Tag: Europe

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Europe could be on the cusp of a golden era in robotics. Here’s why

Robin Godenrath Contributor
Robin Godenrath is founding partner and managing director at Picus Capital. His focus is early-stage technology investments, particularly in HR tech, robotics, and healthcare industries.
Alex Rohregger Contributor
Alex Rohregger is an Investor at Picus Capital. His focus is on early-stage robotics, AI, and DevTool investments.

The United States and China have long been ahead of the pack when it comes to robotics funding. However, data from 2022 is showing that these innovation hubs may have some serious competition as the investment landscape in Europe is starting to outstrip robotics’ biggest players.

The quest for technological supremacy has often been seen as a two-horse race between the U.S. and China. Over the years, we’ve only seen this investment tug-of-war intensify as both economies have vied for dominion to become an innovation superpower. Whilst in the past robotics has seen a similar dynamic, based on 2022 data, investors are starting to place their bets on an up-and-coming contender: Europe.

In 2022, nearly $8.5 billion in funding flowed into robotics companies worldwide — a staggering 42% less than the year prior – in line with the overall global downturn in VC investment. Yet despite the change in economic situation, with total USD investment volume into robotics falling by over 50% for both the U.S. and China between 2021 and 2022, Europe has seen a far more modest decline, only dropping 5% in the same period. Although it’s still early, we’re convinced it’s just the beginning of how Europe is finally beginning to find its place within the modern robotics ecosystem.

Europe emerges as a serious contender with a strong rate of growth

Whilst in the past robotics has seen a similar dynamic, based on 2022 data, investors are starting to place their bets on an up-and-coming contender: Europe.

When we compare Europe’s rate of growth in investment volume within robotics to the U.S. and Chinese markets, we observe a few key trends driving the continent’s recent power play in the robotics market.

With a CAGR of 28% in the period from 2018 to 2022, Europe is already surging ahead compared to global growth figures at 2%. This growth is primarily being led by Germany, which has seen a 77% growth spurt of investment volumes into the robotic space.

Close neighbor France has seen a 54% increase in robotic investment amounts. Meanwhile, robotics powerhouses China and the U.S. have experienced a decline in growth, with robotics investment falling 5% and 2% respectively since 2018.

China and the U.S. experience a 60% slow-down in growth/late-stage funding

To better understand these market shifts, we need to take a deep dive into the funding landscape and explore the state of play by funding rounds.

Slicing our data into grants, early-stage (pre-seed to Series A) and growth/late stage (Series B and onwards), we observed a major slow-down across U.S. and China robotics funding across growth and late-stage investment rounds.

Both the U.S. and China saw a decline of growth/late-stage robotic investment volume by 60% compared to 2021. Meanwhile, looking at the European market, the total investment volume for growth and late-stage deals was only slightly less than those of 2021.

Surprisingly, China has seen an 4% uptick in early-stage investments, whilst Europe and U.S. followed a similar downward trend – a potential sign for new ventures brewing. The trends in the growth/late -stage funding environments, accounting for the lion’s share in terms of investment volume, helps understand the relative stability in Europe.

Comparison in investment volume between 2021 and 2022 across geographies.

Comparison in investment volume between 2021 and 2022 across geographies. Image: Picus Capital with data from Crunchbase

Under the surface, 2022 saw more European robotic firms consistently raise capital — 20 growth/late-stage rounds — and fewer outliers driving investment volume. By comparison, European robotics investments in 2021 were more prominently driven by outliers across 13 growth/late-stage rounds with an average round size of $108M USD. Meanwhile, the U.S. and China have seen a decline across a number of deals and mean & median investment amounts.

Growth/late-stage funding is complex. Nevertheless, we think that one dynamic influencing the change in investment volume discrepancy between U.S., China, and Europe is the shift in priorities for growth and late-stage funds – from growth to profitability. The continued funding into European robotic companies at these stages indicate that these companies are able to meet growth stage criteria better than U.S. companies. This is what we believe will also continue to be relevant throughout 2023.

Europe could be on the cusp of a golden era in robotics. Here’s why by Walter Thompson originally published on TechCrunch

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The US is losing crypto talent as blockchain devs seek safer havens

It’s usually third-world countries that frequently say they’re experiencing a “brain drain” — the bleeding of talent to other countries or parts of the world. But it seems now the United States is the one seeing talent fleeing to other parts of the world, at least as far as blockchain developers are concerned.

The number of blockchain developers in the U.S. has declined every year since 2017, according to a recent report by Electric Capital. While it’s arguably a bad signal for American innovation, it also points to a globally growing remote crypto ecosystem and workforce in a post-COVID world.

According to the report, the U.S.’ share of blockchain developers has fallen 2% per year in the last five years, dropping to 29% last year from 40% in 2017.

“The question is does it matter and why,” Paul Stavropoulos, CEO of credit-focused platform bridging the Web 2.0 and web3 worlds Archie Finance, told TechCrunch+. “The first and most important thing is overall growth of the ecosystem. That has been constant, which is fantastic, but it’s not good that the U.S. is losing market share.”

Compared to other regions in the world, America’s drop is “a marginal difference,” Maria Shen, partner at Electric Capital, said. Europe (excluding the United Kingdom) maintained a consistent share of around 29% during the five years from 2017 to 2022.

Right now, a lot of information being communicated to the crypto industry is through enforcement action. That scares away innovation. Austin King, CEO and co-founder, Recursive

“There’s a counterpoint where it’s not a bad thing that the U.S. is losing market share of developers, but maybe what’s important is the overall number of developers,” Stavropoulos said. “COVID has been a huge help in building remote teams; it’s no longer taboo to build a team with folks all around the world.”

Archie Finance’s engineering team is Slovenian, but it’s still a U.S.-based team, Stavropoulos noted. “It perhaps is not as important that the engineering talent stays in the U.S. as it is that the actual company’s innovation starts in the U.S. I think the scary thing is when innovation doesn’t touch the U.S. at all because of accredited investor rules or people don’t want to be jailed.”

Overall, a significant increase in the number of developers is the most important thing, Stavropoulos said.

The pie is growing

In the last seven years, the crypto industry gained over 22,000 monthly active developers, bringing the total number to 23,343 as of December, up 5% from a year earlier, the report said. About 52% of all monthly active developers began contributing in 2022, marking a big chunk of the people building today.

While the U.S. and Europe are each home to 29% of all crypto developers, regions like Asia, India, Latin America and Africa saw more crypto devs taking up the torch in 2022.

“There’s amazing untapped potential around the globe,” Stavropoulos said. “It’s also cheaper to hire extremely qualified engineers abroad.”

The US is losing crypto talent as blockchain devs seek safer havens by Jacquelyn Melinek originally published on TechCrunch

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‘High conviction, low volume’: Playfair launches $70M pre-seed fund for European startups

Early-stage investments inherently have a higher risk of failing, but these risks also come with potentially higher rewards — getting in at the ground floor of a startup’s journey gives VCs more negotiation clout. This is particularly true at the very early pre-seed stage, where companies might barely have a functioning product to shout about. And this is something that London-based generalist VC firm Playfair Capital knows all about, given its focus on backing super young startups that have yet to make much of a ripple in their respective industries.

In its 10 year history, Playfair has invested in around 100 companies, including well-established unicorns such as Stripe, and Mapillary, a startup that exited to Facebook back in 2020. Those specific investments were from Playfair’s inaugural fund which wasn’t focused on any particular “stage” of company. But Playfair transitioned into more of a pre-seed firm with its second fund announced in 2019, a focus that it’s maintaining for its new £57 million ($70 million) third fund, which it’s announcing today.

While many early-stage VC funds might look to make a few dozen investments annually, Playfair has kept things fairly trim throughout its history, committing to no more than eight investments each year, while ringfencing some of its capital for a handful of follow-on investments. Its latest fund comes amid a swathe of fresh early-stage European VC funds, including Emblem which announced a new $80 million seed fund last week, while France-based Ovni Capital emerged on the scene last month with a $54 million early-stage fund.

‘High conviction, low volume’

Playfair, for its part, seeks out founders “outside of dominant tech hubs,” as well as founders working on projects that may run more tangential to where the main hype and “buzzy-ness” exists. This is perhaps even more integral if its stated goal is to only invest in a handful of startups each year — they don’t have the luxury of spreading a lot of money around to increase their chances of finding a winner. “High conviction, low volume” is Playfair’s stated ethos here, and identifying true differentiators is a major part of this.

“I’d say probably half the funding in our portfolio is pre-product, pre-traction,” Playfair managing partner Chris Smith explained to TechCrunch. “And the other half have some sort of really early traction, maybe a MVP (minimal viable product) or a couple of POCs (proof-of-concepts). But we tend to invest where there’s very little in the way of traction.”

It wasn’t that long ago when autonomous automobile technology was all the rage, dominating just about every trade show and tech conference. And there was one specific event several years back, the EcoMotion mobility event in Israel, that Smith says really helps to highlight its investment ethos.

“I went in to look at the roughly 120 companies exhibiting, about 116 of the companies were doing autonomy for cars,” Smith said. “And as an investor, I look at this and think that if you’re writing tons of checks a year, you probably just invest in lots of them, and try and find a winner — but we don’t, we only do six to eight [annual investments]. So my view was, ‘I don’t want to play in that space’. The only real distinction between them was whether they were choosing LIDAR or computer vision. There just wasn’t enough differentiation.”

However, at this same conference, there were four companies doing something completely different. One of them was Orca AI which was developing a collision-avoidance system for ships, and it was this company from a sea of samey startups that Playfair ended up investing in — both in its 2019 pre-seed funding round, and its follow-on Series A round two years later.

“That’s where we like to look,” Smith said. “We like these nascent markets — I call them ‘overlooked and unsexy sectors’. That’s where we really like to get stuck in, and where I see the opportunity.”

A large chunk of early-stage deals fall apart in the due diligence phase. But if a company doesn’t have any market traction or even a fully-working product yet, how exactly do VCs go about deciding who’s worth a bet? While one of the oldest investment cliches says something about the importance of ‘investing in people rather than companies,’ that is perhaps even more true at the super early stage. And while having previous exits and success in the business world can be a useful indicator, there are many things that can ultimately determine whether a founder or founding team are intrinsically investable.

“We look for a few things, including examples of exceptional performance,” Smith said. “And I think the key thing is that it doesn’t necessarily have to be in the business world, or even in the domain they’re building the company.”

Playfair capital staff portraits Image Credits: Playfair Capital

By way of example, PlayFair recently re-invested in AeroCloud, a four-year-old SaaS startup from the Northwest of England that’s building airport management software, having also invested in its seed round some two years previous. AeroCloud co-founder and CEO George Richardson had been a fairly successful professional racing driver since the age of 15, but he didn’t really have any direct experience of the aviation sector before setting up AeroCloud.

“He didn’t know anything about airports before he started the company,” Smith said. “But we thought, if someone can podium at Le Mans and exist under such enormous pressure, that’s an amazing character trait path for a founder.”

Obviously there are many other factors that go into the due diligence process, including meticulous industry research to establish the scale of a problem the startup proclaims to be solving. But some sort of successful track record, in just about anything, is a useful barometer at the early investment stage.

“If you can play a musical instrument to an incredible level, or [if you’re] a professional racing driver, or golfer or whatever it is — I do think that is quite a useful predictor of future performance,” Smith said. “But it’s [investing due diligence] a combination of spending plenty of time with the founders and getting to understand what makes them tick. Then going really deep to support the thesis.”

Insulated

A lot has happened in the world between 2019 and 2023, with a global pandemic and major economic downturn intersecting Playfair’s second and third funds. In the broader sphere of Big Tech, startups, and venture capital, we’ve seen major redundancies, plunging valuations, and delayed IPOs, but in the early-stage world Playfair inhabits, it’a been a slightly different experience.

“At pre-seed where we invest, we’re quite insulated from what’s happening in the IPO markets, or what’s happening with growth funds,” Smith said.

That’s not to say nothing has changed, though. Its third fund is more than double the size of its second fund, which reflects the size of checks it’s now having to write for companies, growing from an average of around of perhaps £500,000 previously, to around £750,000 today, thought that figure may creep up toward the £1 million mark. So what has driven that change? A combination of factors, as you might expect, including the simple fact that there is more capital around, and the economic conditions that everyone is currently facing.

“In 2021, there was this crazy peak, now it’s settled again — but rounds are still significantly higher than they were in 2018-2019,” Smith said. “We’re actually really fortunate in the U.K. to have the SEIS  and EIS schemes (tax-efficient schemes for investors) because they brought in a ton of angel capital, and then also capital from funds that take advantage of the tax breaks — there’s basically just more money around. I actually think inflation has played a part too. So whilst in some senses the cost of building a startup has fallen, such as access to certain tools, at the same time salaries have gone up a lot. So, startup founders back in 2018-2019 might have paid themselves £30-40,000 [annually], you see founders now being paid maybe £60-70,000. So founders need more to be able to live comfortably while they build their company.”

This, of course, follows through to the hiring and building of teams, who will also now be expecting more money to counter the cost-of-living increases across society. Throw into the mix, perhaps, a growing understanding that a fledgling company might need a little more runway to stand a chance of succeeding, and all this might go someway toward explaining growing check-sizes in the early seed stages.

“I think that Europe has maybe learned a few lessons from the U.S., which is that there’s no point in putting really small amounts of money into companies, giving them really short runways, putting unnecessary pressure on them, and then watching them fail,” Smith said. “You want to give companies enough money so that they’ve got 18 to 24 months, time to pivot, time to figure stuff out. That increases the chances of success.”

Advantages

While not unique in the early-stage investment fray, Playfair has a sole limited partner (LP) in the form of founder Federico Pirzio-Biroli who provides all the capital, and who ran it initially as both a managing partner and LP. Smith stepped in for Federico for the second fund, and Federico has since moved to Kenya where he now has a more passive role in terms of day-to-day involvement. And having a single entity providing the capital simplifies things greatly from an investment and management perspective.

“It gives us a ton of advantages — it means I don’t spend 40-50% of my time fundraising, and I can spend my time working with our founders,” Smith said. “And I think it’s also just a huge vote of confidence.”

This “vote of confidence,” according to Smith, stems from Playfair having already returned the entirety of its first fund in cash, helped in part by several exits. This number will likely receive a major boost too, with Stripe gearing up for a bumper IPO — Playfair invested in the fintech giant at its Series C round in 2014 before it narrowed its focus to pre-seed. And for its second fund, Smith said they’ve reached somewhere in the region of 95th percentile for TVPI (total value vs paid in capital).

According to Dealroom data, some 19% of seed-stage companies raise a Series A within 36 months. By contrast, Playfair says that 75% of its fund 2 investments have now also raised a Series A investment, and in 2022 alone its portfolio companies secured $570 million in follow-on funding from various VCs.

“Success for our founders is basically the same as success for us, which is getting them from pre-seed to a successful Series A round,” Smith said.

And while Playfair does typically pass the lead-investor baton on to another VC firm for subsequent rounds, it will often lead again on the seed round, as well as participating in Series A rounds and very occasionally later. In part, this is as much about displaying confidence as it is providing capital, which is crucial as a startup is gearing up to hit the market.

“I think that’s really important, because if your existing pre-seed investor won’t lead your seed, that can be quite a difficult moment to go out to the market, when you may not have that many proof-points to try and get another external investor in,” Smith added.

‘High conviction, low volume’: Playfair launches $70M pre-seed fund for European startups by Paul Sawers originally published on TechCrunch

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With Project Clover, TikTok touts new EU data privacy and security efforts

TikTok is doubling down on its European charm offensive today as it looks to counter a rising tide of political discontent with the popular short-form video-hosting platform.

A new program called Project Clover will serve to create “a secure enclave for European TikTok user data,” wrote Theo Bertram, TikTok’s European VP of government relations and public policy, in a blog post.

TikTok, which claims more than 1 billion users globally, has been in the regulatory spotlight for a number of years already due to its ties with Chinese tech company ByteDance. Indeed, TikTok’s trajectory of late suggests that some restrictions could be heading its way, with a group of U.S. senators this week unveiling bipartisan legislation that could allow the government to limit or ban foreign-based technologies such as TikTok, if deemed a national security threat.

Elsewhere, the European Commission last month ordered staff to remove TikTok from work devices, following shortly after the U.S. House of Representatives issued a similar ban.

And it’s against that backdrop that TikTok is now looking to curry favor with European regulators with a swathe of commitments specific to the region, and addressing concerns over its data-harnessing practices in light of Europe’s upcoming Digital Services Act (DSA).

Data sovereignty

With Project Clover, TikTok is essentially bundling some previously-announced initiatives alongside some new privacy and security efforts. We already knew that TikTok was planning some major infrastructure investments for Europe in terms of local data centers. The first of these was supposed to open for business in Ireland last year but has been hit with repeated delays, while the company recently announced plans for an additional two data centers in the region. We now know where they will be — one will also be in Ireland, while the third will be deployed in Norway. The Norwegian data center, it said, will run entirely on renewable energy

Migrating data to European servers, a process TikTok says should finally start this year and continue into 2024, will be crucial to satisfying EU regulators, and it comes shortly after news emerged that staff in China could access European users’ data.

With that in mind, Project Clover will also apparently usher in new data access and control processes including “security gateways” that determine which employees can access European TikTok user data. But perhaps more importantly here, TikTok said that it will engage an independent security company in Europe to audit its data controls and practices.

“We are in discussions with a third-party and will announce more details in due course,” Bertram said.

On top of that, Bertram also noted that TikTok intends to partner with other third-parties on integrating “the latest advanced technologies” into its existing systems. This include what is known as personal data “pseudonymisation,” essentially making it more difficult to identify individual users in the event of a data breach.

“A dedicated internal team has been working on Project Clover since last year and we anticipate implementing these novel and industry-leading measures throughout this year and into 2024,” Bertram noted.

While TikTok has arguably faced closer scrutiny due to the fact that its parent company is based in China, its announcements today are roughly in line with efforts being made by large technology companies elsewhere. Data sovereignty is ultimately the name of the game, whereby companies wanting to do business in Europe are expected to keep their data locally, and have measures in place to ensure that consumers and businesses know exactly what is happening with their data.

Last year, Microsoft launched Microsoft Cloud for Sovereignty for public sector customers, while it also recently kickstarted a multi-year rollout of a new EU data localization effort. Elsewhere, the likes of Google and Amazon’s AWS have also been been touting their digital sovereignty credentials, with Europe typically serving as the main driving force.

“Project Clover reinforces our commitment to a European data governance approach that places the safeguarding of user data at its core and aligns with the principle of data sovereignty,” Bertram said.

With Project Clover, TikTok touts new EU data privacy and security efforts by Paul Sawers originally published on TechCrunch

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Outsized seed rounds, neobanks and spicy M&A? Well hello, 2023

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

This week, Natasha Mascarenhas, Mary Ann Azevedo and Rebecca Szkutak got on the mic to talk startups, pet peeves and focaccia. What else did you expect?

Here’s what we got into:

  • Descope landed a $53 million (!) seed round, a Phenomenal new venture fund and a neobank out to make credit more accessible to young people in Mexico.
  • Then we pivoted to talk about buy now, pay later (BNPL), which included some chatter about Affirm’s recent woes and which areas of BNPL that do seem to be growing despite questions around whether this is the end of the BNPL boom as we know it.
  • Tech layoffs are as widespread as ever so we talked about what advice some VCs have for those laid off workers considering launching their own startups, and what we thought of that advice.
  • Finally, we ended with a jump over the pond to talk about EU’s tech scene. Mostly about the fact that it is far more put together than the U.S., and all that jazz.

With that, we’ll be skipping the upcoming week’s Equity Monday due to the holiday and back with more on Wednesday, led by Becca!

Equity drops at 10:00 a.m. PT every Monday and at 7:00 a.m. PT on Wednesdays and Fridays, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders, one that details how our stories come together and more!

Outsized seed rounds, neobanks and spicy M&A? Well hello, 2023 by Natasha Mascarenhas originally published on TechCrunch

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Despite myriad flaws, US remains top spot for Black startup founders seeking VC dollars

Despite, well, everything, the U.S. is still the best place in the world for Black startup founders to raise money. The check sizes are bigger, the market more mature, the ambition oversized. There are more funds, more options, more opportunities, more, more, more.

It’s quite easy to harp on the dismal funding and often discriminatory treatment that Black founders receive in the U.S. Through the haze, though, the reality is that the heart of the American Dream is still beating.

For example, Lotanna Ezeike, a serial founder, said he’s looking to fundraise for his new startup in the U.S., despite raising more than $1 million for his U.K.-based fintech, XPO.

“Across the pond in the U.K., thinking tends to be very limited, especially around the seed stage,” he said, adding that a seed in the U.K. is a pre-seed or family round in the U.S.

“I think this is because of how small the U.K. is compared to other regions, so the mind can only dream so big. It’s a spiral really — less wealth, less capital, fewer ideas that become unicorns.”

Cephas Ndubueze, who is from Germany, echoed similar sentiments. He said he still looks to the U.S. for venture funds for his startup because there are more success stories of Black founders in the U.S. than in Europe, meaning a greater chance of him finding his own path compared to Germany.

“I can definitely say the U.S. is a better environment for Black founders,” he told TechCrunch. “Why? More diverse investors in the U.S. More investors are investing in nontraditional businesses. More institutional investors are providing ticket sizes from $100,000 to $500,000 in the idea stage, more opportunities to build a founder network, and more investors that have already invested in Black founders in the past.”

While the reception of Black founders may appear warmer in the U.S., the numbers show more of the same. (France and Germany do not track race data, though founders and venture capitalists interviewed by TechCrunch revealed anecdotal evidence of persistent racism in both markets.) As an ironic result, founders look to the U.S. for networking opportunities.

Despite myriad flaws, US remains top spot for Black startup founders seeking VC dollars by Dominic-Madori Davis originally published on TechCrunch

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Amazon and EU settle two antitrust cases, including one focused on merchant data abuse

The European Commission (EC) has announced that it has reached an agreement with Amazon over a duo of antitrust probes, one that will enshrine commitments made by Amazon in European Union (EU) antitrust legislation.

The initial probe kicked off back in 2018, when regulators launched enquiries into how Amazon was leveraging non-public data from third-party marketplace sellers on its platform to benefit its own competing business as a retailer. The crux of the concerns centered on how Amazon was able to gain an unfair advantage through big data insights as the marketplace owner, such as optimizing its own pricing or deciding what new products to launch and when.

The probe escalated into a formal investigation the following year, before the EC issued Amazon with a direct Statement of Objections in 2020. Europe’s competition chief Margrethe Vestager said at the time that Amazon was likely abusing its market position in its biggest European markets in France and Germany, and was “illegally distorting” competition through its use of merchant data.

At the same time, the EC announced a second tangential investigation into how Amazon favored its own business in terms of rules it set merchants for being featured in its much-coveted “buy box” and Prime loyalty program. The Commission added that Amazon seemingly favored its own products, as well as sellers that use Amazon’s logistics and delivery services.

Commitments

In the intervening months, Amazon submitted proposals to appease regulators in an attempt to end the probe early, including commitments to: stop using non-public data from its marketplace sellers; treat all sellers equally, regardless of whether they pay for Amazon’s logistics services; allow Prime sellers to choose any carrier for their deliveries. However, the bloc was urged by NGOs, trade unions, and digital rights groups to reject what they deemed to be a “weak” offer by the ecommerce giant, arguing that the Commission should pursue the probe through to its natural conclusion, which may eventually have involved a huge fine.

Fast-forward to today, and the Commission has said that Amazon has made some amendments to its initial offer, which includes improving the layout of a second competing “buy box” that Amazon had earlier proposed, and several other changes that it says will increase transparency and data protection for third-party merchants on the platform.

“Today’s decision sets new rules for how Amazon operates its business in Europe,” noted Margrethe Vestager, the European Commission’s executive vice-president for competition policy, in a statement. “Amazon can no longer abuse its dual role and will have to change several business practices. Competing independent retailers and carriers as well as consumers will benefit from these changes opening up new opportunities and choice.”

These commitments, according to the EC, will be legally binding and cover Amazon’s activities across the whole European Economic Area (EEA), though Italy is excluded from the “buy box” and Prime commitments due to a separate case brought by Italy against Amazon back in 2021.

The Prime and “buy box” commitments will remain enforceable for seven years, while all the remaining commitments will apparently lapse after five years. If Amazon is found to have breached any part of these commitments in that period, it could face a fine of 10% of its global revenue.

Today’s announcement comes just a day after the EC issued a preliminary finding that Facebook’s parent company Meta abused its dominant market position in the classifieds ads space, in contravention of Article 102 of the Treaty on the Functioning of the European Union (TFEU), the same treaty that Amazon allegedly contravened.

However, while Amazon will have to change the way it operates in Europe, the company said that it doesn’t agree with a number of the EC’s assertions.

“We are pleased that we have addressed the European Commission’s concerns and resolved these matters,” an Amazon spokesperson told TechCrunch in a statement. “While we continue to disagree with several of the preliminary conclusions the European Commission made, we have engaged constructively to ensure that we can continue to serve customers across Europe and support the 225,000 European small and medium sized businesses selling through our stores.”

Amazon and EU settle two antitrust cases, including one focused on merchant data abuse by Paul Sawers originally published on TechCrunch

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Meta abused its dominant market position to benefit Facebook Marketplace, EU’s initial findings show

The European Commission (EC) has confirmed that it’s proceeding with an antitrust investigation into Facebook’s parent company Meta Platforms Inc. (Meta), over the way it ties together its core social network and Marketplace classified ads service.

The Commission’s Statement of Objections also points to “unfair trading conditions” related to how it uses data gleaned from rival online classified ads services.

Today’s announcement comes some 18 months after both the EC and the U.K.’s Competition and Markets Authority (CMA) announced separate but collaborative efforts to investigate whether Meta was abusing its dominant market position, leveraging data from its social network to give itself an unfair advantage over rivals in the online classified ads space. The CMA revealed back in August that it would be proceeding with its case against Meta, and the EC is now following suit.

Marketplace, which Meta launched back in 2016, allows any Facebook user to buy and sell just about anything, from clothes and books to smartphones and furniture. But the EC has now taken the view that the company is likely in breach of European Union (EU) antitrust rules, through “distorting competition in the markets for online classified ads” by tethering its classifieds product to the social network side of its business. This, it says, may infringe on Article 102 of the Treaty on the Functioning of the European Union (TFEU) that has provisions for companies abusing a dominant market position.

“With its Facebook social network, Meta reaches globally billions of monthly users and millions active advertisers,” noted Margrethe Vestager, the European Commission’s executive vice-president for competition policy, in a statement. “Our preliminary concern is that Meta ties its dominant social network Facebook to its online classified ad services called Facebook Marketplace. This means Facebook users have no choice but to have access to Facebook Marketplace.”

In tandem, the scope of the EC’s investigation also covers rival classified ads services that advertise on Meta’s online properties such as Facebook and Instagram, calling the terms and conditions it forces on the advertisers “unjustified” and “disproportionate.” Essentially, the EC is looking at how Meta may use advertising-related data from its competitors to benefit Marketplace.

“We are concerned that Meta imposed unfair trading conditions, allowing it to use of data on competing online classified ad services,” Vestager added. “If confirmed, Meta’s practices would be illegal under our competition rules.”

Legal wrangles

Meta and its big tech brethren are facing a swathe of legal and regulatory wrangles in Europe. Meta and Google are currently facing an investigation over alleged anti-competitive collusion in the ad tech realm, while in the U.K. Meta’s surveillance-based business model is facing a legal challenge over how it processes data for ad targeting.

Today’s news signals the first time Meta has been formally accused of abusing a dominant market position in Europe. A Statement of Objection essentially means that the EC writes to the alleged offending company informing them of the EC’s specific objections, and allows the company to respond with any of their own objections or comments. After that, the EC has the power to instruct that the company stops doing what it’s doing, while it can also impose a fine of up to 10% of its global turnover. There is no specific legal deadline in place for such antitrust investigations to conclude.

TechCrunch reached out to Meta for comment, and will update if or when we hear back.

Meta abused its dominant market position to benefit Facebook Marketplace, EU’s initial findings show by Paul Sawers originally published on TechCrunch

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Digip digitizes the process of applying for trademarks

For businesses, protecting trademarks is often a lengthy and expensive process, especially if they have multiple brands. Digip digitizes much of the process, helping its customers file trademarks by themselves instead of going to law firms. The Stockholm-based legaltech startup announced today it has added $1.3 million to its seed round, bringing the total to $3.4 million. The new funding was led by Industrifonden and Seed X, with participation from family offices and angel investors.

Founded in 2020, Digip now has 500 customers in 42 countries, ranging from startups to large enterprises that make hundreds of dollars in revenue. Digip currently makes about $500,000 in annual recurring revenue and that amount is forecasted to grow 3x during the 2022 fiscal year. Over the last year, Digip has also expanded its IP service into the United States and other international markets.

Co-founder and CEO Viktor Johansson told TechCrunch that Digip was founded after its team saw that entrepreneurs are reluctant to use traditional law firms that bill by the hour. To file trademarks, businesses usually ask a lawyer to conduct trademark searches. They are billed per search, which adds up quickly if a business has multiple brands they need to trademark. Then they have to pay for a lawyer to file trademark applications. But the process doesn’t end there. Businesses also have to monitor their trademarks in markets where they own it, and that is another charge.

Digip combines all these steps into one online workflow. Instead of charging for different parts of the process, its customers pay a flat monthly or yearly subscription fee, plus application fees charged by trademark offices.

Digip's team

Digip’s team

Businesses can use Digip to research trademarks and get on-demand advice from its team for free. If they become subscribers, they can then use Digip’s platform to manage their trademark applications in 180 countries. The platform enables this with a trademark warehouse that has updated trademark data. Data collection and updates are automated as Digip enter new markets.

It also trains AI/ML algorithms for searches that cover 100 languages and manages customers’ trademarks by reading and interpreting trademark data. This enables onboarding to be automated and makes Digip’s process scalable.

Johansson said Digip initially considered offering its service to law firms, but decided not to since they are slow at adopting legal tech. But Digip does have a global network of lawyers that its customers can go to for support.

Johansson said that Digip’s largest markets are the United Kingdom, Nordic countries and the European Union, and it’s seeing more demand from the United States, Canada and Australia. Many of its customers are venture-backed businesses that run digital businesses in sectors in sectors including SaaS, deep tech, direct to consumer, life science, metaverse, blockchain and fintech.

“A cool thing with trademarking is that you pick up on early business trends,” Johansson said. “We have been involved in some interesting projects with emerging technologies that will hit the markets in coming years. This is a really fun and exciting part of our setup.”

Johansson said Digip’s closest competition are still law firms, but it also considers lawyers to be close collaborators. “Because digitization of legal has been slow many companies are stuck in legacy bills by the hour trademark solutions,” he said. “Some law firms that rely significantly on trademark filings are our competitors, whilst other law firms that do not do significant business through trademark filings see us as a great potential partner for them.”

Over the next few months, Digip will launch several new features. These include an open API that will let partners integrate Digip’s technology into their workflows. Johansson said users will see a significantly improved trademark search on Digip.com. The company will also expand into new markets over the next 12 months.

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Digip digitizes the process of applying for trademarks by Catherine Shu originally published on TechCrunch