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December 12, 2018
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Huawei, Google, and the tiring politics of tech

in Asia/China/Delhi/Google/Government/huawei/India/London/Meng Wanzhou/Oath/Policy/Politics/Sheryl Sandberg/Sundar Pichai/Verizon/Verizon Communications by

The defining question of the 21st century is pretty simple: who owns what? Who owns the telecommunications infrastructure that powers our mobile devices? Who owns the OS that powers those devices? Who owns our data?

Today, we see these intersecting arcs with two prominent tech leaders mired in legal and political processes.

TechCrunch is experimenting with new content forms. This is a rough draft of something new – provide your feedback directly to the author (Danny at danny@techcrunch.com) if you like or hate something here.

In Canada, we have day three(!) of the bail hearing for Huawei head of finance Meng Wanzhou (孟晚舟), who was arrested at the request of the U.S. a little more than a week ago. And on Capitol Hill today, Sundar Pichai, the CEO of Google, is testifying in front of the House Judiciary Committee, starting a few minutes ago at 10am.

These may be pedestrian proceedings, but they are riven with deep debates over the meaning of ownership. Meng was arrested for supposedly selling equipment to Iran through intermediaries in violation of U.S. sanctions. Huawei is a Chinese company, but uses American intellectual property in its products. Thus, America claims worldwide jurisdiction over the company, since it owns the patents beneath Huawei’s products.

Meanwhile, Pichai is testifying over a number of concerns, including data privacy (i.e. data ownership) and Project Dragonfly, the company’s attempt to re-enter China. He also has to contend with another data breach bug discovered yesterday in Google+. Is Google an American “owned” company (as Pichai will attempt to paint it today), or is it a global company owned by shareholders with obligations to enter China?

These aren’t simple questions, which is why the broader question of ownership will be so important for this century. Despite the win-win attitude of free traders, the reality is that much of technology ownership is monopolistic owing to barriers to entry – there are only a handful of telco equipment manufacturers, public clouds, mobile OSes and search engines out there. Whoever owns that property is going to get rich at the expense of others.

That’s why the US/China trade conflict is an irreconcilable tug-of-war.

For China, a developing country by most metrics even if it has glittering cities like Shanghai, owning that technological wealth is crucial for it to reach the zenith of its growth. It cannot become rich without becoming a technology power, a manufacturing power, and a consumer market capital all at once. And it views with deep suspicion American blocks on wealth transfers. Isn’t this just a way to keep the country down, to replay the century of humiliation all over again?

For the U.S., China’s constant conniving to pilfer American intellectual property undermines U.S. economic hegemony. China does want to steal plans for airplanes, and semiconductors, and other high-tech goods. Of course, it eventually wants to have the human capital and know-how to build these themselves, but first it has to catch up. America, fundamentally, doesn’t want it to catch-up.

As more and more wealth derives from technology, technology = politics becomes the bedrock law.

That’s frankly tiring for someone who just loves great products and wants to see massive technological progress for everyone regardless of nationality. But political symbolism is increasingly a language that Silicon Valley and the tech industry writ large have to understand.

Why Oath keeps Tumblring (now with a price tag)

Last week, I wrote a bit of a screed on why TechCrunch’s parent company, Oath, is struggling so badly:

Oath has a problem:* it needs to grow for Wall Street to be happy and for Verizon not to neuter it, but it has an incredible penchant for making product decisions that basically tell users to fuck off. Oath’s year over year revenues last quarter were down 6.9%, driven by extreme competition from digital ad leaders Google and Facebook.

Now, we know the costs of those product decisions, as well as the greater challenges in the digital advertising market. Verizon announced today that it will write down the value of Oath by $4.6 billion. That will change Oath’s goodwill value from $4.8 billion to $0.2 billion in the fourth quarter. Yikes.

This was a necessary accounting valuation change, and one that recognizes the challenges that Oath faces. As the filing said:

Verizon’s Media business, branded Oath, has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings. These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business. Oath has also achieved lower than expected benefits from the integration of the Yahoo Inc. and AOL Inc. businesses.

The upside is that Oath still has many, many millions of users every month. It just needs to figure out what to do with all of those eyeballs to build a sustainable business.

Can the West build anything?

Photo by VictorHuang via Getty Images

Seriously, from the Financial Times:

The capital should have been celebrating the opening of the east-west London railway, the biggest construction project in Europe, this week. But Crossrail announced in August that it would not begin operation until autumn 2019 at the earliest.

Even that now seemed “wildly optimistic”, one person close to the project said, given the problems with signals, trains and stations leading to “growing panic” among TfL executives. A number of people close to the project now say it may not be ready until late next year.

Crossrail is one of the most important subway projects in the world, designed to dramatically increase capacity in London’s Underground on the east-west axis. But it is just one of a series of major setbacks in infrastructure costs in the West. Meanwhile in California from Connor Harris at City Journal:

Ten years later, supporters have ample cause to reconsider. CAHSR’s costs have severely escalated: the California High-Speed Rail Authority (CHSRA) now estimates that the train’s core segment alone, from San Francisco to Los Angeles, will cost from $77 billion to $98 billion. Promises that private investors would cover most of the costs have fallen through. Forecasts for the project’s completion date and travel times have also slipped. The fastest trains in the CHSRA’s current business plan have a running time of over three hours, and the first segment of the line—San Jose to Bakersfield, almost 200 miles short of completion—won’t open until 2029.

I want high-speed rail, and I want new subways. I just don’t want new subways that cost billions of dollars per mile, and I don’t want high-speed rail at $100 billion.

The inability of Western countries to build infrastructure within any period of time and within any sort of budget is just mesmerizing. What we are left with is raising the speed limits on subways in New York City from 15 MPH to something a bit more reasonable.

I have talked previously about the need for more startups in this space:

California is home to two very different innovation worlds. For the readers of TechCrunch, there is the familiar excitement of the startup world, with startups working on longevity and age extension, rockets to Mars, and cars that drive themselves. Hundreds of thousands of entrepreneurs, engineers, and product managers are building these futures every day, often on shoestring budgets all in the hope of seeing their solution come to fruition.

Then, there is the “innovation” world of California’s infrastructure. Let’s take the most prominent example, which is the bullet train connecting southern to northern California. The train, first approved in a bond authorized by voters in 2008, is expected to have its first passengers in 2025 — three years after the original target of 2022.

That’s roughly 17 years start to finish, or older than the ages of Facebook (14 years) and the iPhone (10 years) are right now. Given that environmental reviews aren’t even slated to come in until 2020, it seems hard to believe that the route will maintain its current schedule.

Startups, we need your innovation in this space desperately. It’s a trillion dollar market ready for anything that might make these projects move faster, and cost less.

Quick Bites

My quick bites turned into full bites above.

What’s next

I am still obsessing about next-gen semiconductors. If you have thoughts there, give me a ring: danny@techcrunch.com.

Thoughts on Articles

The Increasingly United States – I read this book this weekend. Probably best to just read the reviews for most readers, although if you like modern political science research, this has about all the techniques you can do in American studies these days.

The core thesis is that the notion that “all politics is local” is completely bunk on two dimensions. Voters increasingly vote for candidates at every level of government using the same litmus tests, and they also get their information about politics exclusively from national sources. That basically means city councilors are debating immigration policy (which they have zero control over) rather than trash policy. It also explains the rising polarization in Congress — with less local issues to debate, there are just no opportunities afforded to build coalitions.

The book charts the pathways through which this nationalization takes place, and they will be intimately familiar to most readers (campaign finance changes, national media markets, nationalized policy planning, etc).

The thesis though raises a number of questions. First, how will local issues (zoning, trash pickup, etc.) get the attention they need to make our cities livable and thriving? Second, how can we fund local media so that voters have differentiated visibility into what is happening in their own backyard? These questions aren’t easy to answer, but we must if we want our federal-style system to function the way the founders intended.

The Death of Democracy in Hong Kong by Jeffrey Wasserstrom. A short and emotional look back at the failure of Hong Kong’s Umbrella Movement in 2014 and its ramifications.

Lean In’s Sheryl Sandberg Problem by Nellie Bowles. What does an organization do when the reputation of its founder and major icon turns sour? Lean In is trying to find out. Good if a bit lengthy, but I’m starting to get tired of the constant anti-Sandberg coverage.

Reading docket

What I’m reading (or at least, trying to read)

News Source = techcrunch.com

AppOnboard raises $15 million to let Android users try before they buy apps on Google Play

in AdColony/app developers/app-store/apple inc/apple store/AppOnboard/Apps/Chief Operating Officer/Delhi/e-commerce/Entrepreneur/Google/India/iOS/iTunes/London/Los Angeles/mobile app/online marketplaces/opera software/Paul Heydon/Politics/Software/United States by

Pitching app developers with a new way to convert app browsers into actual customers, AppOnboard has raised $15 million in a new round of funding, the company said.

Based in Los Angeles, AppOnboard sees itself as one of a new breed of LA startup that’s steeping itself in the local ecosystem and trying to be one of the cornerstone’s for a new technology hub in the southern California region.

Company co-founder Jonathan Zweig has already had one hit as a Los Angeles-based entrepreneur. Zweig was one of the architects behind the success of AdColony, a startup which sold to Opera Software in 2014 for $350 million. It was an early success for the regional ecosystem and proved to be one of the most valuable exits (from a capital efficiency standpoint) for the year.

Now Zweig is back again… this time pitching app developers a tool that can help convert browsers into buyers for new applications in app stores around the world. As consumers sour on the free-to-use model (since that model depends on selling user information in order for “free” apps to make money), giving users a way to try before they buy makes sense.

Zweig claims that conversion rates have increased significantly for the companies that pay a fee for his company’s service. Play Store shoppers who engage with an app store demo before installing have higher retention and are more likely to become paying customers than those who install directly without playing or using a demo version, the company said.

That certainly aligns with the thinking of Paul Heydon, an investor at Breakaway Growth, which led the new round for AppOnboard. “The entire app store paradigm is about to change dramatically, and AppOnboard is perfectly positioned for this disruption,” said Heydon in a statement. “With its patented app demo technology and tools, users will now be able to experience their apps and games on-demand and without an install across various platforms, starting with Google .”

Zweig says that the service is the first from a third party to be directly integrated into a platform like Google’s Play store.

“Google has been a great partner for us,” Zweig says. And the company is in talks with other platforms, like the Apple Store, he said.

Now, with the additional cash in hand, Zweig says AppOnboard is ready to make some international expansion moves. The company already has offices in London and in cities across the U.S., but Zweig thinks there’s more room to grow.

“Our vision continues to be that every app and game will be instant and available for users to experience without a download. We look forward to continuing to work with global developers, Google, and partners to make this a reality for all mobile app users,” said Bryan Buskas, the chief operating officer of AppOnboard. As part of its new pitch, the company is offering a 30-day free trial for any App Store Demo.

News Source = techcrunch.com

SimbaPay launches Kenya to China payment service via WeChat

in africa/Barclays/ceo/China/Column/coo/Delhi/east africa/Economy/electronics/Europe/India/internet access/kenya/London/M-Pesa/mobile payments/money/Nairobi/north america/Politics/Safaricom/Software/TechStars/Tencent/United Kingdom/Vodafone/WeChat/western union by

Forging another link between Africa and China’s digital economies, the African-focused money transfer startup SimbaPay and Kenya’s Family Bank are partnering with WeChat to launch an instant payment service from East-Africa to China.

The product partnership is aimed at Kenyan merchants who purchase goods from China—Kenya’s largest import source.

Using QR codes, SimbaPay developed a third-party payment aggregator that enables funds delivery into WeChat’s billion plus user network.

Individuals and businesses can now send funds to China through Family Bank’s PesaPap app, Safaricom’s M-Pesa, or by texting USSD using the code *325#.

The service opens up a faster and less expensive money transfer option between Kenya and China through the TenCent-owned WeChat social media platform.

“Kenya imports about $4 billion goods from China. That’s the total market that we’re getting into. We’re looking at a single digit market share of the transactional volume around that,” SimbaPay Founder and CEO Sagini Onyancha told TechCrunch.

“The users [of the new product] are primary small Kenyan businesses, that import phones, gadgets, electronics…small to medium size traders who import goods from China,” he said.

SimbaPay and Family Bank will generate revenues on the WeChat based transfer service through a fee share arrangement on transactions. “We have a sliding scale of charges [for the service]. For example, to send the equivalent of $80 will cost $3.50,” said Sagini.

This presents a significant reduction of fees and opportunity cost for Kenyan traders who import from China, according to Sagini and Family Bank.

Current available payment methods to China for Kenyan businesses are less secure and more expensive options such as traditional money transmitters (Western Union), SWIFT, and off the grid services, according to Sagini and Family Bank Chief Operation Officer (COO) Godfrey Kariuki Kamau.

“There are informal channels on the street who will take your money, get it paid out to the recipient [in China] one or two days later and take a percentage,” said Sagini.

SimbaPay and Family Bank estimate over seven million customers and businesses will be able to access their China WeChat payment service, based on projections of Kenya’s current SMEs.

Located in Nairobi, Family Bank has a current customer base of 600,000 account holders (including SMEs) across 92 branches, according to COO Kariuki Kamau.

Prior to the SimbaPay-Family Bank China service, he said a number of Family Bank’s small business customers “were taking cash from our counters and pooling with…informal transmitters” to pay Chinese vendors.

Kariuki Kamau estimates the immediate transactional potential for the new SimbaPay WeChat based service will be $1 million in the first three months.

“The businesses in Kenya import over $4 billion from China, so this could be conservative. We could see this grow 4 to 5 times beyond that when people hear they can send money directly,” said Kariuki Kamau.

On regulation of this new service, he confirmed “Family Bank got the approval of the [Kenyan] Central Bank for SimbaPay to move in the market and…we confirmed with the UK financial regulators that SimbaPay is allowed to do this business.

Headquarted in London, SimbaPay launched in 2015 to facilitate more cost effective and efficient transfer of funds across Africa. The platform works as a gateway payment product “for banks and mobile money providers to offer their customers without having to make any major technical integration” to send funds across Africa’s borders, explained Sagini.

“We’ve created the platform in such a way that we’re able to provide this service like a SaaS B2B service to banks and telcos…and our service is available without internet access,” Sagini said—noting the platform’s USSD capabilities.

The startup has focused more on capturing intra-Africa and out-of-Africa payments volumes, compared to a number of fintech companies with an eye on the multi-billion dollar remittance market for funds sent to Africa from regions such as Europe and North America.

SimbaPay transfers funds to 11 countries—9 in Africa then to China and India. “Early next year we’ll increase this to 29 countries,” said Sagini. This includes offering the WeChat China payment service elsewhere in East Africa.

SimbaPay has raised $1 million in seed funds from TechStars, Barclays Accelerator, and local angel investors, according its CEO.

News Source = techcrunch.com

China’s Youon expands into Europe as other bike startups backpedal worldwide

in alibaba/alipay/Ant Financial/Asia/China/Delhi/Europe/hellobike/India/London/mobike/ofo/Politics/sharing economy/Transportation/United Kingdom by

A little known Chinese bike company is riding into Europe as its peer Ofo has applied the brakes to its global expansion strategy in recent months.

Youon, which gets by manufacturing public bikes for city governments across China, has formed a joint venture with UK-based bike-sharing startup Cycle.land, it says in a statement. The deal allows the Chinese firm to sit back in its headquarters in eastern China while its British partner deploys its bikes and takes care of on-the-ground operation.

Youon’s fleet of 1,000 public bikes will start appearing in London next March, making the UK the fourth country in its international expansion after Russia, India, and Malaysia.

Youon’s name may not ring a bell, but its subsidiary Hellobike is increasingly turning heads as its dockless bikes win over users in China’s smaller cities where its larger rivals Ofo and Mobike lack a presence. This is in part thanks to Hellobike’s partnership with its investor Ant Financial, Alibaba’s financial affiliate, which lets users skip Hellobike’s standalone app and access the service on Ant’s Alipay wallet, which has over 500 million MAUs.

While Hellobike’s mobile penetration recorded a 20 percent month-over-month increase (link in Chinese) in September, Mobike and Ofo barely saw any growth in the same period, according to data service provider Jiguang.

Away from home, Youon’s partnership approach is also noticeably different from that of Mobike and Ofo, which have chosen to run their own overseas operation. Teaming up with local players gives Youon insight into customers abroad, suggests market research firm Analysys.

“User behavior in Europe and North America is very different and it will be reckless for a [Chinese] firm to abruptly set up its own operations overseas,” Sun Naiyue, an analyst at Analysys, tells TechCrunch.

China’s Youon partnered with peer-to-peer bike-sharing startup Cycle.land to expand to the UK [Image via Youon]

Having a local ally also helps Youon avoid government protectionism and regulatory meddling in the foreign market, Sun adds. London has already greenlighted the company to place bikes in the city and the company will “follow local demand and rules to deploy bikes accordingly,” Cycle.land says of its partner.

Contrasting the prospects of Youon’s latest push is the bleak outlook of its peer. The past few months have seen Ofo retreat from its overseas markets to prioritize profitability. To date, Ofo has shut down in Australia, Austria, Czech Republic, Germany, India, Israel, and scaled back operation in a host of other countries.

News Source = techcrunch.com

Uber back in court in UK to argue against workers rights for drivers

in Apps/Delhi/employment law/Europe/GMB Union/India/James Farrar/lawsuit/London/Politics/Transportation/Uber/UK government/United Kingdom/workers rights by

Uber is back in court in the UK today and tomorrow to try once again to overturn a  two year old employment tribunal ruling that judged a group of Uber drivers to be workers — meaning they’re entitled to workers benefits such as holiday pay, paid rest breaks and the national minimum wage.

Uber lost its first appeal against the ruling last year but has said it will continue to appeal.

On Sunday the GMB Union calculated that Uber drivers in the UK are £18,000 out of pocket as a result of the company continuing to fight the rights judgement, rather than paying the additional entitlements.

In a statement Sue Harris, GMB legal director, said: “These figures lay bare the human cost of Uber continuing to refuse to accept the ruling of the courts. While the company are wasting money losing appeal after appeal, their drivers are up to £18,000 out of pocket for the last two years alone.

“That’s thousands of drivers struggling to pay their rent, or feed their families. It’s time Uber admits defeat and pays up. The company needs to stop wasting money dragging its lost cause through the courts. Instead, Uber should do the decent thing and give drivers the rights to which those courts have already said they are legally entitled.”

Uber has previously suggested it would cost its UK business “tens of millions” of pounds if it reclassified the circa 50,000 ‘self-employed’ drivers operating on its platform as Limb (b) workers — an existing employment categorization that sits between ‘self-employed’ and ‘worker’.

The GMB Union notes that in Uber London’s latest accounts, released last week, it warns shareholders that it faces “numerous legal and regulatory risks”, both pertaining to existing regulations and the development of new regulations, as well as as a result of “claims and litigation” related to its classification of drivers as independent contractors.

This year the UK government has signalled a high level intent to bolster rights for more types of workers.

In February it announced a package of labor market reforms intended to respond to changing working patterns — saying it would expand workers rights for millions of workers and touting tighter enforcement.

Though it continues to consult on the issue, to shape the detail of its response, and it’s likely the Uber litigation will feed into government thinking given the timing of the case.

This month Uber drivers in the UK staged a one-day strike over pay and conditions, piling more pressure on the issue and calling for the company to immediately apply the tribunal judgement and implement employment conditions that respect worker rights for drivers.

Uber responded by pointing to changes it has made since the original tribunal ruling — including expanding a free insurance product it now offers to drivers and couriers across Europe.

It also claims to have changed how it takes feedback from drivers, and flagged a number of tweaks to its app it claims help drivers access data insights to boost their earnings.

We’ve reached out to Uber for comment on the latest stage of its appeal. Update: A company spokesperson sent us the following statement:

Almost all taxi and private hire drivers have been self-employed for decades, long before our app existed. A recent Oxford University study found that drivers make more than the London Living Wage and want to keep the freedom to choose if, when and where they drive. If drivers were classed as workers they would inevitably lose some of the freedom and flexibility that comes with being their own boss.

We believe the Employment Appeal Tribunal last year fundamentally misunderstood how we operate. For example, they relied on the assertion that drivers are required to take 80% of trips sent to them when logged into the app, which has never been the case in the UK.

Over the last two years we’ve made many changes to give drivers even more control over how they use the app, alongside more security through sickness, maternity and paternity protections. We’ll keep listening to drivers and introduce further improvements.

The Independent Workers’ Union of Great Britain (IWGB), which is defending the tribunal judgement at the hearings this week, backing former Uber drivers and co-claimants Yaseen Aslam and James Farrar, who brought the original case, has organized a demonstration to coincide with the hearing.

It says it expects hundreds of “precarious workers” — i.e. people who labor in the so-called ‘gig economy’ — to march through London in solidarity with the drivers and demand an end to all work that undermines workers rights.

The march is also being backed by the left-leaning UK political organization Momentum, the Communications Workers Union, War On Want, Bakers Food and Allied Workers Union and United Voices of the World, among others.

A parallel event is being held in Glasgow to coincide with the hearing.

Commenting in a statement, IWGB United Private Hire Drivers branch chair and Uber case co-claimant Farrar said: “It’s two years since we beat Uber at the Employment Tribunal, yet minicab drivers all over the UK are still waiting for justice, while Uber exhausts endless appeals. As the government ignores this mounting crisis, it’s been left to workers to fix this broken system and bring rogue bosses to account. If anything gives me hope, it is the rising tide of precarious workers that are organising and demanding a fair deal.”

IWGB general secretary Jason Moyer Lee added: “Precarious workers are getting hammered in this country. The protest is the articulation of the legitimate grievance of those who are being denied the basic rights and dignities at work that we should all be able to take for granted.”

News Source = techcrunch.com

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