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9 Berlin-based VCs discuss how COVID-19 has changed the landscape 11 Aug 2020, 7:45 am

A breeding ground for European entrepreneurs, Berlin has a knack for producing a lot of new startups: the city attracts top international, diverse talent, and it is packed with investors, events and accelerators. Also important: it’s a more affordable place to live and work when compared to many other cities in the region.

Berlin ranked 10th place in the 2019 Global Ecosystem Report, trailing behind only two other European cities: London and Paris. It’s home to unicorns such as N26, Zalando, HelloFresh and pioneers of the scene such as SoundCloud.

Top VCs include Earlybird, Point Nine, Project A, Rocket Internet, Holtzbrinck Ventures, and accelerators such as Axel Springer Plug and Play Accelerator, hub:raum and The Family.

To get a sense of how the novel coronavirus has changed the landscape, we asked nine investors to give us an insight into their thinking during these pivotal times:

Jorge Fonturbel, Target Global

Which trends are you most excited about investing in, generally? 
Mobility, logistics, automotive, industry automation, supply chain.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
70% Europe and Israel, 30% rest of world.

Luis Shemtov, Lunar Ventures

Which trends are you most excited about investing in, generally? 
We invest in the overlap of deep tech and software. in 2020 we’re focused on low data machine learning, private computation, shift to MLops, edge cloud, dev tools consumerization expanding into other software fields.

What’s your latest, most exciting investment? 
Latest is Neurolabs.eu — developing a platform for computer vision synthetic data.

What are you looking for in your next investment, in general?
Pre-seed/seed global minded technical founders.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We’re Europe-wide, less than half in Berlin.

How should investors in other cities think about the overall investment climate and opportunities in your city? 
Berlin is rapidly evolving from its consumer/rocket past into a global hub for diversified software technology.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
At pre-seed stages, there are still major advantages to hubs by A stage and Silicon Valley by B stage, which remote work cannot solve.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times? 
None. We invest in hard software. Some go-to-market strategies slowed down, but we’re not seeing correlation so far.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
So far most of the portfolio startups have accelerated. The biggest worry is investor behavior in line with the LP fundraising environment uncertainty for seed/Series A.

Mike Lobanov, Target Global

Court finds some fault with UK police force’s use of facial recognition tech 11 Aug 2020, 7:41 am

Civil rights campaigners in the UK have won a legal challenge to South Wales Police’s (SWP) use of facial recognition technology. The win on appeal is being hailed as a “world-first” victory in the fight against the use of an “oppressive surveillance tool”, as human rights group Liberty puts it.

However the police force does not intend to appeal the ruling — and has said it remains committed to “careful” use of the tech.

The back story here is SWP has been trialing automated facial recognition (AFR) technology since 2017, deploying a system known as AFR Locate on around 50 occasions between May 2017 and April 2019 at a variety of public events in Wales.

The force has used the technology in conjunction with watchlists of between 400-800 people — which included persons wanted on warrants; persons who had escaped from custody; persons suspected of having committed crimes; persons who may be in need of protection; vulnerable persons; persons of possible interest to it for intelligence purposes; and persons whose presence at a particular event causes particular concern, per a press summary issued by the appeals court.

A challenge was brought to SWP’s use of AFR by a Cardiff-based civil liberties campaigner, called Edward Bridges, with support from Liberty . Bridges was in the vicinity of two deployments of AFR Locate — first on December 21, 2017 in Cardiff city centre and again on March 27, 2018 at the Defence Procurement, Research, Technology and Exportability Exhibition taking place in the city — and while he was not himself included on a force watchlist he contends that given his proximity to the cameras his image was recorded by the system, even if deleted almost immediately after.

The human rights implications of warrantless processing of sensitive personal data by the police is the core issue in the case. The issue of bias risks that can flow from automating identity decisions is another key consideration.

Bridges initially brought a claim for judicial review on the basis that AFR was not compatible with the right to respect for private life under Article 8 of the European Convention on Human Rights, data protection legislation, and the Public Sector Equality Duty (“PSED”) under section 149 of the Equality Act 2010.

The divisional court dismissed his appeal on all grounds last September. He then appealed on five grounds — and has succeeded on three under today’s unanimous court of appeal decision.

The court judged that the legal framework and policies used by SWP did not provide clear guidance on where AFR Locate could be used and who could be put on a watchlist — finding too broad a discretion was afforded to police officers to meet the standard required by Article 8(2) of the European Convention on Human Rights.

It also found that an inadequate data protection impact assessment was carried out, given SWP had written the document on the basis of no infringement of Article 8, meaning the force had failed to comply with the UK’s Data Protection Act 2018.

The court also judged the force wrong to hold that it had complied with the PSED — because it had not taken reasonable steps to make enquiries about whether the AFR Locate software contained bias on racial or sex grounds. (Though the court noted there was no clear evidence the tool was so biased.)

I'm incredibly, ecstatically pleased by today's judgement on the case I brought with @libertyhq against the use of automatic facial recognition technology by South Wales Police. The Court of Appeal agreed that this technology threatens our rights. https://t.co/2kZiz7lJpv [1/5]

— Ed Bridges (@DrEdBridges) August 11, 2020

Since Bridges brought the challenge London’s Met police has gone ahead and switched on operational use of facial recognition technology — flipping the switch at the start of this year. Although in its case a private company (NEC) is operating the system.

At the time of the Met announcement, Liberty branded the move “dangerous, oppressive and completely unjustified”. In a press release today it suggests the Met deployment may be unlawful for similar reasons as the SWP’s use of the tech — citing a review the force carried out. Civil liberties campaigners, AI ethicists and privacy experts have all accused the Met of ignoring the findings of an independent report which concluded it had failed to consider human rights impacts.

Commenting on today’s appeals court ruling in a statement, Liberty lawyer Megan Goulding said: “This judgment is a major victory in the fight against discriminatory and oppressive facial recognition. The Court has agreed that this dystopian surveillance tool violates our rights and threatens our liberties. Facial recognition discriminates against people of colour, and it is absolutely right that the Court found that South Wales Police had failed in their duty to investigate and avoid discrimination.

“It is time for the Government to recognise the serious dangers of this intrusive technology. Facial recognition is a threat to our freedom — it needs to be banned.”

In another supporting statement, Bridges added: “I’m delighted that the Court has agreed that facial recognition clearly threatens our rights. This technology is an intrusive and discriminatory mass surveillance tool. For three years now South Wales Police has been using it against hundreds of thousands of us, without our consent and often without our knowledge. We should all be able to use our public spaces without being subjected to oppressive surveillance.”

However it’s important to note that he did not win his appeal on all grounds.

Notably the court held that the earlier court had correctly conducted a weighing exercise to determine whether the police force’s use of AFR was a proportionate interference with human rights law, when it considered “the actual and anticipated benefits” of AFR Locate vs the impact of the AFR deployment on Bridges — and decided that the benefits were potentially great, while the individual impact was minor, hence holding that the use of AFR was proportionate under Article 8(2).

So the UK court does not appear to have closed the door on police use of facial recognition technology entirely.

Indeed, it’s signalled that individual rights impacts can be balanced against a ‘greater good’ potential benefit — so the ruling looks more like it’s defining how such intrusive technology can be used lawfully. (And it’s notable that SWP has said it’s “completely committed” to the “careful development and deployment” of AFR, via BBC.)

The ruling does make it clear that any such deployments need to be more tightly bounded than the SWP application to comply with human rights law. But it has not said police use of facial recognition is inherently unlawful.

Forces also cannot ignore equality requirements by making use of such technology — there’s an obligation, per the ruling, to take steps to assess whether automated facial recognition carries a risk of bias.

Given bias problems that have been identified with such systems that may prove the bigger blocker to continued police use of this flavor of AI.

Tencent and Universal Music to take Chinese artists global under joint label 11 Aug 2020, 7:03 am

Digital entertainment titan Tencent continues to drum up its music ambitions. On Tuesday, Tencent Music Entertainment, majority-owned by Tencent with a 55.6% stake, announced establishing a new joint label with its licensing partner Universal Music Group to discover, develop and promote Chinese artists domestically and to the world.

TME, which spun off from Tencent and went public in the U.S. in 2018, commands the lion’s share of China’s music streaming industry through three apps — QQ Music, Kugou and Kuwo. It also operates other music-related businesses, including live events and a popular karaoke app.

651 million users streamed music through TME services in the second quarter, but only 47.1 million were paid subscribers, signaling a much lower conversion rate compared to Spotify, which did a share swap with TME in 2017.

Licensing fees take up a big chunk of streaming services’ expenses. Cultivating its own artists will give TME more control over music content and eventually reduce dependence on content IP owners.

TME hopes that the new label will enable it to “produce new music loved by the younger demographic, bringing in iconic music stars, innovative music works, and more breakthrough music genres to the global music market, ultimately providing music fans in China and around the world with a spectacular music entertainment experience,” said TC Pan, the group’s vice president of content cooperation.

Break with precedent

As part of the announcement, TME also said it signed a multi-year extension of licensing agreement with UMG.

Concurrent with the news is, noticeably, UMG’s licensing deal with TME’s Chinese rival NetEase Cloud Music. This departs from the precedent of TME’s monopoly on streaming Western mainstream music in China. For years, TME had spent heavily on exclusive rights from UMG, Warner Music and Sony Music Entertainment. It further deepened ties with WMG and SME, which bought shares of TME when it went public.

The setup triggered an antitrust investigation into TME last year. It forced TME’s domestic rivals including NetEase to sublicense its catalogs, often at above-market rates, and indirectly prompted smaller players to develop their own artists. NetEase, for instance, is known for developing indie musicians.

NetEase CEO William Ding has been a critic of exclusive music rights. In a February analyst call, he labeled the practice ‘unfair and unreasonable’ and called for an end to it. He achieved his goal.

Speaking on NetEase’s latest licensing tie-up with UMG, Ding remarked: “The partnership further strengthens NetEase Cloud Music’s position as a go-to platform for high-quality international music and marks a great step forward for China’s music industry as a whole.”

Vitesse, a fintech providing real-time cross-border payments for businesses, scores £6.6M Series A 11 Aug 2020, 5:46 am

Vitesse, the London-based fintech that offers real-time cross-border payments for businesses, has raised £6.6 million in Series A funding. The round is led by Octopus Ventures, with participation from existing backers including Hoxton Ventures and various angel investors.

The company says the new investment will be used for growth, including building out its sales and marketing functions, and expanding Vitesse’s footprint in the U.S. market. It will also further invest in the “reach and speed” of its banking capabilities in order to meet customer demand as the fintech expands globally.

Founded in 2014 by Phillip McGriskin and Paul Townsend, who sold their previous fintech to Worldpay, Vitesse operates a global banking and payment network. This sees it able to provide customers with direct access to the domestic payment networks of more than 100 countries in over 60 currencies.

It currently targets businesses in the insurance, payroll and corporate payment space who want to simplify their liquidity management and easily make cross-border payments. Existing customers include Brit Insurance, DXC Technology and Gett. To date, Vitesse has processed over £2.1 billion across almost 2.3 million transactions.

“Cross border payments are still largely inefficient, especially for businesses,” explains McGriskin. “They can be slow and expensive, and tracking and reconciling them and keeping compliant in a constantly shifting regulatory environment can prove difficult”.

To remedy this, Vitesse’s banking network provides access to multiple domestic banking services so that businesses can make payments to other businesses and their customers in the “fastest, and most economical way”. In addition, they gain greater transparency through things like real-time reporting.


Over on Extra Crunch, early Vitesse backer Hoxton Ventures assess Europe’s early-stage landscape.


“We are essentially running a globally distributed, local banking network to make payments so our customers don’t have to do it themselves,” says McGriskin. “And then we supply a customer specific view so they can manage their funds most effectively, giving appropriate views right across their business. It saves them a lot of time and money and operational expense”.

In the verticals it currently operates, the fintech typically competes with banks, which, conversely, it also partners with to gain access to those domestic payments networks and to tailor its services to customers.

Explains McGriskin: “The biggest different between us and the banks is technology. We are able to use our technology to provide real-time services with very rich and flexible reporting for our customers. And we can be nimble. But we prefer to work with the banks to optimise services for our customers”.

EU-US Privacy Shield is dead. Long live Privacy Shield 11 Aug 2020, 5:21 am

As the saying goes, insanity is doing the same thing over and over again and expecting different results.

And so we arrive at the news, put out yesterday in the horse latitudes of summer via joint press statement, that the EU’s executive body and the US Department of Commerce have begun talks toward fashioning a shiny new papier-mâché ‘Privacy Shield’.

“The U.S. Department of Commerce and the European Commission have initiated discussions to evaluate the potential for an enhanced EU-U.S. Privacy Shield framework to comply with the July 16 judgment of the Court of Justice of the European Union in the Schrems II case,” the pair write.

The EU-US Privacy Shield, as you may recall, refers to the four-year-old data transfer mechanism which Europe’s top court just sunk with the legal equivalent of a nuclear bomb.

Five years ago the same court carpet-bombed its predecessor, a fifteen-year-old arrangement known — without apparent irony — as ‘Safe Harbor’.

Thousands of companies had been signed up to the Privacy Shield, relying on the claimed legal protection to authorize transatlantic transfers of EU users’ data. The mirage collapsed on cue last month, raising legal questions over continued use of cloud services based in a third country like the US — barring data localization.

Alternative data transfer mechanisms do exist but data controllers wanting to use an alternative tool, like Standard Contractual Clauses (SCCs), to take EU citizens’ data over the pond are legally required to carry out an assessment of whether US law provides adequate protections. If they cannot guarantee the data’s safety they cannot use SCCs legally either. (And if they go ahead they are risking costly regulatory intervention.)

The fall of Privacy Shield should really have shocked no one, given the warnings, right from the get-go, that it amounted to ‘lipstick on a pig‘. Nothing has changed the fundamental problems identified by the Court of Justice of the EU in 2015 — so carrying on doing bulk data transfers to the US was headed for the same legal slapdown.

The basic problem is the mechanism failed to do what’s claimed on the tin. Which is to say EU people’s personal data is not safe as houses over there because US government security agencies have their hands in tech platforms’ cookie jars (and all the other jars and tubes of the modern Internet), as the 2013 Snowden revelations illustrated beyond doubt.

Nothing since the Snowden disclosures has substantially reworked US surveillance law to make it less incompatible with EU privacy law. President Obama made a few encouraging noises but under Trump the administration has dug in on helping itself to people’s data without a warrant. So it’s closer to a funnel than a shield.

Turns out neither a ‘Shield’ nor a ‘Harbor’ were metaphors grand enough to paper over this fundamental clash of legal priorities, when a regional trading bloc with long standing laws that protect privacy butts up against an alien regime that rubberstamps digital intrusion on national security grounds, with zero concern for privacy.

And so we arrive at the prospect of a new, papier-mâché ‘Privacy Shield II(I)’ — which looks to be the most appropriate metaphor for this latest round of EU-US ‘negotiations’ aimed at cobbling something together to buy more time for data to keep flowing. Bottom line: Even if Commission and US negotiators ink something on paper any claimed legal protections will, without root and branch reform of US surveillance law, sum to another sham headed for a speedy demolition day in court. 

It’s also worth noting that Europe’s judges are likely to step on the gas in this respect, with Privacy Shield standing for just a fraction of the time Safe Harbor hung around. So any Privacy Shield II (III if you count Safe Harbor) would likely get even shorter shrift. 

Not that legal reality and legal clarity is preventing fuzzy soundbites from being despatched from both sides of the Atlantic, of course.

“The European Union and the United States recognize the vital importance of data protection and the significance of cross-border data transfers to our citizens and economies. We share a commitment to privacy and the rule of law, and to further deepening our economic relationship, and have collaborated on these matters for several decades,” the pair write in a fresh attempt to re-spin a legal car crash disaster that everyone could see coming, years ahead.

“As we face new challenges together, including the recovery of the global economy after the COVID-19 pandemic, our partnership will strengthen data protection and promote greater prosperity for our nearly 800 million citizens on both sides of the Atlantic.”

There’s no doubting the appetite of the Commission and the US Department of Commerce share for data to keep flowing. Both prioritize ‘business as usual’ and lionize their notion of “prosperity”, to the degree where they’re willing to turn a blind eye to rights impacts (including the Commission).

However neither side has demonstrated that it posses the political clout and influence to remake the US’ data industrial complex — which is what’s needed to meaningfully ‘enhance’ Privacy Shield. Instead, we get publicity for their next pantomime.

We’ve reached out to the Commission with questions, lots of questions.

So the @SecretaryRoss and @EU_Justice are (A) working on changing US surveillance laws or (B) working on the third beating by the #CJEU?! 🤔#SchremsII #PrivacyShield https://t.co/E1LXaKgTBQ

— Max Schrems 🇪🇺🇦🇹 (@maxschrems) August 10, 2020

 

Power electronics and wireless charging startup Eggtronic raises $10M Series A 11 Aug 2020, 4:00 am

Eggtronic, the Italy-founded startup developing power electronics, wireless charging and data over power technology and products, has closed around $10 million in Series A funding.

Backing the company is Rinkelberg Capital — the investment fund from the founders of TomTom — and funds managed by an unnamed investment bank in Milan. It brings the total raised by Eggtronic since 2012 to $17 million.

Eggtronic says the capital will be used to develop a new integrated circuits division at the Eggtronic research laboratories as it continues along its roadmap of more efficient power transformers. Eventually, the company hopes its “capacitive” wireless charging technology will be adopted universally as a new industry standard.

Founded by CEO Igor Spinella out of Italy’s Modena — famous for its balsamic vinegar, opera heritage and Ferrari and Lamborghini sports cars — and now with offices and production facilities in the U.S., Italy, and China, Eggtronic is best-known for its sleek laptop charger and stone-shaped wireless chargers.

However, it also makes various power electronics for other brands, and it is B2B, including producing ICs that other manufacturers can use in their own devices, that is the company’s longer-term and “scalable” future.

Spinella tells me that Eggtronic’s consumer and white-labeled products serve as a direct way of signalling to the market what Eggtronic is capable of and brings in revenue that can be reinvested into R&D to get to a better wireless charging future.

“We were not in California, and working in a capital intensive field almost unknown by Italian investors, we created a pipeline able to validate us as a manufacturing and design company, invest in R&D — [including] being able to create some incredible demos of our most innovating technologies — and scale internationally,” explains Spinella.

Those demos included a capacitive wireless surface able to charge a smartphone in 2015, a TV in 2017, and two laptops connected and charging via data over power in 2020.

“These R&D demos were extremely important milestones to validate our own idea of wireless power and data,” says Spinella. [This includes] total position freedom: you can literally put every device on the desk randomly, charging and connecting them all”.

In addition, the company has been able to demonstrate high power use-cases, and data over power that it claims can hit the same speed of a USB 3 cable but wirelessly.

“This technology has already some industrial customers, the next steps are the creation of ICs and the first retails products based on these ICs, then we can work on the adoption by a leading company,” adds the Eggtronic founder.

In the interim, the company is applying some of the same capacitive technology to power conversion for existing applications, such as Eggtronic’s laptop chargers and power bricks.

“We filed several patents in this area, starting from our capacitive power converters able to remove the transformer, increasing efficiency and reducing size,” says Spinella. “Today we have several architectures that we invented, able to cover most of the typical applications, from some tens of Watts to kW, with our own resonant architectures (capacitive, inductive, and hybrid), with several proprietary control algorithms, our own ‘Power Factor Correction’ circuits, several proprietary ways to shrink the size of the components, to reduce the number of stages in series and so on”.

Meanwhile, Spinella is being advised by consumer electronics veteran Mark Gretton, who is the former CTO of TomTom and helped pioneer mobile computing at Psion. He was introduced to Eggtronic via Rinkelberg Capital, before deciding to invest and join as an advisor.

“I decided to get involved because firstly I liked and respected Igor, but also because unlike so many technology companies that come my way, the Eggtronic proposition was refreshingly simple,” Gretton tells me. “We are going to make something that is an integral part of everyone’s lives better through applying technology. There was no change of behaviour, complex business model, or solution to a problem nobody knew they had. Just designing better power electronics for everyone”.

Google rolls out virtual visiting card in India 11 Aug 2020, 2:26 am

Google has rolled out a new Search feature in India that enables influencers, entrepreneurs, freelancers, or anyone else who wants to be easily discovered online create a virtual visiting card in what appears to be the company’s latest attempt to add more LinkedIn -esque functionalities into its search engine.

The company said it has rolled out the feature, called people cards, first in India because of the special affinity people in the world’s second largest internet market have shown toward looking up their own names on the search engine. People cards currently only supports English.

Users can create people cards about themselves by signing into their Google account and then looking up their name on Google search. This will prompt a new option called “add me to Search” or “get started”; tapping which will open a form that asks users to provide a bio (description) of themselves, their picture (by default, Google fetches the image associated with a user’s Google account), links to their website and social media profiles, and optionally, their phone number, address, work and education details, and email address.

Google said the more information a user provides, the easier it would be for others to find them on Google Search. The company said that it has put in place several measures to curb potential misuse of the new feature. One of which is limiting the number of people cards a Google account can create — it is set to one.

“We have a number of mechanisms to protect against abusive or spammy content, and if you come across low quality information or a card that you believe was created by an impersonator, you can tap the feedback link to let us know. If you no longer want your people card to appear in Search, you can delete it at any time,” wrote Lauren Clark, Product Manager for Search at Google, in a blog post.

People card appears to be Google’s latest step to bring more functionalities into Search and thereby reduce a user’s reliance on many other services. In this case, the feature is partially aimed at LinkedIn — though users can’t add other people they find on Google Search as connections. Two years ago, the company added jobs listing discovery feature to Search in India after unveiling it in the U.S. in 2017.

“For the millions of influencers, entrepreneurs, prospective employees, self-employed individuals, freelancers, or anyone else out there who wants to be discovered, we hope this new Search feature will help the world find them. For people in India searching on mobile phones, people cards are rolling out in English starting today,” wrote Clark.

And that’s really it for Google+

Singapore’s trade finance startup Incomlend raises $20M led by Sequoia Capital India 11 Aug 2020, 1:07 am

Incomlend, a Singapore-headquartered startup that operates a trading platform to connect exporters and importers with investors, has raised $20 million in a new financing round, it said on Tuesday.

Sequoia India, the India and SEA investment arm of the storied U.S. headquartered venture firm, led the Series A round in four-year-old Incomlend. The CMA CGM Group, one of the world’s largest shipping and logistics firms, also participated in the round.

Incomlend’s invoice trading platform is solving three pain points. Exporters typically get paid weeks or months after shipping goods and lack working capital to move to service other orders until they have received the due. Incomlend says its platform employs AI-powered underwriting technology to enable exporters to receive early payment.

Similarly, the startup says importers on its platform are able to minimize the risk of supply chain disruption and set more favorable payment terms. And investors have found a new alternative asset class to invest in through Incomlend that offers returns in shorter durations.

These roadblocks have prompted traditional banks to pull back from financing such deals, creating a cash crunch among cross-border trading firms worldwide. “This has led to a $1.5 trillion trade finance gap, hitting mid-cap companies hard. This gap has worsened with Covid-19,” the startup said, citing its own research.

“The impact is acute in high-growth Asia where SMEs — which account for more than 95% of all businesses and provide two out of three private-sector jobs in the region — need more financing options to meet their growing demand. Further, low-interest rates in Asia — and negative rates in Europe — are prompting many global investors to seek alternative asset classes,” the startup said.

Morgan Terigi, co-founder and chief executive of Incomlend, said the startup’s trading platform is able to onboard clients and process deals in a more timely fashion with higher flexibility. Incomlend has facilitated over $330 million in financing and covered invoice finance trades across 50 countries to date.

“The massive trade finance gap, combined with declining global interest rates and the high credit quality of Incomlend’s customers, has helped them create a compelling business that helps solve one of the most important challenges faced by global SMEs,” said Abheek Anand, Managing Director at Sequoia Capital India, in a statement.

Terigi said the startup will deploy the fresh capital to expand into Europe, Southeast Asia, and North Asia and bulk up its technology stack.

Tencent wants to merge China’s esports archrivals Douyu and Huya 11 Aug 2020, 12:59 am

The war between two of China’s largest esports companies may soon come to a truce at the will of their investor Tencent.

Tencent, the world’s biggest games publisher, announced late Monday a proposal to consolidate Douyu and Huya, the competing livestreaming sites focused on video games. Rather than paying in cash, the deal will see the pair enter a stock-for-stock merger.

The proposal is non-binding, but Tencent has paved the way for it to go through. In a separate deal, the entertainment giant agreed to pay Joyy, part-owner of Huya and the company behind TikTok’s serious rival Likee, $810 million in exchange for 30 million shares. Tencent will also buy 1 million shares from Huya CEO Dong Rongjie. Upon the transaction, Tencent will hold 51% of Huya’s shares and 70.4% of its voting rights.

Tencent is also the largest shareholder of Douyu with a 38% stake and voting power.

What this means is the esports platforms that have long fought neck and neck for audiences and livestreaming hosts may soon need to work together. That’s good news for investors who have been hemorrhaging cash.

NYSE-listed Huya has a current market cap of $5.27 billion and NASDAQ-traded Douyu is worth $4.44 billion, giving the duo a combined value of around $10 billion. The pair will together control over 300 million monthly esports users. By March, Douyu had 158 monthly active users and Huya claimed 151.3 MAUs, though there can be overlaps.

The question is who will be in charge of the consolidated behemoth. Could Mr. Dong be relinquishing control of Huya as he gives up a considerable amount of shares? Joyy already signaled its retreat in the first quarter when it stopped folding Huya’s operating results into its own report.

Ammo for Tencent

Industry observers believe the merger can significantly expand Tencent’s reach in the gaming supply chain. The company is the publisher behind blockbusters like the mobile versions of PUBG and Call of Duty, and the addition of a livestreaming empire will allow it to capture not just gamers but also the wider esports spectatorship.

It’s worth noting that Tencent has its own in-house ‘Penguin Esports‘ that’s a counterpart to Douyu and Huya. It’s not hard to imagine the three players integrating resources and generating synergies under Tencent’s oversight.

New challengers have sprung up in the field. While Douyu and Huya focused on esports from the outset, more general-purpose video services like Bilibili and Kuaishou have been luring legions of esports users in recent years. But lo and behold, Tencent is also an investor in Bilibili and Kuaishou.

Daily Crunch: Trying on Apple’s watchOS 7 10 Aug 2020, 6:35 pm

The public beta of watchOS 7 is here, Amazon may be looking to turn malls into distribution centers and Skillshare raises $66 million. This is your Daily Crunch for August 10, 2020.

The big story: Trying on Apple’s watchOS 7

Brian Heater walks us through all the changes coming in watchOS 7. It sounds like the operating system isn’t getting a dramatic upgrade — particularly in comparison to MacOS — but there are still some important changes that should help Apple stay at the top of the smartwatch industry:

Updates include the new hand-washing featuring, cycling directions, new workouts and, most importantly, a number of sleep-tracking features. The last bit is, without question, the most requested addition to the watch — and equally important to Apple’s bottom line, a category the company had fallen behind on relative to the competition … The sleep tracking here works with the sensors already on-board existing devices and joins a number of third-party solutions.

The tech giants

Abandoned mall department stores may become Amazon’s next fulfillment centers — One of the largest owners of shopping mall real estate in the United Stages has been talking to Amazon about transforming its anchor department stores into distribution hubs, according to The Wall Street Journal.

iOS 14 redirects web links from News+ publishers directly to the Apple News app — If you click on a link to a paywalled story published by a News+ partner, iOS 14, iPadOS 14 and macOS Big Sur will take you straight to the article page in the News+ app, even when the link ostensibly points to the publisher’s own website.

Amazon relaunches Twitch Prime as Prime Gaming — In both its old and new incarnations, Twitch Prime/Prime Gaming offers free games, game content (like weapons and skins) and a free Twitch channel subscription, all as part of a standard Prime membership.

Startups, funding and venture capital

ByteDance valuation under huge pressure as TikTok sale nears — The company’s price tag is under tremendous pressure as it’s set to shed its prized asset TikTok, several investors told TechCrunch.

With a renewed focus on creative skills, online learning company Skillshare raises $66M — Skillshare CEO Matt Cooper said 2020 has been a year of rapid growth, even before the pandemic forced large swaths of the population to stay home and turn to online learning for entertainment and enrichment.

A Faraday Future prototype hits the auction block — Although Faraday Future never produced a production vehicle, the company managed to create several prototypes, and one of them will be available for sale soon.

Advice and analysis from Extra Crunch

Seed funding tips and tricks from Uncork Capital founder Jeff Clavier — Clavier said that at the end of 2019, it was estimated there were more than 1,000 firms focusing on seed investing in the market, but by the end of this year, there will be about 2,000.

Unpacking Duck Creek Technologies’ IPO and hoped-for $2.7B valuation — Duck Creek Technologies is looking to go public on the back of growing SaaS revenues.

Three growth marketing experts share their best tools and strategies for 2020 — Recapping observations from our Early Stage virtual event from Graphite’s Ethan Smith, Sound Ventures’ Susan Su and Got Users’ Asher King-Abramson.

(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)

Everything else

Trump administration announces major midband spectrum auction for 5G — Today, the midband of U.S. spectrum is heavily utilized by government services like the military.

Original Content podcast: ‘The Umbrella Academy’ returns for a messy-but-delightful second season — Not only did I cry during the finale, I also got sniffly while just describing the finale.

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.

Y Combinator President Geoff Ralston shares actionable advice for startup founders 10 Aug 2020, 6:20 pm

Running a startup accelerator comes with a number of occupational hazards, but “skepticism is the easiest thing to fall into when you’ve seen too many companies,” said Y Combinator President Geoff Ralston, “and it’s the thing you have to avoid the most.”

Ralston joined me last week for an hour-long Extra Crunch Live interview where we talked about several topics, including how YC has adapted its program during the pandemic, why he has “never stopped coding” and what he sees changing in tech.

“We try to not be too smart, because great founders often see things beyond what you’re seeing,” he said. “If you try to be too smart, you’ll miss the Airbnbs of the world. You’ll say ‘Airbeds in peoples houses? That’s stupid! I’m not going to invest in that,’ and you could’ve bought 10% of Airbnb for like nothing back then… 10% of that company… you can do your own math.”


Extra Crunch Live is our new virtual event series where we sit down with some of the top founders, investors and builders in tech to glean every bit of insight they care to share. We’ve recently been joined by folks like Hunter Walk, Kirsten Green and Mark Cuban.

To watch the entire interview with Geoff Ralston, sign up for ExtraCrunch — but once you’ve got that covered, you can find it (and a bunch of key excerpts from the chat!) below.


Advice for getting into YC

I prefer it when an Extra Crunch Live conversation starts out with actionable advice, so we kicked things off with any suggestions Ralston had for folks looking to apply to YC. And he had plenty! Such as:

  • Mind the deadline, but all hope is not lost if you miss it: “If you miss the deadline, it’s not the end of the world,” says Ralston. “Don’t tell anyone on the admissions team that I said this, but it’s a little bit of a soft deadline. We would never turn down the next epic company because you missed the deadline… although your odds go down of getting in if you don’t make it in by [the deadline]. Why shouldn’t your odds be as high as possible?”
  • Don’t change things up for YC’s sake: “Do whatever you can do to make your company as successful, as real as possible… but don’t try to like, pretty up your company for YC,” he says. “That’s never smart [to do] for an investor. Don’t make bad short-term decisions because you think there’s a deadline that you should do wrong things for. Instead, build your company for the long term, and do the best you can possibly do to find product market fit, to build the right product, to build the right technology, to build the right software or whatever it is you’re building.”

Later in the video (around the 40:55 mark), a question from the audience leads Ralston back to the topic, and he has a few more pieces of advice:

  • Stick to the instructions: “The instructions are fairly clear. It says: do a one-minute video, have all the founders there, and talk to us. That’s a good idea! Don’t give us some marketing video, we’re not interested in that. That’s not how we’re making our decision.”
  • Hone your pitch: “Think about expressing yourself concisely, with great clarity. It does not help to write a book in the application. Be kind to us! We’re reading, you know, hundreds of applications. Get your idea across as clearly as you can. That’s actually a really good signal to us, if you can describe what you’re doing with a minimum of words. That helps us a ton.”
  • Tell your story: “Do not skimp on talking about yourselves!” Ralston notes. “We are super interested in you, who you are, and why you’re doing what you’re doing.”

Shares of Uber, Lyft drift lower after California judge says that contract drivers are employees 10 Aug 2020, 6:15 pm

Shares of Uber and Lyft dipped modestly after a California judge granted a preliminary injunction that TechCrunch reports could force the two American ride-hailing companies to reclassify drivers as employees in the state.

Uber’s stock is off about 1.3% following the cessation of normal trading hours after dipping around 2% in regular trading. Lyft’s stock is down a sharper 2.1%, though its shares rose during regular trading, making the impact of its after-hours declines smaller in aggregate.

As TechCrunch noted in its coverage of the ruling, the costs associated with classifying current drivers as employees and not independent contractors could prove material. While the decision might be meaningful, investors seemed unmoved. Reading the Wall Street tea leaves can be an exercise in futility, but in this case the months of chatter and legal wrangling over the central question of whether drivers should be employees may have desensitized investors to any particular news item.

Both companies provided statements after the news broke, each stating that they will appeal the ruling. That legal posture could also help assuage investor concerns about short-term economic impacts regarding the injunction, which is currently set to take effect in 10 days.

Here’s what Lyft had to say:

Drivers do not want to be employees, full stop. We’ll immediately appeal this ruling and continue to fight for their independence. Ultimately, we believe this issue will be decided by California voters and that they will side with drivers.

And here are Uber notes:

The court’s ruling is stayed for a minimum of 10 days, and we plan to file an immediate emergency appeal on behalf of California drivers. The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law. When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression.

Uber CEO Dara Khosrowshahi published an op-ed in The New York Times today ahead of the ruling, arguing for a middle ground between the gig economy of today’s lack of worker support, and full employment.

To understand why shares of Uber and Lyft are not taking more fire from public investors in light of the news, TechCrunch turned to Uber’s most recent earnings filings. Lyft does not report Q2 earnings until this Wednesday, meaning we have less recent material from the company. Uber’s documents, however, are useful.

Filings

Uber reported earnings last week, showing stiff losses and a surging food-delivery business. The company’s ride-hailing operation was severely hampered by COVID-19 and its related impacts.

As part of its earnings cycle, Uber filed a 10-Q document. It included notes regarding the California legal situation from before the recent decision. The filing is dated August 7, 2020, or last Friday, making it about as fresh a comment from the company that we can expect regarding its pre-news perspective on the matter.

Here’s the first pertinent portion of its SEC filing, with our emphasis to help you parse it:

The Company has existing litigation, including class actions, PAGA lawsuits, arbitration claims, and governmental administrative and audit proceedings, asserting claims by or on behalf of Drivers that Drivers are misclassified as independent contractors. In connection with the enactment of California State Assembly Bill 5 (“AB5”), the Company has received and expects to continue to receive – in California and in other jurisdictions – an increased number of misclassification claims. With respect to the Company’s outstanding legal and regulatory matters, based on its current knowledge, the Company believes that the ultimate amount or range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on the Company’s business, financial position, results of operations, or cash flows. The outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. If one or more of these matters were resolved against the Company for amounts in excess of management’s expectations, the Company’s results of operations, financial condition or cash flows could be materially adversely affected.

A bit further down in the filing, Uber said the following, regarding its chances of success:

On August 6, 2020, following a hearing on the matter, the San Francisco Superior Court informed the parties that the Court would take the motions under submission and publish its order in the coming days.

The Company intends to vigorously defend itself with regard to these actions. The Company’s chances of success on the merits are still uncertain and any reasonably possible loss or range of loss cannot be estimated.

Welcome to the coming days.

Using their share price movement as a barometer, the immediate view from investors appears to be that the possible damage to Uber and Lyft from the decision could prove modest despite.

Uber and Lyft had made profit promises to their shareholders before COVID-19 arose, harming their business results. The California decision could add another layer of difficulty for each as they work to come out of the COVID era solvent, and once again on a path to adjusted profitability.

Reddit CEO defends allowing Trump ads ahead of presidential election 10 Aug 2020, 5:12 pm

Reddit is gearing up to run ads for President Donald Trump ahead of the 2020 presidential election despite concerns from employees, TechCrunch has learned. Reddit CEO Steve Huffman addressed some of these employee concerns during an all-hands meeting last week, viewed by TechCrunch.

“I know for many of you, [Trump] is simply a symbol of hate and there’s no getting around that — what he represents,” Huffman said. “And as a result, many of you have very real anger towards him or fear of where the country is going or sadness around where the country is going, and believe me, I share a lot of those emotions around the state of our country — the polarization of political discourse, the inflammatory rhetoric, the incompetence from our government. It feels like we are regressing.”

Still, Huffman spoke about how he struggles with trying to reconcile his personal beliefs with his duty as the CEO of Reddit. He pointed to Reddit’s long history with Trump, beginning in the 2016 election with r/The_Donald .

“Most of our content policy updates have been related to them in some form or fashion, including the most recent one,” Huffman said.

The decision to allow Trump ads comes within months of Huffman saying Reddit does not tolerate “hate, racism, and violence, and while we have work to do to fight these on our platform, our values are clear.”

“When I think about Reddit’s role moving forward and the role we can play in the world, I think the best way to address many of these issues is actually through the upcoming election,” Huffman said. “There’s a number of things we can do and are doing on that end to ensuring a fair election and I think we have a very important role to play. As I mentioned in my email about Black Lives Matter two months ago, that we later shared, I think in the election — this is one of the areas where Reddit can really lean in and make a difference. […] I know you might not agree with me on some of these points or follow the logic and I can’t take that away from you and I’m not trying to diminish that in any way. What I’m trying to do with Reddit is try to reconcile our beliefs with our platform and see if we can be the best participant possible in the upcoming election.”

And that means allowing political ads. The ads will likely take the form of a homepage takeover, which is the top link on the site, but not the display ads on the sidebar, Huffman explained. Additionally, Reddit will allow reserved buys, which will require the Trump campaign to work directly with the sales team. These ads will feature comments to enable users to engage with the ad.

“My hope is that this would shift the conversation or make the conversation more effective — not just let these ads be a one-way broadcasting mechanism as advertising is elsewhere on the internet but more of a two-way conversation,” Huffman said.

What Reddit won’t allow, however, are auctions, which have previously resulted in advertisers essentially bombing the entire site with their ads.

“We debated having no political ads at all on Reddit and I certainly think there’s a compelling argument for that but I think that Reddit has the opportunity to elevate the discussion around political ads and a duty to play in the political process,” Huffman said. “And I say all of this knowing that this may simply be unacceptable to some of you and I understand why. And in some areas, I can relate to why and in others I can see and hear the pain. There’s an opportunity for this to go well and a risk for this not to go well. And I think that’s a risk we accept and we will do our best to mitigate the challenges that we can foresee.”

Trump’s Election Day YouTube takeover plan feels very different in 2020

Back in April, Reddit announced an update to its political advertising policy that requires campaigns to leave comments open on ads for the first 24 hours. What Reddit is working on now is a bit different. Currently, Reddit allows advertisers to moderate those comments, but Huffman said that’s probably not the right move in this context.

“They’ll either moderate too much or too little and that will create controversy either way,” he said. “And it could be the case that the advertiser wants that, and that controversy would come directly at our expense. So that’s not a workable solution.”

Another option is for Reddit to do comment moderation, but that also poses its risk for controversy. Huffman spoke about how Reddit may then be accused of moderating too much or too little.

“But maybe we can try this other approach, so the other approach would be no direct comments on the ads,” Huffman said. “Instead, we would have a sticky comment with a link encouraging users to submit that ad to a specific community for commentary.”

The vision, Huffman said, is people would be able to discuss the ad in specific communities on Reddit. Those discussions would then be moderated by the specific community. This feature, however, has yet to be built.

The plan is to start running political ads toward the end of September, with the goal to start testing this new feature in early September to see if it works.

“And we are willing to walk away from this deal if that’s not possible — if we can’t hit that bar, if we can’t build this in time,” Huffman said.

Huffman seemed optimistic about being able to get this done, saying it’s not “prohibitively disruptive” to any team’s road maps. Still, he recognized there are other decisions to be made around the election, such as which dates they will allow and won’t allow campaigns to advertise.

“Far and away, I think the most common question I’ve been asked about the ads themselves is, ‘why are we doing this at all?’ Like, ‘why don’t we just say no? It’s a ton of work. It’s a huge distraction,’ ” he said. “[…] I’ve shared with you the challenge about separating my personal views from, I think, my and our work at Reddit, the platform. But even when you now look at just kind of the practical decisions we have to make, that’s a very persuasive argument. At the end of the day, I think that Reddit and politics are deeply intertwined. We will have a role to play in this election no matter what. And political ads are a part of the political process. And if there’s a chance that Reddit can show another more healthy, more effective way, or add to the political conversation I think we should take it. That is what Reddit does. It’s not a sure thing and I think there are a variety of ways for this to go wrong, which we are documenting now, and we will do our best to address.”

TechCrunch has reached out to Reddit and will update this story if we hear back.

Reddit names YC’s Michael Seibel to board, following co-founder Alexis Ohanian’s exit

CA judge grants preliminary injunction forcing Uber and Lyft to reclassify drivers as employees 10 Aug 2020, 5:11 pm

California Superior Court Judge Ethan Schulman has granted a preliminary injunction forcing Uber and Lyft to reclassify its drivers as employees. This order is set to go into effect in 10 days.

“The Court is under no illusion that implementation of its injunction will be costly,” Judge Schulman wrote in the order. “There can be no question that in order for Defendants to comply with A.B. 5, they will have to change the nature of their business practices in significant ways, such as by hiring human resources staff to hire and manage their driver workforces.”

Given that the order won’t go into effect for another 10 days, Uber plans to file an immediate emergency appeal, an Uber spokesperson told TechCrunch.

“The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law,” an Uber spokesperson told TechCrunch. “When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression.”

The decision comes after Judge Schulman heard arguments in court last week. The hearing was the result of California Attorney General Xavier Becerra, along with city attorneys from Los Angeles, San Diego and San Francisco, filing a preliminary injunction in an attempt to force Uber and Lyft to comply with AB 5 and immediately stop classifying their drivers as independent contractors.

“Drivers do not want to be employees, full stop,” a Lyft spokesperson told TechCrunch. “We’ll immediately appeal this ruling and continue to fight for their independence. Ultimately, we believe this issue will be decided by California voters and that they will side with drivers.”

In the order, Judge Schulman says the plaintiffs are likely to prevail on the argument that Uber and Lyft are violating AB 5. AB 5 codifies the 2018 ruling established in Dynamex Operations West, Inc. v Superior Court of Los Angeles. In that case, the court applied the ABC test and decided Dynamex wrongfully classified its workers as independent contractors based on the presumption that “a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits…”

According to the ABC test, in order for a hiring entity to legally classify a worker as an independent contractor, it must prove (A) the worker is free from the control and direction of the hiring entity, (B) performs work outside the scope of the entity’s business and (C) is regularly engaged in an “independently established trade, occupation, or business of the same nature as the work performed.”

The motion for a preliminary junction was filed as part of the suit filed in May, which asserted Uber and Lyft gain an unfair and unlawful competitive advantage by misclassifying workers as independent contractors. The suit argues Uber and Lyft are depriving workers of the right to minimum wage, overtime, access to paid sick leave, disability insurance and unemployment insurance. The lawsuit, filed in the Superior Court of San Francisco, seeks $2,500 in penalties for each violation, possibly per driver, under the California Unfair Competition Law, and another $2,500 for violations against senior citizens or people with disabilities.

“For years, workers have been organizing and speaking out against our mistreatment by billion-dollar gig companies who have refused to obey the law,” Uber driver and member of Gig Workers Rising Edan Alva said in a statement. “It is because of the fearlessness of workers that the Attorney General has been able to argue that the mistreatment we face is so severe that justice can no longer wait. Today, the court sided with workers and not corporations. Thousands of misclassified gig workers will receive the wages, benefits, protections and employee status they are legally owed. It is abundantly clear that Uber and Lyft now must comply with the law. We are steadfast in our demand that the gig companies drop their $110 million ballot initiative, Proposition 22, and reinvest those funds into treating their workers with dignity and respect.”

SpaceX reveals plans for a Texas spaceport resort in new job ad 10 Aug 2020, 4:43 pm

SpaceX has big plans for its Boca Chica, Texas site – where it’s currently building and testing Starship, the company’s next-generation passenger and cargo spacecraft. A new job posting spotted by CNBC’s Michael Sheetz seeks a “Resort Development Manager” to be based out of Brownsville, the nearest neighboring town to the small Boca Chica area where SpaceX has built out its existing test and development site.

The job posting seeks a manger to “oversee the development of SpaceX’s first resort from inception to completion,” with the ultimate aim of turning Boca Chica into a “21st century Spaceport.” That would include overseeing the entire design and construction process, as well as getting all necessary work permits and regulatory approvals, and completing the ultimate build of the facility.

SpaceX has provided some concept designs of what its ideal spaceports might look like, and CEO Elon Musk shared his intent to build floating spaceports for both interstellar and point-to-point Earth travel back in June, when the company announced it was seeking Offshore Operations Engineers, also to be located in Brownsville.

This new posting suggests that SpaceX will seek to create an end-to-end experience out of spaceflight, perhaps more in line with what Virgin Galactic is building at its Spaceport America site in New Mexico. Virgin has placed a lot of emphasis on the customer experience it is providing for its private space tourists, both in terms of its passenger space vehicle cabin, and the amenities available on the ground at the launch site.

SpaceX is readying its own vehicles for private astronaut launches, with announced plans to offer orbital return flights to paying customers using Dragon, which is now closer than ever to human flight certification thanks to having completed a return trip to Earth with NASA astronauts Bob Behnken and Doug Hurley on board. That demonstration mission is the final requirement in its certification process, and SpaceX now looks on track to potentially fly private spacefarers as early as its target window of sometime next year.

DoubleVerify says ad fraudsters are using public domain content to create fake TV apps 10 Aug 2020, 4:13 pm

The team at DoubleVerify, a company that helps advertisers eliminate fraud and ensure brand safety, said that it’s recently identified a new tactic used by ad fraudsters seeking to make money on internet-connected TVs.

Senior Vice President of Product Management Roy Rosenfeld said that it’s harder for those fraudsters to create a legitimate-looking TV app — at least compared to the web and mobile, where “you can just put up a site [or app] to generate content.” For a connected TV app, you need lots of video, which can be costly and time-consuming to produce.

“What these guys have started to do is take old content that’s in the public domain and package that in fancy-looking CTV apps that they submit to the platform,” Rosenfeld said. “But at the end of the day, no one is really watching the old westerns or anything like that. This is just a vehicle to get into the app stores.”

As noted in a new report from the company (which will soon be available online), DoubleVerify said it has identified more than 1,300 fraudulent CTV apps in the past 18 months, with more than half of that coming in 2020.

The report outlined a process by which fraudsters create an app from this content (often old TV and movies from the ’50s and ’60s that has fallen into the public domain); submit the app for approval from Roku, Amazon Fire or Apple TV; then, with the additional legitimacy of an app store ID, generate fake traffic and impressions.

Rosenfeld compared this to a previous boom in flashlight apps for smartphones: “Are there legit flashlight apps? Absolutely. But most of them were not.” In the same way, he argued, “This is not a testament about public domain content overall, it’s not to say that there aren’t legit channels and apps out there that people are consuming and enjoying” — it’s just that many of the public domain apps being submitted are used for ad fraud.

To avoid paying for fake impressions, DoubleVerify recommends that advertisers advocate for transparency standards, buy from platforms that support third-party verification and, of course, buy through ad platforms certified by DoubleVerify.

DoubleVerify names adtech exec Mark Zagorski as new CEO

Trump administration announces major midband spectrum auction for 5G 10 Aug 2020, 3:30 pm

5G is increasingly coming into focus as a set of technologies that has the potential to dramatically expand the quality, bandwidth and range of wireless connectivity. One of the major blocks to actually rolling out these technologies though is simply spectrum: there just isn’t enough of it available for private use. 5G needs spectrum at very low frequencies to penetrate buildings and increase range, and it also needs high frequencies to support the huge bandwidth that future applications will require.

The crux though is in the midband — frequencies that can support a mix of range, latency and bandwidth that could become a mainstay of 5G technologies, particularly as a bridge for legacy infrastructure and devices.

Today, the midband of U.S. spectrum is heavily utilized by government services like the military, which uses the spectrum for everything from conflict operations to satellite connectivity. That has prevented commercial operators from accessing that spectrum and moving forward with wider 5G deployments.

That’s why it is notable today that the White House announced that the 3450 Mhz to 3550 Mhz spectrum will officially be handed off to the FCC for an auction that will allow private operators to access midband spectrum. Given the legal process involved, that auction is expected to take place in December 2021, with private operation of services likely beginning in 2022. Usage of the band is expected to follow the spectrum sharing rules of AWS-3, according to a senior Trump administration official.

According to the White House, a committee of 180 experts was assembled from all the armed services and the Defense Secretary’s office to look at where a segment of the DoD’s spectrum could be freed up and moved to private usage to back 5G.

Such efforts are in line with the MOBILE NOW Act of 2017, which Congress passed in order to spur government agencies to speed up the process of allocating spectrum for 5G uses. That act encouraged NTIA, an agency which advises on telecom issues for the U.S. government, to identify the 3450 Mhz to 3550 Mhz band as a major area of study back in 2018, and earlier this year in January the agency found “viable options” for converting the band to private use.

It’s the latest positive step in the long transition of wireless to 5G services, which demands changes in technology (such as the wireless chips in cell phones), spectrum allocation, policy development and infrastructure buildout in order to come to fruition.

Ted S. Rappaport, a professor of electrical engineering and the founding director of NYU WIRELESS, an academic research center focused on advanced wireless technologies, said that “It’s great news for America … and a terrific move for U.S. consumers and for the U.S. wireless industry.”

He noted that the particular frequency was valuable, given existing knowledge and research in the industry. “It’s not that far from existing 4G spectrum where engineers and technicians already have good understanding of the propagation. And it’s also at a spectrum where the electronics are very low cost and very easy to make.”

There has been growing pressure on U.S. government leaders in recent years over the plodding 5G transition, which has fallen behind peer countries like China and South Korea. Korea in particular has been a world leader, with more than two million 5G subscribers already in the country thanks to an aggressive industrial policy by Seoul to invest in the country’s telecommunications infrastructure and take a lead in this new wireless transition.

The U.S. has been faster at moving ahead in millimeter (high frequency) spectrum for 5G that will have the greatest bandwidth, but it has lagged in midband spectrum allocation. While the announcements today is notable, there will also be concerns whether 100 Mhz of spectrum is sufficient to support the widest variety of 5G devices, and thus, this allocation may well be just the first in a series.

Nonetheless, additional midband spectrum for 5G will help move the transition forward, and will also help device and chip manufacturers begin to focus their efforts on the specific bands they need to support in their products. While it may be a couple of more years until 5G devices are widely available (and useful) in the United States, spectrum has been a key gating factor to reaching the next-generation of wireless, and a gate that is finally opening up.

Nebraska and Iowa win advanced wireless testbed grants for rural broadband

Max Q: SpaceX takes a big hop forward in Starship development 10 Aug 2020, 3:26 pm

Max Q is a weekly newsletter all about space. Sign up here to receive it weekly on Sundays in your inbox.

It wasn’t the busiest week in space tech news — much like a lot of the industry, it feels like we’re entering into a bit of a summer doldrums period, when things slow down considerably. That’s probably especially true right now, with a lot of companies coming off some Herculean efforts and big successes.

This down time will lead to big developments to come, including the first official International Space Station crew mission for SpaceX’s Dragon capsule, which is scheduled to take place toward the end of September. We might also see Blue Origin’s first sub-orbital launch of the year in the same month.

SpaceX launches more Starlink satellites

Image Credits: SpaceX

SpaceX had a successful launch of a batch of 57 more Stalrink satellites for its broadband internet satellite constellation, which is coming together nicely ahead of the planned beta launch this summer. SpaceX has been gearing up for that, and the details we’ve found reveal that it should be getting underway anytime — though we’re unlikely to hear much about how the actual service works, as participation includes agreeing to an NDA.

SpaceX hops its Starship for a good first flight test

Image Credits: SpaceX

SpaceX has flown a full-scale prototype of its Starship for the first time, hopping a long fuselage (with a simulated weight instead of its eventual dome cap, and temp legs) to a height of around 500 feet. The hop included a flight up and then a controlled descent and landing, all of which appeared to have gone very smoothly. This is the first significant forward progress the Starship development program has had this year, really, after a series of (likely very educational) failures.

Rocket Lab boosts payload capacity

Image Credits: Rocket Lab

Rocket Lab has increased the payload capacity of its Electron launch vehicle by a third, bumping the total weight it can carry to orbit up to 660 lbs. That should open up a lot of new potential market for the company, and make it possible for small satellite makers to build additional functionality into the spacecraft they’re putting up with the rocket. The company did this mid-product generation thanks to optimizations of the battery tech that powers some of its thrusters, along with some other tweaks.

Netflix has a new space show premiering September 4

AWAY (L to R) RAY PANTHAKI as RAM ARYA and HILARY SWANK as EMMA GREEN, in episode 109 of AWAY. Cr. DIYAH PERA/NETFLIX © 2020

Netflix’s new show “Away” stars Hilary Swank as an astronaut on a mission to Mars, and seems to focus on the family challenges she encounters between her crucial mission and the people she left behind back on Earth. Looks like more “This Is Us” and less “The Martian,” but it could be great.

Amazon tops 1 million Prime subscribers in India; reports record seller participation in Prime Day 10 Aug 2020, 3:22 pm

Amazon has amassed at least 1 million subscribers for its Prime loyalty program in India, the e-commerce giant revealed today in a long rundown of how its platform fared during last week’s Prime Day in the world’s second largest internet market.

More than a million Prime subscribers in India shopped from small businesses in the two weeks leading up to the 48-hour Prime Day event last week, the company said in a blog post. Factoring in the ongoing global pandemic, Amazon last month chose India as the first market for Prime Day this year.

This is the first time Amazon has even vaguely disclosed how many of its users in India have signed up for the Prime subscription that costs $13.30 a year in the country (compared to $119 in the U.S.) and bundles Prime Video and Prime Music services. Amazon launched Prime in India four years ago. Globally, Amazon has more than 150 million Prime subscribers.

More than 91,000 small businesses (sellers) in India — a record for the company — participated in the local Prime Day, and sold to customers living in 5,900 ZIP codes (covering more than 97% of the country). Over 4,000 of these businesses clocked sales of more than $13,350 (slightly below 4,500 businesses during last year’s Prime Day), and overall 31,000 sellers reported the two-day period last week as their best selling on the platform.

Chinese firms Xiaomi and OnePlus continued to command dominance in the smartphone category, one of the top three selling categories on Amazon, during Prime Day, and also attracted customers to their accessories, laptops and television sets, Amazon disclosed. The reception stands in contrast with the all-time high anti-China sentiments swirling across India in recent months.

Amit Agarwal, SVP and Country Manager of Amazon India, said in a televised interview that last week’s Prime Day also illustrated an “increasing trend of local Indian sellers use Amazon as a starting point to launch products and reach customers globally” but he declined to share any figures.

“This Prime Day was dedicated to our small business (SMB) partners, who have been increasingly looking to Amazon to keep their businesses running. We are humbled that we were able to help as this was our biggest Prime Day ever for small businesses,” he said in a statement.

Prime Day is one of the biggest sales events for Amazon globally. In India, the e-commerce giant has historically sold more goods during sales events scheduled around the festival of Diwali, which is when local residents peak their spendings.

But the participation of 91,000 sellers in last week’s Prime Day is the highest Amazon has ever witnessed during any sales period in India. During the sale around Diwali last year, for instance, the company had reported the participation of 65,000 sellers.

Amazon, which competes with Walmart’s Flipkart in India, has visibly rushed to expand its base of sellers in the country in recent quarters. Earlier this year, Amazon founder and chief executive Jeff Bezos said the company would invest $1 billion in India to help digitize local small businesses and increase their cumulative exports on Amazon to $10 billion by 2025.

The company revealed today that it has amassed 650,000 sellers in India, up from 500,000 it disclosed in January this year.

Amazon has also been focusing on tie-ups with neighborhood stores across the country, leveraging their vast reach to drive more people to shop online. The company said over a thousand such shops from more than 100 cities made their debut on Prime Day last week.

Amazon also claimed that during Prime Day, the number of requests people made to Alexa exceeded one million. The company also shared a wide-range of other stats such as a claim that twice as many customers signed up for a Prime membership during last week’s Prime Day compared to last year’s. But without any concrete figures, these numbers are bereft of meaning.

iOS 14 redirects web links from News+ publishers directly to the Apple News app 10 Aug 2020, 3:20 pm

Apple’s still-in-beta operating systems will automatically redirect News+ subscribers to the Apple News app when they click on links from a News+ publisher.

In other words, if you click or tap on a link to a paywalled story published by a News+ partner — including stories from our own Extra Crunch membership program — iOS 14, iPadOS 14 and macOS Big Sur will take you straight to the article page in the News+ app, even when the link ostensibly points to the publisher’s own website.

Tony Haile (who founded the ad-free subscription news service Scroll) tweeted about the change this morning, and I’ve been able to replicate it myself.

The experience should be familiar to (for example) New York Times app readers who, when they click on a web link, are taken straight to the article page in the NY Times app. (In TechCrunch’s case, I noticed that Apple even prompts users to open the News app when they click on stories that aren’t paywalled.)

Woah, I wonder how many publishers in Apple News+ realize that the new iOS14 and MacOS Big Sur are by default intercepting traffic to their sites and sending it to the Apple News app instead. pic.twitter.com/k4PQG9mE7M

— Tony Haile (@arctictony) August 10, 2020

This addresses one of the more frustrating elements of being a News+ subscriber: Although your $9.99 monthly subscription gets you access to paywalled stories from publishers like The New Yorker and The Wall Street Journal, you only get access via the News app — not the publishers’ websites. So I’ve often seen something I want to read on Google or Twitter, but instead of clicking the link, I have to open the News app and track down the story.

So this seems like it should significantly improve the reader experience, even if it might be a little disconcerting at first. And it only applies to News+ subscribers, who are opted-in but will have the option to turn off the “Open Web Links in News” feature in their News settings.

But as Haile noted, publishers may be less excited about the change: “Any strategic rationale that Apple News+ represents a separate channel/audience is now gone. This directly cannibalizes a publishers’ core subscription audience.”

Although Apple has not released News+ subscriber numbers, there have been several reports — including a November 2019 story from CNBC — suggesting that the service has struggled to attract new subscribers after signing on 200,000 users in the first 48 hours after launch. And Digiday reported that publishers have been underwhelmed with revenue.

Update: An Apple spokesperson just provided the following statement:

Apple is committed to creating the best experience for Apple News+ subscribers. This change offers subscribers seamless access to the content that is part of their News+ subscription right in the News app or publisher app, as well as providing publishers with increased engagement and revenue opportunities on Apple News. News+ subscribers can set their link preference in their News settings.

macOS 11.0 Big Sur preview

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