Robotics startup FJDynamics raises $70M to make manual labor easier

FJDynamics, founded by DJI’s former chief scientist Wu Di, just closed a Series B round of $70 million as it advances its goal to empower workers in the harshest environment with robotic technologies.

When I asked Wu what’s special about his company’s farming robots, he gave an answer that would make any publicist sweat: “I don’t think our technology is that special.” The startup’s vision, he said, is to make useful and affordable robots for the most labor-intensive industries.

“You can have the most advanced AI algorithms,” he continued, “But if the technology doesn’t work on the production line or the farm, because you don’t have any industry experience, then how does your technology benefit people?”

The technologies that Wu worked on before FJDynamics were cutting-edge in every sense. At DJI, he served as the chief scientist and oversaw the drone giant’s acquisition of the 180-year-old Swedish format camera maker Victor Hasselblad AB in 2017. Before returning to China, he spent a decade in Sweden, during which he earned a PhD in domain-specific processor design. He also worked as a vice principal at fabless semiconductor company Coresonic AB and a director at the Swedish luxury sports car maker Koenigsegg AB.

“After seeing all these first-class technologies, it’s a stretch to say we [FJDynamics] are a high-tech company,” said the founder, who donned a slightly faded checkered shirt and a pair of thin-rimmed glasses on the morning of our interview.

We were sitting in a makeshift meeting room, a partition comprising a few desks separated from the rest of the open-plan office by movable walls. The company, located in Shenzhen’s bustling tech hub Shenzhen, was fast expanding and approaching 1,000 employees.

Wu Di, founder and CEO of FJDynamics

In 2019, Wu left DJI to start FJDynamics. The company set out with a focus on agricultural robots, building tools like unmanned lawnmowers, orchard sprayers and feed pushing machines. It has since ventured into other fields that depend heavily on manual work, such as construction and manufacturing.

As Beijing invokes a digital upgrade in the country’s traditional industries, Chinese companies like FJDynamics are in hot demand by investors. FJDynamics itself has attracted a rank of heavyweight financiers, including Tencent and state-owned automaker Dongfeng Asset Management. DJI had a stake in the company early on but has since sold off its shares.

It declined to name its sole investor in its latest Series B round and only said it is a major internet firm in China. The funding, the company said, will allow it to “grow its suite of robotics automation technology across agriculture, facility management, construction and gardening, along with supporting the increasing demand of the company’s ESG product offerings in over 60 countries.”

Over the years, a handful of engineers have left DJI to set up their own shops or join others’ fledgling projects. Portable battery maker EcoFlow, hairdryer Zuvi, electric toothbrush brand Evowera are among the most high-profile ones. For Wu, what drove him away from a prestigious position at the world’s largest drone company was a sense of disconnection he felt making “luxury” hardware.

“If you look at how robotic technology is being applied, there are a lot of companies using drones and autonomous vehicles. But the majority of people on earth aren’t benefiting from it.”

“Agriculture, construction, gardening… Work conditions in these sectors are physically demanding and there are still a lot of us doing this kind of job. The question is how we use robotic technology to improve their work environment, and that doesn’t mean simply replacing them with robots,” said the founder.

Image Credits: FJDynamics’ cow feed pusher, printed with the logo of Sveaverken, a Swedish farming company it acquired

One of FJDynamics’ popular products is the automated feed pusher. To produce high-quality milk, cows need to be fed about ten times throughout the day. The routine requires farms to have staff on-site 24 hours. A farm with 500 cows, for example, needs about three grass feeders to take shifts. But in poorer countries, farms can’t afford to have as many workers and staff could be out tending to the cows all day even in the coldest season.

FJDynamics aims to make farmers’ work easier. Its vision-guided feeder, which costs about 20,000 euros each, can feed up to 500 cows a day. In 2019, it acquired the 110-year-old Swedish farming company Sveaverken, which has helped put the Chinese firm’s feed pushing robots to work.

“I never talk about technology to my customers. The farmer is more interested in whether my product can help improve the crop yield,” said Wu. “Every farmer is an economist.”

Because of the company’s vision in “making tech affordable”, margins are “modest” and the management is vigilant about operational costs.

At the moment, about 40% of the startup’s sales happen outside China across some 60 countries. Many Chinese companies expanding overseas are increasingly cagey about their origin, fearing hostility against anything labeled “Chinese”. Wu takes a more proactive approach.

“Even though I’ve lived in Europe for ten years, I can’t rip off my skin. I don’t think that’s important — whether it’s a Chinese, American or Swedish entrepreneur… As long as you build great products and bring benefits to my customers, there will be users.”

Data compliance is especially key to a company’s global expansion. FJDynamics provides the hardware and software while its local partners help deploy the “system” using the data. Microsoft Azure is its main cloud partner outside China to allow “elastic deployment while meeting data privacy requirements such as GDPR.”

“Our culture is that we don’t want the data,” Wu said.

Unlike smartphones or drones that require sophisticated processors, FJDynamics’ products use relatively simple chips that could be found in China, so the firm is likely immune from the recent supply chain disruptions, the founder reckoned.

While Wu may not be working on the most advanced technology anymore, he looks for ways to impart his knowledge. When he’s not developing the next farming robot, he lectures at the Southern University of Science and Technology in Shenzhen.

“I live a simple life that focuses on two things — product [FJDynamics] and education,” the founder said. “I’ve seen a lot and realized that money can’t change you or make you happier. So you need a simple goal, and achieving the simple goal makes your life happier.”

Second-hand car auction platform Motorway hits Unicorn status after $190M raise with Index, ICONIQ

It was only in June that Motorway – a U.K. platform on which professional car dealers can bid in an auction for privately owned cars for sale – raised $67.7 million in a Series B round. It’s now raised a $190m Series C funding round led by Index Ventures and ICONIQ Growth, a leading Silicon Valley technology growth investment firm. Existing investors Latitude, Unbound, and BMW i Ventures also participated in the round. The startup is now claiming a valuation of over $1bn.

Part of the reason is the impact of the COVID pandemic on supply chains. Second-hand cars have boomed in price because new cars are being made in smaller numbers due to the lack of supply of computer chips and other essential equipment from China.

On Motorway consumers can sell their car via a smartphone app that also uses computer vision to assess the state of the car. The cars are then bid on by professional car dealers in a daily online auction, with the car collected for free by the winning dealer within 24 hours. Given it’s also a “contactless” process, dealers and car owners increasingly seeking to buy and sell cars online.

Motorway says it now has a network of 4,000 professional car dealers using the platform and claims it has booked a 300% uplift in third-quarter sales to $411 million compared with $105 million last year. Some 100,000 used cars have been sold on Motorway since launch, with over 8,000 cars currently being sold a month, with over $2bn projected completed sales over the next year.

Motorway is also announcing the appointment of James Wilson, former Director of Marketplace Fulfillment for Amazon UK, as Chief Operating Officer.

Tom Leathes, CEO of Motorway, said: “8,000 car sales a month is still less than one percent of UK used car sales – so there’s a massive opportunity ahead.”

Danny Rimer, Partner at Index Ventures, said: “Since joining the board, following our initial investment in June, I have experienced first-hand just how fast Motorway is growing and how agile the team is in scaling the business to support this incredible growth.”

Yoonkee Sull, Partner at ICONIQ Growth said: “The used car market’s move online is only accelerating and we believe Motorway is delivering the best consumer experience and the most differentiated supply to dealers in the UK.”

This latest investment brings Motorway’s all-time raise to $273m since it was founded by Leathes, Harry Jones and Alex Buttle in 2017.

In a call with me Leathes added: “There’s no connection with BMW particularly, but they are automotive specialists so they bring quite a lot of knowledge to the white broader market and trends that are happening. They were also part of the B along with Latitude and Unbound.”

“What motorway does differently to a lot of competitors is that we are we’re not a retailer. We don’t own inventory. We’re a marketplace. And so that that allows us to scale much more quickly,” he said.

Ant is changing how consumers borrow money from its app

In December 2020, Beijing laid out a guideline for Ant Group to “rectify” its business after calling off its IPO, which could have been the largest initial public offering in history. In the plan, regulators asked Ant to revamp its credit business, among other changes that would make it subject to the same set of regulations overseeing financial institutions. In other words, Ant can no longer get by with its freewheeling practices by calling itself a “tech” firm.

Nearly a year later, the Alibaba-affiliated fintech powerhouse showed that it has almost finished restructuring its popular consumer credit products.

Credit loan products contributed nearly 40% of Ant’s revenues in the six months ended June 2020, according to the firm’s prospectus filed last year. The two main products are Huabei (Spend), which launched in 2014 for daily expenditures by consumers, working like a virtual credit card. A year later Jiebei (Borrow) was introduced as a credit product for larger consumption transactions.

Under the old model, Ant originated loans that were then underwritten by third-party banks and other financial institutions. As of June 2020, about 98% of Ant’s credit balance originated through its platform was underwritten by its partner financial institutions or securitized, according to the firm’s prospectus.

Jiebei has split itself into two brands, users reported earlier this week. Credit lines extended by third-party banks are now called Xinyong Dai (Credit Loan) on Alipay, Ant’s flagship financial services app. Those provided by Ant’s consumer finance company, which was recently established at the behest of regulators, are staying under the Jiebei brand.

Huabei has similarly started a restructuring, which will show users which loans are extended independently by banks and which by Ant’s consumer finance firm. Huabei will focus on “small-ticket” everyday transactions, it said in a Weibo post.

“Following the brand differentiation, users applying for credit loan services will have more information about their credit providers to avoid brand confusion.”

Huabei also noted that it’s now submitting consumer credit information to a database overseen by China’s central bank. It started the routine in September after it established its consumer credit company, which, just like banks, need to report their credit information to the central bank in China.

Ex-Microsoft exec Harry Shum leads ‘digital economy’ research center in Shenzhen

Overlooking a lush wetland in Hong Kong, the International Digital Economy Academy (IDEA) quietly opened last year.

The research institute sits on the northern bank of the Shenzhen River, which separates Hong Kong from mainland China. But technically, it’s located inside a special area straddling the two cities: the Shenzhen-Hong Kong Innovation and Technology Cooperation Zone. The name is self-explanatory. It’s a joint effort by the governments of Shenzhen and Hong Kong, with support from Beijing, to collaborate on scientific and technological research.

IDEA is one of the organizations that have set up inside the 3.89 km² special zone — which is about the size of 540 football pitches — and is a brainchild of Harry Shum. The renowned computer scientist was an executive vice president at Microsoft from 2013 to 2019 and also co-founded Microsoft’s largest research branch outside the U.S., Microsoft Research Asia.

Like his former colleague at Microsoft, Kai-Fu Lee, Shum was active in both the research and business sides of AI. Now at IDEA, his team aims to “develop disruptive innovative technologies based on social needs and give back to society in a way that allows more people to benefit from the development of the digital economy.” Several research directors at IDEA are also Microsoft veterans, including Yutao Xie and Jiaping Wang.

The sweeping regulatory clampdown on China’s internet firms has led to headlines saying Beijing has turned against tech. But the government’s intent is more nuanced. It’s zeroing in on Big Tech deemed harmful to the society and economy, companies that have encouraged financial market risks, gaming addiction, exploitation of gig workers, and other ills.

In the meantime, China remains fixated on its goal to promote fundamental research and reduce reliance on Western technologies. In Shenzhen, home to tech giants like Huawei, DJI and Tencent, the government is recruiting world-class scientists. Harry Shum and his team are among the latest to have joined the raft.

IDEA definitely has a buzzy name (and a great acronym). The term “digital economy” comes up often in President Xi Jinping’s speeches on how technology can be a driving force for the economy. The “digital economy has become a key force in restructuring the global economy and transforming the global competitive landscape in recent years,” the President said in October. “The internet, big data, cloud computing and other technologies are being increasingly integrated into all sectors of economic and social development.”

IDEA is examining how AI can transform industries like finance, manufacturing and medical care. This week, it announced it’s partnering with leading Chinese quant trader Ubiquant on a joint lab to work on “risk monitoring and avoidance for financial transaction markets,” as well as “basic infrastructure for high-performance computing systems.”

IDEA is just one of the many research labs that have sprung up across Shenzhen in recent years. The Shenzhen Institute of Data Economy, located on the Shenzhen campus of the Chinese University of Hong Kong with support from the government, is another group working to advance China’s digital economy.

Binance CEO Changpeng Zhao talks regulation and platform’s activities in Africa

Changpeng “CZ” Zhao launched Binance in 2017 and, according to some sources, the company grew into the world’s largest cryptocurrency exchange in the world in 180 days.

The Wall Street Journal recently reported that Binance’s daily transactions stood at $76 billion, a volume worth more than its four nearest rivals combined.

In the first half of 2021, Binance attracted 151 million clicks from Africa and the Middle East and 11 million from Nigeria, according to the WSJ. These numbers highlight the general activity of crypto trading in Africa, where $105.6 billion worth of cryptocurrency was transacted from July 2020 to June 2021, according to Chainalysis.

Despite growing over 1,200% by value, Africa still accounts for only 2% of the global value of crypto transacted in this period. With cryptocurrency, blockchain and decentralized finance gaining ground on the continent, Binance wants to be the leader in driving these activities.

However, for that to happen, the company will need to consider the regulatory challenges it might face on the continent, where crypto activities have been barred in two of the most prominent crypto-heavy countries, Nigeria and Kenya.

It is already taking several hits from regulators in the U.S., China, the U.K., Japan, Malaysia, Thailand, and the E.U., which are now concerned about its unregulated and unstifled growth in recent years.

In this interview with TechCrunch, Zhao discussed crypto usage and adoption in Africa, Binance activities and the company’s stance on regulation

(This transcript has been edited for clarity and length.)

TechCrunch: Crypto is one industry several governments are trying to regulate. What’s your take? Should crypto be regulated?

Zhao: Regulation is essential for the crypto industry and will go a long way towards building trust with consumers and institutions interested in the space. Ultimately, it takes proper regulation to realize crypto mass adoption, and we believe in facilitating this in a healthy way through proactively collaborating with local regulators and leading the industry to a common destination: benefit and protect users.

Our view is that it’s great for the regulators to be coming in order to get to 10%, 20%, 80%, 99% [crypto] adoption. However, it’s just as crucial for regulation to complement instead of hinder crypto’s growth. Overall, effective regulations safeguard consumers while stimulating growth and innovation, while poorly crafted regulatory policy stifles growth and protects dated, ineffective processes and institutions.

As the largest exchange globally, why is Binance having so many regulatory issues in the U.S., Europe and China? And what steps is the company taking to address them?

I believe every cryptocurrency exchange is working closely with regulators all around the world. As industry leaders, many people see the industry and see Binance. We don’t take that lightly, as we have the opportunity to lead by example and partner with regulators to move shared objectives forward.

We are the largest crypto exchange because users trust us. We earned that trust through many decisions and actions that protected users. We want to share our best practices with the industry and regulators all around the world. We believe this will help shape a healthier industry.

As part of efforts to meet compliance with all local regulation guidelines, we’ve recently launched new products — such as Shyft Network’s Veriscope to support FATF Travel Rule Compliance and our Tax Reporting Tool API so users can quickly meet their personal tax obligations.

We have also reviewed our existing services, including updating Futures Leverage for New Accounts and restricting access to it in a number of markets and initiating a mandatory KYC [know your customer] requirement across the platform. We’ve also recently hired several top-tier talents with a strong background in compliance.

As an example in leadership, we recently began a push for industry players to be long-term driven, in addition to the standard KYC/AML [anti-money laundering] procedures. We are pushing for longer unlocking schedules for founder tokens, from 2-4 years to 8-10 years. This is something that no regulators have asked for, but we believe it will help the industry become healthier. We are always looking for ways to protect users.

Would you say governments are going about it correctly? And are they knowledgeable about the budding industry and how to hone its advantage?

There is no absolute right or wrong here. It’s a matter of calibration and balance. Crypto and even the regulation of crypto are such new concepts, and many governments are trying to get more clarity about the space.

Regulators share the same mission with us — protecting consumers while encouraging innovation. As regulators work to find the most effective way to engage with the industry, we are committed to 100% compliance globally, and all our teams have been working nonstop to achieve this.

The adoption and development of crypto has many parallels with that of the car. When the car was first invented, there weren’t any traffic laws, traffic lights or even safety belts. Laws and guidelines were developed along the way as the cars were running on the road. These are frameworks and laws we take for granted today that allow this powerful technology to be used widely and safely.

Crypto is similar because it can be accessible for everyone, but frameworks are required to prevent misuse and bad actors. Clarifying and building the first set of standards is critical for the industry’s continued growth. And Binance wants to be a positive contributor.

Why is Binance bullish on Africa, where crypto regulations are increasingly becoming worrying?

The African continent holds some unique opportunities for cryptocurrency adoption and development and so, we’ve always been bullish in Africa. Crypto is solving the issues of cross-border payments and remittances (sending money within Africa and beyond), currency devaluation, etc.

Many African countries have suffered from high unemployment rates, and crypto and blockchain have provided innovative job opportunities for a young and brilliant continent, bringing Africans closer to financial freedom

Even from the first day when Binance launched, we had users from Africa, and they were actually relatively active. And so, I think it was early 2018 that I visited Uganda, Togo, Nigeria at the same time — and also Ethiopia. So, I had a little tour around Africa just to learn a little bit more about the market, and soon after that, we opened Binance Uganda, which was our first fiat gateway.

What is particularly interesting about African usage is that the number of people having bank accounts is quite low due to a lack of access to traditional financial services. However, this is why crypto is so attractive.

Yes, it is attractive, and maybe that’s why African central banks have targeted crypto users in recent months and barred banks from facilitating transactions. What happens when they start coming for Binance instead, similar to the U.S., China and other countries?

Binance welcomes regulation and takes a collaborative approach in working with regulators and governments in navigating this emerging industry, and we take our compliance obligations very seriously. We are actively keeping abreast of changing policies, rules and laws in this space.

As such, Binance is ready to assist regulators and find the optimal way to set a fair playing field — consumer protection is important to all of us. We’ve grown exponentially as an organization and there are certain processes and protocol updates that we are still working through at the request of regulators.

Do you think crypto adoption and growth will slow down if Binance and other crypto platforms are subjected to government regulations worldwide?

No, I don’t. Smart regulation encourages innovation and helps keep users safe. It’s also important to understand that regulation and innovation are not mutually exclusive. Crypto users deserve safe access to emerging technologies and practices, including NFTs, stablecoins, staking, yield-farming and more.

We touched on this in our recently released 10 Fundamental Rights for Crypto Users. Crypto regulation is inevitable. But users have the right to share their voice on how the industry should evolve with their blockchain platform of choice.

What do you think is fueling crypto adoption in Africa?

I think it’s always a combination of many things. Africa is a unique continent with unique challenges. For example, several African countries are plagued with constant currency devaluation, and so users are more likely to use crypto and stablecoins as a hedge against devaluation and as a store of value.

Making payments — whether it is remittances, cross-border transfers or settlements — is also pretty difficult across country lines, and crypto simplifies this.

Many Africans look to crypto for wealth creation and financial freedom. Much like Southeast Asia and Latin America, millions of people live below the poverty line. So it’s natural that more people look for innovative, non-traditional ways to create wealth.

Some reports say only 11% of the population in Africa have bank accounts. Many of the non-banked are skipping banks and coming directly to crypto, using a mobile phone as their bank.

Talking about numbers, a recent WSJ article said Nigeria had 11 million clicks in H1 2021 on Binance. Is that the number of Binance users on the continent?

The Wall Street Journal cited stats provided by a third party based on speculation, as they do not have access to our systems nor any user information. We can’t comment on speculative analysis conducted by external third parties.

As more Africans use P2P more than ever before, how is Binance making sure users are safely trading cryptocurrencies in Africa on its platform?

These have been our focuses in Africa as we remain committed to ensuring that Africans are well educated and protected.

With Binance P2P in particular, user protection and safety are paramount. As of August, we had provided free crypto classes to over 400,000 Africans on topics ranging from user protection to building a career in blockchain.

The team recently implemented new risk management measures, including a crypto escrow service. We have also recently expanded our global KYC requirements to enhance user protection and implement new P2P features to prevent bad actors from exploiting the system.

What potentials do cryptocurrencies and blockchain hold that’ll be transformative for emerging economies such as Africa?

Honestly, the potential is endless, and in emerging economies, this is even more true. New financial infrastructure, systems and processes are being created — transforming lives and creating the potential for financial freedom.

I also personally see huge potential in recent innovations propelled into the mainstream — GameFi, Sports Fan Tokens, NFTs, etc. I think these can be very transformative.

China’s AI giant SenseTime readies Hong Kong IPO

One of China’s biggest AI solution providers SenseTime is a step closer to its initial public offering. SenseTime has received regulatory approval to list on the Hong Kong Stock Exchange, according to media reports.

Founded in 2014, SenseTime was christened as one of China’s four “AI Dragons” alongside Megvii, CloudWalk, and Yitu. In the second half of the 2010s, their algorithms found much demand from businesses and governments hoping to turn real-life data into actionable insights. Cameras embedded with their AI models watch city streets 24 hours. Malls use their sensing solutions to track and predict crowds on the premises.

SenseTime’s three rivals have all mulled plans to sell shares either in mainland China or Hong Kong. Megvii is preparing to list on China’s Nasdaq-style STAR board after its HKEX application lapsed.

The window for China’s data-rich tech firms to list overseas has narrowed. Beijing is making it harder for companies with sensitive data to go public outside China. And regulators in the West are wary of facial recognition companies that could aid mass surveillance.

But in the past few years, China’s AI upstarts were sought after by investors all over the world. In 2018 alone, SenseTime racked up more than $2 billion in investment. To date, the company has raised a staggering $5.2 billion in funding through 12 rounds. Its biggest outside shareholders include SoftBank Vision Fund and Alibaba’s Taobao. For its flotation in Hong Kong, SenseTime plans to raise up to $2 billion, according to Reuters.

SenseTime spends a large chunk of its capital on research and development, which cost it more than 5 billion yuan ($780 million) between 2018 and 2020. The company recorded net losses for the past four years, largely due to “the fair value losses of our preferred shares.” Its net losses reached 3.7 billion yuan in the first half of 2021. Total deficits neared 23 billion yuan as of June.

Like its peers, SenseTime relied on “smart city” projects for monetization. The business comprised 47.6% of its total revenues of 1.65 billion yuan in the six months ended June, up from a share of 27% in the same period of 2020. The number of cities using SenseTime’s software platform reached 119 by June, according to the firm’s prospectus.

The “Smart Business” line, which is tailored to commercial space, residential property, and other enterprise needs, made up about 40% of its revenues in the first half of this year. The firm derived the rest of its revenues from the “Smart Life” unit, which supplies to IoT devices, and “Smart Auto”, which applies perception intelligence to autonomous driving solutions.

A ‘techlash’ with Chinese characteristics

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

This is the second in a pair of articles comparing the impact of the U.S. and Chinese tech crackdowns. Yesterday, Special Series Editor Scott Bade wrote about the geopolitical consequences of each country’s respective approaches. In this piece, Nathan Picarsic and Emily de La Bruyère examine how China’s “techlash” is driven by domestic politics.

In November 2020, Chinese regulators abruptly suspended Ant Group’s IPO in Hong Kong and Shanghai. In July 2021, immediately after ride-hailing service Didi went public on the New York Stock Exchange, Chinese authorities announced sweeping investigations into the company, removing 25 of its apps from China’s app stores — and sending share prices plummeting. The next month, Chinese state media attacks slashed Tencent’s valuation by $60 billion.

These companies effectively represent China’s PayPal, Uber and Facebook. They constitute the highest-profile targets of the Chinese Communist Party’s crackdown on its domestic Big Tech companies. That crackdown stands to transform the Chinese commercial landscape, and thus has huge implications for the wider world, including the U.S. tech sector.

Yet right now, the CCP’s tech crackdown is being misunderstood. Framed as an effort to cripple the Chinese commercial sector, it is being seen as an anti-monopoly effort similar to that underway in Washington. Beijing has deliberately encouraged this interpretation, couching its effort in antitrust language that resembles U.S. rhetoric as well as privacy language that echoes that of Europe.
Read more from the TechCrunch Global Affairs Project

But Beijing’s crackdown is not akin to U.S. antitrust efforts. Beijing is focused not on creating a competitive marketplace, but rather on quashing any challenge to its authoritarian power — in order to strengthen both its domestic control and its standing in geopolitical competition. Beijing is also focused on asserting a new definition of privacy, decidedly unlike that of European regulators; one in which the CCP has private governance over all data. These are the objectives driving China’s techlash.

The goal is to subjugate the domestic Chinese technology landscape to the CCP — and to ensure that the former serves as a vehicle of power projection for the latter. This makes Beijing’s actions the opposite of an anti-monopoly effort. China is reining in its leading tech players in order to support a bigger, more controlling monopoly: the CCP.

Perversely, Washington’s ongoing antitrust push risks playing directly into Beijing’s ambition. Any U.S. break up of Big Tech would exacerbate the asymmetries of scale and centralization that skew today’s tech competition in China’s favor.

The gulf between China’s crackdown and that underway in the United States is evident in the regulatory foundation underpinning Beijing’s latest moves. The CCP’s actions draw on an emerging legal and regulatory architecture for the governance of data — including, most recently, the Data Security Law (DSL) formally implemented in September. U.S. analyses tend to describe it as a “data privacy law.” However, the DSL does not foster “privacy” the way U.S. conceptions — or the European Union’s GDPR — might interpret the term.

The DSL neither restricts companies’ ability to collect data nor ensures the anonymization of information. Rather, the law restricts their ability to export data outside of China or share it with entities that are not the Chinese government (including, notably, foreign governments). At the same time, the DSL locks in Beijing’s access to companies’ information. In doing so, it provides the CCP domestic control over data.

Under the DSL, private data cannot be bought, sold or shipped at will. It is not private — unless, of course, you consider the CCP to be a member of your inner circle of trust.

The Didi case is instructive. Did’s crime was not collecting user information, but allegedly storing that data outside of China and sharing it with overseas regulators as a part of its IPO process. This is worlds apart from proposals in Washington to introduce sweeping data portability and interoperability requirements aimed at increasing consumer privacy and competition.

As the CCP sees it, information technology is catalyzing a new industrial revolution: the digital revolution. This revolution, which is characterized by data as a new factor of production, will reshape the global system. The player, whether government or industry, that can control the production, distribution and consumption of data will be able to lead that reshaping, in effect claiming global hegemony. The CCP believes this is the path to unmatched Chinese military and economic power — and an unrivaled international surveillance state.

To get there, Beijing has committed to building and internationalizing digital architectures, including networks like 5G and the industrial Internet of Things (IoT), as well as platforms like ride-share apps and e-commerce hubs. These systems demand scale: Their integration and growth are to be encouraged. But to deliver competitive returns to China as geopolitical assets, these systems must exist under government control.

So, while China will continue to promote the growth of digital platforms and networks, the CCP will make sure that they do so at Beijing’s behest. Beijing doesn’t want an Apple, Facebook or Google. It wants a super integrated Apple-Facebook-Google that is part and parcel of the CCP.

This approach might manifest in tactical moves that look like antitrust efforts, such as investigations into AliPay and WeChat. But the operative objective is not increased competition. Rather, Beijing seeks to wrap these players into the larger monopoly that is the CCP. Should, as Didi founder reportedly suggested will happen, the Chinese government take over the company, Didi will become part of a far larger and more pernicious platform than Apple, Facebook or Google.

The U.S. will fail to prevent the relative rise and unrivaled influence of Beijing’s tech champions as long as it assumes Beijing is mirror-imaging the American approach. In fact, the U.S. will facilitate Beijing’s ambitions: The only real, credible alternatives to the CCP’s tech ambitions are firms like Apple, Facebook and Google. But instead of turning to them as critical national assets in waging a determinative economic and geopolitical contest, the United States is focused on kneecapping them. Instead of paying attention to China’s global tech offensive and the domestic agenda that propels it, the United States is fixated on overly broad regulation of its own tech sector.

The CCP’s crackdown on Big Tech is about competition, but not fair competition. It’s about strengthening Beijing’s hand as it competes to shape tomorrow’s world — and make it, for any player that is not the Chinese Communist Party, perfectly unfair. Washington and Silicon Valley have the tools to prevent this: It’s time for U.S. political leaders to engage the U.S. tech ecosystem in a new kind of conversation about regulation. What we need now is competitive strategy informed by geopolitical realities and the importance of the private technology sector to national security.
Read more from the TechCrunch Global Affairs Project

China and US tech crackdowns set the stage for the next phase of competition

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

This is the first in a pair of articles comparing the impact of the U.S. and Chinese tech crackdowns. This piece, by Special Series Editor Scott Bade, considers the geopolitical consequences of each country’s respective approaches. Tomorrow, Nathan Picarsic and Emily de La Bruyère examine how China’s “techlash” is driven by domestic politics.

It’s not a good time to be a tech giant. In China, high-flying tech firms were once some of the few able to operate with relative independence. Tech leaders like Alibaba’s Jack Ma and Didi’s Jean Liu were mainstays of Davos and became global symbols of Chinese innovation. No longer.

After Ma gave a speech critical of Chinese regulators last year, his company’s record IPO was suspended and he was effectively “disappeared” for months. Tencent was then hit with numerous fines for antitrust violations; since last year both firms have lost about 20% of their respective value — a combined total reaching over $300 billion. Meanwhile Didi’s shares tumbled 40% after they were ordered off of the country’s app stores. More recently, Chinese regulators have imposed new restrictions on edtech and gaming — and banned cryptocurrency altogether.

Read more from the TechCrunch Global Affairs Project

America’s tech tycoons may have their freedom, but they and their businesses are also coming under government scrutiny. Leading antitrust advocates like Lina Khan, Tim Wu and Jonathan Kanter have all landed senior roles in the Biden administration. Meanwhile Congress is considering new legislation that would regulate tech on issues ranging from privacy to age restrictions.

In both Beijing and Washington (not to mention Brussels, which has been battling tech giants for years), the consensus is increasingly clear: Big Tech has grown too powerful and too unaccountable. Government, politicians across the global ideological divide believe, must now exert some measure of control in the name of the public good. For founders, executives and investors, political risk has never been higher.

But while on the surface both crackdowns look similar, the implications of the two countries’ antitrust strategies couldn’t be more different. In China, antitrust enforcement is being wielded as the sharp end of the stick of the ruling Communist party. The goals of the U.S. antitrust movement, however, are far from uniform.

Yes, China is taking decisive action where the U.S. is just getting started. But Chinese government paeans to data privacy and limiting kids’ screen time are fig leaves to its real agenda: complete political and economic control. In a country with effectively no independent civil society, the tech sector has been one of the few places where power has accrued outside the ruling Communist Party. In the ever-more repressive regime of Xi Jinping, such independent sources of power are unacceptable (see: Hong Kong). The message is clear: Toe the party line or face the might of the Chinese state.

Better yet, project Chinese power. China has long aimed to control the next generation of technology and has aggressively moved to set standards for a host of critical industries and sectors, from 5G and AI, to renewable energy and advanced manufacturing as part of its China Standards 2035 project. While a key part of this strategy has been to quietly dominate international standard-setting bodies, Beijing recognizes that controlling companies developing these technologies are just as critical. Huawei, Xiaomi and TikTok might not actively spy on Westerners, as many Western politicians fear, but the more widespread their usage, the more Chinese standards become global default.

Thus contrast the fate of Jack Ma with that of the founding family of Huawei, China’s 5G leader. Ma might be a Communist Party member, but Huawei’s success making Chinese technology the default 5G kit in much of the world burnishes Chinese technological credibility. Huawei has of course traded on its closeness to Beijing — choosing Huawei has become synonymous with a vote of confidence in China — but been willing to endure the risks. Concern over its ties to Chinese security services has made it the target of an American campaign against it that culminated in the arrest in Canada of CFO Meng Wanzhou, daughter of the company’s founder, over accusations that Huawei violated U.S. sanctions against Iran.

But loyalty doesn’t go unrewarded. Beijing arrested two Canadians and successfully leveraged their detention to cut a deal for Meng’s release. If Huawei wasn’t beholden to Beijing before, it certainly is now. The lesson for China’s other tech moguls? The party takes care of its own.

China’s crackdown has chilled investment, squandered talent and perhaps killed the entrepreneurial spirit that has built its formidable tech sector. But it has unequivocally succeeded in bringing its tech giants to heel in the service of Chinese power.

If Beijing is chastening its tech giants to serve the national interest, the U.S. is rebuking its own to do what, exactly? U.S. trustbusters might be concerned with overweening tech power, but they hardly have a strategic vision for what a more competitive sector would look like. While American tech giants have occasionally made the (credulous) argument that their size is essential to American competitiveness, neither they nor the government see them as agents of American power. Indeed, you’d be hard-pressed to determine whether Congress sees tech giants or China as the greater adversary.

The hope of antitrust supporters is that breaking up or at least regulating the likes of Google and Apple will allow greater competition, which would in turn benefit the body politic and the U.S. tech sector more broadly. But while splitting off AWS from Amazon or Instagram from Facebook might benefit consumers, would it help the U.S. maintain technological primacy? It is entirely unclear.

Until now America’s hands-off, capitalist system — open, flat, democratic — has produced the best innovators in the history of the world. It has benefited from government-supported research but the industry has succeeded despite its government associations not because of it. And that has been a good thing — U.S. firms are (mostly) trusted worldwide because they are known to adhere to the rule of law and not the vicissitudes of whichever administration holds power.

The U.S.-China tech race promises to fundamentally test this premise: Can a decentralized, uncoordinated industry operating independently of government maintain its edge against an industry being marshaled by a superpower?

I remain optimistic that American (and allied) innovation will succeed where it always has. Openness breeds ingenuity. Our research and startups are second to none. And a proper focus on competition suggests a boom to come.

But that doesn’t mean there isn’t room for at least a limited national strategy. I’m not saying the U.S. needs an industrial policy like China’s; after all, China’s top-down model has produced epic waste that could well weigh down its economy for decades. And a blunt “break them up” mentality would likely do more harm than good.

Instead, American lawmakers — now that they are coming around to the European view on antitrust — should work across the Atlantic to develop a sensible framework for global competition standards. The new U.S.-EU Trade and Technology Council and Quad technology working group can lay the groundwork to create a bona fide democratic technology bloc that both fosters cooperation and preserves fair play.

This middle way — provide government support without dictating commercial outcomes — has precedence (see: the Cold War origins of Silicon Valley). It’s also the best policy to provide guardrails for America’s tech industry without smothering its entrepreneurial spirit.

As Congress and the administration consider how to handle tech competition now, they should keep in mind that it’s not just about rectifying current harms but about charting the future of American technology itself. Nothing less than American economic leadership is at stake.

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EV upstart Xpeng is expanding beyond China

Like Nio, Chinese electric car maker Xpeng has kickstarted its international expansion. But unlike its rival, which put on a series of splashy campaigns in Norway, Xpeng launched quietly in the Scandinavian country last month.

In Norway, Xpeng has begun shipping its G3 SUVs and P7 sedans. The Chinese EV startup aims to enter more European markets in 2022, a company spokesperson told TechCrunch.

Xpeng has stayed low-key with its overseas expansion probably because it was waiting to launch its first “international” model, the G9 SUV that came to light today.

“G9 is our first model to be conceived and developed from the ground up for both the international and Chinese markets, bringing our most sophisticated designs to our customers worldwide,” the firm’s co-founder and president Henry Xia said at an auto exhibition on Friday.

The SUV is Xpeng’s fourth production model and will be the first to possess the carmaker’s latest advanced driver assistance system. The ADAS, called Xpilot 4.0, is built for urban driving, as Xpeng explained at its Tech Day last month. Baking Xpilot 4.0 into a passenger car is ambitious, as the version aims to assist anything from “vehicle start-up to parking,” a big step closer to fully autonomous driving.

Xpilot 4.0’s computing power comes from two Nvidia Orin-X system-on-the-chip units. Its hardware includes a mix of cameras, lidar, millimeter-wave radar, and a 3D visual perception network.

In other words, G9 will be layered with sensors. But Xpeng tries to make them inconspicuous. Its dual-lidar units, for example, have been integrated into the headlights. Lidar had traditionally been too expensive for mass-produced cars, but Xpeng and other industry players are working to make the sensing tech affordable.

G9 is not launching in China until the third quarter of 2022, according to a person familiar with the matter, so European customers won’t likely get to try the SUV until 2023.

In the meantime, Xpeng has much work to do before its highly autonomous passenger cars are ready to ship internationally. It will need to set up charging networks in its target markets, a process that is prone to COVID disruptions. Xpilot also relies on high-definition mapping, so the Chinese firm will probably need to team up with local navigation providers.

Xpeng may also be questioned by local governments regarding the safety of its smart cars. Governments around the world vary in their attitude toward vehicle autonomy, and episodes of collisions involving Tesla’s ADAS have only increased their skepticism about the tech’s readiness.

Xpeng has done some preparation in this regard. For instance, it will be testing drivers and giving them a safety score before letting them activate Xpilot. Its vehicles’ built-in monitoring system will also keep vetting drivers and may revoke Xpilot access if it determines a driver is acting irresponsibly.

Other specs

The G9 is compatible with Xpeng’s “superchargers”, 800V high-voltage mass-production SiC (silicon carbide) that’s able to charge a car for up to 200 km of range within five minutes.

The SUV comes with a “fault detection” system that can identify the fault location after a breakdown. The system will then display the service center with available inventory as well as estimated repair time and cost.

Lastly, the G9 uses the Gigabit Ethernet communications architecture, which “improves communications and support” for higher-level autonomous driving, smart cockpits, and OTA upgrades.

Baidu’s robotaxi service aims to be in 100 cities by 2030

Baidu keeps ramping up its autonomous driving ambitions. The Chinese tech company made its name in search engines and still relies greatly on search ads for revenues. But it’s hoping that its heavy bet on autonomous driving will pay off down the road.

Apollo Go, Baidu’s robotaxi service, aims to be in 65 cities by 2025 and 100 cities by 2030, the firm’s co-founder and CEO Robin Li said on an analyst call Wednesday.

That’s a big batch of licenses that Baidu needs to obtain from local regulators. And eventually, the business’s sustainability comes down to how many of these permits grant commercial operations to Apollo Go, and how many rides the service could actually garner.

For now, Li estimated that Baidu is “probably the largest robotaxi service provider in the world by number of rides.” In the third quarter alone, Baidu offered 115,000 rides, and Li expected the number for Q4 to be “much larger than the reported number you can hear anywhere else in the world.”

In terms of improving its driving tech, Baidu has so far racked up over 16 million kilometers (10 million miles) of L4, self-driven distance. That’s up from 6.2 million miles reporterd in its first-quarter results.

These enormous figures, however, have limited substance unless we know how many of these rides actually happen on busy city roads rather than designated routes in enclosed areas.

Like most autonomous vehicle companies in China, Baidu is carving out a commercial robotaxi operation while supplying its advanced driving assistance tech to automakers and OEMs.

Baidu has been providing driving solutions to auto companies via its open-sourced Apollo platform since 2017. While the platform has accumulated hundreds of enterprise users, Baidu has fostered closer ties with certain partners. For example, it set up a joint venture with China’s Geely to form electric vehicle maker Jidu Auto, into which the partners would plow 50 billion yuan ($7.7 billion).