Europe’s inaugural Women in VC Summit the first step in a long climb toward equity

Some of the most prominent women in venture capital descended upon Paris this week for the first-ever Women in VC Summit, European edition.

The event, organized by investors Sophie Winwood, Ruth Foxe Blader and Clarisse Lam, brought together top minds to discuss creating a more inclusive and equitable venture landscape. The conference was open only to those identifying as women, and panels included topics such as the role of LPs in diversifying tech, finding the next women-founded unicorn, and inspiring more women fund managers.

Winwood, Blader, and Lam were inspired to create the conference after growing tired of the paltry funding and few opportunities granted to women in Europe. In 2021, 1.1% of all VC in Europe was allocated to women-founded companies. Though that number is down from the 2.4% raised in 2020, it is on par with what was raised in 2017, 2018 and 2019 which saw women receive 1.5%, 1.8% and 1.5% of all venture capital, respectively.

Diversity conferences such as these are quite common in the U.S., though not at all in Europe. Women in VC Summit: Europe is stunning in the breadth of its vision: Through sunset soirées, wine chats, and networking hours, women from across the continent convened to permeate, once and for all, the concrete ceiling holding them back.

The event will end today with a happy hour known as “ally drinks,” where men will finally be allowed into the room. It’s a subtle nod to knowing that change is a group effort, and those with power are responsible for how they wield it.

Europe’s inaugural Women in VC Summit the first step in a long climb toward equity by Dominic-Madori Davis originally published on TechCrunch

Advisor to Europe’s top court backs antitrust watchdogs looking at privacy

A non-binding opinion issued today by an influential advisor to the Europe Union’s top court could foreshadow a major regional development at the intersection of privacy and competition regulation — or ‘privacy vs competition’ as it’s sometimes narrowly framed.

The opinion follows a referral to the Court of Justice (CJEU) related to an appeal by Facebook (aka Meta) which has been challenging a 2019 order by Germany’s competition watchdog (the FCO) against Facebook’s so-called ‘superprofiling’ of users. The FCO’s case argues that the tech giant’s combining of data on users across multiple services and websites — ergo, Facebook’s total denial of users’ privacy — is itself an “exploitative abuse” linked to its market power and therefore also an abuse of competition laws that the FCO is competent to regulate.

Facebook has been appealing against the FCO’s order by arguing that antirust enforcers should essentially stay in their lane — since they are not the designated oversight bodies for the EU’s General Data Protection Regulation (GDPR).

But today’s opinion pushes against such siloing. And if the Court follows its advisor’s view it could provide a major boost to privacy rights across the EU as antitrust authorities would get a green light to consider data protection compatibility as part of their assessment of competition rules. (Though it’s worth emphasizing that all we have today is an opinion, not binding law; the CJEU itself has still to rule on the questions referred to it.)

This is important because the historically siloed approach of regulatory enforcement touching the digital sphere has failed to keep pace with data-mining platform giants, enabling certain firms to amass massive market power through systematic abuse of privacy — despite the EU having long-standing privacy rules (on paper).

A key piece of the blame is therefore really a failure of stand-alone enforcement of data protection law by European regulators — so if the bloc’s competition authorities can also factor in privacy-related data abuses when they assess competition concerns it widens the oversight net.

From the press release on the AG opinion issued by the Luxemboug court:

In his Opinion delivered today, advocate general Athanasios Rantos, first, takes the view that, while a competition authority does not have jurisdiction to rule on an infringement of the GDPR, it may nevertheless, in the exercise of its own powers, take account of the compatibility of a commercial practice with the GDPR. In that respect, the advocate general emphasises that the compliance or non-compliance of that conduct with the provisions of the GDPR may, in the light of all the circumstances of the case, be an important indication of whether that conduct amounts to a breach of competition rules.”

AG Rantos’ opinion goes on to observe that any assessment made by a competition authority in relation to GDPR compliance would be “without prejudice” to the powers of the competent supervisory authority under the regulation, adding: “Therefore, the competition authority must take account of any decision or investigation by the competent supervisory authority, inform the latter of any relevant details and, where appropriate, consult it.”

So the direction of travel being advocated for by the CJEU’s advisor is towards more joint-working between competition and privacy regulators.

Reached for comment, a Meta spokesperson sent this statement, saying: “We await the final judgment to determine any next steps.”

Back in 2019, the FCO ordered Facebook to stop combining user data — threatening, at a stroke, a hard stop on its surveillance-based business model (at least in Germany). Yet the legality of Meta’s data processing was also being challenged under EU privacy law — however procedural bottlenecks have spun complaints out over years and delayed GDPR enforcement against the most powerful tech platforms (where the need for action is the most acute). So if antitrust authorities across the EU are empowered to also factor in privacy abuses and work more closely with data protection regulators it could put much needed momentum behind enforcement that helps unplug some of the bottlenecks.

The AG’s opinion may also send a signal to the EU’s antitrust authority to rework its approach. The bloc’s competition unit has, historically, been wary of combining privacy and competition — hence, in recent years, its willingness to override major privacy objections raised against the Google-Fitbit merger and allow the deal to go ahead with just a few concessions.

While the FCO’s case against Facebook is rightly seen as pioneering, in the years since the German regulator started digging into Facebook’s exploitation of users’ privacy, other regional oversight bodies have been waking up to the need to evolve their approach — and joint working between privacy and competition authorities is already on the rise — with, for example, the UK’s ICO and CMA working together on a competition case related to Google’s ‘Privacy Sandbox’ proposal to evolve its adtech; and French competition and privacy authorities consulting on complaints against Apple’s App Transparency Tracking feature (which the French antitrust watchdog declined to block), to name two recent examples of consultation and co-working.

Zooming out again quickly, the EU has also approved a major ex ante update to competition rules — called the Digital Markets Act (DMA) — which sets binding operational requirements on the most powerful platforms that include some provisions limiting how data can be used.

Application of the DMA is due to start next year — so a new competition regime for the most powerful companies is absolutely incoming in Europe. (Germany already passed a domestic reboot of its digital competition rules — handing special abuse powers to the FCO which, earlier this year, designated Facebook as one of a number of tech giants falling under the regime; with the classification standing for five years.)

Consent and sensitive data

The AG’s opinion deals with a number of other legal questions that have been referred to the court via Facebook’s appeal to the FCO’s original anti-superprofiling order — with the advisor taking the view that market dominance, per se, does not itself call into question the validity of a consent-based legal basis for a social media service to process user data.

However the advisor suggests market muscle should be factored into the assessment of the freedom of the consent — which he says it is up to the data controller to demonstrate. (NB: The GDPR’s standard for consent as a legal basis for processing personal data is that it must be specific, informed and freely given.)

The AG also does not preclude the possibility that Facebook may be able to process some personal data by relying on alternative legal basis to consent — but only if the processing relates to operational elements that are actually necessary for the provision of the services related to providing the Facebook account. And there he appears to cast doubt that ‘personalized ads’ would fit the definition of “necessary”.

“[T]he advocate general considers that, although the personalisation of content and advertising, the continuous and seamless use of the Meta Platforms group’s services, the security of the network or the improvement of the product may be in the interests of the user or the data controller, those components of the practice at issue do not appear to be necessary for the provision of the abovementioned services,” the Court writes in the press release.

The AG also weighs in on a question related to the processing of sensitive personal data (defined under GDPR as data on racial or ethnic origin, political affiliation, health data, sexual orientation etc) — and on profiling based on sensitive characteristics — pointing out that a prohibition in the regulation on such processing may apply in this context; and, furthermore, that for an exemption in the GDPR to apply (for data which the data subject has “manifestly made public”) the user must be “fully aware that, by an explicit act, he is making personal data public”.

“According to the advocate general, conduct consisting in visiting websites and apps, entering data into those websites and apps and clicking on buttons integrated into them cannot, in principle, be regarded in the same way as conduct that manifestly makes public the user’s sensitive personal data,” the press release goes on, suggesting that the act of background surveillance imposed by Facebook on users via tracking infrastructure embedded into its own services and into third party websites would not constitute a viable get out to avoid the ban on processing sensitive data. Which would mean Facebook would need to either not process users sensitive data at all (good luck!) — or explicitly ask people’s permission to do so. (And you can’t imagine many people willingly agreeing to let Facebook track such stuff.)

Of course it remains to be seen whether the Court will agree with its advisor on all these points.

The CJEU does often, though not always, follow its AGs’ reasoning — so the opinion itself is certainly noteworthy. Typically, it takes between three and six months after an AG opinion for the CJEU to issue a ruling which means the earliest this could be issued is at the end of this year.

Once the CJEU issues its ruling it will be passed back to the referring court — in this case the German court hearing Facebook’s appeal against the FCO order — meaning that a final verdict on that case should be coming some time next year.

This report was updated with a statement from Meta

Advisor to Europe’s top court backs antitrust watchdogs looking at privacy by Natasha Lomas originally published on TechCrunch

Apple is raising prices on App Store across multiple countries in Asia and Europe

Apple announced major price hikes for in-app purchases on App Store in multiple countries across Asia and Europe from October 5. The company said new prices will affect consumers in Chile, Egypt, Japan, Malaysia, Pakistan, Poland, South Korea, Sweden, Vietnam, and all territories that use Euro.

While the firm didn’t specify the reason behind this, it is likely to counter weak local currencies against the dollar. The percentage hike varies across regions. For example, prices in South Korea have been hiked by 20-25%, in Japan, they have been raised by 30-35% and in regions that use Euro, the hike is around 8-10%. This may vary based on different tiers, though.

In Vietnam, Apple’s new price also includes remit applicable taxes, being value-added tax (VAT) and corporate income tax (CIT) at 5% rates respectively.

This announcement comes a week after a report from analytics company Apptopia, which noted that developers have raised App Store prices by 40% year-on-year citing Apple’s anti-tracking measures as a likely reason.

Image Credits: Apptopia

In August 2021, Apple increased the in-app purchase price for users in South Africa, the UK, and all regions using Euro. So effectively it’s the second raise in two years for many European users.

Apple noted that once these changes are rolled out, developers will see new prices in the My Apps app section.

The company registered a record $19.6 billion service revenue in Q2 2022— which includes App Store earnings — with a 12% year-on-year increase. However, it fell marginally short of analyst expectations of $19.7 billion.

On the other hand, local rules — like the ones in South Korea and Japan — might force Apple to let go of some revenue by taking a discounted cut from developers when they use alternative payment systems.

To earn more revenue from App Store, the company is expanding ads to appear in more places in the App Store like the ‘Today’ homepage and individual app pages.

Apple is raising prices on App Store across multiple countries in Asia and Europe by Ivan Mehta originally published on TechCrunch

LockerGoGa ransomware victims can now recover their files for free

Victims of the LockerGoga ransomware can now recover their stolen files for free, thanks to a new decryptor released by Romanian cybersecurity firm Bitdefender and the NoMoreRansom Initiative.

The LockerGoga ransomware family, known for its attacks against industrial organizations, first emerged in 2019.The file-encrypting malware was infamously used in an attack against Norsk Hydro in March 2019, forcing the Norwegian aluminum manufacturer to stop production for almost a week at a cost of more than $50 million. It was also used in attacks against Altran Technologies, a French engineering consultancy, and U.S.-based chemical companies Hexion and Momentive.

According to the Zurich Public Prosecutor’s Office, which also participated in the development of the decryptor along with Europol, the operators of LockerGoga were involved in ransomware attacks against more than 1,800 individuals and institutions in 71 countries, causing more than $100 million in damage.

The group behind the LockerGoga ransomware has been inactive since October 2021, when U.S. and European law enforcement agencies arrested 12 alleged members. Following the arrests, police spent months examining the data collected during the raid and discovered the group’s encryption keys to unlock data from LockerGoga ransomware attacks, the Zurich Public Prosecutor’s Office said.

“Decryption of data is normally possible when we either identify a vulnerability in the ransomware code or when individual decryption keys become available,” Bogdan Botezatu, director of threat research and reporting at Bitdefender, told TechCrunch. “This decryptor relies on the keys seized in the 2021 arrests, which have been shared with us privately as per our collaboration with the involved law enforcement authorities.”

Swiss prosecutors said the perpetrators were also behind the MegaCortex ransomware, targeting enterprise organizations in the U.S. and Europe since 2019, and said a decryptor for MegaCortex victims will be released in the coming months.

The LockerGoga decryptor is available to download for free from Bitdefender, as well as NoMoreRansom, which is home to 136 free tools for 165 ransomware variants, including Babuk, DarkSide, Gandcrab, and REvil.

The NoMoreRansom initiative has so far helped over 1.5 million people successfully decrypt their devices without having to pay a ransom demand.

LockerGoGa ransomware victims can now recover their files for free by Carly Page originally published on TechCrunch

Grocery delivery startups with low margins might drop IPO dreams for M&A reality

Getting a bunch of bananas and avocados from your favorite 15-minute grocery delivery company at 3 a.m. might be the greatest thing since sliced bread, but some of these companies are finding themselves in somewhat of a cost-related pickle in such a low-margin business.

While covering the recent news of Misfits Market acquiring Imperfect Foods, Misfits Market founder and CEO Abhi Ramesh noted it was difficult to reach profitability in the industry as sales leveled off in the past two years. Some companies have made layoffs or left markets due to “burning a tremendous amount of cash and not raising capital.”

With online grocery shopping in the U.S. poised to be a $187.7 billion industry by 2024, up from $95.8 billion in 2020, we found ourselves exploring whether other consolidation possibilities are in the pipeline, as well as the future of IPOs for startups in this space.

Experts say grocery startups are keeping a watchful eye on what happens with Instacart’s looming IPO as an indicator of additional public listings to come. But M&As could be part of the path to the public markets: Ramesh, for instance, said his company aimed to go public. The Imperfect Foods deal was a strategy for reaching profitability as one strong company.

Consolidation station

Instacart itself has been in acquisition mode lately. The delivery giant has acquired four companies in the past 12 months, including two in the past two weeks: Rosie, an e-commerce platform for local and independent retailers and wholesalers, and Eversight, an AI-powered pricing and promotions platform for consumer packaged goods brands and retailers.

Grocery delivery startups with low margins might drop IPO dreams for M&A reality by Christine Hall originally published on TechCrunch

Where’s the center of the startup world? Depends on which VC you ask

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

AlexNatasha and Mary Ann jumped on the mic, with Theresa on backup, to talk through the biggest headlines.

  • We started with a look at the Figma-Adobe deal, worth some $20 billion. TechCrunch’s news coverage is here, and Alex has more notes here.
  • Deals of the Week: Maven, Patreon, and Modulous.
  • We also spoke about the Launch House issue, and what to make of the model, and management of the company. The conversation naturally landed us on just what community is.
  • From there, Europe! Which is seeing a wave a new venture funds, leading to some notable intra-continent competition.
  • And then we wrapped with a short note on the latest on the Twitter-Musk deal.

If you are coming to Disrupt, use the code “EQUITY” to save 15%. It makes us look good internally, and gets you a cheaper discount to our first Disrupt live show in the history of the podcast.

Equity drops every Monday at 7 a.m. PDT and Wednesday and Friday at 6 a.m. PDT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

Where’s the center of the startup world? Depends on which VC you ask by Natasha Mascarenhas originally published on TechCrunch

Singapore’s KNN3 wants to enable social discovery for decentralized apps

There’s no shortage of startups trying to make sense of the explosive growth of data generated from blockchain applications. Nansen has the support from a16z to provide on-chain data analysis for crypto investors. The Graph offers an API for developers to query blockchain data. The latest to get VC recognition is KNN3, a Singapore-based startup working to help developers make sense of relational data across blockchains.

When we get on a social network, the first thing that surfaced is normally suggestions for following. This information is based on analyses of our digital footprint history. KNN3 wants to do the same in web3 by building graph databases that analyze users’ relationships, status, memberships, and other on-chain actions.

The blockchain data space is already quite crowded, co-founder Thomas Yu admitted, but there’s still room for more specialized services. Nansen and web3 development platform Alchemy come in the form of centralized SaaS products. The Graph is “programmable”, but the data structure it supports is quite “limited”, Yu argued.

That’s why Yu, along with his former BTC China colleague Errance Liu, set out to build KNN3, a permissionless (hence decentralized) tool for developers to draw insight from cross-blockchain user data.

KNN3 is starting out by targeting consumer-facing dApps in Asia. While much of web3’s infrastructure building is happening in the West, Asia is generally regarded as the innovation hub of consumer applications, highlighted by the popularity of GameFi platforms like Axie Infinity and StepN. One of KNN3’s better-known customers is Mask Network, which enables users to send cryptocurrencies on web2 services and is now building a decentralized identity system using KNN3’s tech.

In the U.S., in contrast, KNN3 plans to go after enterprise-facing organizations like Chainlink, which feeds real-life data called “oracles” into smart contracts and where Yu used to work. KNN3 is weighing a new product that would provide cloud services built on top of Chainlink’s oracles, which, eventually, will allow developers to build and run decentralized apps and smart contracts without worrying about the “fundamental data layer.”

“What that means is that a developer can use a web2 tool like Google Cloud but actually is building a web3 tool, rather than writing a smart contract and making it work across chains. KNN3 has built the trustless infrastructure using oracles and developers can simply run a container within it,” explained Yu.

KNN3 said it has raised $2.4 million in a seed funding round led by the crypto-focused venture capital firm HashGlobal and Liang Xinjun, former vice chair and CEO of Chinese conglomerate Fosun International. The round closed in April but was only announced it this month.

The seed investment also had a long string of participating investors — a seemingly popular strategy for blockchain startups to form allies early on. They include Mask Network, MetaWeb Venture, Eniac Venture, Tess Venture, Stratified Capital, Fundamental lab, Incuba Alpha, Zeuth Venture, Cogitent Venture, Atlas Capital; Impossible Finance, RSS3, ShowMe, and ETHsign’s co-founders Yan Xin and Potter Li.

KNN3 currently employs a team of 24 across Singapore, China, Europe, and the U.S. With the funding, it looks to attract more tech talent from Silicon Valley. “It’s a good time to hire in the bear market because a lot of rivals are downsizing,” Yu said.

Singapore’s KNN3 wants to enable social discovery for decentralized apps by Rita Liao originally published on TechCrunch

Could the forests and land of Europe offset most of its CO2? This startup hopes to prove it

The voluntary carbon market remains a Wild West. There are few standards, a myriad of approaches, while buyers and sellers are crying out for clarity.

And there are lots of different approaches. In tokenization there are startups like Single.Earth and Flow Carbon. In marketplaces there is CarbonXchange, Aircarbon. In afforestation there is Land Life Company and Future Forest Company. The list goes on.

Arbonics‘ approach is to use a data- and science-driven tool to calculate the potential carbon income of land and forests for landowners in Europe. For obvious reasons, this creates a business for these owners as well as helping to fight climate change.

The company is now announcing that earlier this year it raised €1.8M in a pre-seed round from Taavet Hinrikus (co-founder of Wise) with his new fund Plural.

Founded by Kristjan Lepik and Lisett Luik in early 2022, Arbonics says it helps landowners to analyze and calculate the ability of their land to absorb carbon using many data sources and looks at unused land and existing forests which can generate carbon credits.

Carbon credits are a way for carbon emitters to offset emissions. It’s estimated that the European Union alone has the potential to capture and store up to two gigatonnes of additional carbon annually – equivalent to 73% of the EU’s total CO2 emissions in 2021. Assuming Arbonics is successful, that’s a big prize to shoot for.

Kristjan Lepik, co-founder of Arbonics, told me: “Right now the process of getting carbon credits is far too complex and too costly for an average landowner to go through. Data and tech make this quick and transparent. Secondly, we are taking the long-term view. Some players on the market are trying to create short-term credits that are harder to sell to B2B credit buyers. We need to make sure that long-term changes are made to the forests.”

He says the company is different from competitors because it looks across the whole forest lifecycle, is aimed at European landowners, and is faster that others.

In a statement Taavet Hinrikus, founding investor, added: “I am a big fan of technologies that can speed up carbon capture – direct air capture is one example. But those technologies are only a small part of the solution; we need to empower nature and combine it with data-based technologies to help nature-based solutions scale.” 

Could the forests and land of Europe offset most of its CO2? This startup hopes to prove it by Mike Butcher originally published on TechCrunch

MVP Match, a tech-talent marketplace, raises $5M from Stage 2 Capital

Tech-talent marketplace MVP Match has raised €5 million ($5 million) seed funding from Stage 2 Capital to double down its strategy for pairing companies with talent from across the globe.

The Germany-based startup plans to use the funding to build new hubs in Africa and Europe, grow its team, and re-launch its proprietary platform to make “finding and working with tech talent easier than ever before.”

The plan to grow its reach follows the launch of a new hub in Egypt that MVP Match will use to tap talent in Africa — with the aim of creating more networks in the region. The hubs, which include the existing ones in Lisbon (Portugal) and Tbilisi (Georgia), are intended to help its more than 100 clients hire local talent without having to establish operations in those jurisdictions.

“We see entering Egypt as the first step in our exciting journey to bring the entire continent into the global talent pool. By setting up a local presence and working closely with the local talent, we will be able to really open up this market to our clients. And, with interesting projects from world’s leading product companies comes knowledge transfer that the local senior talent seeks, just as much as fair working rates,” MVP Match CEO, Levin Wense told TechCrunch.

Wense, who founded the startup in 2020 together with Philipp Petrescu, added that MVP Match acts as an Employer of Record, which enables it to manage the whole recruiting process including the establishment of local office spaces and talent onboarding. This helps recruiters to build teams in other regions without worrying about the lengthy recruitment process and paperwork.

“With available locations such as Egypt, for example, our clients and other global companies can scale their products and engineering teams in nearshore, best value-for-money regions. We can provide them with complete legal infrastructure to permanently employ local talent without physical local presence,” said Wense.

“For fast-growing companies that operate on crowded markets, being able to launch a nearshore hub with a fully equipped office space within weeks and in a process build a more diverse and inclusive team can be a difference between delivering or not on their product roadmaps and strategic goals,” he said.

MVP Match said it uses product and technology executives like CTOs, and experienced domain experts to vet talent before recommending them to companies. Vetting includes tech-related challenges and personality interviews, to ensure that their clients, which include Voya Financial and accounting firm PwC, are matched with the right talent.

Of their decision to fund MVP match Stage 2 Capital partner Anubhav Maheshwari said: “Engineering, product, and design roles are critical, yet hard-to-fill positions. They’re in high demand by both growing technology companies, as well as non-tech companies undergoing rapid digital transformation.”

“With dedicated focus on providing an exceptional experience both for customers and remote talent alike, MVP Match is rapidly connecting proven and experienced professionals, wherever they may be located, with exciting and high-impact projects.”

 

MVP Match, a tech-talent marketplace, raises $5M from Stage 2 Capital by Annie Njanja originally published on TechCrunch

Europe wants to shape the future of virtual worlds with rules and taxes

EU lawmakers are moving in on the metaverse and making it plain that, whatever newfangled virtual world/s and/or immersive social connectivity that tech industry hype involving the term may refer to, these next-gen virtual spaces won’t escape one hard reality: Regulation.

There may be a second metaverse certainty too, if the Commission gets its way: Network infrastructure taxes.

The EU’s internal market commissioner, Thierry Breton, said today it believes some of the profits made in an increasingly immersive software realm should flow to providers of the network backbone required to host these virtual spaces — a suggestion that’s sure to trigger a fresh round of net neutrality pearl-clutching.

The Commission has been signalling for some months that it wants to find a way to support mobile operators to expand rollouts of next-gen cellular technologies — via imposing some kind of a levy on US tech giants to help fund European network infrastructure — following heavy lobbying by local telcos.

Last week, Breton revealed it plans to consult on network infrastructure cost contribution ideas in Q1 next year — as part of a wider metaverse-focused initiative, with the latter proposal coming later in the year.

More details of the bloc’s thinking on fostering development of virtual spaces and the network pipes needed to connect them has emerged today.

EU initiative on virtual worlds

In a Letter of Intent published today, setting out the bloc’s policy priorities for 2023 — and accompanying her annual State of the European Union speech — the EU’s president, Ursula von der Leyen, confirmed the Commission will put forward an “Initiative on virtual worlds, such as metaverse” next year.

The letter offers scant details on what exactly will be inside the EU’s virtual worlds package. But Breton — via a blog post on LinkedIn of all places — has picked up the baton to flesh out his views on how to deal, in broad-brush policy terms, with (the) metaverse(s) — something he couches as “one of the pressing digital challenges ahead of us”.

Breton presents his remarks as “Europe’s plan to thrive in the metaverse”. Though it remains to be (officially) confirmed whether he’s flying a little solo here — or playing advanced messenger on the direction of next year’s initiative. (We asked the Commission for more on the forthcoming virtual worlds initiative but with so much EU action today our contact warned there could be a delayed response — before pointing back to Breton’s blog, suggesting he is indeed signposting where the bloc is headed on virtual worlds.)

First up, both Breton (at length) and von der Leyen (in passing) are clear in planting a regulatory stake in virtual ground — by pointing out that would-be metaverse monopolists will have to contend with existing EU rules, such as the recent major EU digital rule reboot.

Rebooted digital rules

In her letter penned in difficult geopolitical and economic times, von der Leyen urges the bloc to stay the course on the green and digital transitions — which formed a key plank of her policy plan when she took up her mandate at the end of 2019. “This is about building a better future for the next generation and making ourselves more resilient and more prepared for challenges to come,” she writes, encouraging EU institutions to stick with the transformative push for sustainability and digitalization and implement key pieces of the plan already agreed on.

“This includes implementing the landmark agreements on the Digital Markets Act (DMA) and the Digital Services Act (DSA) which saw the EU take global leadership in regulating the digital space to make it safer and more open,” she goes on, name checking two big components of the digital reboot agreed by the EU’s institutions earlier this year — before adding a further nod to what else may be coming: “We will continue looking at new digital opportunities and trends, such as the metaverse.”

In his blog post, Breton makes it even more plain that metaverse builders are already subject to EU rules. “With the DSA and DMA, Europe has now strong and future-proof regulatory tools for the digital space,” he writes, pointedly adding: “We have also learned a lesson from this work: We will not witness a new Wild West or new private monopolies.

“We intend to shape from the outset the development of truly safe and thriving metaverses.”

This conviction was doubtless cemented by Facebook’s corporate pivot last year to Meta — a self-declared “metaverse company” — as the tech giant sought to escape years of operational scandals and reputational toxicity stuck like a barnacle to its social media brand by deploying a crisis PR rebranding tactic that implies a pivot, without it having to make meaningful reform to its business or business model.

While no one can say for sure whether the metaverse will ever exist (or merely remain an amorphous marketing label), should anything of substance actually materialize it’s pretty clear it won’t be located that far away from the kind of social connectivity Meta already monetizes through mass surveillance-based profiling and behavioural ads. So it seems a safe bet Zuckerberg is hoping to bankroll Facebook’s ‘metaverse’ future via plenty of user-profiling and behavioral ads too, at least in large part.

But if the Facebook founder was betting on a little corporate rebranding exercise to get Meta ahead of pesky regulators — such as privacy watchdogs in Europe that are finally starting to land some sizeable lumps on the company — he may be disappointed to find virtual worlds aren’t an escapist paradise after all.

Out with the old growth playbook

Taken as a whole, Breton’s remarks suggest the EU will be coming with a blended ‘sow and scythe’ package for virtual worlds — offering support initiatives (to encourage development and infrastructure) but also warnings that it will step in actively to steer and shape development, to ensure any new wave of ever-more-immersive socio-digital spaces don’t just repeat the same toxic growth playbook as Facebook.

Key EU preoccupations here appear to be enforcing user-centric safety issues (such as in areas like content moderation); and ensuring platforms remain open and contestable to the whole market (via mandating interoperability standards).

“Our European way to foster the virtual worlds is threefold: People, technologies and infrastructure,” Breton writes, summarizing the planned approach. “This new virtual environment must embed European values from the outset. People should feel as safe in the virtual worlds as they do in the real one.

“Private metaverses should develop based on interoperable standards and no single private player should hold the key to the public square or set its terms and conditions. Innovators and technologies should be allowed to thrive unhindered.”

There is also a reference to launching a “creative and interdisciplinary movement” — with the goal of developing “standards, increas[ing] interoperability, maximising impact” — a movement Breton says he wants to involve IT experts, regulatory experts citizens’ organisations and youth, in a similar fashion to the new European Bauhaus initiative the EU has applied to encourage engagement with sustainability-focused ‘green deal’ goals.

This piece of the EU plan contrasts to the more single-minded focus of Meta president (and former EU lawmaker), Nick Clegg, who — in his role evangelizing metaverse for Meta — has spent a lot of words talking up the volume of developer jobs that will be needed to build the immersive future Meta is betting its corporate continuity on.

Breton’s point appears to be that the EU wants a far more diverse mix of expertise to be involved in any ‘metaverse’ development. (Or, tl;dr: ‘We all know what happens when tech worlds are built, owned and operated by too many techbros — and we sure don’t want a repeat of that!’)

Ecosystem support — and infrastructure taxes?

A second big chunk of Breton’s blog post focuses on the technologies and tech skills the Commission sees as necessary for the bloc to have the power to bend virtual world makers to “European values”.

Breton notes these span many areas — of “software, platforms, middleware, 5G, HPC, clouds, etc” — but with “immersive technologies and virtual reality” identified as being “at the heart” of the metaverse “phenomenon”. So immersive tech looks to be where the EU will direct the meatiest ecosystem support in the forthcoming virtual worlds package.

But for starters Breton has announced the launch of a VR and AR industry coalition.

“The Commission has been laying the groundwork to structure this ecosystem,” he writes. “Today, I am happy to launch the Virtual and Augmented Reality Industrial Coalition, bringing together stakeholders from key metaverse technologies. We have developed a roadmap endorsed by over 40 EU organisations active in this space, from large organisations to SMEs, and universities.”

He also gives a nod to the European Chips Act — which aims to mobilize public and private investment to drive on-shore semiconductor manufacture in a supply chain resilience and digital sovereignty drive — with the commissioner recognizing that hardware development and production is a core component for virtual worlds, underpinning its development (and, ultimately, most likely, determining whether or not immersive technologies like VR and AR remain a niche (sometimes) nausea-inducing pass-time for the geeky few or actually make the leap into a transformative mainstream medium).

“The next step will be a quantum leap from current virtual reality and other enabling technologies to a world that truly blends the real with the virtual,” pens Breton, a former telco exec, in full tech evangelist mode.

The EU commissioner saves the most controversial piece of the upcoming metaverse plan for last: A plan for infrastructure taxes to come down the policy pipe. And he confines himself to trying to tamp down any objections by laying out a case for some form of levy to fund the necessary connectivity — aka the high capacity, high bandwidth, high speed, low latency networks we’re told will be needed to sustain these hyper immersive virtual spaces we’re also told we’ll want to pause our off-line existence to spend time in.

There are no firm details on what the EU is proposing on virtual world taxes as yet — just an affirmation that a consultation is coming down the pipe.

“The current situation, exacerbated during the Covid pandemic, shows a paradox of increasing volumes of data being carried on the infrastructures but decreasing revenues and appetite to invest to strengthen them and make them resilient,” writes Breton, drawing on long-standing telco gripes about scale of network investment demanded to roll out techs like 5G vs dwindling returns.

“The current economic climate sees stagnating rewards for investment and increasing deployment costs for pure connectivity infrastructure,” he goes on. “In Europe, all market players benefiting from the digital transformation should make a fair and proportionate contribution to public goods, services and infrastructures, for the benefit of all Europeans.”

Case made, Breton ends by trailing what he couches as a “comprehensive reflection and consultation on the vision and business model of the infrastructure that we need to carry the volumes of data and the instant and continuous interactions which will happen in the metaverses” — thereby landing a second blow of his case-hammer backing metaverse infrastructure taxes.

Still, you have to admire the EU’s repurposing of the tech industry’s latest shiny new hype vehicle to truck back the other way and deliver an age-old demand for a revenue share.

 

Europe wants to shape the future of virtual worlds with rules and taxes by Natasha Lomas originally published on TechCrunch