Richard Dal Porto

March 23, 2022

Daily Crunch: YouTube will let US users stream full seasons of nearly 4,000 TV shows (with ads)

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Hello and welcome to Daily Crunch for Wednesday, March 23, 2022! Lots to talk about today, including bushels of news from both startups and Big Tech alike. But as we are entering Event Season, a reminder that you can showcase your startup at our upcoming climate event, and that Early Stage should feature some pretty solid small group chats. – Alex

Showcase your early-stage startup at TC Sessions: Climate 2022

The TechCrunch Top 3

Build-A-Bing: Microsoft was hacked by the Lapsus$ hacking group, leading to the leaking of company source code for Bing, Bing Maps and Cortana, TechCrunch reports. Does this mean that founders can parse the Bing code, learn from it and build a competing search engine? Let’s hope so?
Yuga’s yuge funding round: The team behind the Bored Ape NFT phenom are busy, raising $450 million and sketching out a vision for tokens, games, and more. A good question at this juncture is why it is so expensive to build crypto companies. It seems that every major raise in the space is larger than the last. How far can the trend go? Well, pretty far, it seems.
And speaking of crypto: A reminder to keep learning, as the web3 space — such as it is — is fast-moving and constantly inventing stuff for us to parse. Tea, for example, wants to bring a model for compensating open source developers to the crypto world, while our newest reporter has notes up on DeFi (decentralized finance) TVL (total value locked), providing a window into just how busy the investing game is on the blockchain.

Startups and VC

The pros and cons of pro rata: Before we get into discrete funding events and startup product launches, a word about pro rata. Pro rata rights are privileges investors often work into deals so that they can defend their ownership percentage in a startup over time. With pro rata, investors that buy 5% of a company early on can pay up in later rounds to ensure that they are not overly diluted. However, VSC Ventures’ Vijay Chattha thinks that the practice of pro rata is effectively outdated and should go. Food for thought.

Today in mega-rounds: Back in the day, a $100 million Series A fund was news. Today, nine-figure startup rounds can slip through the cracks. To avoid that, TechCrunch wrote up RapidAPI (third-party API integration) raising $150 million, Island (enterprise browser tech) raising $115 million and Astronomer (data orchestration tooling) raising $213 million and buying Datakin.

And the first Nothing phone is coming this summer. So if you are not enthused by current handset OEMs, well, you have a new option coming.

Drones are big business: Japan’s TerraDrone just raised a huge $70 million Series B. What for? Founded back in 2016, TechCrunch reports, the company “develops drone software, hardware and uncrewed aircraft system traffic management solutions.” That means that the company could help its market avoid a drone traffic jam.
Datagen raises for synthetic data sets: Datagen also raised a huge Series B, though at $50 million it’s a little bit smaller than what TerraDrone put together. Regardless, the company’s tech can create custom, synthetic datasets that customers can use to train their own computer vision tools. That there is enough of a market for its services that Datagen was able to attract so much capital underscores the work being done in computer vision more generally.
Skyscraper strawberries: That’s what vertical farming company OnePointOne is going to sell to California Giant Berry Farms. TechCrunch notes that the company is following Bowery into the market. Oversaturation? Not a bit of it. I can eat a whole tub of strawberries with breakfast. Bring ‘em on.
Rugged Robotics is building construction-focused Roombas: Well, not precisely, but close enough. Rugged’s robots paints building layouts onto floors. So Rugged is both a robotics company, and an automation company at the same time. We do note that the company’s “tech isn’t designed to replace humans on the job site, but rather to increase accuracy,” but it’s still the replacing of humans with robots, which is never a bad thing.
And, finally, from Ron Miller, “Scratchpad adds deal alerts to help identify most promising prospects.” This story is neat as it shows that you can start a company building atop someone else’s platform, but pivot into making the service something more. In this case, Scratchpad is now “a central workspace for sales people by using intelligence to surface the most likely prospects to close deals,” Miller writes.

The product-led growth playbook

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

In a previous era, companies threw elbows and money around as they entered new markets and acquired customers. Today, a decade or more into the End User Era, consumers are the tail that wags the dog.

Product-led growth models have been widely embraced: Instead of devoting resources to customer acquisition, PLG companies scale faster and more efficiently.

Vidya Raman, a partner at Sorenson Ventures and former product manager, shared her prerequisites with TechCrunch+ for making PLG efforts more successful and sustainable.

“Think in bite-sized experiences, each of which would be a meaningful outcome for the customer,” she says.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

YouTube announces ad-supported TV shows: During the pandemic, Roku had a crushing good time making money off of folks stuck at home, watching shows and its advertisements. YouTube wants in on that action, so it’s also rolling out ad-supported TV shows. Per our reporting, some 4,000 episodes are included at launch.
Google Cloud now lets customers suspend VMs: The last code I really wrote was back in high school, so I never really had the need to suspend VMs on a public cloud. But Google’s public cloud infra now does offer that ability, if that’s your jam.
Microsoft wants game dev to move to the cloud: And speaking of public clouds, Microsoft announced a new product called Azure Game Development Virtual Machine at a gaming conference today. It’s a game development workstation, but in the cloud.
Are car solar roofs a good idea? The new hybrid Hyundai Sonata has solar panels in its roof, which some folks are saying are too low-powered to be of use. However, TechCrunch notes that their impact over a longer time period really could add up to something material.
Instagram gets down with chronological feeds: If you are an Instagram user, you can now use a chronological feed. From testing earlier in the year, the new feature is now available to all, along with “another new feed-filtering option that will allow you to scroll through posts from your favorite accounts,” TechCrunch writes.
Snap buys a mind-control headband company: Fresh from turning in some quarterly profits, Snap is not slowing its roll. Nope, the social giant has bought NextMind, which builds hardware that reads brain waves to interact with PCs. Snap, what do you have in mind?

January 8, 2022

Venture water, biotech investing and 2021’s carnage

Welcome to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by the daily TechCrunch+ column where it gets its name. Want it in your inbox every Saturday? Sign up here.

Welcome back to the working world, friends, I hope that you survived the return to the desk in good stead and are both warm and healthy. The current boom in COVID cases is a huge bummer, but perhaps this is the last year we’ll have to drag ourselves back to productivity under the specter of lockdowns, mass death and a lack of hugs. I hope so.

Regardless, today we have a lot of fun stuff that should keep your mind off the state of the world for a few minutes.

Kicking off today, let’s talk about Liquid Death. The excellently named company kills thirst with water, hence its name. That’s really the company in a nutshell. Liquid Death sells water in a can, a business around which it has tailored an anti-plastic stance and a general heavy metal vibe. It’s neat.

But Liquid Death also raised $75 million this week, which has me wondering why everything is so expensive to build these days. Why does a water company need to raise a whole pre-seed fund in a single investment? What does it need the money for? Research? It’s selling water!

There was a general perspective a few years ago that it was cheaper than ever to build a startup. With off-the-shelf software, cloud computing and modern fintech back ends, putting together the building blocks of modern business was becoming faster and less expensive. Apart from the high costs of hiring software developers, it seemed that startups would be able to do more with less.

And yet. Startups are raising more money than ever. The Exchange is diving into venture capital data next week, but it’s clear that the venture and startup classes are still moving funds around with great relish. So much so that Liquid Death has raised over $130 million to date, per Crunchbase data.

Square the circle of lower startup costs, and mega-rounds for me if you can. Are we seeing marketing spend raised through equity capital sources? If so, that makes me worry a bit!

(Note that Liquid Death could be a kickass business with great margins and lovely economics; I don’t know its numbers. But why does it need $75 million if it’s in such good shape? What are we missing here?)

Level raised money

From deep in the notes docs, a brief note on Level. Level is a company that I covered back in February of 2021. The company had just closed a $1.5 million round for work we described as bringing “credit to workers who might not be able to tap it from traditional sources, using their current income from freelance work to back the advance.”

It was a neat model, as lending based on assets over cash flow is a bit silly in a world where lots of folks work but don’t live asset-heavy lifestyles. (That’s a polite way of dissing NIMBY boomers, of course).

Anyway, Level raised another round as 2021 closed, this time a $7 million Series A. Anthos Capital led the funding, with NextView Ventures and other prior inventors also kicking in cash. The capital came after the company grew its size by “10x,” per its own data.

What I find most notable in the Level news item is not that the company raised more money — more that its goal set is super big. Per the company, it wants to build a “financial OS for microbusinesses.”

I dig that because tiny businesses are not the sorts of companies that get lots of attention from traditional financial institutions. Fintech should be, in my view, a method of applying tech to break down walls and bring more value to more folks. Level seems to be working along those lines, while also building a venture-ready business. Neat!

PsyMed raises a biotech fund

On the heels of news that a16z has put together $9 billion in new funds for venture, growth and biotech investing it’s easy to forget that there are smaller funds in the market as well. And some that are quite new, in fact.

On the biotech front PsyMed Ventures is busy raising a $25 million fund, the first close of which ($8 million) is in the bank. I chatted with the group Friday to dig in a bit more to their model.

First, basics. PsyMed has three investing partners: Dina Burkitbayeva, Greg Kubin and Matias Serebrinsky. As you can work out from its first fund size target, it will be investing on the earlier side of things in the psychedelic medical space, along with a few related areas. The group isn’t new to working together, having previously formed an investing group using AngelList tech to invest around $15 million to date.

A few thoughts about PsyMed. First, I am hype that we’re expanding the boundaries of what we’re testing for medical use. Prudishness in my home country has held back this sort of work, to our detriment. Second, the biotech investing space is interesting to me as the companies founded go public a lot earlier than what we tend to see in, say, the enterprise software market. So, you get to see more about companies, more quickly and more frequently.

For venture investors in biotech companies, this can also mean earlier liquidity possibilities than what is often seen in today’s unicorn era.

Talking with Burkitbayeva, Kubin and Serebrinsky gave me the impression that we’re nearing a confluence point in terms of regulatory, scientific and medical progress that could unlock a lot of neat new treatments for some sticky human matters. Things like PTSD, treatment-resistant depression and my personal favorite, substance-use disorder.

All this is to say that I’ll be keeping out an eye for where the group puts its new fund to work and how quickly they can boost early-stage pharma startups into the public markets. Here’s to reading more biotech S-1s this year and next, I suppose!

The weekend

And that’s what I have for now — don’t forget that Equity is back to its regular thrice-weekly cadence next week, so I’ll chat with you on your podcasting app of choice in short order! Hugs!

Alex

January 7, 2022

Daily Crunch: Avataar raises $45M Series B to improve 3D e-commerce product visualizations

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Hello and welcome to Daily Crunch for January 7, 2021! It’s Friday and the snow is falling like the dickens in my neck of the woods. But it was no snow day in the tech world. Not at all. In fact, one venture firm raised 10 figures of capital today. Can you guess who?

Before we jump in, today’s TechCrunch staff highlight is Grace Mendenhall, a member of the Equity team who is also a documentary film editor. And she’s frankly just the best. Now, the news! —Alex

The TechCrunch Top 3

a16z reloads with $9B in new capital: The venture capital money arms race continued this week with news that Andreessen Horowitz has put together $9 billion to invest in venture deals, growth deals and biotech more specifically. As TechCrunch notes, the resulting dollar figure is a boost on the group’s last trio of similar funds. There is, it appears, an infinite capital appetite in today’s startup market.
Roblox pulls Chinese app: Five months after launching with Tencent in China, Roblox’s LuoBuLeSi was taken down. What happened? It may be that Roblox has some work to do on the data side of its service, something that it hinted at in a statement. Regardless, the move is yet another example of how hard it is for non-Chinese companies to build and sell digital products in the country.
India to investigate Google: In the wake of industry complaints from news groups, India’s Competition Commission “said Friday that Google dominates certain online services and its initial view is that Google has broken the local antitrust laws,” TechCrunch reports. Given how big and lucrative the Indian market is, this is not good news for Mountain View.

Startups/VC

Before we jump into all the startup news of the day, TechCrunch has a little treat for you. We got veteran venture capitalist Matt Murphy on the phone as 2021 came to a close to chat about prior tech booms, prior tech busts and what he sees as the strengths and weaknesses of today’s venture game. It’s a great weekend read.

And now, the news:

Pendulum raises $5.9M for narrative tracking: This is a fun one, as the company’s target market is utterly new to me. Per our reporting, Pendulum “helps companies, governments and other organizations track harmful narratives on social media platforms and elsewhere on the web.” I guess you and I currently do this by reading lots of tweets, but seeing a company build software for it makes good sense.
Peter Reinhardt leaves Twilio: Remember when Twilio bought Segment for $3.2 billion? It also bought Segment’s CEO, Peter Reinhardt, as part of the deal. Now, however, the exec is leaving to “be full-time CEO at Charm Industrial, a carbon mitigation startup he co-founded in 2018,” Ron Miller reports. I can’t quite connect charm and carbon, but we’ll keep an eye out for what the startup does next.
Avataar raises $45M for “life-sized 3D product evaluation”: No, this is not “Avatar,” like the movie. It’s Avataar, a U.S.- and India-based startup that helps consumers “visualize products in real-life size and feel in their living room” using their phones. Given that we all want to buy more stuff online, but it’s not always easy to picture a new footstool in situ, I like what the company is up to. Unsurprisingly, Avataar is working with e-commerce brands in categories like furniture.
Bfree wants to update the irksome business of credit collections: If you have ever gotten a call from a person who thinks that you owe them or someone that they represent money, you may have harkened back to how much more fun it was to get a root canal. Bfree, a “Nigerian credit management fintech,” as TechCrunch puts it, is working to build something that it considers to be more ethical debt collection. The company just raised $1.7 million and is busy recruiting in 16 markets, we report.
From the CES Beat: TechCrunch’s coverage of the great consumer electronics confab continued today, with posts up on the promises of elder tech and, well, all things metaverse, good and bad.

If you need even more startup news and notes and analysis this weekend, the Equity team has you covered.

After talking to marketing leaders for a year, here’s my advice for CEOs

paper head with puzzle pieces-Autism concept.Blue background

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

This is a fantastic time to launch a startup, but if you’re trying to grow one — well, winter is coming.

We’ve already noted the impacts of new data regulations and consumers’ growing desire for more privacy, but here’s another log to toss on the bad news fire: As a percentage of company revenue, marketing budgets plummeted from 11% in 2020 to 6.4% last year.

“This is the lowest proportion allocated to marketing in the history of Gartner’s Annual CMO Spend Survey,” the research company reported.

Rebecca Lynn, co-founder and general partner at Canvas Ventures, has had dozens of conversations with early-stage founders in recent months.

In a TechCrunch+ guest post, she covers the “downward pressure on the efficiency of marketing dollars” and shares several strategies that are producing results — as well as some “crazy” ideas “that seemed ridiculous at the time.”

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

Apple keeps working on its fitness product: TechCrunch has news up today regarding Apple’s fitness product, the somewhat lamely named Fitness+. What’s new? Collections, which we write are ”curated series of workouts and meditations” that are targeted at a particular goal. Also new is what’s called “Time to Run,” an “audio running experience,” as we put it. Why doesn’t Apple just buy Peloton? I don’t know.
When does a Twitter Space become a podcast? We’re going to find out. Twitter is working on recording its live-audio product, called Spaces. And the social network is saying that it will include replay analytics. Which is super cool? Twitter’s product team is seemingly bringing its really solid 2021 product cadence into the new year.
And finally, from CES, a roundup of electric mobility two-wheelers for everyone out there who lives in a city that hasn’t given up its soul to provide more parking for lazy folks.

TechCrunch Experts

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Read one of the testimonials we’ve received below!

Marketer: Ridhi Singh, founder, 91Ninjas

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Testimonial: “Ridhi and team 91Ninjas bring in good domain knowledge, high-quality thinking and focused execution. We chose them for their expertise, disciplined approach and excellent work ethic. Thanks to team 91Ninjas, our inbound marketing engine has picked up good momentum. After coming onboard, they rapidly kick-started work on multiple fronts. In particular, we witnessed good traction on the social media and content front. We saw a good surge in organic traffic on blogs and our search appearance on domain-specific keywords has improved a lot.”

January 6, 2022

Daily Crunch: France’s data watchdog bites Google and Facebook over cookie consent violations

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Hello and welcome to Daily Crunch for January 6, 2021! Today we have not only killer notes on this year’s strange CES confab, but breaking media news and even an editorial from United States Secretary of Transportation Pete Buttigieg. And, of course, a host of updates from startup land. Let’s have some fun! —Alex

The TechCrunch Top 3

Reflections on another pandemic CES: Our own Brian Heater has the must-read from this year’s kinda-IRL CES event. TechCrunch decided to not attend in-person due to spiking COVID-19 cases, but that doesn’t mean that we’re not paying attention. If you want to know even more on what it looks like to cover the event from afar, Devin Coldeway has the nitty-gritty you are looking for.
The NYTimes is buying The Athletic: After The Athletic went about the nation hiring all the newspaper sports reporters it could, the company is reversing its model and is instead selling itself to The New York Times. For a reported price of $550 million. That’s a lot of dosh, but not that much in today’s startup terms. Media remains a pretty hard game.
Mark Cuban-backed fintech goes public: Remember SPACs? Dave does, because the fintech startup finally rode its chosen blank-check company to the public markets. TechCrunch spoke to the company’s CEO about the transaction, its timing and what’s ahead for the company.

Rounding out the top stories of the day is this entry from United States Secretary of Transportation Pete Buttigieg. He talks about innovation and the role of government in the creation of what’s next, from a transit perspective.

Startups/VC

Before we jump into our usual mix of startup updates, something fun. TechCrunch’s own Natasha Lomas spent four weeks testing a “metabolic fitness” service from Ultrahuman. “Becoming a cyborg is no longer as sci-fi as that sounds” in the world of quantified health realm, she says, but the post is a great look into how we may care for our bodies in the future.

How will the crypto selloff impact NFTs? In the last day, before a partial recovery, cryptos sold off sharply. TechCrunch wants to know what impact falling cryptocurrency prices will have on NFTs and other assets that are priced in crypto terms.
Crypto lending sans crypto collateral: Lucas Matney reports that “most [crypto] lending platforms rely on an end user’s existing crypto collateralization,” while DeFi startup Goldfinch is taking a different approach. It just raised $25 million for its efforts, led by a16z.
Zuddl raises $13M for virtual events: Notably I have not heard that Hopin has raised another trillion dollars in several months, which now feels like a surprise given how busy that company was in the last few years. Regardless, the virtual events space is still attracting capital, Zuddl shows. While it’s nice to see competition in the online confab market, I have to protest gently against Zuddl’s name, which reads like a mix of zoodle (which are gross) and muddle (which is what the company’s name reminds me of).
The mental health startup market is hot: TechCrunch has notes on the blog today about Little Otter ($22 million, focused on child mental health) and Mined ($3.5 million, focused on emotional well-being). Two rounds in the same space in a single day reads like a data point to me.
RIP Popcorn Time: The golden era of online piracy is behind us, but that doesn’t mean that some services that flagrantly broke copyright law didn’t keep the flame of the past alive. For a while. Now Popcorn Time is no more, which I am sure some of you will mourn.
Dunzo raises $240M from Reliance Retail: Focused on hyperlocal delivery in seven Indian cities, Dunzo has landed a huge new round led by Reliance Retail, which put in $200 million of the total for a 25.8% stake in the company. Hyperlocal, rapid delivery is a big push around the world. We’re curious about the economics involved, but it’s clear that there’s appetite to invest in the thesis.

There was even more. Rupifi raised $25 million to build its B2B payments business in India, while JABU raised $3.2 million for its B2B e-commerce business, and Payfit became France’s latest unicorn after raising $259 million. It’s busy out there — so busy that some folks even in the venture world are curious about the sheer pace of today’s private-market investing.

5 growth marketing predictions for 2022

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Our latest guest column with predictions for the coming year doesn’t just prognosticate: Growth expert Jonathan Martinez shares several tactics early-stage companies can use to capitalize on these trends.

Among other topics, Martinez shared methods for incrementally testing ads, his ideas about video ads and influencer marketing, and a few thoughts about Facebook and iOS 14 privacy changes.

“I believe we’ll start seeing heavy investments by Facebook and other social media platforms to keep users on their platforms, where they will still have access to first-party data,” writes Martinez.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

Meta has a good VR holiday cycle: Meta, the company behind Facebook and the Oculus VR platform appears to have had a good holiday sales cycle, TechCrunch reports. The mobile companion app for the Oculus VR hardware was downloaded “roughly 2 million times globally since Christmas Day,” per third-party data. That’s a lot of headsets.
Spotify does an innovation: Spotify has introduced a new podcast advertising format. Cue the parades. What I want is for Spotify to make new ways for me to support musical artists that I love. Spotify, in contrast, is busy working on the podcasting side of its business. I suppose part of my gig is podcasting, but, Spotify. C’mon. Focus back on music!
Facebook, Google get hit with European cookie fines: Around a quarter billion worth of fines have been handed out to Google and Facebook for “failing to respect local (and pan-EU) cookie consent rules” thanks to the Commission nationale de l’informatique et des libertés, or CNIL. Someone should add up all the fines that American tech companies have paid to various EU countries and bodies at some point; it’s starting to add up.

TechCrunch Experts

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January 5, 2022

Daily Crunch: $360M funding round values Fractl ‘well north of $1 billion,’ says co-founder

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Hello and welcome to Daily Crunch for January 5, 2021! Today we have a great mix of news for you. Mega-rounds? Heck yes. Electric trucks from U.S. companies? Yep! Android cozying up to Windows? But of course. And some great essays on lock-up periods, LP transparency and more.

But before we do that, every once in a while I’m going to highlight a TechCruncher behind the scenes who deserves some love. Today it’s Henry Pickavet, one of our editors and guiding lights, someone I have known and worked with since my early 20s. He’s perfect, apart from the sports teams he follows and the fact that he likes cricket. Follow him on Twitter here if you are so inclined! —Alex

The TechCrunch Top 3

Making sense of OpenSea at $13B: From rumor to report to confirmation, the OpenSea funding round worth $300 million came to its conclusion quickly. Now the NFT marketplace is worth some $13 billion. So, TechCrunch did the obvious thing and asked if that number makes any darn sense. As it turns out, yes, but how much depends on your level of crypto-bullishness,
Android Windows: While Apple has been busy defending its walls surrounding the garden that is iOS, Google and Microsoft have been busy paving roads between their Android and Windows operating systems. First, Microsoft announced that some Android apps would eventually run on Windows. And now, news that “Google is working with the likes of Intel, Acer and HP to [connect] your phone to your Windows PC.”
And here’s the *other* company now worth more than $10B: It’s Miro! Yep, the online workspace company, as we put it, is now worth some $17.5 billion after raising a $400 million round. The company claims it has 30 million users. Competitor Mural is also doing well, indicating that their market is fairly deep in the remote-work era.

Startups/VC

A few essays to start our startup download today, I think. The first comes from our own Connie Loizos diving into the “year of the disappearing lock-up.” In short, Loizos notes that the traditional forced holding period post-IPO is being dismantled in hot public offerings. Not that this is a guarantee of future results — the opposite, it seems — but it’s worth tracking the change to what was once a key IPO rule, and, frankly, mark of confidence.

Speaking of IPOs, the insurtech IPO wave of 2020 and 2021 is looking pretty darn threadbare today. TechCrunch took a look back at the struggles of names we’ve written about for ages, the Roots and Metromiles of the world, but also Oscar Health. It hasn’t done well either, it turns out.

Anna Heim wrote a fascinating piece on LP transparency. The idea that founders should care about where their investors get their money is not new. But what is fresh is the leverage that founders have over investors — the founder-investor power dynamic has flipped, leading more VCs to think that it might be time to open up their own books a little.

Now, more news!

Bankaya goes offline for customer acquisition: The hunt for new users is a global startup challenge, and one that leads to some interesting solutions. Mexican fintech Bankaya is taking an IRL tack to the challenge, noting that the major ad channels for its products are rife with competitors chasing the same eyeballs.
Tax advantaged crypto investments? Startup Alto just raised $40 million for what TechCrunch reports is a “self-directed IRA platform [that] provides a simpler, more affordable option for individuals to invest their retirement savings into alternatives,” at least in theory. I dig it.
Fractal goes unicorn with new $360M round: It turns out that this company is 21 years old, so it’s not a startup, per se. But it is a private company that just raised nine figures, so it hit our radar. The company’s analytics product does AI and analytics work for major companies.
SoftBank eyes new Indian investment: Pune-based ElasticRun is in talks to close a round worth $200 million or so from SoftBank Vision 2 and Goldman Sachs, Manish Singh reports for TechCrunch. The startup helps neighborhood stores “secure inventory from top brands and working capital,” we report.
Meet a very cute dishwasher named Bob: From the CES trenches, meet Bob. It’s a small dishwasher unit for apartment countertops that is efficient, and, dare we say it, adorable.
To close out our startup items, Xage has raised $30 million to help project critical infrastructure. Which is good, given that much of the power lines and water facilities that you depend on are fairly out of date and begging for nation-state shenanigans. (The startup’s name is pronounced zage, Ron Miller.)

4 trends that will define e-commerce in 2022

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Data privacy has been top of mind for online sellers and for good reason: Regulators are taking an interest, and iOS 14.5 lets users turn off data tracking, with negative consequences for “Facebook’s ad targeting.”

Bearing those factors and others in mind, Ben Parr, president and co-founder of e-commerce marketing platform Octane.ai, shared his predictions for 2022 with TechCrunch+:

Personalization and zero-party data become critical.
E-commerce embraces web3 and NFTs, but what will that look like?
Live shopping goes mainstream.
Slow but gradual improvement to the supply chain.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

We have a number of automotive-themed news items below, but let’s start on your phone with Instagram. The social subsidiary of the larger Meta empire is bringing back its chronological feed. Praise be. Forcing users to endure algorithmic timelines is lame, in my view, and something that moves power away from users toward the adtech gods that run social platforms. I might even re-sign up for Instagram now that this is fixed.

Mortgage data analytics company settles with FTC over data breach: Back in 2019, TechCrunch reported that “OpticsML, a New York-based vendor working for Ascension, left a database of highly sensitive financial data exposed to the internet without a password.” Now two years after that reporting, results!
GM promises a plethora of electric vehicles: If you want an electric Equinox or Blazer, GM is going to hook you up in 2023. It claims. And the company is building an electric Silverado pickup, coming a bit late to the table given how many announcements Ford has already made. But the die really is cast here regarding the future of rolling vehicles, no matter who is currently leading. They are going electric. And fast.
And GM wants to get self-driving cars on the road: By the middle of the decade, the company said. I am a wee bit skeptical of any provided timeline for autonomous vehicles, but at some point they will work — right? — and that day will be good. Let’s hope these latest projections bear out in time.

TechCrunch Experts

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TechCrunch wants you to recommend growth marketers who have expertise in SEO, social, content writing and more! If you’re a growth marketer, pass this survey along to your clients; we’d like to hear about why they loved working with you.

If you’re curious about how these surveys are shaping our coverage, check out this article on TechCrunch+ from Ben Parr: “4 trends that will define e-commerce in 2022.”

January 4, 2022

Daily Crunch: Israel-based cybersecurity startup Siemplify sells to Google for $500M

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PST, subscribe here.

Hello and welcome to Daily Crunch for January 4, 2022! Yesterday we noted that startup news was kicking off the year a little light, but that that would change quickly. And change it has. In the following we have IPO news, robot news, canned-water startup news, acquisitions and more. Let’s go! —Alex

The TechCrunch Top 3

Justworks’ valuation could top $2B in IPO: The first of the anticipated 2022 technology IPOs dropped a price range this morning, meaning that the public offering season is officially underway. SMB HR-focused Justworks’ valuation could scoot past the $2 billion mark, by our reckoning, when it starts to trade (we presume) later this month. For its investors, the price appears to be a win.
Joe Lonsdale’s bad tweets get him in trouble: After diving into the issue of disparate investment totals for different groups of people, 8VC’s Joe Lonsdale has been trying to walk back his comments on Twitter. It’s not really working, as he appears to have said what he thinks. And folks in venture are not thrilled, Natasha reports.
Google confirms $500M buy of Israeli cybersecurity startup: Reports that U.S. search giant Google was buying Israeli startup Siemplify have been confirmed, TechCrunch writes. Sources close to the deal confirmed the price, even if Google is staying mum on how much it dished out for the company.

Startups/VC

Before we dive into startup news about individual companies, a few notes. First, while tech stocks have taken a hammering in recent weeks, it appears that the private markets are full-steam ahead. There’s risk there. Looking abroad, we also have notes up on fintech in Africa and how dominant the single startup category is proving to be. And Refinery Ventures’ new fund is all about getting startups to their Series A, Christine Hall reports.

Now, the rest of it:

Why is canned water so expensive to sell? That’s my question regarding the news that Liquid Death just raised a $75 million round. Don’t get me wrong, water is fine, and death-themed water is right up my heavy metal alley. But the sheer amount of capital that is flowing into tech-light businesses is confusing. That said, I am here to support any brand that leans into metal music as far as Liquid Death has, per its merch page.
Robot bar carts are here to help: Labrador Systems’ multiyear project to build a robot for moving things about a home is coming to fruition, TechCrunch reports. We clapped eyes on the device back in 2020, meaning we’ve been waiting for it to come out for some time. Per our reporting, the company’s Retriever robot offers “assistance for elderly users and people with limited mobility.” That’s rad.
Skydio launches refined drone model: U.S. drone startup Skydio has updated its Skydio 2 drone to the Skydio 2+, which brings with it longer flight range, more battery life and new software. Skydio captured attention with its drones that follow and film their owners.
Great, now my meditation app wants me to actually do things: Calm, best known as one of the major meditation mobile apps, is expanding into other areas of self-care. And now, we don’t mean extra wine on Monday mornings. Instead, Calm has put together what it calls “Daily Move” videos that will help its users move. Bold from a company that made its bread to date on helping people sit still. But because you have to do both to be sane, I have learned, Calm could be onto something here. Let’s see how the new content performs in-market.
Recorded Future spends $65M on SecurityTrails: Here’s a neat little startup deal. Recorded Future, a threat intelligence company, has purchased SecurityTrails, a company that we report “collects and maintains vast amounts of current and historical internet records, such as domain name records, registration data and DNS information, giving organizations visibility into what their threat attack surface is.”
Atmosphere raises $100M: OK, this one is cool. Atmosphere is a startup that creates video content — at times sans sound — for “broadcast in public places like bars, restaurants and doctors’ offices.” Think of the visual version of the music you hear in elevators. Get it? The company’s new round was 80% equity, 20% debt.

And from the what did you expect file, Starlink is shedding Indian staff after it was told to stop operating in the country without a license.

AWS will buy a SaaS company, and other 2022 enterprise predictions

Image Credits: Tyler E Nixon (opens in a new window) / Getty Images

Yesterday, TechCrunch reporter Ron Miller shared his predictions for enterprise companies this year.

As he noted, making enterprise forecasts is tricky: In 2021, who expected Salesforce to snap up Slack for almost $28 billion, or that Jeff Bezos would hand over the reins of Amazon to Andy Jassy?

“I sure didn’t see that coming, and I’m betting most people didn’t,” wrote Ron. “The tech world moves so quickly, it’s often hard to keep up.”

With “the usual caveats,” his prognostications encompass ongoing supply chain issues, the impacts of increased regulatory oversight in Europe and the U.S., and his thoughts on a M&A market where table stakes are measured in the tens of billions.

His boldest, spiciest take?

Salesforce … was quiet in 2021, busy closing the Slack deal. It won’t be too unrealistic to expect something in 2022. Maybe something SaaS-y like Zoom, Box or Dropbox. Maybe Benioff finally gets Twitter, a company he desperately wanted in 2016, as Casey Newton suggested in The Platformer this week.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

There are two topics to hit on today from Big Tech. The first is from Amazon, and the rest is a huge pile of reporting on what’s going on at CES this year. First, Kindle:

Kindle’s future in China is fading: The Amazon e-reader has been in the Chinese market for nine years, but supply of its devices is drying up in the country. Given the broader push by the Chinese government to control media of all sorts, the move is not a surprise. After all, even a smaller Kindle library is still a lot of books. And, well, open inquiry is not really ascendant in the Chinese market these days thanks to the Chinese Communist Party.

And from CES:

Intel doubles down on hybrid chip architecture, unveils 28 new 12th-gen Intel Core mobile processors and 22 desktop processors
Mobileye and Zeekr plan to build an autonomous EV for Chinese consumers
GE Lighting adds smart thermostats, security cameras and other bright ideas
Formlabs promises up to 40% speed increase with new 3D printers
And so very much more here, where we’re collecting our CES 2022 coverage

TechCrunch Experts

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If you’re curious about how these surveys are shaping our coverage, check out this article on TechCrunch+ from Miranda Halpern: “10 growth marketing experts share their 2022 predictions and New Year’s resolutions.”

January 4, 2022

Opportunity not fear: Reframing cybersecurity to build a safer net for all

Dr. Melanie Garson Contributor

Dr. Melanie Garson is the policy lead for Europe, Israel and the Middle East in the Internet Policy Unit at the Tony Blair Institute for Global Change. She is also a lecturer in International Conflict Resolution and International Security in the Department of Political Science at University College London, where she teaches about cyberwarfare and the future of conflict in the digital age, as well as International Negotiation.

The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics.

Throughout 2021, global news seemed to ricochet between the rapid spread of new iterations of COVID-19 and cyber criminality — both becoming increasingly creative and disruptive as they mutate in a battle for survival; both interlinked as cybercriminals profit from rapid digitalization forced by COVID-19 lockdowns. In a recent interview, a prominent cybersecurity executive pointed out that alongside birth, death and taxes, the only other guarantee in our current lives is the exponential growth of digital threats.

Yet misperceptions over cybersecurity — particularly that it is complex, costly, onerous and even futile — has led many emerging economies to leave cybersecurity behind as they seek to join the Fourth Industrial Revolution. But without mature cybersecurity policies, states might find themselves unable to fully realize the potential of their digital economies.

Reframing cybersecurity as a path to opportunity and competitive advantage in the development of innovation ecosystems could be the key to increasing individual states’ cyber resilience, as well as strengthening the global digital ecosystem for all.

Innovation or security?

As 10 billion devices are set to join the Internet of Things (IoT) by 2025, emerging digital economies are vying to be at the center of this revolution. In 2020, about $2.4 billion worth of investment was deployed in African startups and Africa’s e-commerce sales are projected to reach $75 billion by 2025. It is home to half of the 40 fastest-growing emerging and developing countries and is currently the most entrepreneurial continent. This trend will only accelerate as initiatives to close the digital divide by 2030 connect the remaining 78% of the population to the internet.

But as internet access expands, so too, will global cybercrime. Experts estimate that cybercrime will cost the world economy $10.5 trillion annually by 2025. While digitally advanced nations have responded by bolstering their cyber defenses, Africa’s innovation ecosystem remains one of the most under-protected globally.

Only 10 out of 55 African countries have ratified the African Union Convention on Data Protection and Cybersecurity (the Malabo Convention) and Africa continues to be the lowest-scoring continent on the International Telecommunication Union’s (ITU) Global Cybersecurity Index. Despite ITU and World Bank initiatives, only 29 countries in Africa have any type of cybersecurity legislation and only 19 have cyber incident and emergency response teams. This leaves African economies exposed and African leaders outside of the bodies shaping global cybersecurity policy.

When viewed globally, this rapid investment in innovation systems without concurrent investment in security creates a digital maturity-security paradox, in which attackers can exploit the gap between these two levels of maturity. In turn, those entities within the states and the states themselves are left doubly exposed and vulnerable as they become low-hanging fruit susceptible to opportunistic and malicious cyber criminals.

Image Credits: Garson

In a dynamic reminiscent of vaccine geopolitics, this runs the risk of leaving states with fledgling and fragile innovation systems exposed.

Cybersecurity fight or flight?

It would be logical to assume that the increase of cyber incidents — and the sticker shock costs associated with them — should lead to increased cybersecurity. Yet, counterintuitively, the narratives of cybersecurity that spur action in the West either lead to policy paralysis or restrictive knee jerk reactions.

As game theorist and Nobel laureate Thomas C. Schelling noted “there is a tendency in our planning to confuse the unfamiliar with the improbable … what is improbable need not be considered seriously.” Many digitally developing states consider themselves outside of the great power politics that underpin malicious cyber activity. It seems improbable to them that they would be victims to the magnitude of action witnessed in Russian-U.S. cyberspace confrontations, the China-U.S. race for digital supremacy, or the Iran-Israel digital war of attrition. Protecting from such cyberattacks is low on the list of policy imperatives.

Digitally advanced nations have responded to the rapid proliferation of cyber threats with cybersecurity mechanisms such as new legislation with draconian punishments for failure to report cyber incidents and ransomware payments and coordinated international initiatives to paralyze ransomware gangs such as REvil. At the other end of the spectrum, digitally developing states are often ill-incentivized and ill-equipped to unravel the perceived complexity of cybersecurity measures required to address these threats.

This is compounded by a wariness of Western cybersecurity paradigms, which many see as a form of potential technological neo-colonialism. Demands for regulatory compliance, adoption of norms and purchase of Western cybersecurity technologies are often perceived as stifling these nations’ opportunities for growth. And, attempts at trying to shame states into cybersecurity compliance can be perceived as an attack on their sovereignty, which could backfire and drive states to seek alternative paradigms such as internet shutdowns that may ultimately threaten their access to the benefits of the free, open and interoperable internet.

More frequently, though, leaders often react to overwhelming threats with paralysis — and fail to act at all.

It is the CISO’s mantra that cybersecurity is a team sport. In the global context, this means ensuring that developing digital economies want to be part of the team. To achieve this cybersecurity needs a radical makeover.

Radically reframing cybersecurity

Cybersecurity advocates can start by reframing cybersecurity as an opportunity to build a vibrant and resilient innovation ecosystem rather than a burden or a restraint. New narratives that emphasize the attractiveness and value of cybersecurity are needed to counteract perceptions of unreasonable standards that stifle innovation.

For instance surveys show that cybersecurity and data privacy is a major source of competitiveness for retailers, outranking even price sensitivity. Meanwhile, recent U.S. and British initiatives, like the new State Department Cyber Bureau and the U.K.’s National Cyber Strategy 2022 have highlighted strong cyber ecosystems as strategic advantages.

Governments of mature digital economies, multilateral institutions and cybertech providers should emphasize that those states able to protect themselves will be the most sought-after partners in the digital revolution. They will also be those able to shape global conversations on cybersecurity.

The value of safer net for all

A vibrant and competitive digital economy that leads to prosperity for all requires open and interoperable networks that are trusted, safe and secure. States that are able to leverage best practices to secure their innovation ecosystems will lead the way in disruptive development. But to induce states, SMEs and individuals to take cybersecurity seriously requires a shift from advocating policy built from fear toward policy built on an optimistic rationale for cybersecurity.

Changing the narrative also requires digitally mature states to provide sustained support to those more vulnerable. This is more than digitally developing states being just a market for cybertech exports and cybersecurity strategy blueprints, but a commitment to helping develop the infrastructure that unleashes the benefits of cybersecurity locally and globally. Through a radical reframing of cybersecurity as an opportunity, states and societies can work together to ensure that innovation systems built on safe digital inclusion can create a safer net for all and the potential of the internet as a force for good will be realized.

January 3, 2022

Daily Crunch: No-code app development platform Abstra raises $2.3M

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PST, subscribe here.

Hello and welcome back to Daily Crunch for January 3, 2022! It’s a new year, but that doesn’t mean we’re going to reinvent the wheel. This newsletter is going to stick to its tried-and-true format, so expect few surprises and lots of news.

Before we start, a big thanks to Greg for taking over while I was off. Now, to work! —Alex

The TechCrunch Top 3

Apple’s value touches the $3T mark: It’s easy to forget just how big the biggest tech companies are. The numbers simply scale past our ability to understand them. U.S. tech behemoth Apple made that point in spades today by briefly becoming worth three trillion USD. It’s a little hard to sum up just how much money that is, but it’s enough money that if you distributed the sum to all current Americans it would work out to around $9,000.
Abstra raises $2.3M for no-code apps: The boom in no- and low-code services in recent years is partly thanks to demand for traditional developers outstripping supply, and technology itself advancing to allow the method of development to, well, work. Brazil’s Abstra’s latest round further indicates that the no- and low-code phenomenon is a global affair.
Twitter completes MoPub sale: The October-announced sale of Twitter’s MoPub service to AppLovin, a deal worth $1.05 billion, is now complete. MoPub is a mobile advertising platform, but Twitter is not done with ads. The company intends to keep building its in-house ad tech now that the deal is done, TechCrunch reports.

Startups/VC

The new year is already paying drama dividends, with the latest coming from an investor and the former CEO of Twitter. You see, Chris Dixon doesn’t agree with Jack Dorsey’s criticisms of non-Bitcoin crypto companies. You can imagine the fun that we are having with this.

Smarter Health raises $3.8M for better healthcare data sharing: If you have ever had to port your own data for your healthcare providers, you are aware of how much fun it is. None. That’s how much. Happily Smarter Health is working on the issue in Singapore, working to allow for a “smoother exchange of data between different parties in the healthcare system, improving patient care and reducing administrative costs.”
What’s ahead for wheels? The TechCrunch transit desk has a great look back at 2021 and a forecast for 2022. If you care about e-scooters, autonomous driving or anything related, we have you covered.
AIMMO raises $12M Series A for data labeling: AI is neat but needs lots of data to function. And to get that data, sometimes you have to do lots of tagging. Startups are taking this problem on, including Scale AI. AIMMO, a South Korean startup, has a neat take on the work varietal and, now, a full bank account.

And because you deserve a treat for making it through the first working day of the year: The “Cheugiest tech moments of 2021” from three of TechCrunch’s best.

If you need even more diversion, TechCrunch also has stories today on zen balls and driving fish.

When fundraising, New Zealand startup founders should play the “Kiwi card”

Kiwi crossing sign and Ngauruhoe Volcano, Tongariro National Park, North Island, New Zealand

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

In the final article in a series about New Zealand, Rebecca Bellan spoke to four stakeholders to learn more about how foreign investment and a fund of funds program are juicing up the nation’s burgeoning startup ecosystem:

Peter Beck, CEO/CTO Rocket Lab
Cecilia Robinson, founder and co-CEO, Tend Health
Phoebe Harrop, principal, Blackbird Ventures
Robbie Paul, CEO, Icehouse Ventures

“While starting on a rock at the bottom of the world comes with challenges, there are plenty of advantages, too,” said Paul, who advises native founders to “play the Kiwi card.”

Almost one of every five New Zealanders lives abroad, and that diaspora has helped the nation build a great deal of international goodwill. “It’s an easy conversation starter and chances are most interesting people offshore have some sort of affinity or connection to New Zealand,” Paul said.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

Why is Delivery Hero buying more of Glovo? The latter company previously said that it wanted to stay indie and go public. And yet it was recently announced that Delivery Hero would acquire a majority stake in the business. TechCrunch digs into what might have happened.
BlackBerry’s network is done: You really, really have to get rid of your BlackBerry. Why? Because the company “will end access to legacy services” tomorrow, which means no “key features like data, phone calls, SMS and 911 access.” It is time. At long last. All seven of you who still use a BlackBerry.

TechCrunch Experts

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December 31, 2021

Securing the global digital economy beyond the China challenge

Ainikki Riikonen Contributor

Ainikki Riikonen is a research associate with the Technology and National Security Program at the Center for a New American Security (CNAS). She is a co-author of the CNAS report “Edge Networks, Core Policy: Securing America’s 6G Future.”

The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics.

The push by countries at all levels of development to modernize their information and communications networks has created unprecedented demand for technological infrastructure. Governments and industry are investing billions of dollars to expand digital connectivity worldwide. New deployments of 4G, 5G, satellites and fiber-optic cables could create huge opportunities for host nations but pose significant risks if networks are built without adequate safeguards. The U.S. has a role to play in securing the future of the internet and the global digital economy but will need to move beyond confrontation with China to succeed.

China’s network effects

Digital access is the foundation for digital services, like fintech and e-commerce, that connect communities to trade and financial resources. As startups in Latin America and Sub-Saharan Africa draw billions in investment, their services require a strong and wide-reaching information communications technology (ICT) backbone to flourish.

China, through its Digital Silk Road, Belt and Road Space Information Corridor and other state-led initiatives, has become a leading purveyor of ICT infrastructure virtually everywhere, especially by financing projects in less affluent nations. But these investments come with a price: cybersecurity and manipulation risks due to the influence of China’s government on its vendors.

Due to legal obligations to the Chinese state — including sharing customer data at its request — China’s tech firms cannot guarantee that they will put their clients first. Many firms also host internal Party organizations that influence decision-making. The Communist Party of China (CPC) is not omnipotent — some companies have slow-rolled compliance with information requests — but the CPC’s ongoing crackdown on tech companies is diminishing their ability to circumvent directives.

But because network modernization is an economic imperative and Chinese firms often offer lower prices than their global competitors, many countries choose to source their technology despite these political and security hazards.

While the risks posed by companies such as Huawei are not evidence of collaboration with China’s government, these legal and institutional pressures, combined with engineers’ track record of spying for other national governments, such as in Uganda and Zambia, suggest that even China’s most powerful ICT companies can be susceptible to co-option. As the digital economy grows and diversifies, more kinds of data, from personal communications to financial, business, health and other sensitive information will become vulnerable to a “data trap.”

While state intervention is not guaranteed, the CPC’s approach to foreign affairs heightens that likelihood. Beijing wants international audiences to accommodate its priorities and activities and pursues “information dominance” with that purpose in mind. Data is important for understanding the information environment and shaping perceptions of the CPC, so access to and influence over ICT infrastructure — the vehicle for modern communications — makes the companies that provide it pivotal to Chinese foreign policy.

Information dominance also means preference for CPC-friendly content and platforms, which hinders opportunities for local populations. For example, StarTimes, a Beijing-based media company that upgraded and operates television networks in 30 African countries, received hundreds of millions of dollars from China’s EXIM Bank to enter African markets. It offers state-run media channels in its cheapest subscriptions or even for free which “tell the China story well” to local audiences, at the cost of excluding bandwidth dedicated to local perspectives or media free from CPC propaganda.

America’s response: Still loading

In response to the spread of China’s network projects, U.S. policymakers have begun to tackle vendor security assessments and expand government mechanisms to finance ICT. Buried under the Trump administration’s “us or China” rhetoric, the State Department’s Clean Network initiative included country-agnostic criteria for assessing vendor-based cyber risks and support for the multilateral Prague Proposals, which underscored non-technical aspects of 5G security. The administration also retooled the U.S. International Development Finance Corporation (DFC) to better support digital modernization and network construction. In an early victory for DFC, Ethiopia selected a Vodafone-led group in lieu of a bid linked to China’s Silk Road Fund, despite long-standing relationships with Huawei and ZTE to supply telecommunications.

These developments highlight the U.S. commitment to generating alternatives, in collaboration with other countries. But these measures alone may be insufficient to address the scale of China’s approach. In addition to vast government investments into overseas projects, China has subsidized its tech giants to such an extent that Huawei once proposed a 5G project at “a price that wouldn’t even cover the cost of parts.”

The United States, while motivated to offset China’s influence, should not look to outspend it or mimic its approach. Instead, U.S. leadership should mobilize a variety of sustainable investments, find technology solutions to make tech adoption cheaper and pitch neutral infrastructure that will offer equitable opportunities for local economies.

The White House should spearhead creation of a multilateral digital development bank to make more resources available to states looking to modernize their networks. Doing so would also add heft to commitments the Biden administration has made under the G7’s Build Back Better World initiative.

In coordination with Congress, the Biden administration should also back efforts to lower the cost of equipment itself to sustainably compete with China’s low-priced kit. One solution is interoperability in technology standards; Open RAN for 5G networks is one example of how this approach has already proven less expensive than traditional network architecture.

Another avenue to lower costs is to invest in research and development for network technologies that can replace the most expensive legacy components. For example, fiber-optic cables are expensive to deploy on land; workarounds may include wireless optic solutions or integration of satellite mesh networks with terrestrial systems.

Finally, the White House should explore ways to integrate net neutrality principles into network financing projects run by agencies such as DFC. Net neutrality could offer economic benefits to host nations by keeping the digital playing field open for local media and innovation. Neutral networks would set the foundation for a third way forward from what has been criticized as digital colonization by China’s government and similar criticisms of the U.S. private sector.

A digital network is ultimately a means to an end: infrastructure for interpersonal communications, content, services, industry and innovation. While few countries, at least for now, supply ICT infrastructure to the majority of the world, that majority should have full access to the opportunities it can offer. A revised route to digital modernization, premised on open participation, can not only offset the local costs of China’s cyber and influence power, but pave the way for an equitable internet for all.

December 28, 2021

Europe’s antitrust policy shouldn’t ignore China

Carisa Nietsche Contributor

Carisa Nietsche is an associate fellow for the Transatlantic Security Program at the Center for a New American Security.

The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics.

Europe has a well-earned reputation for regulating Big Tech, taking the lead on privacy, data protection and especially competition. Now, new antitrust legislation that introduces criteria to identify large online “gatekeepers” is winding its way through the European Parliament. But while the Digital Markets Act is expected to target a number of U.S. tech companies, if used strategically the DMA — and European antitrust and competition policy writ large — can also be a tool to compete with China.

In the past few years, Europe has slowly awakened to China’s challenge to transatlantic technology leadership. Although many Europeans are slowly converging on Washington’s threat perceptions, Europe still lacks the tools and political will to address challenges emanating from Beijing’s juggernauts.

While transatlantic policy responses to China should be aligned, they need not be the same. The United States and Europe should leverage their respective strengths and toolboxes to combat China’s market distorting practices in the technology sphere. And Europe should bring its comparative advantage — developing and enforcing competition policy — to bear to compete with China, beginning with the DMA.

Beijing’s tech giants are competing for size and control of the global technology ecosystem — a dynamic the transatlantic partners cannot afford to ignore. The Chinese Communist Party (CCP) has set the goal of market domination for their largest technology companies. To achieve this goal, the CCP is engaged in anti-competitive behavior to improve their companies’ market positions. In addition to state subsidies, the CCP often provides sweetheart deals to companies to improve their market standing.

The 5G case study illustrates this dynamic. The Chinese government provided 5G champion Huawei with $75 billion of state support through tax breaks, discounted resources and financing assistance. Meanwhile, China’s domestic market enables state-backed champions — including Huawei — to leverage very little competition and high market share within China to offer services for a fraction of the price in third countries. When faced with this reality, Europe’s leading producers of 5G technology, Nokia and Ericsson, previously struggled to compete with Huawei in their home market. Beijing’s domestic economic policy thus has global consequences.

In the past year, European countries have formed investment screening mechanisms to combat Beijing’s growing footprint in Europe. Yet, they still have work to do. Of the 27 member states, only 18 have established investment screening mechanisms, though an additional six are in development. There are also reasons to question the mechanism’s efficacy. The European Commission only blocked eight of the 265 projects they examined. Only 8% of the examined projects were Chinese projects. And they don’t explicitly tackle anti-competitive behavior.

That’s beginning to change. In May 2021, the European Commission proposed a regulation on foreign subsidies distorting the internal market, which introduces tools to investigate and potentially halt financial contributions by a non-EU government involving foreign subsidies. But while Europe’s nascent efforts are encouraging, they are not enough to address Chinese companies’ market positions and the Chinese government’s distortive policies.

Nonetheless, Europe is well positioned to leverage its regulatory momentum. Given China’s multifaceted playbook, Europe should think beyond subsidies. To effectively compete with China’s tech giants and address the unfair market position of Chinese companies, Europe must use antitrust regulations to target Chinese companies engaging in anti-competitive behavior, including by calibrating the Digital Markets Act (DMA). Pairing investment screenings with antitrust policy would give Brussels ample tools to address Beijing’s anti-competitive behavior.

Combating China’s anti-competitive behavior through antitrust policy is a logical extension of Europe’s toolkit. While the United States traditionally views antitrust policy through the lens of consumer welfare, Europe often views antitrust policy through the lens of market competition. Furthermore, Europe is often loath to view Chinese companies through a national security or anti-China frame. While investment screenings mechanisms focus on national security, antitrust and competition policy is pursued to ensure market competition in Europe. This framing makes addressing Beijing’s anti-competitive practices through antitrust policy a natural fit for Europe. In fact, last week, members of the European Parliament argued that the DMA should be extended to China’s Alibaba.

Such a move would also correct for perceived anti-American bias when it comes to antitrust enforcement. Commission officials maintain that Chinese companies do not do enough business in Europe to be subject to DMA. But that approach means that American firms are targeted by European regulators almost exclusively. Yet when viewed through a geopolitical lens, China’s technology national champions pose a greater threat than U.S. technology companies to Europe’s innovation ecosystem. This continues to be a point of contention in Washington and threatens to weaken the transatlantic relationship.

While Europe often bristles at the United States’ anti-China framing of technology issues, moving forward with a pro-democracy affirmative agenda — Europe’s preferred framing of the challenge — requires the United States and Europe to bolster their respective innovation ecosystems. Exclusively targeting U.S. companies in the Digital Markets Act threatens to hobble potential transatlantic cooperation and hinder an affirmative transatlantic agenda.

While the Digital Markets Act is not wrong to keep U.S. tech companies accountable, it is an opportunity for Europe to use antitrust and competition policy to recalibrate an approach to the China challenge that fits European perceptions and strengths. Europe shouldn’t miss this opportunity to address China’s market distorting behavior and to add another tool to its toolbox to push back on China’s anti-competitive behavior.