Carriers ‘violated federal law’ by selling your location data, FCC tells Congress

More than a year and a half after wireless carriers were caught red-handed selling the real-time location data of their customers to anyone willing to pay for it, the FCC has determined that they committed a crime. An official documentation of exactly how these companies violated the law is forthcoming.

FCC Chairman Ajit Pai shared his finding in a letter to Congressman Frank Pallone (D-NJ), who chairs the Energy and Commerce Committee that oversees the agency. Rep. Pallone has been active on this and prodded the FCC for updates late last year, prompting today’s letter.

“I wish to inform you that the FCC’s Enforcement Bureau has completed its extensive investigation and that it has concluded that one or more wireless carriers apparently violated federal law,” Pai wrote.

Extensive it must have been, since we first heard of this egregious breach of privacy in May of 2018, when multiple reports showed that every major carrier (including TechCrunch’s parent company Verizon) was selling precise location data wholesale to resellers who then either resold it or gave it away. It took nearly a year for the carriers to follow through on their promises to stop the practice. And now, 18 months later, we get the first real indication that regulators took notice.

A year after outcry, carriers are finally stopping sale of location data, letters to FCC show

“It’s a shame that it took so long for the FCC to reach a conclusion that was so obvious,” said Commissioner Jessica Rosenworcel in a statement issued alongside the Chairman’s letter. She has repeatedly brought up the issue in the interim, seemingly baffled that such a large-scale and obvious violation was going almost completely unacknowledged by the agency.

Commissioner Brendan Starks echoed her sentiment in his own statement: “These pay-to-track schemes violated consumers’ privacy rights and endangered to their safety. I’m glad we may finally act on these egregious allegations. My question is: what took so long?”

Chairman Pai’s letter explains that “in the coming days” he will be proposing a “Notice of Apparent Liability for Forfeiture,” or several of them. This complicated-sounding document is basically the official declaration, with evidence and legal standing, that someone has violated FCC rules and may be subject to a “forfeiture,” essentially a fine.

Right now that is all the information anyone has, including the other Commissioners, but the arrival of the notice will no doubt make things much clearer — and may help show exactly how seriously the agency took this problem and when it began to take action.

Representative Pallone issued the following statement after receiving the letter:

Following our longstanding calls to take action, the FCC finally informed the Committee today that one or more wireless carriers apparently violated federal privacy protections by turning a blind eye to the widespread disclosure of consumers’ real-time location data. This is certainly a step in the right direction, but I’ll be watching to make sure the FCC doesn’t just let these lawbreakers off the hook with a slap on the wrist.

Cybersecurity 101: Seven simple security guides for protecting your privacy

Disclosure: TechCrunch is owned by Verizon Media, a subsidiary of Verizon Wireless, but this has no effect on our coverage.

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How Dubsmash revived itself as #2 to TikTok

Lip-syncing app Dubsmash was on the brink of death. After a brief moment of virality in 2015 alongside Vine (R.I.P), Dubsmash was bleeding users faster than it could recruit them. The app let you choose an audio track like a rap song or movie quote and shoot a video of you pretending to say the words. But there was nowhere in the app to post the videos. It was a creation tool like Hipstamatic, not a network like Instagram. There’s a reason we’re only using one of those today.

So in 2017 Dubsmash‘s three executives burned down the 30-person company and rebuilt something social from the ashes with the rest of the $15.4 million it’d raised from Lowercase Capital, Index Ventures, and Raine. They ditched its Berlin headquarters and resettled in Brooklyn, closer to the one demographic still pushing Dubsmashes to the Instagram Explore page: African-American teenagers posting dances and lip-syncs to indie hip-hop songs on the rise.

Dubsmash stretched its funding to rehire a whole new team of 15. They spent a year coding a new version of Dubsmash centered around Following and Trending feeds, desperately trying to match the core features of Musically, which by then had been bought by China’s ByteDance. It’s got chat but still lacks the augmented reality filters, cut transitions, and photo slideshows of TikTok. But Dubsmash has the critical remix option for soundtracking your clip with the audio of any other video that sets it apart from Instagram and Snapchat.

“We realized to build a great product, we needed a depth of expertise that we just didn’t have access to in Berlin” Dubsmash co-founder and CEO Jonas Druppel tells me. “It was a risky move and we felt the weight of it acutely.  But we also knew there was no other way forward, given the scale and pace of the other players in the market.”

Few social apps have ever pulled off a real comeback. Even Snapchat had only lost 5 million of its 191 million users before it started growing again. But in the case of Dubsmash, its biggest competitor was also its savior.

The pre-relaunch version of Dubsmash

In August 2018, ByteDance merged Musically into TikTok to form a micro-entertainment phenomenon. Instead of haphazardly sharing auto-biographical Stories shot with little forethought, people began storyboarding skits and practicing dances. The resulting videos were denser and more compelling than content on Snapchat and Instagram. The new Dubsmash, launched two months later, rode along with the surge of interest in short-form video like a Lilliputian in a giant’s shirt pocket. The momentum helped Dubsmash raise a secret round of funding last year to keep up the chase.

Now Dubsmash has 1 billion video views per month.

Dubsmash rebuilt its app and revived its usage

“The turnaround that we executed hasn’t been done in recent memory by a consumer app in such a competitive marketplace. Most of them fade to oblivion or shut down” Dubsmash co-founder and President Suchit Dash tells me. “By moving the company to the United States, hiring a brand new all-star team & relaunching the product, we gave this company & product a second life. Through that journey, we obsessed only on one metric: retention.”

Now the app has pulled 27% of the US short-form video market share by installs, second only to TikTok’s 59%, according to AppAnnie. Sensor Tower tells TechCrunch that TikTok has about 3X as many US lifetime installs as Dubsmash, and 11X more between when Musically became TikTok in August 2018 and now.

In terms of active users outside of TikTok, Dubsmash has 73% of the US market, compared to just 23% on Triller, 3.6% on Firework, and an embarrassing 0% on Facebook’s Lasso. And while Triller began surpassing Dubsmash in downloads per month in October, Dubsmash has 3X as many active users and saw 38% more first-time downloads in 2018 than 2019. Dubsmash now sees 30% retention after a month, and 30% of its daily users are creating content.

It’s that stellar rate of participation that’s brought Dubsmash back to life. It also attracted a previously unannounced round of $6.75 million in the Spring of 2019, largely from existing investors. While TikTok’s superstars and huge visibility could be scaring some users away from shooting videos while a long-tail of recent downloaders watch passively, Dubsmash has managed to make people feel comfortable on camera.

“Dubsmash is ground zero for culture creation in America—it’s where  the newest,  most popular hip-hop and dance challenges on the Internet originate” Dash declares.  “Members of the community are developing content that will make them the superstars of tomorrow.”

Being #2 might not be so bad, given how mobile video viewing is growing massively thanks to better cameras, bigger screens, faster networks, and cheaper data. Right now, Dubsmash doesn’t make any money. It hopes to one day generate revenue while helping its creators earn a living too, perhaps through ad revenue shares, tipping, subscriptions, merchandise, or offline meetups.

One advantage of not being TikTok is that the app feels less crowded by semi-pro creators and influencers. That gives users the vibe that they’re more likely to hit the Trending or Explore page on Dubsmash. The Trending page is dominated by hot new songs and flashy dances, even if they’re shot with a lower production quality that feels accessible.

Dubsmash tries to stoke that sense of opportunity by making Explore about discovering accounts and all the content they’ve made rather than specific videos. While popular clips might have tens of thousands of views rather than the hundred-thousand or multi-million counts on TikTok’s top content, there’s enough visibility to make shooting Dubsmashes worth it.

TikTok has already taken notice. Shown in a leak of its moderation guidelines from Netzpolitik, the company’s policy is to downrank the visibility of any video referencing or including a watermark from direct competitors including Dubsmash, Triller, Lasso, Snapchat, and WhatsApp. That keeps Dubsmash videos, which you can save to your camera roll, from going viral on TikTok and luring users away.

TikTok’s content moderation guidelines show it downranks content featuring the watermarks of competitors like Dubsmash

TikTok also continues to aggressively buy users via ads on competing apps like Facebook thanks to the billions in funding raked in by its parent ByteDance. In contast, Dash says Dubsmash has never spent a dollar on user acquisition, influencer marketing, or any other source of growth. That makes it achieving even half to a third of as many installs as TikTok in the US an impressive fete.

Why would creators choose Dubsmash over TikTok? Dash clinically explains that its a “decoupled audio and video platform that enables producers and tastemakers to upload fresh, original tracks that are utilized by creators and  influencers alike” but that it’s also about “Its role as a welcoming home for a community that’s underrepresented on social platforms.”

If Dubsmash keeps growing, though, it will encounter the inevitable content moderation problems that come with scale. It’s already doing a solid job of requiring users to sign up with their birthdate to watch or post videos, and it blocks those under 13. Only users who follow each other can chat.

Any piece of content that’s flagged by users is hidden from the network until it passes a review by its human moderation team that works around the clock, and it does proactive takedowns too. However, brigading and malicious takedown reports could be used by trolls to silence their enemies. Dubsmash is working off of a common sense model of what’s allowed rather than firm guidelines, which will be tough to keep consistent at scale.

“Being a social media app in 2020 means you need to take greater responsibility for the well being of the community” says Dash. “We decided upon relaunch to take a strict perspective. Our goal is to be intentional and proactive early, and invest in safety and healthy growth rather than growth at all costs. This may not be the most popular approach amongst the market, but we believe this is the most effective way to build a social platform.”

Dubsmash proves that short-form video is so compelling to teens that the market can sustain multiple apps. That will have to be the case given Instagram is preparing to release its TikTok clone Reels, and Vine’s co-founder Dom Hofmann just launched his successor Byte. The breakdown could look like:

• TikTok: A slightly longer-form combo of comedy, dance, and absurdity
• Dubsmash: Mid-length dance and music videos with a diverse community
• Byte: Super short-form comedy featuring slightly older ex-Vine stars
• Triller: Mid-length life blogging clips from Hollywood celebrities
• Instagram Reels: International influencers making videos for a mainstream audience

Perhaps we’ll eventually see consolidation in the market, with giants like TikTok and Instagram acquiring smaller players to grow their content network effect with more fodder for remixes. But fragmentation could breed creativity. Different tools and audiences beg for different types of videos. Make something special, and there’s an app out there to enter your into pop culture cannon.

For more on the short-form video wars and the future of micro-entertainment, read:

Zuckerberg misunderstands the huge threat of TikTok

Instagram Stories launches TikTok clone Reels in Brazil

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EU lawmakers take fresh aim at Apple’s Lightning connector with latest e-waste push

The European parliament has voted overwhelmingly for tougher action to reduce e-waste, calling for the Commission to come up with beefed up rules by July 2020.

Specifically, the parliament wants the Commission to adopt the delegated act foreseen in the 2014 Radio Equipment Directive by that deadline — or else table a legislative measure by the same date, at the latest.

The resolution, which was approved by 582 votes to 40, points out that MEPs have been calling for a single charger for mobile devices for more than a decade now. But the Commission has repeatedly postponed taking steps to force an industry-wide shift. Subtext: We’re tired of the ongoing charging cable nightmare.

The parliament says there is now “an urgent need” for EU regulatory action on the issue — to shrink e-waste, empower consumers to make sustainable choices, and allow EU citizens to “fully participate in an efficient and well-functioning internal market”.

The resolution notes that around 50 million metric tons of e-waste is generated globally per year, with an average of more than 6 kg per person.

While, in Europe in 2016, the figure for total e-waste generated was 12.3 million metric tonnes, equivalent to 16.6 kg on average per inhabitant — with the parliament asserting this represents “an unnecessary environmental footprint that can be reduced”.

To date, the Commission’s approach to the charger e-waste issue has been to lean on industry to take voluntary steps to reduce unnecessary variety. Which has resulted in a reduction of the number of charger types on the market — down from 30+ in 2009 to just three today — but still no universal charger which works across brands and device types (phones, tablets, e-readers etc).

Most notably, Apple continues to use its own Lightning port charger standard — while other device makers have switched to USB-based charging (such as the newest, USB-C standard).

When news emerged earlier this month of the parliament’s intention to vote on tougher measures to standardize mobile chargers Apple attacked the plan — arguing that regulation would ‘stifle innovation’.

But the tech giant has had plenty of years to chew over clever ways to switch from the proprietary charging port only it uses to one of two USB standards used by everyone else. So the ‘innovation’ argument seems a pretty stale one.

Meanwhile Apple has worked around previous EU attempts to push device makers to standardize charging on Micro USB by expanding its revenue-generating dongle collection — and selling Europeans a Lighting to Micro USB adaptor. Thereby necessitating even more e-waste.

Perhaps picking up on Apple’s ‘innovation’ framing sidestep, i.e. to try to duck the e-waste issue, the parliament also writes:

… that the Commission, without hampering innovation, should ensure that the legislative framework for a common charger will be scrutinised regularly in order to take into account technical progress; reiterates the importance of research and innovation in this domain to improve existing technologies and come up with new ones;

It also wants the Commission to grapple with the issue of wireless chargers — and take steps to ensure interoperability there too, so that wireless chargers aren’t locked to only one brand or device type.

Consumers should not be obliged to buy new chargers with each new device, per the resolution, with the parliament calling on the Commission to introduce strategies to decouple the purchase of chargers from a new device alongside a common charger solution — while making sure any decoupling measures do not result in higher prices for consumers.

It also wants the Commission to look at legislative options for increasing the volume of cables and chargers that are collected and recycled in EU member states.

We’ve reached out to the Commission for comment.

Per Reuters, officials in the executive are in agreement that the voluntary approach is not working and have said they plan to introduce legislation for a common charger this year.

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Snapchat launches Bitmoji TV: zany 4-min cartoons of your avatar

If you were the star of every show, would you watch more mobile television? Snapchat is betting that narcissism drives resonance for its new weekly videos that put you and your friends’ customizable Bitmoji avatars into a flurry of silly animated situations. Bitmoji TV premieres on Saturday morning, and it’s remarkably funny, exciting, and addictive. Think cartoon SNL on fast-forward with you playing a secret agent, a zombie president, or a Moonlympics athlete.

It’s a style of content only Snapchat could pull off that relies on ubiquitous personalized avatars only Snapchat owns. The company says 70% of its daily active users, or 147 million of its 210 million, have made themselves a Bitmoji. Snapchat bought Bitmoji’s parent company Bitstrips in 2016 for a steal at $62.5 million, and it’s paying off. Amidst a sea of premium video and haphazard Stories that blur together across streaming services and social apps, Snapchat finally found something Facebook can’t copy.

“We really believe that we have invented a new category of entertainment. It’s scripted but it’s personalized. You could take that in a million directions” says Bitmoji co-founder and CEO Ba Blackstock who wrote and directed Bitmoji TV. “First and foremost, I hope that everyone who watches this has kind of a mind blowing experience that they’ve never had before.”

Bitmoji TV, which TechCrunch was first to report Snapchat was building last month, will have its own Snapchat Show page where users can subscribe to get notifications and see new episodes on the Discover Page. Users can visit this page on mobile or tap and hold on the Snapcode below while pointing at it with the Snapchat camera to open Bitmoji TV.

The show is designed to be PG-13 with some bleeped out swearing and a little bloody violence. The shows are made out of Bitmoji’s Toronto office and are based on North American TV, film, and advertising. Each episode cuts away and back to a main story, with the first two centered around an America’s Best Bitmoji game show and a Mime Cops hostage negotiation. Interspersed are ‘channel flips’ between shorter single-gag clips that take your avatar into sit-coms, soap operas, action movies, and informercials.

The gags are ridiculous. At the basketball “Moonlympics”, a player jumps up for a dunk, but low gravity causes him to crash through the glass dome and suck all the other players into space. At Cannibal High, an school announcement says “Attention students, we’re all deeply saddened by the sudden passing of Vice Principal Schneider. To honor his legacy, today the cafeteria will be serving Vice Principal Schneider.”

You’re not alone it Bitmoji TV. There’ll be occassional celebrity guests like Randy Jackson, Andy Richter, and Jon Lovitz. But your co-star in these segments is the Bitmoji of whichever person you last interacted with on Snapchat. That lets you control whether you want your best friend, your significant other, or some rando alongside you. That decision will change the way you interpret the jokes and scenes. Your Bitmoji won’t talk, but their’s will.

Getting philosophical, Blackstock explains that “When you say words to me, it’s not just your words in a vacuum. They’re coming from you. You’re the medium … In any narrative fiction you learn about the characters, they have a back story, they have relationships that exist under the story that color it.” Who you make your supporting actor lends personal subtext that enriches each story. That’s one reason you can’t download or easily share clips of your version of Bitmoji TV, and Snap instead just lets you share a link to watch the real thing. Blackstock says it just doesn’t have the same effect if you’re not in the spotlight.

One thing you won’t find in Bitmoji TV, at least at first, are advertisements. The initial 10 episode season won’t have them. But that does seem to be the plan. When I asked Blackstock about monetizing the show, he said “You can imagine. Discover has a business model of showing ads.” Since it make Bitmoji TV, Snapchat would get to keep that ad money rather than paying it out with revenue shares to partners or by buying content. Just as we’ve seen music and video streaming apps move to cut royalty expenses by creating content in-house, Snap seems to have the same idea.

Snapchat has yet to monetize Bitmoji directly beyond its merchandise store where you can get yours on t-shirts and mugs. Surprisingly, it doesn’t sell premium or branded clothes and looks for Bitmoji, nor does it allow brands to pay to have their apparel featured.

Snap did recently start letting people mix-and-match clothes for their Bitmoji, and when asked if that could foreshadow a revenue opportunity, Blackstock said “You gotta build the store before you start selling the clothes … this was a foundational evolution designed to not only improve the experience for users but to set the stage for things to come.” You and your friends seeing your avatar’s fresh outfit on Bitmoji TV might make people care more about what their digital mini-mes wear.

Having watched the first three episodes, I’m pretty certain Bitmoji TV is going to be a hit. The show embodies the whimsy of Snapchat and the youth culture of the community who uses it. It’s rare to see something so premium but so unabashedly kooky. It’s remininscent of the Rick & Morty ‘Interdimensional Cable’ episodes that similarly feature rapid-fire snippets of fake and absurd TV shows.

Yet “the idea for Bitmoji TV actually precedes Bitmoji. It’s something I’ve been thinking about since those days [before Snapchat acquired it.] In a way it precedes Bitstrips. I’ve been making comics and cartoons since I was a little kid” Blackstock tells me. “How I met two of the co-founders of Bitstrips was passing them comics in class. Even after school when we had jobs I would draw comics of my co-founder that were very compromising and I would fax them to his office to try to get him fired” he recalls with a hearty laugh. Now he has the budget to make them TV-worthy but just as crazy.

Snapchat has a good hunch it’s going to work because it’s been testing a comic-stripped down version called Bitmoji Stories. These still or lightly-animated slide shows use the same idea of starring the avatars of you and your friends, but without full-motion video or constant audio. 130 million people have watched Bitmoji Stories since they launched in late 2018.

Blackstock tells me “They were easier to make at a high volume and release ongoingly, which we could put out as a prelude to get our audience ready for personalized content — but also for us to learn from and see how people responded and figure out our own processes in terms of production.” Snapchat had animators and engineers work hand in hand to build a rendering system for Bitmoji Stories and TV. That helps it rapidly produce the personalizable content that can flex to accomodate any shaped avatar without them clipping into their surroundings.

Tonight, Bitmoji TV will receive an in-person ‘silent disco-style’ premiere at Los Angeles’ Soho House. Guests will scan a code on the big screen, don headphones, and each watch on their own phone with themselves as the star.

Snapchat’s head of original content Sean Mills tells me that “New technology will unlock new kinds of storytelling” citing “the power of bringing a user into the experience with their best friends.” Bitmoji TV has certainly found a way to turn vanity into engagement. It’s more compelling than the mediocre originals on Facebook Watch. And it’s technologically innovative, unlike the planned lineup for Quibi.

If the modern era of visual communication began with the selfie, Snap honed it into a messaging tool. A few words were more interesting with a friend’s face behind it. The original Bitmoji chat stickers let your face say whatever you wanted even without having to get on camera. Snapchat’s new Cameo feature grafts your face into GIFs to express even more complex feelings. And now with Bitmoji TV, an animated version of your face can live out your wildest fantasies or weirdest dreams. That’s something worth tuning into.

Snapchat Cameos edit your face into videos

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Facebook hits 2.5B users in Q4 but shares sink from slow profits

Facebook beat Wall Street estimates in Q4 but slowing profit growth beat up the share price. Facebook reached 2.5 billion monthly users, up 2%, from 2.45 billion in Q3 2019 when it grew 1.65%, and it now has 1.66 billion daily active users, up 2.4% from 1.62 billion last quarter when it grew 2%. Facebook brought in $21.08 billion in revenue, up 25% year-over-year, with $2.56 in earnings per share.

But net income was just $7.3 billion, up only 7% year-over-year compared to 61% growth over 2018. Meanwhile, operating margins fell from 45% over 2018 to 34% for 2019. Expenses grew to $12.2 billion for Q4 2019, up a whopping 34% from Q4 2018. For the year, Facebook’s $46 billion in expenses are up 51% vs 2018. One big source of those expenses? Headcount grew 26% year-over-year to 44,942, and Facebook now has over 1000 engineers working on privacy.

While Facebook’s user base keeps growing rather steadily, it’s having trouble squeezing more and more cash out of them with as much efficiency.

Facebook’s earnings beat expectations compared to Zack’s consensus estimates of $20.87 billion in revenue and $2.51 earnings per share. Facebook shares fell over 7% in after-hours trading following the earnings announcement after closing up 2.5% at a peak $223.23 today. Still, Facebook remains near its previous share price high before this month.

Facebook CEO Mark Zuckerberg had previously warned that addressing hate speech, election interference, and other content moderation and safety issues would be costly. Still, expenses grew and profits shrunk faster than Wall Street seems to have expected. Facebook will have to hope its promise of using scalable AI to handle more of these jobs comes to fruition soon. But some might see today as the proper reckoning for Facebook — penance for years of neglecting safety in favor of growth.

Facebook’s executives are apparently bullish on its value despite the share price being at a peak, as today Facebook announced plans to grow its share-repurchase program by $10 billion, adding to its previous authorization of buying back up to $24 billion worth.

Facebook managed to add 1 million daily users in the U.S. & Canada region where it earns the most money after returning to growth there last quarter following a year of slow or no growth. Facebook’s stickiness, or daily to monthly active user ratio remained at 66% amidst competition from apps like TikTok and a resurgent Snapchat.

Masking The Shift To Instagram

Facebook notes that there are now 2.26 billion users that open either Facebook, Messenger, Instagram, or WhatsApp each day, up from 2.2 billion last quarter. The family of apps sees 2.89 billion total monthly users, up 9% year-over-year.

Facebook released a new stat with this earnings report: Family Average Revenue Per Person. That’s essentially the company’s total revenue divided by total users on Facebook, Messenger, Instagram, and WhatsApp. Clearly, the company is trying to use Instagram’s growing ad revenue to make the rest of the company look stronger. This might help mask changes in the Facebook app’s own revenue as teens look to more youthful content feeds. Facebook’s CFO David Wehner confirmed the company will cease sharing Facebook-only stats in favor of Family Of Apps stats in late 2020.

Earnings Call Highlights

Zuckerberg stressed Facebook’s need to stay focused on addressing social issues and consequences of the company’s growth during the earnings call. He said Facebook will continue to make its apps more private and secure.

As for product updates, Zuckerberg seized on opportunities in commerce. Facebook is building out WhatsApp Pay, and he says “I expect this to start rolling out in a number of countries and for us to make a lot of progress here in the next six months.” 140 million small businesses now use its tools. People bought almost $5 million in content on the Oculus Store on Christmas Day, which Zuckerberg called a milestone. He says Facebook’s Spark AR platform is most used of its kind by developers, with hundreds of millions of people experiencing face filters built with it.

Regarding plans to integrate the family’s chat interfaces, Zuckerberg says Messenger, Instagram, and WhatsApp will retain their brands. He also noted they’re already quite integrated on the backend…which could be an attempt to persuade regulators it might be difficult to break up the company.

For guidance, Wehner said “we expect our year-over-year total reported revenue growth rate in Q1 to decelerate by low-to-mid single digit percentage points as compared to our Q4 growth rate. “Factors driving this deceleration include the maturity of our business, as well as the increasing impact from global privacy regulation and other ad targeting related headwinds.”

Wehner says to expect that the worst of these privacy headwinds are still to come due to regulatory initiatives like GDPR and CCPA, mobile operating systems and browser providers like Apple and Google limiting access to ad targeting singals, and Facebook’s own product changes like the new way to disconnect off-Facebook data from your acccount.

On Facebook’s perception issues, Zuckerberg said “We’re also focused on communicating more clearly what we stand for. One critique of our approach for much of the last decade was that, because we wanted to be liked, we didn’t always communicate our views as clearly because we were worried about offending people. So this led to some positive but shallow sentiments towards us and towards the company. And my goal for this next decade isn’t to be liked, but to be understood, because in order to be trusted, people need to know what you stand for.”

Building Despite Scrutiny

The business aside, Facebook had another tough quarter under the scrutiny of journalists and regulators. Democratic presidential candidates have railed against Zuckerberg’s decision to continuing allowing misinformation in political ads. The company dropped out of the top 10 places to work, and pledged $130 million to fund an Oversight Board for its content policies.

The CEO was grilled on Capitol Hill about Facebook’s cryptocurrency Libra that seems stuck in its tracks as major partners like Visa and Stripe dropped out. Facebook took heat for how its treats content moderators and how it tried to cut off competitors from its developer platform. The FTC continued its anti-trust investigation and weighed an injunction that would halt Facebook intermingling its messaging app infrastructure.

But those headwinds didn’t stop Facebook’s march forward. Its four main apps took the top four spots amongst the most downloaded apps of the 2010s. It moved deeper into hardware sales with its new Portal TV attachable camera. It acquired gaming companies like Playgiga and the studio behind VR hit Beat Saber, while signing exclusive game streaming deals with influencers like Disguised Toast. It launched Facebook News, Facebook Pay, its dating feature in the US, and it tested a meme-making app called Whale.

Facebook’s share price remains near an all-time high despite today’s tumble. While the world may be increasingly uncomfortable with Facebook’s access to private data, there’s no debate about how incredibly valuable that data is.

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Verkada raises $80M at $1.6B to be every building’s security OS

50 iPads were stolen from Verkada co-founder Hans Robertson’s old company. Only when they checked the security system did they realize the video cameras hadn’t been working for months. He was pissed. “The market lagged behind the progress seen in the consumer space, where someone could buy high-end cameras with cloud-based software to protect their home” Verkada’s CEO and co-founder Filip Kaliszan tells me of his own attempt to buy enterprise-grade security hardware.

Usually, startups ascend on the backs of fresh technologies and developer platforms. But Kaliszan and Robertson realized that commercial security was so backward that just implementing the established principles of machine vision and the cloud could create a huge company. The plan was to keep data secure yet accessible and train its cameras to take clearer photos when AI detects suspicious situations instead of just grainy video.

At first, few could see the vision through the slow upgrade cycles and basement security rooms common with most potential clients. “The seed and the A were extremely difficult rounds to raise compared to the later rounds because people didn’t believe we could execute what were are proposing” Kaliszan glumly recalls.

But today Verkada receives a huge vote of confidence. It’s just raised an $80 million Series C at a stunning $1.6 billion post-money valuation thanks to lead investor Felicis Ventures writing Verkada its biggest check to date. The cash brings Verkada to $139 million in funding to sell dome cameras, fisheye lenses, footage viewing stations, and the software to monitor it all from anywhere.

Why sink in so much cash at a valuation triple that of Verkada’s $540 million price tag after its April 2019 Series B? Because Verkada wants to bring two-factor authentication to doors with its new access control system that it’s announcing is now in beta testing ahead of a Spring launch. Instead of just allowing a stealable key fob or badge to open your office entryway, it could ask you to look into a Verkada camera too so it can match your face to your permissions.

“Our mission is to be the essential physical security software layer for every building, and the foundation of a larger enterprise IoT infrastructure” Kaliszan tells me. By uniting security cameras and door locks in one system, it could keep banks, schools, hospitals, government buildings, and businesses safe while offering new insights on how their spaces are used.

The founders’ pedigrees don’t hurt its efforts to sell that future to investors like Next47, Sequoia Capital, and Meritech Capital that joined the round. Robertson co-founded IT startup Meraki and sold it to Cisco for $1.2 billion. Kaliszan and his other co-founders Benjamin Bercovitz and James Ren started CourseRank for education software while at Stanford before selling it to Chegg.

Making a better product than what’s out there isn’t rocket science, though. Many building security systems only let footage be accessed from a control room in the building…which doesn’t help much if everyone’s trying to escape due to emergency or if a manager elsewhere simply wants to take a look. Verkada’s cloud lets the right employees keep watch from mobile, and data is also stored locally on the cameras so they keep recording even if the internet cuts out. “Our competitors stream unencrypted video and it’s on you to protect it. We’re responsible for handing that data” Kaliszan says.

Verkada’s machine vision software can make sense of all the footage its cameras collect. “We can immediately show them all the video containing a particular person of interest rather than manually searching through hours of footage” Kaliszan insists. “Our platform can use AI/machine learning to recognize patterns and behaviors that are out of the norm in real-time.”

For example, a hostage negotiator was able to use Verkada’s system to assess whether a SWAT team needed to invade a building. Verkada can group all spottings of an individual together for review, or scan all the footage for people wearing a certain color or with other search filters.

2500 clients including 25 Fortune 500 companies are already using Verkada. In the last year it’s tripled revenue, parterned with 1,100 resellers, launched nine new camera models, added people and vehicle analytics, opened its first London office, and is on track to grow from 300 to 800 employees by the end of 2020.

“We call this reinvention” says Felicis Ventures founder and managing director Aydin Senkut. “One thing people underestimate is how big this market is. Honeywell is valued at $110 billion-plus. There’s a Chinese company that’s over $50 billion. The opportunity to be the operating system for all buildings in the world? Sounds like that market couldn’t be better.” Senkut knows Verkada works because he’s had it installed in all his homes and offices.

Most enterprise software companies don’t have to worry about the complexities of hardware supply chains. There’s always a risk that its sales process stumbles, leaving it stuck with too many cameras. “We’re still burning money. We’re not there yet or we wouldn’t be raising venture. Because we’re going after a mature market, you can’t come at it with a model that doesn’t make sense. Investors come at it from a hard-nosed approach” Robertson admits.

“People have a tendency to write off Verkada as a boring camera company. They don’t realize how access control as the second product is going to supercharge the company’s potential” Senkut declares.

One bullet Verkada dodged is the one firmly lodged in Amazon’s chest. Ring security cameras have received stern criticism over Amazon’s cooperation with law enforcement that some see as a violation of privacy and expansion of a police state. “We don’t have any arrangements with law enforcement like Ring” Kaliszan tells me. “We view ourselves as providing great physical security tools to the people that run schools, hospitals, and businesses. The data that those organizations gather is their own.”

from RSSMix.com Mix ID 8176981 https://techcrunch.com/2020/01/29/verkada-security/
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Coinbase poaches Google Shopping VP as CPO for cryptocommerce

“We’re trying to shift cryptocurrency from this speculative asset class to driving real-world utility,” Coinbase CEO Brian Armstrong tells me. How? Through commerce and micropayments. But now Coinbase has the who to build it. Today the startup announced it has hired away former head of Product for Indian e-commerce giant Flipkart and Google Shopping VP of Product Surojit Chatterjee to become Coinbase’s chief product officer.

“I’ve always enjoyed being associated with technology that is on the brink of changing how we live” writes Chatterjee. “Google ads has helped democratize commerce, Flipkart and ecommerce has revolutionized life in India, and I believe Coinbase is going to turn conventional finance on its head.”

Chatterjee spent more than 11 years at Google over two stints, the first as a founding member of Google’s mobile search Ads product that’s grown to tens of billions in revenue per year. When he starts at Coinbase next week, Armstrong tells me he’ll help Coinbase organize its complex array of products, including its cryptocurrency exchange, wallet, stablecoin, incentivized crypto education platform Earn and Coinbase Commerce that lets businesses take payments in Bitcoin, Ethereum and more. Chatterjee replaces Jeremy Henrickson, the former Coinbase CPO who departed in December 2018.

“Surojit is a huge asset here because we’re a product-led company,” Armstrong says. “We have different leaders and they increasingly have responsibilities around P&L. Having one really experienced chief product officer that can mentor them and teach them to own revenues and budgets — really in the model of Google — that will professionalize Coinbase.”

One opportunity Armstrong hopes Chatterjee can help Coinbase seize on is building products for emerging markets where financial infrastructure is weak. “E-commerce is not equally distributed around the world. Micropayments don’t work that well … Him spending time living in India, a developing market, he deeply understands mobile money.” Given the explosion of phone-based payments, the demonetization and the prevalence of cash on delivery methods in India that Flipkart dealt with, “his background is kind of ideal from that worldly perspective,” Armstrong explains.

Chatterjee cites his upbringing as inspiration to deliver “economic freedom for everyone,” as Armstrong says is Coinbase’s mission. “Growing up in India in a poor middle-class household, I saw very closely what a lack of liquid cash does to a family’s lifestyle,” Chatterjee recalls. 

“As a kid I would go with my mom to a local bank to withdraw money. And believe me when I tell you that the process was epic!” It included withdrawal slips, tokens and anxiously trying to match current signatures to versions decades old. When India demonetized and made everyone exchange their cash, “My dad, who was almost 80 at that time, stood in a queue for five hours to get 2000 Rs, which was the per-day limit for the first week. That’s less than $30!” Digital money could ensure people always have access to everything they own.

Surojit Chatterjee (far right) rides along for a Flipkart delivery to understand the consumer commerce experience

In developed countries, Armstrong sees a chance for Chatterjee to enable digital content creators to turn their passion into their profession. “There’s lots of people who lurk on Reddit or Stack Overflow and answer questions … If there was real money on these things, these could be their full time jobs — contributing content on user-generated social sites,” Armstrong predicts. “I think you’d see a lot more contributions, as well.”

Now might be the perfect time to hire Chatterjee since we’re in a lull period for cryptocurrency in the wake of the rush at the end of 2018. “Crypto is always challenging to navigate. In these periods when it’s relatively quiet, we tend to do really well,” Armstrong says. The company grew market share, volume and app installs versus competitors between 50% and 100%, according to the CEO. Referencing ancient war strategy, Armstrong concludes that, “There’s years where you just want to train the soldiers and stockpile resources and you’re basically just preparing. We’re building the company, not just responding to crazy hype.”

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No pan-EU Huawei ban as Commission endorses 5G risk mitigation plan

The European Commission has endorsed a risk mitigation approach to managing 5G rollouts across the bloc — meaning there will be no pan-EU ban on Huawei. Rather it’s calling for Member States to coordinate and implement a package of “mitigating measures” in a 5G toolbox it announced last October and has endorsed today.

“Through the toolbox, the Member States are committing to move forward in a joint manner based on an objective assessment of identified risks and proportionate mitigating measures,” it writes in a press release.

It adds that Member States have agreed to “strengthen security requirements, to assess the risk profiles of suppliers, to apply relevant restrictions for suppliers considered to be high risk including necessary exclusions for key assets considered as critical and sensitive (such as the core network functions), and to have strategies in place to ensure the diversification of vendors”.

The move is another blow for the Trump administration — after the UK government announced yesterday that it would not be banning so-called “high risk” providers from supplying 5G networks.

Instead the UK said it will place restrictions on such suppliers — barring their kit from the “sensitive” ‘core’ of 5G networks, as well as from certain strategic sites (such as military locations), and placing a 35% cap on such kit supplying the access network.

However the US has been amping up pressure on the international community to shut the door entirely on the Chinese tech giant, claiming there’s inherent strategic risk in allowing Huawei to be involved in supplying such critical infrastructure — with the Trump administration seeking to demolish trust in Chinese-made technology.

Next-gen 5G is expected to support a new breed of responsive applications — such as self-driving cars and personalized telemedicine — where risks, should there be any network failure, are likely to scale too.

But the Commission take the view that such risks can be collectively managed.

The approach to 5G security continues to leave decisions on “specific security” measures as the responsibility of Member States. So there’s a possibility of individual countries making their own decisions to shut out Huawei. But in Europe the momentum appears to be against such moves.

“The collective work on the toolbox demonstrates a strong determination to jointly respond to the security challenges of 5G networks,” the EU writes. “This is essential for a successful and credible EU approach to 5G security and to ensure the continued openness of the internal market provided risk-based EU security requirements are respected.”

The next deadline for the 5G toolbox is April 2020, when the Commission expects Member States to have implemented the recommended measures. A joint report on their implementation will follow later this year.

Key actions being endorsed in the toolbox include:

•     Strengthen security requirements for mobile network operators (e.g. strict access controls, rules on secure operation and monitoring, limitations on outsourcing of specific functions, etc.);
•     Assess the risk profile of suppliers; as a consequence,  apply relevant restrictions for suppliers considered to be high risk – including necessary exclusions to effectively mitigate risks – for key assets defined as critical and sensitive in the EU-wide coordinated risk assessment (e.g. core network functions, network management and orchestration functions, and access network functions);
•     Ensure that each operator has an appropriate multi-vendor strategy to avoid or limit any major dependency on a single supplier (or suppliers with a similar risk profile), ensure an adequate balance of suppliers at national level and avoid dependency on suppliers considered to be high risk; this also requires avoiding any situations of lock-in with a single supplier, including by promoting greater interoperability of equipment;

The Commission also recommends that Member States should contribute towards increasing diversification and sustainability in the 5G supply chain and co-ordinate on standardization around security objectives and on developing EU-wide certification schemes.

from RSSMix.com Mix ID 8176981 https://techcrunch.com/2020/01/29/no-pan-eu-huawei-ban-as-commission-endorses-5g-risk-mitigation-plan/
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