New Facebook ad campaign extols the benefits of personalized ads

Online advertising can be a “pretty dry topic,” as Facebook’s head of brand marketing Andrew Stirk acknowledged, but with a new campaign of its own, the social networking giant is looking to “bring to life how personalized ads level the playing field” for small businesses.

The Good Ideas Deserve To Be Found campaign will include TV, radio and digital advertising. Individual businesses will also be able to promote it using a new Instagram sticker and the #DeserveToBeFound hashtag on Facebook.

The campaign will highlight specific small businesses on Facebook, including bag and luggage company House of Takura, whose founder Annette Njau spoke about the benefits of digital advertising at a press event yesterday.

“What those platforms allow us to do is, they allow us to tell stories,” Njau said. “I can’t tell this story on TV, I can’t tell this story in a huge magazine because it costs money and I don’t know who will see it.”

These sentiments are similar to a campaign that Facebook launched last year in opposition to Apple’s upcoming App Tracking Transparency feature, where apps will have to ask for permission before sharing user data for third-party ad targeting. In response, Facebook claimed that it was “standing up to Apple for small businesses everywhere,” though the social network also pointed to these changes as one of the “more significant advertising headwinds” that it expects to face this year. (Apple’s Tim Cook, in contrast, has said that these changes provide consumers with the control that they’ve been asking for.)

When asked how this fits into the broader dispute with Apple, Stirk said that while Facebook has been publicly opposed to Apple’s changes, this campaign is part the company’s longer-term support for small business.

“There is a degree of urgency in the fact that … small businesses are hurting right now,” he said.

Head of Facebook Business Products Helen Ma added that this is “very much an extension of the work that we did on the product side at the very start of the COVID period,” which included the launch of the Businesses Nearby section and a #SupportSmallBusiness hashtag.

In addition to launching the campaign today, Facebook is announcing several product changes, including a simplified Ads Manager dashboard, new options for restaurants to provide more information about their dining experiences and more information about personalized ads in Facebook’s Business Resource hub and Instagram’s Professional Dashboard.

The company also said it will continue to waive fees on transactions through Checkouts on Shops through June 2021, and will do the same for fees collected on paid online events until August 2021 at the earliest.

After Facebook’s news flex, Australia passes bargaining code for platforms and publishers

A week after Facebook grabbed eyeballs globally by blocking news publishers and turning off news-sharing on its platform in Australia, the country’s parliament has approved legislation that makes it mandatory for platform giants like Facebook and Google to negotiate to remunerate local news publishers for their content, to take account of how journalism is shared on their platforms.

The News Media and Digital Platforms Mandatory Bargaining Code was developed in conjunction with Australia’s Competition and Consumer Commission (ACCC) with the aim of addressing the power imbalance that exists between digital platforms and news businesses.

Facebook and Google had both lobbied aggressively against the legislation, with Google initially threatening to close down its search engine in Australia — before changing tack and hurrying to strike deals with local publishers in a bid to undercut the law by showing an alternative model.

But none of the tech giants’ moves derailed the legislative effort entirely.

“The Code will ensure that news media businesses are fairly remunerated for the content they generate, helping to sustain public interest journalism in Australia,” said treasury minister Josh Frydenberg and communications minister Paul Fletcher in a joint statement today.

“The Code provides a framework for good faith negotiations between the parties and a fair and balanced arbitration process to resolve outstanding disputes,” they added.

The operation of the code will be reviewed by the government within a year “to ensure it is delivering outcomes that are consistent with the Government’s policy intent”, they added.

On Tuesday Facebook reversed course on its intentionally over-broad news ban after the government agreed to make amendments to the draft legislation — including adding a two-month mediation period to allow digital platforms and publishers to agree deals before being forced to enter into arbitration.

The government also agreed to take platforms’ existing deals with publishers into account before deciding whether the code applies to them and provide them with one month’s notice before taking a final decision.

Facebook said it was satisfied with the tweaks, having been concerned commercial deals it struck off its own bat would not be taken into account.

In a blog post which the tech giant entitled “the real story” (yes, really), Facebook’s chief spin doctor, Nick Clegg — aka the former deputy prime minister of the UK — wrote that the law as originally drafted would have forced it to pay “potentially unlimited amounts of money to multi-national media conglomerates under an arbitration system that deliberately misdescribes the relationship between publishers and Facebook”.

“Thankfully, after further discussion, the Australian government has agreed to changes that mean fair negotiations are encouraged without the looming threat of heavy-handed and unpredictable arbitration,” Clegg added.

Who exactly has come out on top in this stand off between a sovereign government and two of the biggest tech giants in the world remains to be seen. But if Facebook and Google were hoping to block the law they certainly failed.

Claims by the Australian government that public interest journalism has won are, however, being tempered by critical suggestions that the law will merely end up favoring big media over small publishers — after all, it’s the larger publishers Google has rushed to strike deals with, for example.

How much of the adtech duopoly’s money ends up trickling down to support smaller publishers and grow media pluralism in Australia isn’t yet clear. But the suspicion among some is that the whole episode amounts to a shake down of big tech by big media via their friends in government — and that ugly oligarchy won.

There is also the risk that by directly linking the funding of public interest journalism — and therefore, by implication, the vitality of a country’s democracy — to tech giants like Facebook and Google it will further entrench the monopoly positions of those selfsame giants.

Suddenly calls to break up Google et al can be conflated with ‘harming democracy’ by taking money away from ‘public interest journalism’. Even just the claim of support suggests rich PR pickings for Facebook and co.

Yet these are platform giants that already have massive and unprecedented power over the public information sphere — as Facebook just demonstrated, via its flex against legislators (showing it can flip a switch to crater traffic to all sorts of publicly valuable information if it so chooses, leaving all its users in an entire country vulnerable to disinformation).

Their dominance has also long been implicated in harming democracy around the world — as their ad-funded business models profile people and amplify content for profit, without any kind of public service mission (quite unlike traditional media).

So if the tech giants were looking for a cheap way to reduce their antitrust risk then paying over a couple of billion every few years to regional publishers (who they may hope will also dial down their techlash rhetoric as a result) probably doesn’t sound so bad.

Facebook said this week that it plans to spend at least $1BN on ‘supporting’ the news media over the next three years. Google also recently outted a $1BN fund for news licensing fees.

Neither company can claim it just discovered the existence of journalism; it’s crystal clear these suddenly pledged billions are only on the table because lawmakers have made platforms paying for news mandatory. (Australia is not alone here; EU lawmakers also legislated in recent years to extend copyright to cover snippets of news — which is starting to result in Google striking licensing deals with publishers in Europe.)

So news publishers are certainly winning by gaining revenue that wasn’t being made available to them before. Though at what wider cost — if the mechanism being used to support them helps entrench anti-democratic monopolists?

The lack of transparency around the commercial deals being struck between platforms and publishers is certainly unhelpful. Without clarity on such arrangements the risk, again, is that the law will favor the big publishers while the smaller ones (who may have more of a public interest mission) will be at a disadvantage — needing to work even harder to compete with tabloid giants further fattened up with fresh adtech profits.

Australia has for certain won something, though. It’s bagged the world’s attention for taking on tech giants through a legislative code.

Its direct thrust at Facebook and Google — coming up with a framework tailor made to take on their market power — has caught the eye of other policymakers and competition regulators.

The chief of the UK’s Competition and Markets Authority, Andrea Coscelli, said this week that he’s watching the media code with interest as the UK government moves at a clip to set up a pro-competition regulator with the aim of reining in big tech, calling Australia’s approach of having a backstop of mandatory arbitration if commercial negotiations fail “a sensible one”.

“We are definitely following what’s happening in Australia,” he told the BBC. “We think they are dealing with problems we have in the UK as well and they are coming up with possible solutions to that. There are many variants to it but certainly I think it’s a very important data point for what we could in the UK.”

Asked if the UK should follow Australia’s example, Coscelli gave a cautious thumbs up to something along those lines, saying: “We have said we should also think about fair trading between publishers and the platforms for news content. So I know both government and parliament is certainly interested in what’s happening in Australia — and potentially thinking about something similar.”

Europe kicks off bid to find a route to ‘better’ gig work

The European Union has kicked off the first stage of a consultation process involving gig platforms and workers. Regional lawmakers have said they want to improve working conditions for people who provide labor via platforms which EU digital policy chief, Margrethe Vestager, accepted in a speech today can be “poor” and “precarious”.

Yet she also made it clear the Commission’s agenda vis-a-vis the issue of gig work is to find some kind of “balance” between (poor) platform work and, er, good and stable (rights protected) employment.

There’s no detail yet on how exactly regional lawmakers plan to square the circle of giving gig platforms a continued pass on not providing good/stable work — given that their sustainability as businesses (still with only theoretical profits, in many cases) is chain-linked to not shelling out for the full suite of employment rights for the thousands of people they rely upon to be engaged in the sweating toil of delivering their service off the corporate payroll.

But that, presumably, is what the Commission’s consultation process is aimed at figuring out. Baked into the first stage of the process is getting the two sides together to try to hash out what better looks like.

“The platform economy is here to stay — new technologies, new sources of knowledge, new forms of work will shape the world in the years ahead,” said Vestager, segueing into a red-line that there must be no reduction in the rights or the social safety net for platform workers (NB: The word ‘should’ is doing rather a lot of heavy lifting here): “And for all of our work on the digital economy, these new opportunities must not come with different rights. Online just as offline, all people should be protected and allowed to work safely and with dignity.”

“The key issue in our consultations is to find a balance between making the most of the opportunities of the platform economy and ensuring that the social rights of people working in it are the same as in the traditional economy,” she also said, adding: “It is also a matter of a fair competition and level playing field between platforms and traditional companies that have higher labour costs because they are subject to traditional labour laws.”

The Commission’s two-stage consultation process on gig work starts with a consultation of “social partners” on “the need and direction of possible EU action to improve the working conditions in platform work”, as it puts it.

This will be open for at least six weeks. It will involve platforms talking with workers (and/or their representatives) to try to come up with agreement on what ‘better’ looks like in the context of platform working conditions, either to steer the direction of any Commission initiative. Or — else — to kick the legislative can down the road on said initiative if they can come up with stuff they can agree to implement themselves.

The second phase — assuming the “social partners” don’t agree on and implement a way forward themselves — is planned to take place before the summer and will focus on “the content of the initiative”, per Vestager. (Aka: what exactly the EU ends up proposing to square the circle that must be squared.)

The competition component of the gig work conundrum — whereby there’s also the ’employer fairness’ dynamic to consider, given platforms aren’t playing by the same rules as traditional employers so are potentially undercutting rivals who are offering those good and stable jobs — explains why the Commission is launching a competition-focused parallel consultation alongside the social stakeholder chats.

“We will soon start a public consultation on this initiative that has another legal base since it is about competition law and not social policies. This is the reason why we consult differently on the two initiatives,” noted Vestager.

She said this will aim to ensure that EU competition rules “do not stand in the way of collective bargaining for those who need it” — suggesting the Commission is hoping that collective bargaining will form some part of the solution to achieving the sought for (precarious) balance of ‘better’ platform work.

Albeit, a cynical person might predict the end goal of all this solicitation of views will probably be some kind of fudge — that offers the perception of a plug for the platform rights gap without actually disrupting the platform economy which Vestager has sworn is here to say.

Uber for one has scented opportunity in the Commission’s talk of improving “legal clarity” for platforms.

The ride-hailing giant put out a white paper last week in which it lobbied lawmakers to deregulate platform work — pushing for a Prop-22 style outcome in Europe, having succeeded in getting a carve out from tightened employment laws in California.

Expect other platforms to follow with similarly self-serving suggestions aimed at encouraging Europe’s social contract to be retooled at the points where it intersects with their business models. (Last week Uber was accused of intentionally stalling on improving conditions for workers in favor of lobbying for deregulation, for example.)

The start of the Commission’s gig work consultation come hard on heels of a landmark ruling by the UK’s Supreme Court (also last week) — which dismissed Uber’s final appeal against a long running employment tribunal.

The judges cemented the view that the group of drivers who sued Uber had indeed been erroneously classified as ‘self employed’, making Uber liable to pay compensation for the rights it should have been funding all along.

So if the EU ends up offering a lower level of employment rights to platform workers vis-a-vis the (post-brexit) UK that would surely make for some uncomfortable faces in Brussels.

While it may be unrealistic to talk about striking a ‘balance’ in the context of business models that are inherently imbalanced, given they’re based on dodging existing employment regulations and disrupting the usual social playbook for profit, he Commission seems to think that a consultation process and a network of overlapping regulations is the way to rein in the worst excesses of the gig economy/big tech more generally.

In a press release about the consultation, it notes that platform work is “developing rapidly” across various business sectors in the region.

“It can offer increased flexibility, job opportunities and additional revenue, including for people who might find it more difficult to enter the traditional labour market,” it writes, starting with some of the positives that are, pesumably, feeding its desire for a ‘balanced’ outcome.

“However, certain types of platform work are also associated with precarious working conditions, reflected in the lack of transparency and predictability of contractual arrangements, health and safety challenges, and insufficient access to social protection. Additional challenges related to platform work include its cross-border dimension and the issue of algorithmic management.”

It also notes the role of the coronavirus pandemic in both accelerating uptake of platform work and increasing concern about the “vulnerable situation” of gig workers — who may have to choose between earning money and risking their health (and the health of other people) via working and thus potential viral exposure.

The Commission reports that around 11% of the EU workforce (some 24 million people) say they have already provided services through a platform.

Vestager said most of these people “only have platform work as a secondary or a marginal source of income” — but added that some three million people do it as a main job.

And just imagine the cost to gig platforms if those three million people had to be put on the payroll in Europe…

In the bit of her speech leading up to her conclusion that platform work is here to stay, Vestager quoted a recent study she said had indicated that 35% to 55% of consumers say they intend to continue to ask for home delivery more in the future.

“We… see that the platform economy is growing rapidly,” she added. “Worldwide, the online labour platform market has grown by 30% over a period of 2 years. This growth is expected to continue and the number of people working through platforms is expected to become more significant in the years ahead.”

“European values are at the heart of our work to shape Europe’s digital future,” she also went on, taking her cue to point to the smorgasbord of digital regulations in the EU’s pipeline — and perhaps illustrating the concept of an overlapping regulatory net that the Commission intends to straightjacket platform giants into more socially acceptable and fair behavior (though it hasn’t yet).

“Our proposals from December for a Digital Services Act and a Digital Markets Act are meant to protect us as consumers if technology poses a risk to fundamental rights. In April we will follow up on our white paper on Artificial Intelligence from last year and our upcoming proposal will also have the aim to protect us as citizens. The fairness aspect and the integration of European values will also be a driver for our upcoming proposal on a digital tax that we plan to present before summer.

“All these initiatives are part of our ambition to balance the great potential that the digital transformation holds for our societies and economies.”

 

Daily Crunch: Facebook brings news sharing back to Australia

The Facebook-Australia news battle seems to have reached an end, Android gets an update and Lucid Motors is going public via SPAC. This is your Daily Crunch for February 23, 2021.

The big story: Facebook brings news sharing back to Australia

Last week, Facebook responded to the Australian government’s proposed law requiring internet platforms to strike revenue-sharing agreements with news publishers by blocking news sharing and viewing for users in the country. But with the government amending the law, Facebook said it will restore news sharing in the “coming days.”

Among other things, the amendments call for a two-month mediation period before Facebook is forced into arbitration with publishers, and it also says the government will consider commercial agreements that the platforms have made with local publishers before deciding whether the law applies to them.

William Easton, Facebook’s managing director for Australia and New Zealand, said in a statement that the amendments address “core concerns about allowing commercial deals that recognize the value our platform provides to publishers relative to the value we receive from them.”

The tech giants

Android’s latest update will let you schedule texts, secure your passwords and more — This update will integrate a feature called Password Checkup to alert you to passwords you’re using that have been previously exposed.

Twitter relaunches test that asks users to revise harmful replies — Twitter is running a new test that will ask users to pause and think before they tweet.

Area 120 is beginning to use Google’s massive reach to scale HTML5 GameSnacks platform — GameSnacks is an HTML5 gaming platform where titles are bite-sized and load much faster.

Startups, funding and venture capital

Lucid Motors strikes SPAC deal to go public with $24B valuation — This will be the largest deal yet between a blank-check company and an electric vehicle startup.

Shippo raises $45M more at $495M valuation as e-commerce booms — The startup provides shipping-related services to e-commerce companies.

Reddit ups Series E round by another $116M — Reddit had already announced a $250 million Series E earlier this month.

Advice and analysis from Extra Crunch

How to overcome the challenges of switching to usage-based pricing — The usage-based pricing model almost feels like a cheat code, according to OpenView’s Kyle Poyar.

Oscar Health’s initial IPO price is so high, it makes me want to swear — Alex Wilhelm doesn’t mince words: “Public investors have lost their damn minds.”

RIBS: The messaging framework for every company and product — The test is designed to tell you if your story is memorable, so you can turn it into a compelling message.

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

Everything else

Announcing the complete agenda for TC Sessions: Justice — Our second-ever dedicated event to diversity, equity, inclusion and labor in tech is coming up on March 3.

Six Miami-based investors share their views on the region’s startup scene — Investors see a huge opportunity for the region to become a major startup hub by utilizing its diverse workforce and wonderful quality of life.

SolarWinds hackers targeted NASA, Federal Aviation Administration networks — Hackers are said to have broken into the networks of U.S. space agency NASA and the Federal Aviation Administration as part of a wider espionage campaign.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

Spain’s ten-year plan to put startups in the economic driving seat

Spain is preparing to push forward with pro-startup legislation, having recently unveiled a big and bold transformation plan with the headline goal, by 2030, of turning the country into ‘Spain Entrepreneurial Nation’, as the slightly clumsy English translation has it.

Prime minister Pedro Sanchez took a turn on Web Summit’s stage in December to announce the introduction of the forthcoming Startup Act — and to trumpet a new role, a high commissioner, tasked with bringing off a nationwide entrepreneurial economic transformation by working with all the relevant government ministries.

The broad-brush goals for the strategy are to increase growth in startup investments; attract and retain talent; promote scalability; and inject innovation into the public sector so it can bolster and support Spain’s digital development.

The aforementioned Startup Act is the first piece of dedicated legislation for the sector — and is intended to simplify starting up in Spain, as well as bringing in tax concessions and incentives for foreign investments. So it will be something of a milestone.

Chat to local founders and there’s a litany of administrative, tax-based and fundraising pain-points they’ll quickly point to as frustrations. Wider issues seem more cultural; startups not thinking big enough, investors lacking the necessary appetite for risk, and even — among wider society — some latent suspicion of entrepreneurs. While Spain-based investors are champing at the bit for administrative reform and better stock options. Moving the needle on all that is the Spanish government’s self-appointed mission for the foreseeable future.

TechCrunch spoke to Francisco Polo, Spain’s high commissioner overseeing delivery of the entrepreneurial strategy, to get the inside track on the plan to grow the startup ecosystem and find out which bits entrepreneurs are likely to see in action first.

“The high commissioner for Spain entrepreneurial nation is a new body that’s within the presidency. So for the first time we have an institution that, from the presidency, is able to help coordinate the different ministries on one single thing: Creating the first national mission. In this case this nation mission has the goal to turn Spain into the entrepreneurial nation with the greatest social impact in history,” says Polo.

“What we do is that work of coordination with all the ministries. Basically we have a set of internal objectives. First is what we call impacts — different sets of measures that is contained in the Spain entrepreneurial nation strategy. We also work trying to get everyone together on this national mission so we work on different alliances.

“Finally, we are also very focused on helping let the people know that Spain has made a decision to become — by 2030 — this entrepreneurial nation that is going to leave no one behind. So that’s our job.”

Scaling up on the shoulders of giants

The southern European nation doesn’t attract the same level of startup investment as some of its near neighbors, including the UK, France and Germany. But in some ways Spain punches above its regional weight — with major cities like Barcelona and Madrid routinely ranked as highly attractive locations for founders, owing to relatively low costs and the pull of a Mediterranean lifestyle.

Spanish cities’ urban density, high levels of youth unemployment and a sociable culture that’s eagerly embraced digital chatter makes an attractive test-bed for consumer-facing app-based businesses — one that’s demonstrated disruptive potential over the past decade+, in the wake of the 2008 financial crisis which hit the country hard.

Local startups that have gained global attention over this period — for velocity of growth and level of ambition, at the least — include the likes of Badi, Cabify, Glovo, Jobandtalent, Red Points, Sherpa.ai, TravelPerk, Typeform and Wallapop, to name a few.

Spain’s left-leaning coalition government is now looking to pick up the startup baton in earnest, to drive a broader pro-digital shift in the economy and production base — but in a way that’s socially inclusive. The shift will be based on “an ironclad principle that we leave no one behind”, said Sanchez in December.

For this reason the slate of policy measures Sanchez’s government has distilled as necessary to support and grow the ecosystem — following a long period of consultation with private and public stakeholders — pays close attention to social impact. Hence the parallel goal of tackling a variety of gaps (territorial, gender, socio-economic, generational and so on) that might otherwise be exacerbated by a more single-minded rush to accelerate the size of the digital sector.

“We are a new generation of young people in government. I think in our generation we don’t understand creating a new innovation system or a new industrial-economic system if we are not also talking about its social impact,” says Polo. “That’s why at the basis of the model we have also designed inclusion policies. So all this strategy is aimed at closing the gender gap, the territorial gap, the socio-economic gap and the generational gap. So at the end of the day, by 2030, we have created the entrepreneurial nation with the highest social impact in history.”

There’s money on the table too: Spain will be routing a portion of the ‘Next Generation EU‘ coronavirus recovery funding it receives from the pan-EU pot into this ‘entrepreneurial’ push.

“Specifically, for 2021, the budget assigned to the different goals of the strategy — we have more than €1.5BN for the main measures that we want to start setting up. And for the period 2023 it’s over €4.5BN dedicated to the rest of the measures. So basically between 2021 and 2023 we will be setting the basis/foundations of the Spain entrepreneurial nation,” says Polo.

Execution of the strategy will be down to the relevant ministries of government — who will be enacting projects and passing legislation, as needed — but Polo’s department is there to “guide and accompany” the various arms and branches of government on that journey; aka “to help make things happen” with a startup hat on.

The national strategy envisages entrepreneurship/startup innovation as the driving force at the top of a pyramid that sits atop existing sectors of the Spanish economy — “spearheading the innovative system that we want to generate”, as Polo puts it. “We are not only focusing on innovative entrepreneurship. We are also trying to create virtuous cycles between this ecosystem and the actual driving sectors of the Spanish economy — that’s why we listed a set of ten driving sectors that represent above 60% of the GDP. And this is of utmost importance.”

The listed sectors where the government wants to concentrate and foster support — so those same sectors can leverage gains through closer working with digital innovation are: Industry; Tourism and culture; Mobility; Health; Construction and materials; Energy and ecological transition; Banking and finance; Digitalization and telecommunications; Agri-food; and Biotechnology.

“We decided we needed to make the cut at some point and we decided that putting together 60% of the GDP in Spain was a clear direction of the sectors that we could be using in order to accelerate the change that we want to see,” says Polo. “Basically what we want to shift with this model is that the innovative entrepreneurship that has been quite enclosed in the past starts working with the different driving sectors that we have in the country because they can help each other solve their different issues.

“So first, for example, for investment — what if big companies start investing more and more than they are actually doing? We accelerate also that path — into innovative entrepreneurship system. That is going to help close that gap… What if startups and scale ups in Spain work together with our international companies in order to attract and retain that talent? That is going to put us as a country in a better position.

“To me the best example is about scaling up: Because what is better than scaling up on the shoulders of giants? We have already a big number of international of world class companies that are in different markets so what is better than being able to scale up with a company that is already there, that has the knowledge and that can help you mature as a scale up in a shorter period of time. So there are a lot of virtuous cycles that we can generate and that’s why we wanted to make also a broad appeal to the different driving sectors. Because we want to let the country know that everyone is called to make this a reality.”

Lime scooters outside El Retiro Park in Madrid (Image credits: Natasha Lomas/TechCrunch)

Digital divides

Digital can itself divide, of course, as has been writ large during a global pandemic in which the development of children excluded from attending school in person can hinge on whether or not they have Internet access and computer literacy.

So the principle of entrepreneurial growth being predicated upon social inclusion looks like an important one — even if pulling off major industrial transformations which will necessitate a degree of retraining and upskilling in order to bring workers of all ages along the same path is clearly not going to be easy.

But the ten-year timeframe for ‘Spain Entrepreneurial Nation’ looks like a recognition that inclusion requires time.

The long term plan is also intended to address a common criticism of Spain’s politics being too short-termist, per Polo. “In Spain particularly it’s been a regular criticism that politics always look in the small term so this is proof that this government is also addressing the short term issues but also is preparing Spain for the future,” he says, adding: “We really believe that [presenting a long term vision is] a good thing and it’s an answer to that social demand.”

The country has also — over the last decade or so — gained a bit of a reputation for successfully challenging digital developments over specific societal impacts in Europe’s courts. Such as, in 2010, when a Spanish citizen challenged Google’s refusal to delist outdated information about him from its index — which led, in 2014, to Europe’s top court backing what’s colloquially referred to as the ‘right to be forgotten’.

Uber’s regulation-dodging was also successfully challenged by Spanish taxi associations — leading to a 2017 ruling at the highest level in Europe that Uber is a transport service (and therefore subject to local urban transport rules; not just a technology platform as the ride-hailing giant had sought to claim).

Anti-Uber (and anti-Cabify) strikes have, meanwhile, been a quasi-regular (and sometimes violent) feature of Spain’s streets — as the taxi industry has protested at a perceived lack of enforcement of the law against app-based rivals who are not competing fairly, as it sees it.

And while gig platforms (even homegrown European ones) tend to try to shrug off such protests as protectionist (and/or ‘anti-innovation’), they have oftentimes found themselves losing challenges to the legality of their models — including most recently in the UK Supreme Court (which just slapped down Uber’s classification of drivers/riders as self employed — meaning it’s liable for a slew of costs for associated benefits).

All of which is to say that the muscular sense of injustice that segments of Spanish society have willingly — and even viscerally — demonstrated when they feel unfair impacts flowing from shiny new tech tools should not be dismissed; rather it looks like people here have their finger on the pulse of what’s really important to them.

That may also explain why the government is so keen to ensure no one in Spain feels left behind as it unboxes a major packet of startup-friendly policies.

Among a package of some 50 support measures, the entrepreneurial strategy makes a reference to “smart regulation” and floats the idea of sandboxing for testing products publicly (i.e. without needing to worry about regulatory compliance first).

The idea of opening up sandboxing is popular with local gig platform Glovo. “I really believe this is key; allowing innovation to test products/services without having to go through regulatory nightmares to test. This would really drive innovation,” co-founder Sacha Michaud tells us. “This is working well in financial services but could be applied across a wide range of tech areas.”

Attracting more investment to Spain and improving stock options so that local companies can better compete to attract talent are other key priorities for him.

Michaud says he’s fully supportive of the government’s entrepreneurial strategy and the Startup Act, while not expecting immediate results on account of what he expects will be a long legislative process.

He’s less happy about the government’s in-train plan to regulate gig platforms, though — arguing that last-mile delivery is being unfairly singled out there. This reform, which is being worked on by the Ministry of Labor, has been driven by a number of legal challenges to platforms’ employment classifications of gig workers in recent years — including a loss last year for Glovo in Spain’s Supreme Court.

“In Glovo’s case [the government] are specifically looking at regulating only riders, last-mile delivery platforms — yet still allowing over an estimated 500,000 autonomous workers in logistics, services and installations to continue,” says Michaud, dubbing this “very discriminatory; affecting literally a handful of tech companies and ‘protecting’ the status quo of the traditional IBEX35 Spanish companies”.

Asked about progress on the reform of the labor law Polo says only that work is continuing. “I don’t have more transparency on the work they are doing. I have probably the same information that you have and the conversations that we have with the different companies, also the gig companies that we keep an open dialogue with,” he says.

But when pressed on whether reforming regulations to take account of tech-driven changes to how people work is an important component of the wider entrepreneurial strategy he also emphasizes that the “ultimate goal” of the national transformation plan is “to generate more and better jobs”.

“We are always inclined to try to foster the companies that generate these better and increasing new jobs,” says Polo. “And I’m sure that the different gig companies that we have in Spain — I know that they understand this ultimate goal. They understand the benefits for the company and for the country of following this path and that they are willing to transform and evolve as the country is also evolving.”

At the time of writing Barcelona is also being rocked by street protests over the jailing of rapper, Pablo Hasél, over certain social media postings — including tweets criticising police brutality — judged, by Spanish courts, to have violated its criminal code around glorifying terrorism.

Spain’s laws in this area have long been denounced as draconian and disproportionate. Including by Amnesty International — which called Hasél’s imprisonment “an excessive and disproportionate restriction on his freedom of expression”. But Polo dismisses the idea that there’s any contradiction in Spain seeking to rebrand itself as a modernizing, pro-entrepreneur nation at the same time as Spain’s courts are putting people in prison over the contents of their tweets. (Hasél is not the only artist or citizen to fall foul of this law — which has also been infamously triggered by social media jokes).

“There’s no opposition of concepts at all,” Polo argues. “Spain is one of the most robust democracies in the world and that is something that is not us who are saying it — it’s the international rankings. And we have a rule of law. And in this case it’s a very clear case of someone who went across the limits that are established in legislation because the freedom of speech has limits of the rights of other people so it’s something that has nothing to do unfortunately with freedom of speech… The reason why Pablo Hasél is in jail is because he promoted terrorism.”

Pressed further on how ‘jail time for tweets’ might look to an international audience, he reiterates a recent government statement that they do intend to reform the penal code. “There are very specific things that, yes, we want to reform. Because times have advanced,” he says, adding: “We are a more mature country than the one we were in the 1980s. And there are specific things that we want to change in the penal code — but they have nothing to do with the recent events.”

Graffiti in a Barcelona street protesting against the imprisonment of rapper, Pablo Hasél, for crimes involving freedom of speech (Image credit: Natasha Lomas/TechCrunch)

Measures to change mindsets

On the broader issue of cultural challenge — aka: how to change a national mindset to be more entrepreneurial — Polo expresses confidence in his mission. He says it’s about making sure people see the big picture and their place in the vision of the future you’re presenting to them; so they see you’re actively working to bring them along for the ride.

“This is one of the things that I feel confident about. Particularly based on my background prior to being in politics. That is helping change mindsets,” he tells TechCrunch. “In the past I was able to help tonnes of people realize that they were capable of doing things that they thought they were never capable of doing. My understanding is that in order to generate those cultural changes you need to do one thing first: That is generating a vision for the future.

“That’s why we insist so much that by 2030 Spain is going to become an entrepreneurial nation with the greatest social impact in history and that we have a plan for that… Where we take the entrepreneurship and we help them spearhead this new innovation model. We leverage all the driving sectors of the economy so we are actually building on success; on the actual success of Spain as an international economy. And that there’s something for you in that plan. That’s why we are including in the strategy at the basis of the strategy the inclusion policies in order to close the gender gap, the territorial gap, the socio-economic gap, the generational gap.

“In order to change cultures you need align people into working together towards building something that is greater than themselves and I think that with the Spain entrepreneurial nation strategy we made that first step. And this is why — and this is a parenthesis — that’s why we say the [startup] law is as important as having this strategy.”

That startup law — due to be presented shortly in draft (aka as an anteproyecto de ley) for approval by the Council of Ministers, before going to parliament for a wider debate process (and potential amendments) — is the first piece of legislation aligned with the wider strategy. It also looks set to be one of its first deliverables.

Although it’s not clear how long it will be before Spain gets its shiny new startup law. (The country’s politics has lacked consensus for years; Sanchez’s ‘progressive coalition’ was only put together after he tried and failed to get a full majority for his Spanish Socialist Workers’ Party (PSOE) twice in a row.)

“That’s something that is difficult to say because there are laws that have a shorter and others that have a longer period of approval,” says Polo, on the timeframe for passing the legislation. “For us the important issue here is that the startup law has a full process — so it has a full agreement on every side of the hill so it becomes robust and stable legislation for the years to come.”

This “long awaited” regulation which the ecosystem has been calling for for “years”, per Polo, will address a number of different issues — from the first legal “definition” of startup (to reflect differentiation vs other types of companies); to measures to help startups retain and attract talent.

“We need to reform stock options so that they become a tool in order to compete internationally for talent,” he says, noting that the idea is to enable Spain to compete with regimes already offered by countries elsewhere in Europe, such as the UK, France and Germany.

“Also we need to reform VISAs in order to again retain and attract that talent,” he continues. “The president also talked about incentivizing investment and having a certain degree of tax breaks — and we understand that business angels need more incentives. So we have a more ordain and logical system of investment at the pre-seed and seed stage. And many other actions — it’s the Ministry of Economy that will end up with the final text that will be passed in the Council of Ministers in the coming weeks.”

Polo cautions that the law won’t instantly fix every gripe of founders and investors in Spain. Clearly it’s going to be a marathon, not a sprint.

“That’s why we have a strategy,” he emphasizes. “I understand the interest in the startup law but I always say that as important as the startup law is the Spain entrepreneurial nation strategy. Because it’s in there where we address the big problems that we have as a country when it comes to the ecosystem. And in there we have pointed out four big challenges that we have.

“First is investment. We need to accelerate the velocity of maturity of the investment in Spain… The numbers have been growing, year after year, and they look really good. So what we want to do is to help accelerate those numbers so we are able to run faster and close the gap that we have between us and our neighbours: Basically Germany and France. That they have 4x or 5x the number of investment that we have in Spain. We really want to be in ten years in a place where Spain could be leading the investment in innovative entrepreneurship in mainland Europe.

“Second challenge: Talent. We know that in order to build the entrepreneurial nation we need all the talent that we have. So we need to develop the internal talent but we also need to attract international talent and we need to retain that talent. So that’s why we were talking about the different tools that might be included in the startup law.

“The third challenge is scaling up. We in Spain have a lot of companies that assimilate success to selling. And that’s great — it’s totally legitimate. But what we need as a country is to have an increasing percentage of companies in the future that do not think about selling as a synonym of success; but they think about buying other startups around the world. Of growing. Of scaling up. So they started building today the big companies that in the future by 2030 they will generate thousands of good quality jobs in Spain which is the ultimate goal and the bottom line of the strategy.

“And the fourth goal: Turn the political administration into an entrepreneurial administration. Meaning that the political administration, it’s more agile. That we generate a positive benchmark. And that sometimes the public sector makes the investment that not even the riskier of venture capital funds can do. Because that’s the role of the public sector; to generate this kind of visions and to put the means in in order to achieve those. So among all the challenges that we have in the ecosystem it’s something we have put together in the strategy — that is going to addressed not only with one law but with 50 different measures that we included in the Spain entrepreneurial nation strategy.”

The wider entrepreneur strategy talks about nine priority actions to be developed in the next two years via certain projects — which Polo envisages being accelerated in the near term with the help of EU coronavirus recovery funds.

He highlights a couple of priority projects: One to create a network to link entrepreneurs and policymakers with the wider ecosystem, and another to connect incubators and accelerators to build out a national support network for founders — both of which have been inspired by approaches taken in other European countries.

“Among these projects we have one — Oficina Nacional de Emprendimiento — which is deeply inspired by La French Tech in France. So we want to generate a one-stop-shop for entrepreneurs, investors and the rest of the ecosystem to access all of opportunities of collaboration between the central government, regions and CP councils in order to improve entrepreneurship in their respective areas,” says Polo.

“We have other projects like Renace — which is an acronym for Red Nacional de Centros de Emprendimiento — and in there we’ve also been inspired by the network that Portugal has that are doing such exciting things. So what we want to do is help connect the different incubators and accelerators and venture builders that we have in Spain. So they’re at first connected and we add more value — but with one particular focus: The different gaps.

“With Renace in particular we want to help close the territorial gap. Because it’s going to be very interesting to be able to work with engineers in Cáceres for a company that is based in Barcelona. Or to work with a team of designers from the Basque country for a company that is setting up in Malaga. With Renace we can help integrate the country and really talk about an entrepreneurial nation and not just cities. So Spain has the potential to build that. And there are many others issues.”

France alone spends billions annually both on R&D and on direct support for the digital sector. And even with EU funding Spain can’t hope to match the level of ‘ecosystem’ spend of richer, northern European countries. But Polo says the plan is to make the most of what it has with the resources it can marshal — hence, with the Renace project, it’s about linking up existing incubators/accelerators (and adding “a new layer of value” such as via public-private partnerships).

“When you end up reading the Spain entrepreneurial strategy you realize it’s not a billionaire plan of money that you put on the table in order to start building this Spain entrepreneurial nation,” he says. “It’s instead it’s a very robust plan in order to create that vision and putting together the different pieces that we already have — the different assets that we have as a country to start working together intelligently so we can make the best of everything that we can.”

Polo also argues that Spain is already doing well on the startup cluster front — saying it stands alone with Germany in having more than one city ranked among the top ten ‘most entrepreneurial’ in Europe, per such listings. More recently, he says, Spain has risen further up these listicles — as more of its cities have popped up in the “global competition for innovative entrepreneurship”.

“Meaning that in different places of Spain there are many cities and regions that have the hunger to become a place that is helping entrepreneurs to create this kind of economy. And we can get many more,” he suggests, pointing to Renace‘s hoped for value from a social inclusion angle.

“With Renace what we want to do is generate this network and add more value — provide services, get into public-private partnership in order to add the value of the different places that we have in the country. So let’s say that a company in Barcelona can find tonnes of engineers in a city like Cáceres. The company in Barcelona becomes more competitive because the salaries in Cáceres — if you pay them the best salary in Cáceres they could be two-thirds of the salary in Barcelona. So the company in Barcelona becomes more competitive. But also the engineers in the city of Cáceres who want to stay in the region, who want to stay with their family or to have a life-project in Cáceres they can stay. So this is an example of how we can close the territorial gap and also become really integrated startup nation in the full term of nation.”

“The ultimate goal of the Spain entrepreneurial nation strategy is turning Spain into a country that is able to avoid the effects of different crises. And particularly the effects of that we saw in 2008 when the most vulnerable jobs were destroyed overnight — and they were counted by tens of thousands. That particularly struck the young people with unemployment rates that were above 55%. The immigrants and the people over 50. We don’t want that to happen again. So there’s been a very profound reflection on what needed to happen in Spain for that to change. And the conclusion was that we needed to change the productive basis of the country,” he continues.

“That’s why we are putting together a strategy that is going to help the innovative entrepreneurship sector spearhead these new models, this new economic model for Spain. That is going to be leveraging the different driving sectors of the economy — those ten sectors that we state in the strategy — and that as it could not be differently in a 21st century strategy, and particularly a strategy designed by a new generation of politicians and trying to respond to the ambitions of the new generations that is a strategy that is not including the social impact of this phenomenon. So that’s why we are also focused on putting together inclusion policies.”

Polo won’t be drawn into naming any especially promising startups he’s encountered on his travels around Spain — referring instead to the “tonnes of super innovative companies” he says he’s sure will soon be disrupting business as usual in Spain and (the government hopes) internationally — from battery charging companies to retail disruptors working on new ways to make clothes. (“Different kinds of innovations that people can’t imagine,” is his pithy shorthand.)

“What we are trying to do every time we have an opportunity is to also promote the knowledge of these companies — and also help Spanish people and also people abroad — to know that we have everything that we need in order to succeed as a nation and become that entrepreneurial nation with the greatest social impact in history,” he adds, acknowledging that a big part of his mission is “to tell the rest of the world that we are here”.

 

Facebook to restore news sharing in Australia after government amends proposed law

Facebook said it will begin restoring news sharing to Australian users’ feeds in “the coming days” after reaching an agreement with the country’s government. The social media giant made the drastic move of restricting news content in Australia last Wednesday after a dispute over a proposed media bargaining code that is expected to be voted into law soon. The code would have forced Facebook, and other major tech companies like Google, to make revenue-sharing agreements with publishers for content posted to their social media platforms.

Australian treasurer Josh Frydenberg said changes have been made to the code to “provide further clarity to digital platforms and news media businesses about the way the Code is intended to operate and strengthen the framework for ensuring news media businesses are fairly remunerated,” reported Seven News.

The amendments mean the code now includes a two-month mediation period to allow digital platforms like Facebook and publishers to agree on deals before they are forced to enter into arbitration. The Australian government will also consider commercial agreements tech platforms have already made with local publishers before deciding if the code applies to them, and give them one month’s notice before reaching a final decision.

William Easton, managing director of Facebook Australia and New Zealand, said in a statement that the company was “satisfied” with the changes, adding that they addressed Facebook’s “core concerns about allowing commercial deals that recognize the value our platform provides to publishers relative to the value we receive from them.”

Facebook’s restrictions last week meant Australian publishers were restricted from sharing or posting content from Facebook Pages, and users in Australia were unable to view or share Australian or international news content.

The Australian government announced in April 2020 it would adopt a mandatory code ordering Google, Facebook and other tech giants to pay local media for reusing their content, after an earlier attempt to create a voluntary code with the companies stalled.

As it lobbied against the proposed law, Facebook first threatened to restrict the public sharing of news content in Australia last September. Google also claimed that user experience in Australia would suffer and suggested it may no longer be able to offer free services in the country.

Daily Crunch: Uber loses UK legal challenge

Uber loses a legal battle over driver classification, we survey mobility investors and new data suggests a COVID-19 vaccine should be easier to transport. This is your Daily Crunch for February 19, 2021.

The big story: Uber loses UK legal challenge

The United Kingdom’s Supreme Court has reaffirmed earlier rulings that the Uber drivers who brought the case — which dates back to 2016 — are workers, not independent contractors.

“Drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill,” the court said in a statement. “In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance.”

Uber, while acknowledging the decision, emphasized that it applies to the specific group of drivers who brought the case, many of whom are no longer driving through the app.

Startups, funding and venture capital

Ex-General Catalyst and General Atlantic VC announces $68M debut fund — New York-based Avid Ventures is launching its $68 million debut venture capital fund.

With $20M A round, Promise brings financial flexibility to outdated government and utility payment systems — Promise integrates with official payment systems to offer more forgiving terms for fees and debts that people can’t handle all at once.

Acast acquires podcasting startup RadioPublic — RadioPublic spun out of public radio marketplace PRX in 2016.

Advice and analysis from Extra Crunch

Ten investors predict MaaS, on-demand delivery and EVs will dominate mobility’s post-pandemic future — The COVID-19 pandemic didn’t just upend the transportation industry, it laid bare its weaknesses and uncovered potential opportunities.

A fraction of Robinhood’s users are driving its runaway growth — A closer look at payment for order flow, a controversial practice in which Robinhood is paid by market makers for executing customer trades.

Three strategies for elevating brand authority in 2021 — Advice from Fractl marketing director Amanda Milligan.

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

Everything else

Pfizer-BioNTech’s COVID-19 vaccine just got a lot easier to transport and distribute — There’s new stability data collected by Pfizer and BioNTech, which has been submitted to the U.S. Food and Drug Administration.

Dizzying view of Perseverance mid-descent makes its ‘seven minutes of terror’ feel very real — NASA has just shared a hair-raising image of the rover as it dangled from its jetpack above the Martian landscape.

Will the Texas winter disaster deter further tech migration? — It’s too early to tell the exact toll the storm has taken in loss of life, property damage and economic activity.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

Fintech companies must balance the pursuit of profit against ethical data usage

Financial institutions are falling behind the tech curve in delivering on the convenience consumers demand, leaving the door wide open for Big Tech companies like Apple, Amazon and Google to become our bankers. In November, Google redesigned its contactless payments service Google Pay, merging the services of traditional banks with the seamless, convenient experience users expect from the likes of Big Tech.

But there’s a catch.

Despite the elaborate smoke and mirrors that Google has put up, one fact remains: Google is an advertising company with ads representing 71% of its revenue sources in 2019.

What happens when an advertising company now wants to be our bank?

One must ask: What happens when an advertising company — armed with the terabytes of data points it has harvested from our personal emails, location data, song preferences and shopping lists — now wants to be our bank? The answer is potentially unsettling, especially considering the extraordinary neglect Big Tech has shown for user privacy, as seen here. And here. And here.

As the marketplace is poked by yet another technocrat tentacle, this time in the heart of financial services, traditional banks that consumers and businesses once relied on find themselves at a crossroads. To retain market share, these institutions will need to continue investing in fintech so they can level up with convenience and personalization provided by new competitors while preserving trust and transparency.

Traditional banks miss the digital mark

Fintech holds the potential to fundamentally transform the financial services industry, enabling financial institutions (FIs) to operate more efficiently and deliver superb user experiences (UX).

But there’s a digital gap holding FIs back, especially small community banks and credit unions. Many have long struggled to compete with the deep pockets of national banks and the tech savvy of neo and challenger banks, like Varo and Monzo. After investing more than $1 trillion in new technology from 2016 through 2019, the majority of banks globally have yet to see any financial boost from digital transformation programs, according to Accenture.

Never before has this gap been more prevalent than amid the pandemic as customers migrated online en masse. In April 2020 alone, there was a 200% uptick in new mobile banking registrations and total mobile banking traffic jumped 85%, according to Fidelity National Information Services (FIS).

Data is the grand prize for Big Tech, not revenue from financial services

Naturally, Big Tech players have recognized the opportunity to foray into financial services and flex their innovation muscles, giving banks and credit unions a strenuous run for their money. Consumers looking to digitize their finances must heed caution before they break up with traditional banks and run into the arms of Big Tech.

It’s important to bear in mind that the venture into payments and financial services is multipronged for Big Tech players. For example, in-house payments capabilities would not just provide companies focused on retail and commerce an additional revenue stream; it promises them more power and control over the shopping process.

Regulations in the U.S. might restrain this invasion to an extent, or at least limit a company’s ability to directly profit. Because let’s face it: the Big Tech players certainly aren’t asking for the regulatory “baggage” that comes with a bank charter.

But tech companies don’t need to profit directly from offerings like payments and wealth management, so long as they can hoard data. Gleaning insights on users’ spending patterns offers companies significant ROI in the long term, informing them how a user spends their money, if they have a mortgage, what credit cards they have, who they bank with, who they transact with, etc.

Financial behavior also potentially includes highly personal purchases, such as medications, insurance policies and even engagement rings.

With this laser sharp view into consumers’ wallets, imagine how much more valuable and domineering Google’s advertising platform will become.

Banks must lead the charge in ethical data

When it comes to the digitization of financial services, the old adage “with great power comes great responsibility” rings true.

Customer data is an incredible tool, allowing banks to cater to all consumers wherever they fall on the financial spectrum. For example, by analyzing a customers’ spending habits, a bank can offer tailored solutions that help them save, invest or spend money more wisely.

However, what if being a customer of these services means you’re then inundated with ads that respond directly to your searches and purchases? Or, even more insidiously, what if your bank now knows you so well that they can create a persona for you and proactively predict your needs and desires before even you can? That’s what the future looks like if you’re a customer of the Bank of Google.

It’s not enough to use customer data to refine product offerings. It must be done in a way that ensures security and privacy. By using data to personalize services, rather than bolster revenue behind the scenes, banks can distinguish a deeper understanding of consumer needs and gain trust.

Trust could become the weapon that banks use to defend their throne, especially as consumers become more aware of how their data is being used and they rebel against it. A Ponemon study on privacy and security found that 86% of adults said they are “very concerned” about how Facebook and Google use their personal information.

In an environment where data collection is necessary but contentious, the main competitive advantage for banks lies in trust and transparency. A report from nCipher Security found that consumers still overwhelmingly trust banks with their personal information more than they do other industries. At the same time, trust is waning for technology, with 36% of consumers reportedly less comfortable sharing information now than a year ago, according to PwC.

Banks are in a prime position to lead the charge on ethical data strategy and the deployment of artificial intelligence (AI) technologies, while still delivering what consumers need. Doing so will give them a leg up on collecting data over Big Tech in the long term.

Looking toward a customer-centric, win-win future

The financial services industry has reached a pivotal crossroads, with consumers being given the choice to leave traditional banks and hand over their personal data to Big Tech conglomerates so they can enjoy digital experiences, greater convenience and personalization.

But banks can still win back consumers if they take a customer-centric approach to digitization.

While Big Tech collects consumer data to support their advertising revenue, banks can win the hearts of consumers by collecting data to drive personalization and superior UXs. This is especially true for local community banks and credit unions, as their high-touch approach to services has always been their core differentiator. By delivering personalized interactions while ensuring the data collection is secure and transparent, banks can regain market share and win the hearts of customers again.

Big Tech has written the playbook for what not to do with our data, while also laying the framework for how to build exceptional experiences. Even if a bank lacks the technology expertise or the deep-pocket funding of Facebook, Google or Apple, it can partner with responsible fintechs that understand the delicate balance between ethical data usage and superior UXs.

When done right, everybody wins.

Daily Crunch: Facebook’s Australian news ban is pretty broad

We explore the fallout of Facebook’s news ban, WhatsApp addresses privacy concerns and Perseverance lands on Mars. This is your Daily Crunch for February 18, 2021.

The big story: Facebook’s Australian news ban is pretty broad

Yes, this was the lead story in yesterday’s newsletter, but 24 hours later, we have a better sense of how things are playing out.

A quick refresher: As the Australian government is debating a law that would require tech platforms to pay media companies for linked content, Facebook has gone ahead and started blocking the sharing or viewing of news. The move has been criticized as censorship and even “an assault on a sovereign nation,” but also praised as a reasonable stand against a “link tax.” (Google made a similar threat but has instead been striking deals with Australian publishers.)

Regardless of how you feel about the decision in theory, the initial implementation has left something to be desired, with the Facebook Pages of hospitals, universities, unions, government departments and the bureau of meteorology all wiped clean. When reached for comment, Facebook confirmed that it applied an intentionally broad definition of news, designed to reflect the law “as drafted.”

The tech giants

Following backlash, WhatsApp to roll out in-app banner to better explain its privacy update — If users choose to review the changes, they’ll be shown a deeper summary, including added details about how WhatsApp works with Facebook.

Apple TV+ arrives on Google TV devices, starting with Chromecast — It will also become available on Google TVs from both Sony and TCL, with expansions to other Android TV-powered devices in the months to come.

Microsoft announces the next perpetual release of Office — If you use Office, Microsoft would really, really, really like you to buy a cloud-enabled subscription to Microsoft 365, but it will continue to make a standalone, perpetual license for Office available, too.

Startups, funding and venture capital

Robinhood goes to Congress — Alex Wilhelm did not enjoy watching.

Math learning app Photomath raises $23M as it reaches 220 million downloads — Chances are, you might already know about the app if you have a teenager in your household.

Wholesale marketplace Abound raises $22.9M — The marketplace helps independent retailers stock their shelves with new products from up-and-coming brands.

Advice and analysis from Extra Crunch

Why do SaaS companies with usage-based pricing grow faster? — Public SaaS companies that have adopted usage-based pricing grow faster because they’re better at landing new customers, growing with them and keeping them as customers.

Creating a prediction machine for the financial markets — Data is the backbone of any prediction machine.

Check out the incredible speakers joining us on Extra Crunch Live in March — Our March slate starts with Sarah Kunst of Cleo Capital and Julia Collins of Planet FWD.

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

Everything else

Perseverance lands safely on Mars and sends back its first images of the surface — Perseverance landed after a white-knuckle descent that involved picking a landing spot just moments before making a rocket-powered sky-crane landing.

Tired of ‘Zoom University’? So is edtech — A wave of startups is trying to disrupt the virtual school day.

California DMV warns of data breach after a contractor was hit by ransomware — Automatic Funds Transfer Services, which the DMV said it has used for verifying changes of address, was hit by an unspecified strain of ransomware earlier this month.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

Following backlash, WhatsApp to roll out in-app banner to better explain its privacy update

Last month, Facebook-owned WhatsApp announced it would delay enforcement of its new privacy terms, following a backlash from confused users which later led to a legal challenge in India and various regulatory investigations. WhatsApp users had misinterpreted the privacy updates as an indication that the app would begin sharing more data — including their private messages — with Facebook. Today, the company is sharing the next steps it’s taking to try to rectify the issue and clarify that’s not the case.

The mishandling of the privacy update on WhatsApp’s part led to widespread confusion and misinformation. In reality, WhatsApp had been sharing some information about its users with Facebook since 2016, following its acquisition by Facebook.

But the backlash is a solid indication of much user trust Facebook has since squandered. People immediately suspected the worst, and millions fled to alternative messaging apps, like Signal and Telegram, as a result.

Following the outcry, WhatsApp attempted to explain that the privacy update was actually focused on optional business features on the app, which allow business to see the content of messages between it and the end user, and give the businesses permission to use that information for its own marketing purposes, including advertising on Facebook. WhatsApp also said it labels conversations with businesses that are using hosting services from Facebook to manage their chats with customers, so users were aware.

Image Credits: WhatsApp

In the weeks since the debacle, WhatsApp says it spent time gathering user feedback and listening to concerns from people in various countries. The company found that users wanted assurance that WhatsApp was not reading their private messages or listening to their conversations, and that their communications were end-to-end encrypted. Users also said they wanted to know that WhatsApp wasn’t keeping logs of who they were messaging or sharing contact lists with Facebook.

These latter concerns seem valid, given that Facebook recently made its messaging systems across Facebook, Messenger and Instagram interoperable. One has to wonder when similar integrations will make their way to WhatsApp.

Today, WhatsApp says it will roll out new communications to users about the privacy update, which follows the Status update it offered back in January aimed at clarifying points of confusion. (See below).

Image Credits: WhatsApp

In a few weeks, WhatsApp will begin to roll out a small, in-app banner that will ask users to re-review the privacy policies — a change the company said users have shown to prefer over the pop-up, full-screen alert it displayed before.

When users click on “to review,” they’ll be shown a deeper summary of the changes, including added details about how WhatsApp works with Facebook. The changes stress that WhatsApp’s update don’t impact the privacy of users’ conversations, and reiterate the information about the optional business features.

Eventually, WhatsApp will begin to remind users to review and accept its updates to keep using WhatsApp. According to its prior announcement, it won’t be enforcing the new policy until May 15.

Image Credits: WhatsApp

Users will still need to be aware that their communications with businesses are not as secure as their private messages. This impacts a growing number of WhatsApp users, 175 million of which now communicate with businesses on the app, WhatsApp said in October.

In today’s blog post about the changes, WhatsApp also took a big swipe at rival messaging apps that used the confusion over the privacy update to draw in WhatsApp’s fleeing users by touting their own app’s privacy.

“We’ve seen some of our competitors try to get away with claiming they can’t see people’s messages – if an app doesn’t offer end-to-end encryption by default that means they can read your messages,” WhatsApp’s blog post read.

This seems to be a comment directed specifically towards Telegram, which often touts its “heavily encrypted” messaging app as more private alternative. But Telegram doesn’t offer end-to-end encryption by default, as apps like WhatsApp and Signal do. It uses “transport layer” encryption that protects the connection from the user to the server, a Wired article citing cybersecurity professionals explained in January. When users want an end-to-end encrypted experience for their one-on-one chats, they can enable the “secret chats” feature instead. (And this feature isn’t even available for group chats.)

In addition, WhatsApp fought back against the characterization that it’s somehow less safe because it has some limited data on users.

“Other apps say they’re better because they know even less information than WhatsApp. We believe people are looking for apps to be both reliable and safe, even if that requires WhatsApp having some limited data,” the post read. “We strive to be thoughtful on the decisions we make and we’ll continue to develop new ways of meeting these responsibilities with less information, not more,” it noted.