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Privacy-oriented search app Xayn raises $12M from Japanese backers to go into devices
Back in December 2020 we covered the launch of a new kind of smartphone app-based search engine, Xayn.
“A search engine?!” I hear you say? Well, yes, because despite the convenience of modern search engines’ ability to tailor their search results to the individual, this user-tracking comes at the expense of privacy. This mass surveillance might be what improves Google’s search engine and Facebook’s ad targeting, to name just two examples, but it’s not very good for our privacy.
Internet users are admittedly able to switch to the U.S.-based DuckDuckGo, or perhaps France’s Qwant, but what they gain in privacy, they often lose in user experience and the relevance of search results, through this lack of tailoring.
What Berlin-based Xayn has come up with is personalized, but a privacy-safe web search on smartphones, which replaces the cloud-based AI employed by Google et al. with the innate AI in-built into modern smartphones. The result is that no data about you is uploaded to Xayn’s servers.
And this approach is not just for “privacy freaks”. Businesses that need search but don’t need Google’s dominant market position are increasingly attracted by this model.
And the evidence comes today with the news that Xayn has now raised almost $12 million in Series A funding led by the Japanese investors Global Brain and KDDI (a Japanese telecommunications operator), with participation from previous backers, including the Earlybird VC in Berlin. Xayn’s total financing now comes to more than $23 million.
It would appear that Xayn’s fusion of a search engine, a discovery feed and a mobile browser has appealed to these Asian market players, particularly because Xayn can be built into OEM devices.
The result of the investment is that Xayn will now also focus on the Asian market, starting with Japan, as well as Europe.
Leif-Nissen Lundbæk, co-founder and CEO of Xayn said: “We proved with Xayn that you can have it all: great results through personalization, privacy by design through advanced technology and a convenient user experience through clean design.”
He added: “In an industry in which selling data and delivering ads en masse are the norm, we choose to lead with privacy instead and put user satisfaction front and center.”
The funding comes as legislation such as the EU’s GDPR or California’s CCPA have both raised public awareness about personal data online.
Since its launch, Xayn says its app has been downloaded around 215,000 times worldwide, and a web version of its app is expected soon.
Over a call, Lundbæk expanded on the KDDI aspect of the fund-raising: “The partnership with KDDI means we will give users access to Xayn for free, while the corporate — such as KDDI — is the actual customer but gives our search engine away for free.”
The core features of Xayn include personalized search results; a personalized feed of the entire internet, which learns from their Tinder-like swipes, without collecting or sharing personal data; and an ad-free experience.
Naoki Kamimeada, partner at Global Brain Corporation said: “The market for private online search is growing, but Xayn is head and shoulders above everyone else because of the way they’re re-thinking how finding information online should be.”
Kazuhiko Chuman, head of KDDI Open Innovation Fund, said: “This European discovery engine uniquely combines efficient AI with a privacy-protecting focus and a smooth user experience. At KDDI, we’re constantly on the lookout for companies that can shape the future with their expertise and technology. That’s why it was a perfect match for us.”
In addition to the three co-founders (Leif-Nissen Lundbæk, chief executive officer, Professor Michael Huth, chief research officer, and Felix Hahmann, chief operations officer), Dr Daniel von Heyl will come on board as chief financial officer. Frank Pepermans will take on the role of chief technology officer and Michael Briggs will join as chief growth officer.
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Trump’s Huawei ban also causing tech shocks in Europe
The escalating U.S.-China trade war that’s seen Chinese tech giant Huawei slapped on a U.S. trade blacklist is causing ripples of shock across Europe too, as restrictions imposed on U.S. companies hit regional suppliers concerned they could face U.S. restrictions if they don’t ditch Huawei.
Reuters reports shares fell sharply today in three European chipmakers — Infineon Technologies, AMS and STMicroelectronics — after reports suggested some already had, or were about to, halt shipments to Huawei following the executive order barring U.S. firms from trading with the Chinese tech giant.
The interconnectedness of high-tech supply chains coupled with U.S. dominance of the sector and Huawei’s strong regional position as a supplier of cellular, IT and network kit in Europe suddenly makes political risk a fast-accelerating threat for EU technology companies, large and small.
On the small side is French startup Qwant, which competes with Google by offering a pro-privacy search engine. In recent months it has been hoping to leverage a European antitrust decision against Google Android last year to get smartphones to market in Europe that preload its search engine, not Google’s.
Huawei was its intended first major partner for such devices. Though, prior to recent trade war developments, it was already facing difficulties related to price incentives Google included in reworked EU Android licensing terms.
Still, the U.S.-China trade war threatens to throw a far more existential spanner in European Commission efforts to reset the competitive planning field for smartphone services — certainly if Google’s response to Huawei’s blacklisting is to torch its supply of almost all Android-related services, per Reuters.
A key aim of the EU antitrust decision was intended to support the unbundling of popular Google services from Android so that device makers can try selling combinations that aren’t entirely Google-flavored — while still being able to offer enough “Google” to excite consumers (such as preloading the Play Store but with a different search and browser bundle instead of the usual Google + Chrome combo).
Yet if Google intends to limit Huawei’s access to such key services, there’s little chance of that.
(In a statement responding to the Reuters report Google suggested it’s still deciding how to proceed, with a spokesperson writing: “We are complying with the order and reviewing the implications. For users of our services, Google Play and the security protections from Google Play Protect will continue to function on existing Huawei devices.”)
Going on Google’s initial response, Qwant co-founder and CEO Eric Léandri told us he thinks Google has overreacted — even as he dubbed the U.S.-China trade war “world war III — economical war but it’s a world war for sure.”
“I really need to see exactly what President Trump has said about Huawei and how to work with them. Because I think maybe Google has overreacted. Because I haven’t [interpreted it] that way so I’m very surprised,” he told TechCrunch.
“If Huawei can be [blacklisted] what about the others?,” he added. “Because I would say 60% of the cell phone sales in Europe today are coming from China. Huawei or ZTE, OnePlus and the others — they are all under the same kind of risk.
“Even some of our European brands who are very small like Nokia… all of them are made in China, usually with partnership with these big cell phone manufacturers. So that means several things but one thing that I’m sure is we should not rely on one OS. It would be difficult to explain how the Play Store is not as important as the search in Android.”
Léandri also questioned whether Google’s response to the blacklisting will include instructing Huawei not to even use its search engine — a move that could impact its share of the smartphone search market.
“At the end of the day there is just one thing I can say because I’m just a search engine and a European one — I haven’t seen Google asking to not be by default in Huawei as search engine. If they can be in the Huawei by default as a search engine so I presume that everyone else can be there.”
Léandri said Qwant will be watching to see what Huawei’s next steps will be — such as whether it will decide to try offering devices with its own store baked in in Europe.
And indeed how China will react.
“We have to understand the result politically, globally, the European consequences. The European attitude. It’s not only American and China — the rest of the world exists,” he said.
“I have plan b, plan c, plan d, plan f. To be clear we are a startup — so we can have tonnes of plans, The only thing is right now is it’s too enormous.
“I know that they are the two giants in the tech field… but the rest of the world have some words today and let’s see how the European Commission will react, my government will react and some of us will react because it’s not only a small commercial problem right now. It’s a real political power demonstration and it’s global so I will not be more — I am nobody in all this. I do my job and I do my job well and I will use the maximum opportunity that I can find on the market.”
We’ve reached out to the Commission to ask how it intends to respond to escalating risks for European tech firms as Trump’s trade war steps up.
Also today, Reuters reports that the German Economy Minister is examining the impact of U.S. sanctions against Huawei on local companies.
But while a startup like Qwant waits to see what the next few months will bring — and how the landscape of the smartphone market might radically reconfigure in the face of sharply spiking political risk, a different European startup is hoping to catch some uplift: Finland-based Jolla steers development of a made-in-Europe Android alternative, called Sailfish OS.
It’s a very tiny player in a Google-dominated smartphone world. Yet could be positioned to make gains amid U.S. and Chinese tech clashes — which in turn risk making major platform pieces feel a whole lot less stable.
A made-in-Europe non-Google-led OS might gain more ground among risk averse governments and enterprises — as a sensible hedge against Trump-fueled global uncertainty.
“Sailfish OS, as a non-American, open-source based, secure mobile OS platform, is naturally an interesting option for different players — currently the interest is stronger among corporate and governmental customers and partners, as our product offering is clearly focused on this segment,” says Jolla co-founder and CEO Sami Pienimäki .
“Overall, there definitely has been increased interest towards Sailfish OS as a mobile OS platform in different parts of the world, partly triggered by the on-going political activity in many locations. We have also had clearly more discussions with e.g. Chinese device manufacturers, and Jolla has also recently started new corporate and governmental customer projects in Europe.”
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How a blockchain startup with 1M users is working to break your Google habit
The antitrust argument that says big tech needs breaking up to stop platforms abusing competition and consumers in a two-faced role as seller and (manipulative) marketplace may only just be getting going on a mainstream political stage — but startups have been at the coal face of the fight against crushing platform power for years.
Presearch, a 2017-founded, pro-privacy blockchain-based startup that’s using cryptocurrency tokens as an incentive to decentralize search — and thereby (it hopes) loosen Google’s grip on what Internet users find and experience — was born out of the frustration, almost a decade before, of trying to build a local listing business only to have its efforts downranked by Google.
That business, Silicon Valley-based ShopCity.com, was founded in 2008 and offers local business search on Google’s home turf — operating sites like ShopPaloAlto.com and ShopMountainView.com — intended to promote local businesses by making them easier to find online.
But back in 2011 ShopCity complained publicly that Google’s search ranking systems were judging its content ‘low quality’ and relegating its listings pages to the unread deeps of search results. Listings which, nonetheless, had backing and buy in from city governments, business associations and local newspapers.
ShopCity went on to complain to the U.S. Federal Trade Commission (FTC), arguing Google was unfairly favoring its own local search products.
Going public with its complaint brought it into contact with sceptical segments of the tech press more accustomed to cheerleading Google’s rise than questioning the agency of its algorithms.
“We have developed a very comprehensive and holistic platform for community commerce, and that is why companies like The Buffalo News, owned by Berkshire Hathaway, have partnered up with us and paid substantial licensing fees to use our system,” wrote ShopCity co-founder Colin Pape, responding to a dismissive Gigaom article in November 2011 by trying to engage the author in comments below the fold.
“The fact that Google recently began copying our multi-domain model… and our in-community approach, is a good indication that we are onto something and not just a ‘two-bit upstart’,” Pape went on. “Google has stated that the local space is of great importance to them… so they definitely have a motive to hinder others from becoming leaders, and if all it takes to stop a competitor from developing is a quick tweak to a domain profile, then why not?”
While the FTC went on to clear Google of anti-competitive behavior in the ShopCity case, Europe’s antitrust authorities have taken a very different view about Mountain View’s algorithmic influence: The EU fined Google $2.73BN in 2017 after a lengthy investigations into its search comparison service which found, in a scenario similar to ShopCity’s contention, Google had demoted rival product search services and promoted its own competing comparison search product.
That decision was the first of a trio of multibillion EU fines for Google: A record-breaking $5BN fine for Android antitrust violations fast-followed in 2018. Earlier this year Google was stung a further $1.7BN for anti-competitive behavior related to its search ad brokering business.
“Google has given its own comparison shopping service an illegal advantage by abusing its dominance in general Internet search,” competition commissioner Margrethe Vestager said briefing press on the 2017 antitrust decision. “It has harmed competition and consumers.”
Of course fines alone — even those that exceed a billion dollars — won’t change anything where tech giants are concerned. But each EU antitrust decision requires Google to change its regional business practices to end the anti-competitive conduct too.
Commission authorities continue monitoring Google’s compliance in all three cases, leaving the door open for further interventions if its remedies are deemed inadequate (as rivals continue to complain). So the search giant remains on close watch in Europe, where its monopoly in search puts special conditions on it not to break EU competition rules in any other markets it operates in or enters.
There are wider signs, too, that increasing antitrust scrutiny of big tech — including the idea of breaking platforms up that’s suddenly inflated into a mainstream political talking point in the U.S. — is lifting a little of the crushing weight off of Google competitors.
One example: Google quietly added privacy-focused search rival DuckDuckGo to the list of default search engines offered in its Chrome browser in around 60 markets earlier this year.
DDG is a veteran pro-privacy search engine Google rival that’s been growing usage steadily for years. Not that you’d have guessed that from looking at Chrome’s selective lists prior to the aforementioned silent update: From zero markets to ~60 overnight does look rather 
.
Rising antitrust risk could help unlatch more previously battened down platform hatches in a way that’s helpful to even smaller Google rivals. Search startups like Presearch . (On the size front, it’s just passed a million registered users — and says monthly active users for its beta are ~250k. Early adopters skew power user + crypto geek.)
Google’s dominance in search remains a given for now but a fresh wind is rattling tech giants thanks to a shift in tone around technology and antitrust, fuelled by societal concern about wider platform power and impacts, that’s aligned with fresh academic thinking.
And now growing, cross-spectrum political appetite to regulate the Internet. Or, to put it another way, the tech backlash smells like a vote winner.
That may seem counterintuitive when platforms have built massive consumer businesses by heavily marketing ‘free’ consumer-friendly services. But their shiny freebies have sprouted a hydra of ugly heads in recent years — whether it’s Facebook-fuelled, democracy-denting disinformation; YouTube-accelerated hate speech and extremism; or Twitter’s penchant for creating safe spaces for nazis to make friends and influence people.
Add to that: Omnipresent creepy ads that stalk people around the Internet. And a fast-flowing river of data breach scandals that have kept a steady spotlight on how the industry systematically plays fast and loose with people’s data.
European privacy regulations have further helped decloak adtech via an updated privacy legal framework that highlights how very many faceless companies are lurking in the background of the Internet, making money by selling intelligence they’ve gleaned by spying on what web users are browsing.
And that’s just the consumer side. For small businesses and startups trying to compete with platform goliaths engineered and optimized to throw their bulk around, deploying massive networks and resources to tractor-beam and data mine anything — from product development; to usage and app trends; to their next startup acquisition — the feeling can be one of complete impotence. And, well, burning injustice.
“That was actually the real genesis moment behind [Presearch] — the realization of just how big Google is,” Pape tells TechCrunch, recounting the history of the ShopCity FTC complaint. “In 2011 we woke up one day and found out that 80-90% of our Google traffic had disappeared and all of these sites, some of which had been online for more than a decade and were being run in partnership with city governments and chambers of commerce, they were all basically demoted onto page eight of Google.
“Even if you typed them by name… Google had effectively, in their own backyard, shut down this local initiative.”
“We ended up participating in this [FTC] investigation and ultimately it cleared Google but we’ve been really aware of the market power that they have — and certainly what could be perceived as monopolistic practices,” he adds. “It’s a huge challenge. Anybody trying to do any sort of publishing or anything really on the web, Google is the gatekeeper.”
Now, with Presearch, Pape and co are hoping to go after Google in its techie backyard — of search.
Search, decentralized
Breaking the “Google habit” and opening up web users to a richer and more diverse field of search alternatives is the name of the game.
Presearch’s vision is a community-owned, choice-rich online playing field in the place where the Google search box normally squats; a sort of pluralist, collaborative commons that welcomes multiple search providers and rewards and surfaces community-curated search results to further diversity — encouraging Internet users to discover a democratized multiplicity of search results, not just the things big tech wants them to see.
Or as Pape puts it: “The ultimate vision is a fully decentralized search engine where the users are actually crawling the web as they surf — and where there’s kind of a framework for all of the participants within the ecosystem to be rewarded.”
This means that Presearch, which is developing a community-contributed search engine in addition to the federated search tool platform, is competing with the third party search providers it offers access to.
But from its point of view it’s ‘the more the merrier’; Call it search choices for customizable courses.
“Or as we like to think of it, like a ‘Switzerland of search’,” says Pape, adding: “We do want to make sure it’s all about the user.”
Presearch’s startup advisor roster includes names that will be familiar to the wider blockchain community: Ethereum co-founder and founder of Decentral, Anthony Di Iorio; Rich Skrenta, founder and CEO of startup search engine Blekko (acquired by IBM Watson back in 2015); and industry lawyer, Addison Cameron-Huff.
“When you’re a producer on the web you realize how much control Google does really have over user traffic. Yet there are thousands of different search resources that are out there that are subsisting underneath of Google,” continues Pape. “So we’re really trying to give them more of a platform that a lot of these different providers — including DuckDuckGo, Qwant — could get behind to basically break that Google dependency and make it easier for them to have a direct relationship with the their audience.”
Of course they’re nowhere near challenging Google’s grip yet.
And like so many startups Presearch may never make good on the massive disruptive vision. It’s certainly got its work cut out. Being a startup in the Google-dominated search space makes the standard hostile success odds exponentially harsher.
“Presearch is a highly-ambitious project,” the startup admits in its WhitePaper. “Google is one of the best companies in the world, and #1 on the Internet. Improving on their results, experience, and integrations will be no small feat — many even say it’s impossible. However, we believe that collectively the community can creatively and elegantly fulfill its own search needs from the ground up and create an amazing and open search engine that is aligned with the interests of humanity, not just one company.”
For now the beta product is, by Pape’s ready admission, more of a “search utility” — offering a familiar search box where users can type their queries but atop a row of icons that allow them to quickly switch between different search engines or services.
As well as offering Google search (the default search engine for now), DuckDuckGo is in the list, as is French search engine Qwant. Social platforms like Facebook and LinkedIn are also there to cater to people-focused queries. As is stuff like Wikipedia for community-edited authority. In all Pape says the beta offers access to around 80 search services.
The basic idea for now is to let users select the most appropriate search tool for whatever bit of info they’re trying to locate. Aka that “level playing field for a whole bunch of different search resources” idea.
This does look like a power tool with niche appeal — Pape says about a quarter of active users are actively switching between different engines; so ~75% are not — but which is being juiced, and here comes the crypto, by rewarding users for searching via the federated search field with a token called PRE.
Pape says users are provided with a quarter token per presearch performed — up to a cap of eight tokens per day. The current market value of the PRE token is around $0.05. (So the hardest working Presearchers could presumably call themselves ’40cents’.)
While there are ways for users to extract PRE from the platform if they wish, converting it to another cryptocurrency via community built exchanges, Pape says the intent is to create more of “a closed loop ecosystem”. Hence he says they’re busy building a portal for users to be able to sell PRE tokens to advertisers.
“We will be promoting this closed loop ecosystem but it is an open standardized currency,” he notes. “It is tradable on various exchanges that community members have set up so there is the ability for people to convert the Presearch token to bitcoin which can then be converted to any local currency.”
“We see as well as opportunity to really build out an ecosystem of places for people to spend the token as well,” he adds. “So that they can exchange it directly for either digital goods or material goods through an online platform. So that’s also in the works.”
As things stand Pape says most early adopters are ‘hodlers’. Which is to say they’re holding onto their PRE — speculating on as yet unknown token economics. (As it so often goes in the blockchain space — until, well, it suddenly doesn’t.)
“There is, as throughout the entire cryptocurrency space, an element of speculation,” he agrees. “People do tend to let their imaginations run wild so there’s kind of this interesting confluence of that core base utility — where you basically have a token that is backed by advertising, something that you can really convert it to. And then there is this potential concept of the value of the network, and of having essentially some time of stake in the value of that network.
“So there’s going to be this interesting period over the next couple of years as the token economics change as we go from this nascent startup mode into more of a full on operating mode. Where the value will likely change.”
For advertisers the PRE token buys targeted ad impressions placed in front of Presearch users by being linked to keywords used by searchers (or “targeted, non-intrusive, keyword sponsorships” as the website explainer puts it).
This is the virtuous, privacy-respecting circle Presearch is hoping to create.
Pape makes a point of emphasizing there is “no tracking” of users’ searches. Which means there’s no profiling of Preseachers by Presearch itself — ads are being targeted contextually, per the current keyword search.
But of course if you’re clicking through to a third party like Google or Facebook that’s a whole other matter; and the standard tracking caveats apply.
Presearch’s claim not to be storing or otherwise tracking users’ searches has to be taken on trust for now. However it intends to fully open source the platform to ensure truly accountable transparency in the near future. (Pape says they’re hoping they’ll be able to do so in a year.)
In the meantime he notes that the founders make themselves available to users via a messaging group on Telegram — contrasting that accessibility with the perfect unreachability of Google’s founders to the average (or really almost any) Google user.
In the modern age of messaging apps, and with their ecosystem’s community-building imperatives, these founders are most certainly not operating in a vacuum.
Currently one PRE token buys an advertiser four ad impressions on the platform — which is one lever Presearch will be able to pull on to influence the value of the token as the ecosystem develops.
“Ultimately [impressions per token] could go to ten, a hundred,” suggests Pape. “That’s obviously going to change the token — and we’ll basically do that as we see the market forces at work and how many people are actually willing to sell their tokens.
“We’ve currently got a pretty strong demand side equation right now. It’s like three to one demand to supply. A lot of the people that are earning tokens are not choosing to redeem them; they’re choosing to keep them in a wallet and hold onto them for the future. So it’s an interesting experiment in tokenomics.”
“It’s super volatile, there’s so much sentiment that’s involved, that’s really the core driver of the value,” he adds. “There’s no real fundamentals yet. Nobody has established any correlation between anything.”
Presearch began life as an internal search tool built for use at the founders’ other company to reduce time tracking down information online. And then the crypto boom caught their eye — and they saw an possible incentive structure to encourage Google users to switch.
“We didn’t really see a go to market strategy with it — search is a very challenging industry. But then when we really started looking at the cryptocurrency opportunity and the ability to potentially denominate an advertising platform in a token that could be utilized to incentivize people to switch we started thinking that it was viable; we put it out to the community, we got really good feedback on the need and on the messaging.”
A token sale followed, between July and November 2017, to raise funds for developing the platform — the obvious route for Presearch to grow a blockchain-based, community-sustaining, closed-loop ecosystem.
“One of the keys was really the ownership structure and making sure that all the participants within the ecosystem are aligned under one unit of account — which is the token. Vs having conflicting interests where there’s an equity incentive as well that may run counter to that token,” notes Pape.
The token sale raised an initial $7M but lucky timing meant Presearch was riding the cryptocurrency rollercoaster during an upward wave which meant funds appreciated to around $21M by the end of the sale period.
The first version of the platform was also launched in November of 2017, with the token itself launching at the end of the month.
Since then Pape says several hundred advertisers have participated in testing phases of the platform. A new version of the platform is pending for launch “shortly” — with a different ad unit which will arrive with a dozen “curated sponsors” on board. “There’s more brand exposure so we really want to be selective in the early days and making sure that we’re only partnering with aligned projects,” he adds.
Almost a year and a half on from the original platform launch Presearch has just made good on the number one community ask: Browser extensions to make the platform easier to use for search.
User surveys showed the biggest reason people dropped out was ease of use, according to Pape.
The new extension is available for Chrome, Brave and Firefox browsers, and works to shave off usability friction. Previously beta users had to set Presearch as their homepage or remember to type its address into the URL bar before searching.
“There’s a really good alignment of the core community but ultimately it does come down to changing user habit and behavior and that is always challenging,” he adds. “This new browser extension enables them to use the browser URL field or the search field and basically access Presearch through the UI that they’re used to and that they’ve been demanding.
Around a quarter of sign-ups stick around and become active users, according to Pape — who dubs that “already really high”. The team is expecting the new browser extensions to fuel “significant” further growth.
“We are getting ready to push it out to the users through email — [and anticipate] that we’re going to see a significant increase in the percentage of users utilizing it. And if that assumption holds through and everything really holds out we’re going to do a much more active push to grow the user base.”
They also launched an iOS Presearch app last year which taps into the voice search trend. Users can speak to search specific services with a library of sites that can be added to the app to enable deep searching of web resources, as well as apps running locally on the device. (So, for example, you could tap and tell it to ‘presearch Google Maps for London’ or ‘Spotify for Taylor Swift’.)
Competition concerns attached to the convenience of voice search — which risks further flattening consumer choice and concentrating already highly concentrated market power given its focus on filtering options to return just one search result — is an area of interest for antitrust regulators.
Europe’s antitrust chief Vestager said in an interview earlier this year that she was trying to figure out “how to have competition when you have voice search”. So perhaps Presearch’s federated platform approach offers a glimpse of a possible solution.
Global community vs Google
Pape sums up the overall competitive positioning that Presearch is shooting for as “Google for usage, DuckDuckGo for positioning”.
“We have been focused on the cryptocurrency community but there’s a really big opportunity to help all these other content providers, internet service providers,” he argues. “There’s all this traffic that is happening and it’s currently defaulting over to Google with really no compensation to the publishers — or to the tech provider. And so we’re going to be going after those opportunities pretty aggressively to get people to basically replace Google as the default that they use if they’re linking in an article to some more information or if they are an ISP and they have an error page that shows up if somebody types in a URL wrong or types in a strange query or something. Rather than have it go to Google, have it go to Presearch.”
Trying to make crypto more accessible is another focus. So there’s a built-in wallet to store PRE tokens — meaning users don’t have to have their own wallet set up to start earning crypto. (Though of course they can move PRE into a different wallet if/when they want.)
“As far as geographies go it’s a global audience but there’s a pretty heavy contingent of users in Central and South America… Mexico, Brazil, Venezuela,” he adds, discussing where early interest has been coming from. “There’s a lot of crypto adoption that’s happening down there due to this [combination] where they’re super tech savvy, they’ve got really great infrastructure, but they are still in a developing nation. So any of these types of crypto opportunities are very significant to them.”
While Google remains the staple default search option Presearch does offer its own search engine — leaning on third party APIs for search results.
Pape says the plan is to switch from Google to this engine as the default down the line. Albeit they can’t justify the switch yet.
“We want to provide users with the best search results to start,” he concedes, before adding: “Up until just recently Google’s results were certainly superior; now we think we’ve got something that is actually quite competitive.”
He couches the Presearch engine as “very similar to DuckDuckGo” but with a couple of “unique features” — including an infinite scroll view, rather than having search results paginated. (“As you’re scrolling it will automatically refresh the results.”)
“But the biggest thing really is that we have these open source community packages so anybody can submit to us a package that would get triggered by certain keywords and basically show up with results at the top of the search.”
An example of one of these community packages can be seen by conducting a Presearch for “bitcoin” — which returns the below block of curated info related to the cryptocurrency above the rest of the search results:
Another example is currency conversions. When a currency conversion is typed into Presearch as a search query in the correct format (using relevant acronyms like USD and CAD) the query will surface a currency converter built by community members.
“It’s basically enabling anybody who knows HTML or Javascript to participate within the search ecosystem and add value to Presearch,” adds Pape.
The ultimate goal with the Presearch engine is to offer fully community-powered search where users not only create content packages and build out wider utility that can be served for particular keywords/searches but also curate these packages too.
The aim is also to have the community manage the entire process — such as by voting on what package should be the default where there are conflicting packages; and/or voting to approve package updates — much like Wikipedia editors work together on editing the online encyclopedia’s entries.
Pape notes that users would still be able to customize their own search results, such as by browsing the full suite of approved packages and selecting those that best meet their needs.
“The whole concept of the search engine is really more about user choice and giving them the ability to actively personalize their search results, and choose which contributors within the ecosystem they want to support,” he adds.
Of course Presearch is a very long way off that grand vision of wholly-community-powered search. So for now community packages are being curated by its core dev team.
Nor is it the first startup to dream big of community-powered and owned search. Not by a long, long chalk. It’s an idea that’s been kicked around the block many times before, even as Google’s dominating grip on search has cemented itself into place.
The level of crowdsourced effort required to generate differentiating value in the Google-dominated search space has proved a stumbling block for similarly minded startups wanting to compete head to head with Mountain View. And, clearly, Presearch will need a much larger user base if it’s to build and sustain enough community contributions to make its engine a compellingly useful product vs the usual search giant suspects.
But, as with Wikipedia, the idea is to keep building utility and momentum in growing increments. With — in its case — crypto rewards, backed by $21M in initial token sales, as the carrot to encourage community participation and contribution. So the founder logic sums to: ‘If we build it and pay people they’ll come’.
It’s worth noting that despite the community-focused mission Presearch’s current corporate structure is a Canadian corporation.
It does have a plan to transition to a foundation in future — with Pape envisaging distributing ~90%+ of the revenue that flows through the ecosystem to the various constituents and participants (searchers; node operators; curators; subject matter experts contributing to information indexes etc, etc), and retaining around 10% to fund operating the platform entity itself.
This is a structure familiar to many blockchain projects. Though Presearch is perhaps a bit unusual by being initially incorporated as a business.
“A lot of the crypto projects have done this foundation route [right off the bat] but really it’s more about taxes and it’s more about jurisdictional arbitrage and trying to minimize the potential regulatory risk,” Pape suggests. “For us, because of the way that we launched it, and our legal advisor [Cameron-Huff] — the founding lawyer for Ethereum — he gave us some really good guidance right out of the gate. And we’ve treated it as a business.
“We think we’ve got a really strong legal position and so we really didn’t need to do the offshore stuff at first. We figured we would get the usage and build up the core token economics. And then switch to an actual truly community-governed foundation, rather than a foundation in name which is governed by all the insiders — which is really what most of the crypto projects currently have done.”
For now Pape remains the sole shareholder of Presearch. Transitioning that sole ownership into the future foundation structure is likely a year out by his reckoning.
“One of the key concepts behind the project is ultimately providing an open source, transparent resource that is treated like more of a utility, that the community can provide input on and manage,” he adds. “So we’re looking at all the different government options.
“There’s a lot of technology being developed within the blockchain space right now. And some best practices that are starting to emerge. So we figured that we would give it a little while for that technology and those practices to mature and then we would be able to do that transition.”
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Fleksy’s AI keyboard is getting a store to put mini apps at chatters’ fingertips
Remember Fleksy? The customizable Android keyboard app has a new trick up its sleeve: It’s adding a store where users can find and add lightweight third party apps to enhance their typing experience.
Right now it’s launched a taster, preloading a selection of ‘mini apps’ into the keyboard — some from very familiar brand names, some a little less so — so users can start to see how it works.
The first in-keyboard apps are Yelp (local services search); Skyscanner (flight search); Giphy (animated Gif search); GifNote (music Gifs; launching for U.S. users only for rights reasons); Vlipsy (reaction video clips); and Emogi (stickers) — with “many more” branded apps slated as coming in the next few months.
They’re not saying exactly what other brands are coming but there are plenty of familiar logos to be spotted in their press materials — from Spotify to Uber to JustEat to Tripadvisor to PayPal and more…
The full keyboard store itself — which will let users find and add and/or delete apps — will be launching at the end of this month.
The latest version of the Fleksy app can be downloaded for free via the Play Store.
Mini apps made for messaging
The core idea for these mini apps (aka Fleksyapps) is to offer lightweight additions designed to serve the messaging use case.
Say, for example, you’re chatting about where to eat and a friend suggests sushi. The Yelp Fleksyapp might pop up a contextual suggestion for a nearby Japanese restaurant that can be shared directly into the conversation — thereby saving time by doing away with the need for someone to cut out of the chat, switch apps, find some relevant info and cut and paste it back into the chat.
Fleksyapps are intended to be helpful shortcuts that keep the conversation flowing. They also of course put brands back into the conversation.
“We couldn’t be more excited to bring the power of the world’s popular songs with GIFs, videos and photos to the new Fleksyapps platform,” says Gifnote co-founder, John vanSuchtelen, in a supporting statement.
Fleksy’s mini apps appear above the Qwerty keyboard — in much the same space as a next-word prediction. The user can scroll through the app stack (each a tiny branded circle until tapped on to expand) and choose one to interact with. It’s similar to the micro apps lodged in Apple’s iMessage but on Android where iMessage isn’t… The team also plans for Fleksy to support a much wider range of branded apps — hence the Fleksyapps store.
In-keyboard apps is not a new concept for the dev team behind Fleksy; an earlier keyboard app of theirs (called ThingThing) offered micro apps they built themselves as a tool to extend its utility.
But now they’re hoping to garner backing and buy in from third party brands excited about the exposure and reach they could gain by being where users spend the most device time: The keyboard.
“Think of it a bit like the iMessage equivalent but on Android across any app. Or the WeChat mini program but inside the keyboard, available everywhere — not only in one app,” CEO Olivier Plante tells TechCrunch. “That’s a problem of messaging apps these days. All of them are verticals but the keyboard is horizontal. So that’s the benefit for those brands. And the user will have the ability to move them around, add some, to remove some, to explore, to discover.”
“The brands that want to join our platform they have the option of being preloaded by default. The analogy is that by default on the home screen of a phone you are by default in our keyboard. And moving forward you’ll be able to have a membership — you’re becoming a ‘brand member’ of the Fleksyapps platform, and you can have your brand inside the keyboard,” he adds.
The first clutch of Fleksyapps were developed jointly, with the team working with the brands in question. But Plante says they’re planning to launch a tool in future so brands will be able to put together their own apps — in as little as just a few hours.
“We’re opening this array of functionalities and there’s a lot of verticals possible,” he continues. “In the future months we will embed new capabilities for the platform — new type of apps. You can think about professional apps, or cloud apps. Accessing your files from different types of clouds. You have the weather vertical. You have ecommerce vertical. You have so many verticals.
“What you have on the app store today will be reflected into the Fleksyappstore. But really with the focus of messaging and being useful in messaging. So it’s not the full app that we want to bring in — it’s really the core functionality of this app.”
The Yelp Fleksyapp, for example, only includes the ability to see nearby places and search for and share places. So it’s intentionally stripped down. “The core benefit for the brand is it gives them the ability to extend their reach,” says Plante. “We don’t want to compete with the app, per se, we just want to bring these types of app providers inside the messenger on Android across any app.”
On the user side, the main advantage he touts is “it’s really, really fast — fleshing that out to: “It’s very lightweight, it’s very, very fast and we want to become the fastest access to content across any app.”
Users of Fleksyapps don’t need to have the full app installed because the keyboard plugs directly into the API of each branded service. So they get core functionality in bite-sized form without a requirement to download the full app. (Of course they can if they wish.)
So Plante also notes the approach has benefits vis-a-vis data consumption — which could be an advantage in emerging markets where smartphone users’ choices may be hard-ruled by the costs of data and/or connectivity limits.
“For those types of users it gives them an ability to access content but in a very light way — where the app itself, loading the app, loading all the content inside the app can be megabits. In Fleksy you’re talking about kilobits,” he says.
Privacy-sensitive next app suggestions
While baking a bunch of third party apps into a keyboard might sound like a privacy nightmare, the dev team behind Fleksy have been careful to make sure users remain in control.
To wit: Also on board is an AI keyboard assistant (called Fleksynext) — aka “a neural deep learning engine” — which Plante says can detect the context, intention and sentiment of conversations in order to offer “very useful” app suggestions as the chat flows.
The idea is the AI supports the substance of the chat by offering useful functionality from whatever pick and mix of apps are available. Plante refers to these AI-powered ‘next app’ suggestions as “pops”.
And — crucially, from a privacy point of view — the Fleksynext suggestion engine operates locally, on device.
That means no conversation data is sent out of the keyboard. Indeed, Plante says nothing the user types in the keyboard itself is shared with brands (including suggestions that pop up but get ignored). So there’s no risk — as with some other keyboard apps — of users being continually strip-mined for personal data to profile them as they type.
That said, if the user chooses to interact with a Fleksyapp (or its suggestive pop) they are then interacting with a third party’s API. So the usual tracking caveats apply.
“We interact with the web so there’s tracking everywhere,” admits Plante. “But, per se, there’s not specific sensitive data that is shared suddenly with someone. It is not related with the service itself — with the Fleksy app.”
The key point is that the keyboard user gets to choose which apps they want to use and which they don’t. So they can choose which third parties they want to share their plans and intentions with and which they don’t.
“We’re not interesting in making this an advertising platform where the advertiser decides everything,” emphasizes Plante. “We want this to be really close to the user. So the user decides. My intentions. My sentiment. What I type decides. And that is really our goal. The user is able to power it. He can tap on the suggestion or ignore it. And then if he taps on it it’s a very good quality conversion because the user really wants to access restaurants nearby or explore flights for escaping his daily routine… or transfer money. That could be another use-case for instance.”
They won’t be selling brands a guaranteed number of conversions, either.
That’s clearly very important because — to win over users — Fleksynext suggestions will need to feel telepathically useful, rather than irritating, misfired nag. Though the risk of that seems low given how Fleksy users can customize the keyboard apps to only see stuff that’s useful to them.
“In a sense we’re starting reshape a bit how advertising is seen by putting the user in the center,” suggests Plante. “And giving them a useful means of accessing content. This is the original vision and we’ve been very loyal to that — and we think it can reshape the landscape.”
“When you look into five years from now, the smartphone we have will be really, really powerful — so why process things in the cloud? When you can process things on the phone. That’s what we are betting on: Processing everything on the phone,” he adds.
When the full store launches users will be able to add and delete (any) apps — included preloads. So they will be in the driving seat. (We asked Plante to a confirm the user will be able to delete all apps, including any pre-loadeds and he said yes. So if you take him at his word Fleksy will not be cutting any deals with OEMs or carriers to indelibly preload certain Fleksyapps. Or, to put it another way, crapware baked into the keyboard is most definitely not plan.)
Depending on what other Fleksyapps launch in future a Fleksy keyboard user could choose to add, for example, a search service like DuckDuckGo or France’s Qwant to power a pro-privacy alternative to using Google search in the keyboard. Or they could choose Google.
Again the point is the choice is theirs.
Scaling a keyboard into a platform
The idea of keyboard-as-platform offers at least the possibility of reintroducing the choice and variety of smartphone app stores back before the cynical tricks of attention-harvesting tech giants used their network effects and platform power to throttle the app economy.
The Android keyboard space was also a fertile experiment ground in years past. But it’s now dominated by Google’s Gboard and Microsoft-acquired Swiftkey. Which makes Fleksy the plucky upstart gunning to scale an independent alternative that’s not owned by big tech and is open to any third party that wants to join its mini apps party.
“It will be Bing search for Swiftkey, it will be Google search for Gboard, it will be Google Music, it will be YouTube. But on our side we can have YouTube, we can also have… other services that exist for video. The same way with pictures and the same way for file-sharing and drive. So you have Google Drive but you have Dropbox, you have OneDrive, there’s a lot of services in the cloud. And we want to be the platform that has them all, basically,” says Plante.
The original founding team of the Fleksy keyboard was acqui-hired by Pinterest back in 2016, leaving the keyboard app itself to languish with minimal updates. Then two years ago Barcelona-based keyboard app maker, ThingThing, stepped in to take over development.
Plante confirms it’s since fully acquired the Fleksy keyboard technology itself — providing a solid foundation for the keyboard-as-platform business it’s now hoping to scale with the launch of Fleksyapps.
Talking of scale, he tells us the startup is in the process of raising a multi-million Series A — aiming to close this summer. (ThingThing last took in $800,000 via equity crowdfunding last fall.)
The team’s investor pitch is the keyboard offers perhaps the only viable conduit left on mobile to reset the playing field for brands by offering a route to cut through tech giant walled gardens and get where users are spending most of their time and attention: i.e. typing and sharing stuff with their friends in private one-to-one and group chats.
That means the keyboard-as-platform has the potential to get brands of all stripes back in front of users — by embedding innovative, entertaining and helpful bite-sized utility where it can prove its worth and amass social currency on the dominant messaging platforms people use.
The next step for the rebooted Fleksy team is of course building scale by acquiring users for a keyboard which, as of half a year ago, only had around 1M active users from pure downloads.
Its strategy on this front is to target Android device makers to preload Fleksy as the default keyboard.
ThingThing’s business model is a revenue share on any suggestions the keyboard converts, which it argues represent valuable leads for brands — given the level of contextual intention. It is also intending to charge brands that want to be preloaded on the Fleksy keyboard by default.
Again, though, a revenue share model requires substantial scale to work. Not least because brands will need to see evidence of scale to buy into the Fleksyapps’ vision.
Plante isn’t disclosing active users of the Fleksy keyboard right now. But says he’s confident they’re on track to hit 30M-35M active users this year — on account of around ten deals he says are in the pipeline with device makers to preload Fleksy’s keyboard. (Palm was an early example, as we reported last year.)
The carrot for OEMs to join the Fleksyapps party is they’re cutting them in on the revenue share from user interactions with branded keyboard apps — playing to device makers’ needs to find ways to boost famously tight hardware margins.
“The fact that the keyboard can monetize and provide value to the phone brands — this is really massive for them,” argues Plante. “The phone brands can expect revenue flowing in their bank account because we give the brands distribution and the handset manufacturer will make money and we will make money.”
It’s a smart approach, and one that’s essentially only possible because Google’s own Gboard keyboard doesn’t come preloaded on the majority of Android devices. (Exceptions include its own Pixel brand devices.) So — unusually for a core phone app on Android — there’s a bit of an open door where the keyboard sits, instead of the usual preloaded Google wares. And that’s an opportunity.
Markets wise, ThingThing is targeting OEMs in all global regions with its Fleksy pitch — barring China (which Plante readily admits it too complex for a small startup to sensibly try jumping at).
Apps vs tech giants
In its stamping ground of Europe there are warm regulatory winds blowing too: An European Commission antitrust intervention last year saw Google hit with a $5BN fine over anti-competitive practices attached to its Android platform — forcing the company to change local licensing terms.
That antirust decision means mobile makers finally have the chance to unbundle Google apps from devices they sell in the region.
Which translates into growing opportunities for OEMs to rethink their Android strategies. Even as Google remains under pressure not to get in the way by force feeding any more of its wares.
Really, a key component of this shift is that device makers are being told to think, to look around and see what else is out there. For the first time there looks to be a viable chance to profit off of Android without having to preload everything Google wants.
“For us it’s a super good sign,” says Plante of the Commission decision. “Every monopolistic situation is a problem. And the market needs to be fragmented. Because if not we’re just going to lose innovation. And right now Europe — and I see good progress for the US as well — are trying to dismantle the imposed power of those big guys. For the simple evolution of human being and technology and the future of us.”
“I think good things can happen,” he adds. “We’re in talks with handset manufacturers who are coming into Europe and they want to be the most respectful of the market. And with us they have this reassurance that you have a good partner that ensures there’s a revenue stream, there’s a business model behind it, there’s really a strong use-case for users.
“We can finally be where we always wanted to be: A choice, an alternative. But having Google imposing its way since start — and making sure that all the direct competition of Google is just a side, I think governments have now seen the problem. And we’re a winner of course because we’re a keyboard.”
But what about iOS? Plante says the team has plans to bring what they’re building with Fleksy to Apple’s mobile platform too, in time. But for now they’re fully focusing efforts on Android — to push for scale and execute on their vision of staking their claim to be the independent keyboard platform.
Apple has supported third party keyboards on iOS for years. Unfortunately, though, the experience isn’t great — with a flaky toggle to switch away from the default Apple keyboard, combined with heavy system warnings about the risks of using third party keyboards.
Meanwhile the default iOS keyboard ‘just works’ — and users have loads of extra features baked by default into Apple’s native messaging app, iMessage.
Clearly alternative keyboards have found it all but impossible to build any kind of scale in that iOS pincer.
“iOS is coming later because we need to focus on these distribution deals and we need to focus on the brands coming into the platform. And that’s why iOS right now we’re really focusing for later. What we can say is it will come later,” says Plante, adding: “Apple limits a lot keyboards. You can see it with other keyboard companies. It’s the same. The update cycle for iOS keyboard is really, really, really slow.”
Plus, of course, Fleksy being preloaded as a default keyboard on — the team hopes — millions of Android devices is a much more scalable proposition vs just being another downloadable app languishing invisibly on the side lines of another tech giant’s platform.
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Ahead of third antitrust ruling, Google announces fresh tweaks to Android in Europe
Google is widely expected to be handed a third antitrust fine in Europe this week, with reports suggesting the European Commission’s decision in its long-running investigation of AdSense could land later today.
Right on cue the search giant has PRed another Android product tweak — which it bills as “supporting choice and competition in Europe”.
In the coming months Google says it will start prompting users of existing and new Android devices in Europe to ask which browser and search apps they would like to use.
This follows licensing changes for Android in Europe which Google announced last fall, following the Commission’s $5BN antitrust fine for anti-competitive behavior related to how it operates the dominant smartphone OS.
tl;dr competition regulation can shift policy and product.
Albeit, the devil will be in the detail of Google’s self-imposed ‘remedy’ for Android browser and search apps.
Which means how exactly the user is prompted will be key — given tech giants are well-versed in the manipulative arts of dark pattern design, enabling them to create ‘consent’ flows that deliver their desired outcome.
A ‘choice’ designed in such a way — based on wording, button/text size and color, timing of prompt and so on — to promote Google’s preferred browser and search app choice by subtly encouraging Android users to stick with its default apps may not actually end up being much of a ‘choice’.
According to Reuters the prompt will surface to Android users via the Play Store. (Though the version of Google’s blog post we read did not include that detail.)
Using the Play Store for the prompt would require an Android device to have Google’s app store pre-loaded — and licensing tweaks made to the OS in Europe last year were supposedly intended to enable OEMs to choose to unbundle Google apps from Android forks. Ergo making only the Play Store the route for enabling choice would be rather contradictory. (As well as spotlighting Google’s continued grip on Android.)
Add to that Google has the advantage of massive brand dominance here, thanks to its kingpin position in search, browsers and smartphone platforms.
So again the consumer decision is weighted in its favor. Or, to put it another way: ‘This is Google; it can afford to offer a ‘choice’.’
In its blog post getting out ahead of the Commission’s looming AdSense ruling, Google’s SVP of global affairs, Kent Walker, writes that the company has been “listening carefully to the feedback we’re getting” vis-a-vis competition.
Though the search giant is actually appealing both antitrust decisions. (The other being a $2.7BN fine it got slapped with two years ago for promoting its own shopping comparison service and demoting rivals’.)
“After the Commission’s July 2018 decision, we changed the licensing model for the Google apps we build for use on Android phones, creating new, separate licenses for Google Play, the Google Chrome browser, and for Google Search,” Walker continues. “In doing so, we maintained the freedom for phone makers to install any alternative app alongside a Google app.”
Other opinions are available on those changes too.
Such as French pro-privacy Google search rival Qwant, which last year told us how those licensing changes still make it essentially impossible for smartphone makers to profit off of devices that don’t bake in Google apps by default. (More recently Qwant’s founder condensed the situation to “it’s a joke“.)
Qwant and another European startup Jolla, which leads development of an Android alternative smartphone platform called Sailfish — and is also a competition complainant against Google in Europe — want regulators to step in and do more.
The Commission has said it is closely monitoring changes made by Google to determine whether or not the company has complied with its orders to stop anti-competitive behavior.
So the jury is still out on whether any of its tweaks sum to compliance. (Google says so but that’s as you’d expect — and certainly doesn’t mean the Commission will agree.)
In its Android decision last summer the Commission judged that Google’s practices harmed competition and “further innovation” in the wider mobile space, i.e. beyond Internet search — because it prevented other mobile browsers from competing effectively with its pre-installed Chrome browser.
So browser choice is a key component here. And ‘effective competition’ is the bar Google’s homebrew ‘remedies’ will have to meet.
Still, the company will be hoping its latest Android tweaks steer off further Commission antitrust action. Or at least generate more fuzz and fuel for its long-game legal appeal.
Current EU competition commissioner, Margrethe Vestager, has flagged for years that the division is also fielding complaints about other Google products, including travel search, image search and maps. Which suggests Google could face fresh antitrust investigations in future, even as the last of the first batch is about to wrap up.
The FT reports that Android users in the European economic area last week started seeing links to rival websites appearing above Google’s answer box for searches for products, jobs or businesses — with the rival links appearing above paid results links to Google’s own services.
The newspaper points out that tweak is similar to a change promoted by Google in 2013, when it was trying to resolve EU antitrust concerns under the prior commissioner, Joaquín Almunia.
However rivals at the time complained the tweak was insufficient. The Commission subsequently agreed — and under Vestager’s tenure went on to hit Google with antitrust fines.
Walker doesn’t mention these any of additional antitrust complaints swirling around Google’s business in Europe, choosing to focus on highlighting changes it’s made in response to the two extant Commission antitrust rulings.
“After the Commission’s July 2018 decision, we changed the licensing model for the Google apps we build for use on Android phones, creating new, separate licenses for Google Play, the Google Chrome browser, and for Google Search. In doing so, we maintained the freedom for phone makers to install any alternative app alongside a Google app,” he writes.
Nor does he make mention of a recent change Google quietly made to the lists of default search engine choices in its Chrome browser — which expanded the “choice” he claims the company offers by surfacing more rivals. (The biggest beneficiary of that tweak is privacy search rival DuckDuckGo, which suddenly got added to the Chrome search engine lists in around 60 markets. Qwant also got added as a default choice in France.)
Talking about Android specifically Walker instead takes a subtle indirect swipe at iOS maker Apple — which now finds itself the target of competition complaints in Europe, via music streaming rival Spotify, and is potentially facing a Commission probe of its own (albeit, iOS’ marketshare in Europe is tiny vs Android). So top deflecting Google.
“On Android phones, you’ve always been able to install any search engine or browser you want, irrespective of what came pre-installed on the phone when you bought it. In fact, a typical Android phone user will usually install around 50 additional apps on their phone,” Walker writes, drawing attention to the fact that Apple does not offer iOS users as much of a literal choice as Google does.
“Now we’ll also do more to ensure that Android phone owners know about the wide choice of browsers and search engines available to download to their phones,” he adds, saying: “This will involve asking users of existing and new Android devices in Europe which browser and search apps they would like to use.”
We’ve reached out to Commission for comment, and to Google with questions about the design of its incoming browser and search app prompts for Android users in Europe and will update this report with any response.
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Apple’s increasingly tricky international trade-offs
Far from Apple’s troubles in emerging markets and China, the company is attracting the ire of what should really be a core supporter demographic naturally aligned with the pro-privacy stance CEO Tim Cook has made into his public soapbox in recent years — but which is instead crying foul over perceived hypocrisy.
The problem for this subset of otherwise loyal European iPhone users is that Apple isn’t offering enough privacy.
These users want more choice over key elements such as the search engine that can be set as the default in Safari on iOS (Apple currently offers four choices: Google, Yahoo, Bing and DuckDuckGo, all U.S. search engines; and with ad tech giant Google set as the default).
It is also being called out over other default settings that undermine its claims to follow a privacy by design philosophy. Such as the iOS location services setting which, once enabled, non-transparently flip an associated sub-menu of settings — including location-based Apple ads. Yet bundled consent is never the same as informed consent…
6/ and @Apple also defaults to ON, approx 13 location settings the moment a user enables location settings
that includes using YOUR location to support APPLE’s advertising business interests & $$$. By ‘enabling location based services’ you give your consent to this
— Privacy Matters (@PrivacyMatters) October 19, 2018
As the saying goes you can’t please all of the people all of the time. But the new normal of a saturated smartphone market is imposing new pressures that will require a reconfiguration of approach.
Certainly the challenges of revenue growth and user retention are only going to step up from here on in. So keeping an otherwise loyal base of users happy and — crucially — feeling listened to and well served is going to be more and more important for the tech giant as the back and forth business of services becomes, well, essential to its fortunes going forward.
(At least barring some miracle new piece of Apple hardware — yet to be unboxed but which somehow rekindles smartphone-level demand afresh. That’s highly unlikely in any medium term timeframe given how versatile and capable the smartphone remains; ergo Apple’s greatest success is now Apple’s biggest challenge.)
With smartphone hardware replacement cycles slowing, the pressure on Cook to accelerate services revenue naturally steps up — which could in turn increase pressure on the core principles Cupertino likes to flash around.
Yet without principles there can be no brand premium for Apple to command. So that way ruin absolutely lies.
Control shift
It’s true that controlling the iOS experience by applying certain limits to deliver mainstream consumer friendly hardware served Apple well for years. But it’s also true iOS has grown in complexity over time having dropped some of its control freakery.
Elements that were previously locked down have been opened up — like the keyboard, for instance, allowing for third party keyboard apps to be installed by users that wish to rethink how they type.
This shift means the imposed limit on which search engines users can choose to set as an iOS default looks increasingly hard for Apple to justify from a user experience point of view.
Though of course from a business PoV Apple benefits by being able to charge Google a large sum of money to remain in the plum search default spot. (Reportedly a very large sum, though claims that the 2018 figure was $9BN have not been confirmed. Unsurprisingly neither party wants to talk about the terms of the transaction.)
The problem for Apple is that indirectly benefiting from Google eroding the user privacy it claims to champion — by letting the ad tech giant pay it to suck up iOS users’ search queries by default — is hardly consistent messaging.
Not when privacy is increasingly central to the premium the Apple brand commands.
Cook has also made a point of strongly and publicly attacking the ‘data industrial complex‘. Yet without mentioning the inconvenient side-note that Apple also engages in trading user data for profit in some instances, albeit indirectly.
In 2017 Apple switched from using Bing to Google for Siri web search results. So even as it has stepped up its rhetoric around user privacy it has deepened its business relationship with one of the Western Internet’s primary data suckers.
All of which makes for a very easy charge of hypocrisy.
Of course Apple offers iOS users a non-tracking search engine choice, DuckDuckGo, as an alternative choice — and has done so since 2014’s iOS 8.
Its support for a growing but still very niche product in what are mainstream consumer devices is an example of Apple being true to its word and actively championing privacy.
The presence of the DDG startup alongside three data-mining tech giants has allowed those ‘in the know’ iOS users to flip the bird at Google for years, meaning Apple has kept privacy conscious consumers buying its products (if not fully on side with all its business choices).
But that sort of compromise position looks increasingly difficult for Apple to defend.
Not if it wants privacy to be the clear blue water that differentiates its brand in an era of increasingly cut-throat and cut-price Android -powered smartphone competition that’s serving up much the same features at a lower up-front price thanks to all the embedded data-suckers.
There is also the not-so-small matter of the inflating $1,000+ price-tags on Apple’s top-of-the-range iPhones. $1,000+ for a smartphone that isn’t selling your data by default might still sound very pricy but at least you’d be getting something more than just shiny glass for all those extra dollars. But the iPhone isn’t actually that phone. Not by default.
Apple may be taking a view that the most privacy sensitive iPhone users are effectively a captive market with little option but to buy iOS hardware, given the Google-flavored Android competition. Which is true but also wouldn’t bode well for the chances of Apple upselling more services to these people to drive replacement revenue in a saturated smartphone market.
Offending those consumers who otherwise could be your very best, most committed and bought in users seems short-sighted and short-termist to say the least.
Although removing Google as the default search provider in markets where it dominates would obviously go massively against the mainstream grain that Apple’s business exists to serve.
This logic says Google is in the default position because, for most Internet users, Google search remains their default.
Indeed, Cook rolled out this exact line late last year when asked to defend the arrangement in an interview with Axios on HBO — saying: “I think their search engine is the best.”
He also flagged various pro-privacy features Apple has baked into its software in recent years, such as private browsing mode and smart tracker prevention, which he said work against the data suckers.
Albeit, that’s a bit like saying you’ve scattered a few garlic cloves around the house after inviting the thirsty vampire inside. And Cook readily admitted the arrangement isn’t “perfect”.
Clearly it’s a trade off. But Apple benefitting financially is what makes this particular trade-off whiff.
It implies Apple does indeed have an eye on quarterly balance sheets, and the increasingly important services line item specifically, in continuing this imperfect but lucrative arrangement — rather than taking a longer term view as the company purports to, per Cook’s letter to shareholders this week; in which he wrote: “We manage Apple for the long term, and Apple has always used periods of adversity to re-examine our approach, to take advantage of our culture of flexibility, adaptability and creativity, and to emerge better as a result.”
If Google’s search product is the best and Apple wants to take the moral high ground over privacy by decrying the surveillance industrial complex it could maintain the default arrangement in service to its mainstream base but donate Google’s billions to consumer and digital rights groups that fight to uphold and strengthen the privacy laws that people-profiling ad tech giants are butting hard against.
Apple’s shareholders might not like that medicine, though.
More palatable for investors would be for Apple to offer a broader choice of alternative search engines, thereby widening the playing field and opening up to more pro-privacy Google alternatives.
It could also design this choice in a way that flags up the trade-off to its millions of users. Such as, during device set-up, proactively asking users whether they want to keep their Internet searches private by default or use Google?
When put like that rather more people than you imagine might choose not to opt for Google to be their search default.
Non-tracking search engine DDG has been growing steadily for years, for example, hitting 30M daily searches last fall — with year-on-year growth of ~50%.
Given the terms of the Apple-Google arrangement sit under an NDA (as indeed all these arrangements do; DDG told us it couldn’t share any details about its own arrangement with Apple, for e.g.) it’s not clear whether one of Google’s conditions requires there be a limit on how many other search engines iOS users can pick from.
But it’s at least a possibility that Google is paying Apple to limit how many rivals sit in the list of competitors iOS users can pick out an alternative default. (It has, after all, recently been spanked in Europe for anti-competitive contractual limits imposed on Android OEMs to limit their ability to use alternatives to Google products, including search. So you could say Google has history where search is concerned.)
Equally, should Google actually relaunch a search product in China — as it’s controversially been toying with doing — it’s likely the company would push Apple to give it the default slot there too.
Though Apple would have more reason to push back, given Google would likely remain a minnow in that market. (Apple currently defaults to local search giant Baidu for iOS users in China.)
So even the current picture around search on iOS is a little more fuzzy than Cook likes to make out.
Local flavor
China is an interesting case, because if you look at Apple’s growth challenges in that market you could come to a very different conclusion vis-a-vis the power of privacy as a brand premium.
In China it’s convenience, via the do-it-all ‘Swiss army knife’ WeChat platform, that’s apparently the driving consumer force — and now also a headwind for Apple’s business there.
At the same time, the idea of users in the market having any kind of privacy online — when Internet surveillance has been imposed and ‘normalized’ by the state — is essentially impossible to imagine.
Yet Apple continues doing business in China, netting it further charges of hypocrisy.
Its revised guidance this week merely spotlights how important China and emerging markets are to its business fortunes. A principled pull-out hardly looks to be on the cards.
All of which underscores growing emerging market pressures on Apple that might push harder against its stated principles. What price privacy indeed?
It’s clear that carving out growth in a saturated smartphone market is going to be an increasingly tricky business for all players, with the risk of fresh trade-offs and pitfalls looming especially for Apple.
Negotiating this terrain certainly demands a fresh approach, as Cook implies is on his mind, per the shareholder letter.
Arguably the new normal may also call for an increasingly localized approach as a way to differentiate in a saturated and samey smartphone market.
The old Apple ‘one-sized fits all’ philosophy is already very outdated for some users and risks being caught flat-footed on a growing number of fronts — be that if your measure is software ‘innovation’ or a principled position on privacy.
An arbitrary limit on the choice of search engine your users can pick seems a telling example. Why not offer iOS users a free choice?
Or are Google’s billions really standing in the way of that?
It’s certainly an odd situation that iPhone owners in France, say, can pick from a wide range of keyboard apps — from mainstream names to superficial bling-focused glitter and/or neon LED keyboard skins or indeed emoji and GIF-obsessed keyboards — but if they want to use locally developed pro-privacy search engine Qwant on their phone’s native browser they have to tediously surf to the company’s webpage every time they want to look something up.
Google search might be the best for a median average ‘global’ (excluding China) iOS user but in an age of increasingly self-focused and self-centred technology, with ever more demanding consumers, there’s really no argument against letting people who want to choose for themselves.
In Europe there’s also the updated data protection framework, GDPR, to consider. Which may yet rework some mainstream ad tech business models.
On this front Qwant questions how even non-tracking rival DDG can protect users’ searches from government surveillance given its use of AWS cloud hosting and the U.S. Cloud Act. (Though, responding to a discussion thread about the issue on Github two years ago, DDG’s founder noted it has servers around the world, writing: “If you are in Europe you will be connected to our European servers.” He also reiterated that DDG does not collect any personal data from users — thereby limiting what could be extracted from AWS via the Act.)
Asked what reception it’s had when asking about getting its search engine on the Safari iOS list, Qwant told us the line that’s been (indirectly) fed back to it is “we are too European according to Apple”. (Apple declined to comment on the search choices it offers iOS users.)
“I have to work a lot to be more American,” Qwant co-founder and CEO Eric Leandri told us, summing up the smoke signals coming out of Cupertino.
“I understand that Apple wants to give the same kind of experience to their customers… but I would say that if I was Apple now, based on the politics that I want to follow — about protecting the privacy of customers — I think it would be great to start thinking about Europe as a market where people have a different point of view on their data,” he continued.
“Apple has done a lot of work to, for example, not let applications give data to each by a very strict [anti-tracking policy]; Apple has done a lot of work to guarantee that cookies and tracking is super difficult on iOS; and now the last problem of Apple is Google search.”
“So I hope that Apple will look at our proposal in a different way — not just one-fits-all. Because we don’t think that one-fits-all today,” he added.
Qwant too, then, is hoping for a better Apple to emerge as a result of a little market adversity.
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Google still claimed to be blocking search rivals on Android, despite Europe’s antitrust action
Mobile licensing changes made by Google this fall, when it tweaked terms for OEMs wanting to license its Android smartphone platform on devices destined for the European market, don’t appear to be offering succour to search rivals — despite being triggered by an antitrust ruling intended to reset the competitive playing field.
The European Commission found the search giant guilty of anti-competitive practices related to its Android platform this summer, slapping the company with a $5BN fine. The decision required Google cease practices judged to be illegally skewing the market and do so within 90 days.
It was the second such major EC antitrust finding against Google, after last year’s Google Shopping ruling, when the company was warned that having been found dominant in search it had a “special responsibility” to avoid breaching antitrust rules in any market it plays in.
Google disputes the Commission’s findings of competitive abuse in both cases, and has lodged legal appeals.
But the nature of competition law demands action in the meanwhile, given the threat of punitive penalties for any continued breach. So in October Google responded to the Commission’s Android ruling by updating its regional compatibility agreement to provide a route for OEMs to unbundle key services from the Android OS — rather than requiring its suite of Google apps be pre-loaded for devices to get the Play Store.
However it also incorporated licensing fees for some unbundled configurations (e.g. Android + Play Store). At the same time it said it would not charge any fee to include search or Chrome. And it said it was offering incentives for OEMs to place its eponymous, market dominating search engine (and/or browser) prominently on their devices — despite one of the behaviors the Commission judged illegal being payments Google had made to certain large manufacturers and mobile carriers to exclusively pre-install Google Search.
The Commission did not prescribe specific remedies for the anticompetitive behaviours it pegged to Android — saying it’s “Google’s sole responsibility to make sure that it changes its conduct in a way that brings the infringements to an effective end”.
Though it warned it would closely monitor the company’s conduct, noting that any finding of continued non-compliance would risk fresh fines — of up to 5% of the average daily turnover of Alphabet for each day of non-compliance.
The key word there is “effective” — in terms of what the Commission is watching for.
Meanwhile Google’s dominant position in search naturally makes it the smartphone consumer’s go-to choice — which in turn means there’s a natural incentive for device makers not to ditch Google as the search default. At least for mainstream devices.
But Google’s new European licensing terms for Android appear to be piling additional pressure on OEMs not to switch even for more experimental and/or regional device launches, according to privacy-focused search engine Qwant.
The suggestion is Google’s licensing changes have essentially blocked the launch of an Android device with Qwant search rather than Google as the default.
Pay to install
Its experience suggests Google’s initial ‘remedy’ — far from delivering an “effective end” to the competitive infringements the Commission found — is actively steering OEMs away from search alternatives and rival companies.
Qwant, a French startup, launched its non-tracking search offering back in 2013, and has been on a growth tear on its home turf in recent months — winning over high profile users in the public sector as concern has risen about Silicon Valley’s intrusive grip on user data.
The French National Assembly and the French Ministry of the Armed Forces Minister announced this fall they’d switch to Qwant instead of Google as their default.
Of course the startup is still a minnow compared to Google. But it’s growing: Qwant tracks queries rather than users (given it doesn’t track people), and it says it generated 2.6BN queries in 2016; which grew to 9BN last year; and is now on track to end this year with around 18BN queries.
“So if we think about it that means that last year we were three days of Google; this year six days of Google — not so bad!” says co-founder Eric Leandri.
“In France we have now more than 6% of the market,” he continues. “In Germany something like 2%. And we are still growing. We do growth of 20% by month for the last four months. The growth in our revenue is two digit too, by month.”
Earlier this year it had been hoping to make additional regional marketshare gains by securing a deal to be pre-loaded on Android smartphones destined for European markets. A spokesman tells us it has a framework agreement with Huawei. (The Chinese Android OEM is second only to Samsung in global marketshare terms, according to analysts.)
The Commission’s antitrust ruling opened the door to this possibility, given it banned Google from prohibiting OEMs from launching non-Google approved Android forks. So after the ruling things were looking good for Qwant, with the startup on the cusp of securing a device deal for a few European countries, as Leandri tells it.
He blames Google’s licensing changes for putting the kibosh on a launch they’d been expecting to be able to announce in November. Early that month the startup pinged us to trail forthcoming news — of “a major partnership that will allow us to accelerate in the smartphone market” — only to go silent.
A few weeks later it got in touch again to say it had had to postpone the announcement.
“We are very near to one or two deals to be by default or in the list of search engines in some Android cell phone made by a very large Asian manufacturer… Just for Europe, and just for some countries in Europe but we are talking about 10 million or 20 million of cell phones,” says Leandri now.
“And when we have won the bid against Google in October then Google start to say that in Europe you have to pay $40 for Android. So now if you install Qwant you have to pay $40 and if you install Google they give you some cash.”
“Before it was impossible to bid against Google because Google was blocking everything. Now you can — but now the solution of Google is you have to pay $40 if you don’t install Google by default with Chrome just on the bar. You know the bar that is fixed on Android. And this is again an abuse of their dominant position,” he adds.
“Because if I want, for example, 10 million smartphones, the guy has to pay $400M to Google. Do you really think they will pay $400M to Google just to install Qwant?”
Google’s rebuttal of the Commission’s antitrust finding for Android has focused on claims that its approach of free licensing combined with a bundle of Google services has generally enabled competition to thrive in the mobile app ecosystem, as well as claiming lower prices are a “classic hallmark… of robust competition”.
Yet Qwant’s experience offers a clear counterpoint, underlining how challenging it remains to try to compete with Google’s core search business when the same company also dominates the smartphone market and can just throw the levers of Android’s licensing terms to configure how much ‘appetite’ OEMs have for investing in alternative search defaults (given tiny hardware profit margins in the Android space).
After Qwant won over Huawei to building a device with its search engine in prime position, Leandri says it was Google’s changes to the licensing terms for Android that threw a spanner in the works.
“After that pressure then the manufacturer doesn’t know how to react now,” he says, confirming he believes there’s currently no chance for the device to be launched. Not without further changes to how Android operates in the market — i.e. further regulatory intervention.
“So we will work a lot with the European Commission to stop that,” he adds. “But again, again my question is why Google goes that way?”
We reached out to Google to ask about the fees it would charge an OEM wanting to launch an Android device with Google Play but without Google search as the default in Europe.
We also asked how charging a fee for Android if OEMs don’t also bundle Google services can help increase competition, per the Commission’s intention.
At the time of writing Google had not responded to our questions.
We also reached out to Huawei for comment and will update this story with any response.
Even if Qwant and Huawei get their way, and European buyers in a handful of countries are able to choose to buy an Android device with a little search localization as its differentiating out-of-the-box twist, Leandri isn’t under any illusions that a majority of consumers will still switch back to Google of their own accord — given its dominance of search.
He reckons those who’d stick with a non-Google search choice might be as low as a third or 40%.
But his point is that, as it stands, Qwant doesn’t even have the chance to try competing against the Google Goliath on its own terms. And he argues that’s simply not fair.
“Google has billions to make advertisement to ask people to switch, right. And they can even do advertisement on the Play Store for zero because they control the Play Store. Why they don’t come back to a normal market where we are all on the same line and they just compete with advertisement, with pushing their products, with a better proposition of value. It’s crazy, it’s crazy!” he says.
“They have 95% of the market, and on that market they expect that if they don’t have the search by default there then they don’t do money with the Play Store. This is bullshit. They do billions of euros with the app on the Play Store each year. With the 30% that they take on the apps. So this is not true. This is not true, sorry.
“So right now this is our goal and my main work actually is just to obtain the right to have a fair competition — a simple, fair competition.”
“I don’t want to dismantle Google. I don’t want Google to be fined 10BN. I don’t care. The only thing I want is to have the right to have a fair competition,” he adds.
We asked the European Commission to respond to Qwant’s experience, and for an update on its monitoring of Google’s compliance with the Android antitrust ruling.
A spokeswoman declined to comment on an individual case but we understand the Commission has been sending questionnaires to market players as part of its compliance monitoring.
It’s clear the regulator’s intention with the Android decision was to expand consumer choice by creating opportunities for competition that didn’t exist before — including for rival search and browser providers to be able to compete on the merits with Google when it comes to pre-loading their products on Android devices.
So if the Commission’s monitoring efforts confirm instances where competition is being blocked, as appears the case here with Qwant, further interventions will surely follow.
Leandri also points out that Google made much the same arguments vis-a-vis ‘fair competition’ more than a decade ago — when it called for the then computing incumbent, Microsoft, not to stand in the way of Internet upstarts by bundling MSN search into its Internet Explorer web browser.
“The market favors open choice for search, and companies should compete for users based on the quality of their search services,” said Marissa Mayer in 2006, then Google’s vice president for search products. “We don’t think it’s right for Microsoft to just set the default to MSN. We believe users should choose.”
“I totally agree with what they say in 2006! Just exchange Microsoft for Google and that’s it!” he says now, adding: “We have to fight because there is not a lot of other way. But I stop fighting tomorrow as soon as I have a fair competition.
“I’m not waiting for the Commission to make the competition. Right now the percentage of growth that I have in France it’s not based on the Commission who has won or not. It’s based on our value proposition.”
Leandri is also president of the Open Internet Project, a European organization whose members lobby for regulatory action to rein in what they view as Google’s abusive dominance of digital markets, and which was also involved in the Google Shopping complaints — though he points out that in the Android case three of the five complainants are American.
“We are the only European. So the problem is not only for a small startup in Europe. Who, y’know, complained because ‘Google is so cool’. And we are so dumb. And so ridiculous. But the problem is for Oracle, it’s for the Fair Search. It’s not for kids.”
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