can’t get credit from banks. That said, a specific vertical of BNPL products is gaining traction — one targeted toward small and medium enterprises (SMEs). This new vertical is known as “SME BNPL.”

B2B commerce in India is moving online

E-commerce has seen tremendous growth in India over the past decade. Skyrocketing smartphone and internet penetration led to rapid growth in e-commerce across large cities and smaller towns alike. Consumer credit has also taken off in parallel as credit cards and digital lending spurred credit-based consumption across offline and online stores.

However, the large B2B supply chain enabling the burgeoning retail market was plagued by bottlenecks and inefficiencies because it involved a plethora of intermediaries and streamlining became a big problem. A number of tech players responded by organizing the previously disorganized B2B commerce market at various touch points, inserting convenience, pricing and easier product access through tech-enabled logistics and a modern supply chain.

Image Credits: Redseer

India’s B2B e-commerce space has developed rapidly since 2020. Small businesses have moved from using paper to smartphone apps for running a significant part of their day-to-day business, leading to widespread disruption in how businesses transact today. The COVID-19 pandemic also forced small businesses, which were earlier using physical means to procure goods and services, to try new and online models to conduct their affairs.

Image Credits: Redseer

Moreover, the Indian government’s widespread promotion of an instant payments system in the form of the Unified Payments Interface (UPI) has changed how people send money to each other or pay merchants for their goods and services. The next step for solving the digital B2B puzzle is to embed credit inside every transaction and invoice.

Image Credits: Redseer

If we compare online B2B transactions to the offline world, there is only one missing link: The terms offered to small businesses by their supplier/distributor or vendor. Businesses, unlike consumers, must buy goods and services to eventually trade them, or add value and sell to consumers or others down the value chain. This process is not immediate and has a certain time cycle attached.

The longer sales cycle means many small businesses require credit payment terms when buying inventory. As B2B commerce scales and grows through digital means, a BNPL product that caters to the needs of SMEs can support their growth and alleviate the burden on their cash flows.

How does consumer BNPL differ from SME BNPL?

An SME BNPL product is a purchase financing product for small businesses transacting with suppliers, distributors, aggregator platforms or B2B marketplaces.

News: Extra Crunch roundup: China’s new data privacy law, fractional farming, debt vs. equity

• September 10, 2021
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China’s first data privacy laws go into effect on November 1, 2021. Will your company be in compliance? Modeled after the EU’s GDPR, the new regulations “[introduce] perhaps the most stringent set of requirements and protections for data privacy in the world,” writes Scott W. Pink, special counsel in O’Melveny’s Data Security & Privacy practice.

China’s first data privacy laws go into effect on November 1, 2021. Will your company be in compliance?

Modeled after the EU’s GDPR, the new regulations “[introduce] perhaps the most stringent set of requirements and protections for data privacy in the world,” writes Scott W. Pink, special counsel in O’Melveny’s Data Security & Privacy practice.

In a comprehensive overview, he explains its key requirements and compliance steps for U.S.-based firms that service Chinese consumers.

“American firms doing business in China or with companies inside China will need to immediately start assessing how this new law will impact their activities,” he advises.

Now that the world has embraced remote work, are visas as critical for startup founders who want to succeed in the United States?

On Tuesday, September 14, at 2 p.m PT/5 p.m. ET, Managing Editor Danny Crichton and immigration law attorney Sophie Alcorn will discuss the matter on Twitter Spaces.

Join @DannyCrichton on Tuesday, September, 14 at 2 p.m. PT/5 p.m. ET as he discusses if remote work will make H-1B visas redundant with @Sophie_Alcorn https://t.co/SCMUiqUj8J

— TechCrunch (@TechCrunch) September 10, 2021

They’ll take questions from the audience, so mark your calendar and follow @techcrunch on Twitter to get a reminder before the chat.

Thanks very much for reading Extra Crunch; I hope you have a great weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

Fintech is transforming the world’s oldest asset class: Farmland

Image Credits: hauged (opens in a new window) / Getty Images

Whether or not he actually said it, “buy land, they ain’t making any more of it,” is one of Mark Twain’s best quotes on capitalism.

Past recessions and the ongoing pandemic have created real uncertainty about the future of commercial and residential real estate, but farmland is “historically stable,” says Artem Milinchuk, founder and CEO of FarmTogether.

Anatomy of a SPAC: Inside Better.com’s ambitious plans

Image Credits: mikroman6 (opens in a new window) / Getty Images

Online mortgage company Better.com isn’t waiting to complete its SPAC merger before making big moves: Ryan Lawler reported that it purchased Property Partners, a U.K.-based startup that offers fractional property ownership.

It’s the second company Better bought in recent months: In July, it snapped up digital mortgage brokerage Trussle.

“We aren’t so easily categorized,” said Better CEO Vishal Garg, who told Ryan that the company plans to soon expand into traditional financial services like auto loans and insurance.

Said CFO Kevin Ryan, “a lot of people have their niches in the way they’re attacking this, but we feel like we’re on a path to being full stack where everything’s embedded in the same flow.”

5 factors that can make or break a startup’s growth journey

Image Credits: JoKMedia (opens in a new window) / Getty Images

If you don’t have a good story to share, it doesn’t matter how big your marketing budget is.

“Paid marketing can be a useful tool in your toolkit to accelerate an already humming flywheel. Just don’t let it be the only one,” suggests Brian Rothenberg, a two-time founder who’s now a partner at Defy.

Drawing from his time as VP of growth for Eventbrite, he shares five critical factors for kick-starting, maintaining and measuring growth over the long term.

Debt versus equity: When do non-traditional funding strategies make sense?

Image Credits: Peter Dazeley (opens in a new window) / Getty Images

Many potential founders are well-versed in startup economics — and many are completely green.

When it comes to raising funds, understanding the relative benefits (and limitations) of debt and equity financing is required knowledge, however.

Founders who are less willing to dilute their control may be willing to use debt financing to fund their capital expenditures, “but it doesn’t make sense for everyone,” says six-time entrepreneur David Friend.

Investors are doubling down on Southeast Asia’s digital economy

Image Credits: Getty Images

Last year, startups based in Southeast Asia raised more than $8.2 billion, a 4x increase from 2015.

In the first half of 2021, regional M&A has increased 83% to a record $124.8 billion.

It’s not just venture capitalists and Big Tech who are beefing up their presence in the region.

“Over 229 family offices have been registered in Singapore since 2020, with total assets under management of an estimated $20 billion,” writes Amit Anand, a founding partner of Jungle Ventures.

Edtech leans into the creator economy with cohort-based classes

Image Credits: Bryce Durbin / TechCrunch

Natasha Mascarenhas examined the parallels between edtech and the creator economy, both of which boomed amid the pandemic — and blurred amid the rise of cohort-based classes.

“Edtech and the creator economy certainly differ in the problems they try to solve: Finding a VR solution to make online STEM classes more realistic is a different nut to crack than streamlining all of a creator’s different monetization strategies into one platform. Still, the two sectors have found common ground in the past year.”

Meet retail’s new sustainability strategy: Personalization

Image Credits: Liyao Xie (opens in a new window) / Getty Images

Were the shoes, jacket and makeup that looked so good on Instagram (and in your shopping cart) disappointing when you put them on for the first time?

Due to buyer’s remorse, it’s not uncommon for apparel or beauty products to languish in the back of a drawer or end up as gifts, but there are also serious consequences.

“The beauty industry produces over 120 billion units of packaging every year, little of which is recycled. Globally, an estimated 92 million tons of textile waste ends up in landfills,” Sindhya Valloppillil, founder and CEO of Skin Dossier, notes in a guest column.

The answer to bringing sustainability to the industry, she says, is using tech to personalize the retail experience:

• AR virtual try-on with shade matching
• Advanced virtual fitting rooms with VR/AR for fashion
• Smart packaging with IoT and distributed ledger technology

Plentywaka founder Onyeka Akumah on African startups and global expansion

Image Credits: Bryce Durbin / TechCrunch

Twenty million people live in Lagos, Nigeria, and each day, 14 million of them use the city’s transit system.

Travelers rely on overcrowded public buses that navigate congested routes: What should be a 30-minute trip is often a three-hour journey, but Treepz CEO and co-founder Onyeka Akumah “has big plans to ameliorate the public transport infrastructure in Africa and beyond,” writes Rebecca Bellan.

“We wanted to give people a better way to commute with predictability, where they can know when the bus will get here, the certainty that they will have a seat in a vehicle, that it’s a decent vehicle and a safe one where you can bring your laptop,” said Akumah.

“Those are the things we said we wanted to change.”

Dear Sophie: When can I apply for my US work permit?

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

My husband just accepted a job in Silicon Valley. His new employer will be sponsoring him for an E-3 visa.

I would like to continue working after we move to the United States. I understand I can get a work permit with the E-3 visa for spouses.

How soon can I apply for my U.S. work permit?

— Adaptive Aussie

News: Quizlet plans for IPO over a year after hitting unicorn status

• September 10, 2021
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Quizlet, a flashcard tool turned artificial intelligence-powered tutoring platform, is planning an initial public offering nearly a year after it was valued at $1 billion. According to people familiar with the matter, Quizlet is considerably far along in the process to go public. A recent job filing shows that it is hiring for senior roles

Quizlet, a flashcard tool turned artificial intelligence-powered tutoring platform, is planning an initial public offering nearly a year after it was valued at $1 billion. According to people familiar with the matter, Quizlet is considerably far along in the process to go public. A recent job filing shows that it is hiring for senior roles to “help build the financial systems and processes as we move towards an IPO.”

In an email to TechCrunch, the San Francisco-based edtech startup declined to comment. Quizlet hasn’t said much about its revenue specifics or if it’s profitable. Last year, the still-private startup claimed it was growing revenue 100% annually. On its website, Quizlet says that it has 60 million monthly learners, up 10 million learners compared to its 2018 totals.

Quizlet has built a large-scale business around simple to share and simple to use products. Its free flashcard maker helps students spin up study guides on topics to prepare for exams. Those insights fuel Quizlet Plus, the startup’s subscription product that charges $47.88 a year for access to more features, including tutoring services.

Quizlet’s tutoring arm, also known as Quizlet Learn, is the company’s most popular offering, per CEO Matthew Glotzbach. As a student goes through the system, Quizlet Learn consistently assesses students to see where they are making mistakes — and where they are making progress.

“It obviously doesn’t yet replace and can’t come anywhere close to replacing a human, but it can provide that guidance and point you in the right direction and help you spend your time in the right places,” he said. “Just even helping you set goals is such a critical step in learning.”

Most recently, Quizlet announced the launch of explanations, a feature that offers a step-by-step solution guide for problem sets from popular textbooks. The feature is “written and verified by experts” and is aimed to help “students better understand the reasoning and thought process behind study questions so they can practice and apply their learnings on their own,” it said in a statement. It also reclaimed the Q from its less fortunate predecessor, amid an entire rebrand.

Quizlet’s quiet march toward the public markets has been slow yet steady. The startup was founded in 2005 by a 15-year-old, Andrew Sutherland. It was fully bootstrapped until 2015. Glotzbach, who was previously an executive at YouTube, then joined in 2016. The startup still doesn’t appear to have a CFO, which is rare for companies that are going public.

Quizlet has raised a majority of its $62 million in venture capital under Glotzbach. Now, investors in the company include General Atlantic, Owl Ventures, Union Square Ventures, Costanoa Ventures and Altos Ventures.

Quizlet’s pursuit of the public markets comes as other edtech companies are proving the market’s reception to the sector. Duolingo, for example, is another consumer-focused education company, albeit one that focuses on one vertical versus Quizlet’s choice to stay broad. Duolingo went public in July, and is currently trading above its open price at $169.75 per share.

News: Advanced rider assistance systems: Tech spawned by the politics of micromobility

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Operators like Spin, Voi, Zipp, Bird and Superpedestrian are investing in tech that can detect and correct poor rider behavior, sometimes going as far as stopping scooters if they’re on a sidewalk.

The desire to achieve something as simple as keeping shared electric scooters off sidewalks has driven the development of some advanced technology in the micromobility industry. Once the province of geofencing, scooter companies are so eager to get a leg up on the competition that they’re now implementing technology similar to advanced driver assistance systems (ADAS) usually found in cars.

Operators like Spin, Voi, Zipp, Bird and Superpedestrian are investing in camera-based or location-based tech that can detect and even correct poor rider behavior, sometimes going to the extent of slowing scooters to a stop if they’re riding on a sidewalk.

People riding or parking scooters on sidewalks is a big problem for cities and forms one of the main complaints from NIMBYist residents who dislike change all the more when it becomes a tripping hazard. Companies are trying to solve this problem with tech that effectively puts the onus of rider behavior on operators, which may result in cities requiring scooter operators to have this sort of ADAS tech.

Scooter ADAS is probably the most doable and cost-effective method that cities can use to prevent unwanted rider behavior. And, it’s far cheaper than trying to police rider behavior themselves, or, address the lack of protected cycling infrastructure.

“This technology comes from a need for protected bike lanes,” said Dmitry Shevelenko, co-founder and president of Tortoise, an automated vehicle positioning service for micromobility companies. “It exists in this world where riders kind of have to do things that aren’t that great for others, because they have nowhere else to go. And so that’s the true driver of the need for this.”

Cities can solve this problem for the long term by building bike lanes or creating scooter parking bays, but until that happens, operators need to reassure local administrations that micromobility is safe, compliant and a good thing for cities.

“Until cities have dedicated infrastructure for whatever new modality comes to play, you have to figure out a way to use technology to make sure things don’t mix poorly,” said Alex Nesic, co-founder and chief business officer of Drover AI, a computer vision startup that provides camera-based scooter ADAS. “That’s really what we’re after. We want to enable this kind of maturation of the industry.”

Street views versus satellite views

Drover AI works with Spin, while Luna, another computer vision company, works with Voi and Zipp to attach cameras, sensors and a microprocessor to scooters to detect lanes, sidewalks, pedestrians and other environmental surroundings.

News: DataRobot CEO Dan Wright coming to TC Sessions: SaaS to discuss role of data in machine learning

• September 10, 2021
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Just about every company is sitting on vast amounts of data, which they can use to their advantage if they can just learn how to harness it. Data is actually the fuel for machine learning models, and with the proper tools, businesses can learn to process this data and build models to help them compete

Just about every company is sitting on vast amounts of data, which they can use to their advantage if they can just learn how to harness it. Data is actually the fuel for machine learning models, and with the proper tools, businesses can learn to process this data and build models to help them compete in a rapidly-changing marketplace, to react more quickly to shifting customer requirements and to find insights faster than any human ever possibly could.

Boston-based DataRobot, a late-stage startup that has built a platform to help companies navigate the machine learning model lifecycle, has been raising money by the bushel over the last several years including $206 million in September 2019 and another $300 million in July. DataRobot CEO Dan Wright will be joining us on a panel to discuss the role of data in business at TC Sessions: SaaS on October 27th.

The company covers the gamut of the machine learning lifecycle including preparing data, operationalizing it and finally building APIs to make it useful for the organization as it attempts to build a soup-to-nuts platform. DataRobot’s broad platform approach has appealed to investors.

As we wrote at the time of the $206 million round:

The company has been catching the attention of these investors by offering a machine learning platform aimed at analysts, developers and data scientists to help build predictive models much more quickly than it typically takes using traditional methodologies. Once built, the company provides a way to deliver the model in the form of an API, simplifying deployment.

DataRobot has raised a total of $1 billion on $6.3 billion post valuation, according to Pitchbook data and it’s been putting that money to work to add to its platform of services. Most recently the company acquired Algorithmia, which helps manage machine learning models.

As the pandemic has pushed more business online, companies are always looking for an edge and one way to achieve that is by taking advantage of AI and machine learning. Wright will be joined on the data panel by Monte Carlo co-founder and CEO Barr Moses and AgentSync co-founder and CTO Jenn Knight to discuss the growing role of data in business operations

In addition to our discussion with Wright, the conference will also include Microsoft’s Jared Spataro, Amplitude’s Olivia Rose, as well as investors Kobey Fuller and Laela Sturdy, among others. We hope you’ll join us. It’s going to be a thought-provoking lineup.

Buy your pass now to save up to $100. We can’t wait to see you in October!

News: Apple prohibited from blocking outside payment in Epic ruling

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A judge this morning issued a ruling in California’s Epic v. Apple case, siding with the Fortnite maker on the topic of third-party payments. Effectively, the judge has ruled that Apple cannot prohibit developers from adding links for alternative payments beyond Apple’s App Store-based monetization. The mobile giant’s control over fees on iOS has long

A judge this morning issued a ruling in California’s Epic v. Apple case, siding with the Fortnite maker on the topic of third-party payments. Effectively, the judge has ruled that Apple cannot prohibit developers from adding links for alternative payments beyond Apple’s App Store-based monetization.

The mobile giant’s control over fees on iOS has long been a sticking point for Epic and the veritable cash cow of its in-gaming micro-transactions.

The ruling notes, in part,

Apple Inc. and its officers, agents, servants, employees, and any person in active concert or participation with them (“Apple”), are hereby permanently restrained and enjoined from prohibiting developers from (i) including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.

The decision is the result of a fight that’s been brewing for years between Apple and larger developers, particularly in gaming, whose businesses account for a hefty majority — 70%, the judge noted — of App Store revenue.

After Apple banned Epic Games’ Fortnite app for its implementation of a new payment mechanism that allowed it to bypass Apple’s in-app purchase framework last August, the game maker sued Apple, alleging it was abusing its market power by forcing companies to use Apple’s payment systems. Epic Games also sued Google and joined up with other app developers to form the Coalification for App Fairness, a group that actively lobbied for app store reform, including by involving itself in individual efforts to generate legislation at the state level in the U.S.

In recent weeks, Apple has made a few minor tweaks to its App Store rules as the result of concessions related to other lawsuits and legislation, which included a settlement with a Japanese regulator that saw the tech giant change its policies for “reader apps”– apps that provide access to purchased content — that would allow them to point users to their own website where users could sign up and manage their accounts. Another settlement gave developers permission to use customer contact information collected inside their app to tell customers about other payment options. And in South Korea, a new law forced Apple and Google to allow developers to use their own third-party payment systems. After the passing of that law, Epic Games asked to reinstate Fortnite to the App Store in that market, but Apple rebuffed that request.

Apple’s ongoing refusal to adapt its App Store rules to the changing environment, it has historically argued, is about consumer protections. In prior statements, allowing alternative means of in-app purchases could put users at risk of fraud and undermine their privacy, the company has said.

While today’s ruling will force Apple to now accommodate developers by allowing them the choice to include buttons or links to other places where they can pay, it still won in the sense that it was not deemed a monopoly. U.S. District Judge Yvonne Gonzalez Rogers had disagreed with how both Apple and Epic Games have framed the relevant market, saying that in digital mobile gaming transactions, Apple did not have a monopoly.

“While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct,” Rogers wrote. “Success is not illegal.”

“Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law,” an Apple spokesperson said. “As the Court recognized ‘success is not illegal.’ Apple faces rigorous competition in every segment in which we do business, and we believe customers and developers choose us because our products and services are the best in the world. We remain committed to ensuring the App Store is a safe and trusted marketplace that supports a thriving developer community and more than 2.1 million U.S. jobs, and where the rules apply equally to everyone.”

Today’s ruling may have longer-term implications for the developer community, as Apple will have to adjust its rules to accommodate apps that point to other payment options. It could choose to require apps to include Apple’s own in-app payments option as an option, for example. It could also decide that qualifying “reader apps” as a separate category no longer makes sense, given this new requirement. But those sorts of decisions will roll out in the days ahead.

What Epic Games didn’t win is getting Apple dubbed a monopolist, which is ultimately a much bigger deal with ramifications that could have led to U.S. government regulations. And Apple will not have to allow third-party app stores or sideloading, which could have been far more disruptive to the long-term prospects of its App Store business as a whole. For consumers, however, it means the App Store could get more complicated as they’re forced to exit apps to make purchases or to get better pricing. And when consumers use outside payment systems, they’ll lose the ability to manage all their subscriptions in one place, potentially making cancellations more difficult.

As a result of the lawsuit, Rogers ruled that Epic Games will have to pay Apple the 30% of the $12 million it earned when it introduced its alternative payment system in Fortnite, which was then in breach of its legal contract with Apple.

Following the decision, Epic Games CEO Tim Sweeney tweeted that Fortnite will return to the App Store when and where it can offer in-app payment in “fair competition with Apple in-app payment,” and would pass along the savings to consumers.

“Thanks to everyone who put so much time and effort into the battle over fair competition on digital platforms, and thanks especially to the court for managing a very complex case on a speedy timeline,” he wrote. “We will fight on.”

News: Iceland’s Crowberry Capital launches $90M seed and early-stage fund aimed at Nordics

• September 10, 2021
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Crowberry Capital, operating in Reykjavik and Copenhagen, has launched Crowberry II: a $90 million seed and early-stage fund aimed at startups in the Nordic region. A second close — bringing in an additional $40 million — is planned for July 2022. The EIF (European Investment Fund) is the lead LP on the fund, after putting

Crowberry Capital, operating in Reykjavik and Copenhagen, has launched Crowberry II: a $90 million seed and early-stage fund aimed at startups in the Nordic region. A second close — bringing in an additional $40 million — is planned for July 2022.

The EIF (European Investment Fund) is the lead LP on the fund, after putting in €20 million from the EU’s “InnovFin Equity” program. This is InnovFin Equity’s first VC fund in Iceland.

Other investors include Icelandic Pension funds, several family offices and angels, including David Helgason, founder of Unity Technologies.

Crowberry II, which claims to be the largest VC fund operating out of Iceland, is headed up by three women founders: Hekla Arnardottir, Helga Valfells and Jenny Ruth Hrafnsdottir.

The Crowberry I fund (a $40 million fund launched in 2017), invested in startups in the areas of gaming, SaaS, health tech and fintech.

Hekla Arnardottir said: “An incorrect assumption is that because we are women, we are only interested in supporting female founders. As our investment record shows, we support companies because they are game changers, irrespective of the gender of their senior team members. However, we also benefit, as an all-female team, from a circumspection which means that we can see potential in businesses and sectors which are typically overlooked by others in our space.”

She added: “Inclusivity is good for business, and through being open and approachable, your deal-flow multiplies in parallel to your talent pool, and businesses are built with a broader potential user base. It’s crazy that in 2020, female-led startups received just 2.3% of VC funding, yet Crowberry considers this to be an opportunity: where the Nordics lead in gender equality on a societal level, we want to show that the region can also show the way in terms of inventive venture support.”

Crowberry’s previous fund (Crowberry I) featured 15 companies, of which 33% had female CEOs.

News: WhatsApp will finally let users encrypt their chat backups in the cloud

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WhatsApp said on Friday it will give its two billion users the option to encrypt their chat backups to the cloud, taking a significant step to put a lid on one of the tricky ways private communication between individuals on the app can be compromised. The Facebook-owned service has end-to-end encrypted chats between users for

WhatsApp said on Friday it will give its two billion users the option to encrypt their chat backups to the cloud, taking a significant step to put a lid on one of the tricky ways private communication between individuals on the app can be compromised.

The Facebook-owned service has end-to-end encrypted chats between users for more than a decade. But users have had no option but to store their chat backup to their cloud — iCloud on iPhones and Google Drive on Android — in an unencrypted format.

Tapping these unencrypted WhatsApp chat backups on Google and Apple servers is one of the widely known ways law enforcement agencies across the globe have for years been able to access WhatsApp chats of suspect individuals.

Now WhatsApp says it is patching this weak link in the system.

“WhatsApp is the first global messaging service at this scale to offer end-to-end encrypted messaging and backups, and getting there was a really hard technical challenge that required an entirely new framework for key storage and cloud storage across operating systems,” said Facebook’s chief executive Mark Zuckerberg in a post announcing the new feature.

Store your own encryption keys

The company said it has devised a system to enable WhatsApp users on Android and iOS to lock their chat backups with encryption keys. WhatsApp says it will offer users two ways to encrypt their cloud backups, and the feature is optional.

In the “coming weeks,” users on WhatsApp will see an option to generate a 64-digit encryption key to lock their chat backups in the cloud. Users can store the encryption key offline or in a password manager of their choice, or they can create a password that backs up their encryption key in a cloud-based “backup key vault” that WhatsApp has developed. The cloud-stored encryption key can’t be used without the user’s password, which isn’t known by WhatsApp.

Image Credits: WhatsApp/supplied

“We know that some will prefer the 64-digit encryption key whereas others want something they can easily remember, so we will be including both options. Once a user sets their backup password, it is not known to us. They can reset it on their original device if they forget it,” WhatsApp said.

“For the 64-digit key, we will notify users multiple times when they sign up for end-to-end encrypted backups that if they lose their 64-digit key, we will not be able to restore their backup and that they should write it down. Before the setup is complete, we’ll ask users to affirm that they’ve saved their password or 64-digit encryption key.”

A WhatsApp spokesperson told TechCrunch that once an encrypted backup is created, previous copies of the backup will be deleted. “This will happen automatically and there is no action that a user will need to take,” the spokesperson added.

Potential regulatory pushback?

The move to introduce this added layer of privacy is significant and one that could have far-reaching implications.

End-to-end encryption remains a thorny topic of discussion as governments continue to lobby for backdoors. Apple was reportedly pressured to not add encryption to iCloud Backups after the FBI complained, and while Google has offered users the ability to encrypt their data stored in Google Drive, the company allegedly didn’t tell governments before it rolled out the feature.

When asked by TechCrunch whether WhatsApp, or its parent firm Facebook, had consulted with government bodies — or if it had received their support — during the development process of this feature, the company declined to discuss any such conversations.

“People’s messages are deeply personal and as we live more of our lives online, we believe companies should enhance the security they provide their users. By releasing this feature, we are providing our users with the option to add this additional layer of security for their backups if they’d like to, and we’re excited to give our users a meaningful advancement in the safety of their personal messages,” the company told TechCrunch.

WhatsApp also confirmed that it will be rolling out this optional feature in every market where its app is operational. It’s not uncommon for companies to withhold privacy features for legal and regulatory reasons. Apple’s upcoming encrypted browsing feature, for instance, won’t be made available to users in certain authoritarian regimes, such as China, Belarus, Egypt, Kazakhstan, Saudi Arabia, Turkmenistan, Uganda and the Philippines.

At any rate, Friday’s announcement comes days after ProPublica reported that private end-to-end encrypted conversations between two users can be read by human contractors when messages are reported by users.

“Making backups fully encrypted is really hard and it’s particularly hard to make it reliable and simple enough for people to use. No other messaging service at this scale has done this and provided this level of security for people’s messages,” Uzma Barlaskar, product lead for privacy at WhatsApp, told TechCrunch.

“We’ve been working on this problem for many years, and to build this, we had to develop an entirely new framework for key storage and cloud storage that can be used across the world’s largest operating systems and that took time.”