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China may kill TikTok’s US operations rather than see them sold
The controversial push to force Chinese tech unicorn ByteDance to divest part or all of its smash-hit TikTok social media service to a U.S.-based company could be in doubt after a report today indicated that China’s government may oppose the transaction. According to reporting by Reuters, the Chinese government may prefer TikTok to simply shutter its U.S. operations instead of allowing it to be sold to an American company.
The potential divestment of TikTok is not a regular business transaction. Instead, the deal is being demanded by the U.S. government, as President Donald Trump directs foreign and economic policymaking via executive fiat. Leaning on his own fabled business acumen, the American premier has also demanded that his government receive a portion of any final sale price. It is not clear if that concept is legal.
As the U.S. and China spar around the globe for both economic and political supremacy, the deal is a flashpoint between the countries with a muddle of companies stuck in the middle. ByteDance is in the mix, along with Microsoft, Walmart and other companies to a lesser degree, like Oracle. The Trump administration has set a mid-September timeline for a deal being struck, though as the month burns away it is not clear if that timeline could be met.
The United States is not alone in taking steps to curb Chinese influence inside its borders, as the TikTok sale comes after India banned the app, along with dozens of other China-based applications.
The deal is also under pressure from a changing regulatory environment in China, with the country’s autocratic leadership changing its export rules to possibly include elements of TikTok that could limit a transaction, and perhaps scuttle its sale.
For ByteDance, the situation is a nightmare. For lead-suitor Microsoft, the transaction is a shotgun marriage that it might not be entirely enthused about. For the Trump administration, it’s an attempt at a power play. And for China’s increasingly authoritarian government, the deal could feel like submission. So, if the deal does manage to come together it will be more surprise than eventuality.
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Daily Crunch: Facebook launches a college-only network
Facebook returns to its college roots, Alexa gets a printing feature and we take a deep dive into Unity’s business. This is your Daily Crunch for September 10, 2020.
The big story: Facebook launches a college-only network
If you’re old and decrepit like me, you remember when Facebook was only for college students and required a college email address to join. Well, it seems everything old is new again, because the company is piloting a new feature called Facebook Campus … which is only for college students and requires a college email address to join.
Facebook’s Charmaine Hung argued that the product is particularly relevant now: “With COVID-19, we see that many students aren’t returning to campus in the fall. Now, classes are being held online and students are trying to react to this new normal of what it’s like to connect to clubs and organizations that you care about, when you’re not together.”
Of course, this could also be a way for Facebook to try to stay relevant to a younger demographic, before they move on to other apps.
The tech giants
Amazon launches Alexa Print, a way to print lists, recipes, games and educational content using your voice — The feature works with any second-generation Echo device or newer, as well as a range of printers.
Google says it’s eliminating Autocomplete suggestions that target candidates or voting — The company says that it will now remove any Autocomplete predictions that seem to endorse or oppose a candidate or a political party, or that make a claim about voting or the electoral process.
Microsoft Surface Duo review — Brian Heater calls it a beautiful, expensive work in progress.
Startups, funding and venture capital
Orchard real estate platform raises $69 million Series C led by Revolution Growth — Orchard (formerly Perch) launched in 2017 with a mission to digitize the entire experience of buying and selling a home.
How Unity built a gaming engine for the future — Eric Peckham offers an in-depth look at the company’s financials as it prepares to go public.
India’s Zomato raises $100M from Tiger Global, says it is planning to file for IPO next year — In an email to employees, CEO Deepinder Goyal said the food delivery startup has about $250 million cash in the bank, with several more “big name” investors preparing to join the current round.
Advice and analysis from Extra Crunch
Use ‘productive paranoia’ to build cybersecurity culture at your startup — We asked Casey Ellis, founder, chairman and chief technology officer at Bugcrowd, to share his ideas for how startups can improve their security posture.
What’s driving API-powered startups forward in 2020? — It’s not hard to find startups with API-based delivery models that are doing well this year.
(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)
Everything else
Announcing the Startup Battlefield companies at TechCrunch Disrupt 2020 — This is our most competitive batch to date.
$3 million Breakthrough Prize goes to scientist designing molecules to fight COVID-19 — David Baker’s work over the last 20 years has helped validate the idea that computers can help us understand and create complex molecules like proteins.
Recorded music revenue is up on streaming growth, as physical sales plummet — With vastly more people stuck inside seeking novel methods of entertainment, paid subscriptions are up 24% year-over-year.
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.
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Snapchat’s new Lens celebrates tomorrow’s NFL kickoff
Snap and the NFL recently announced a multi-year extension to their content partnership. Now, with the season starting tomorrow, they’re revealing more details about what kinds of content fans can expect to find on Snapchat.
For tomorrow night’s kickoff, they’ve created a special augmented reality Lens that takes fans from the Kansas City Chiefs’ locker room (the Chiefs are hosting the Houston Texans) through the tunnel and into Arrowhead Stadium, where they’ll be greeted by Kansas City’s Patrick Mahomes and Houston’s Deshaun Watson.
The Lens will be available nationally, and as regular games begin, it will transform into an entrance into a more generic NFL stadium.
After that, the NFL will be creating a highlight show that updates each game day, plus three weekly shows — “Rankings” (which offers historic NFL facts designed to encourage fan debates), “Mic’d Up” (a behind-the-scenes look at what coaches and players say during the games) and “Predictions.” The NFL will also continue producing “Real Talk with the NFL,” a show that highlights the league’s social justice initiatives.
Ian Trombetta, the NFL’s senior vice president of social and influence marketing, told me that all of this content is created by the league’s social lab in partnership with Snap. And while the NFL continues to see high ratings on traditional linear TV, he said Snapchat plays “a really critical role for us.”
Image Credits: Snap
“It’s always about: How do we engage new audiences, younger audiences, and do it in ways that are very authentic to the platforms?” Trombetta said. “We don’t look to do things that are just content dumps.”
Snapchat says that viewership of NFL content increased 80% during the 2019-20 season, and that 90% of viewers were under the age of 35.
Of course, it’s going to be a strange season. Like other professional sports organizations, the NFL has to test its players for COVID-19, and different teams are taking different approaches toward allowing fans in the stadiums — many games will be taking place without fans at all.
.@NFL launches @Snapchat AR portal celebrating tomorrow’s kickoff https://t.co/mOqNzfZ2wQ @TechCrunch @anthonyha pic.twitter.com/qRKWi282mD
— Russ Caditz-Peck (@RussCP) September 9, 2020
“The [NFL] organization is leaning on us more than they ever had,” Trombetta said. “We didn’t ignore the fact of what’s happening, anyone would be crazy to think we could totally shut that off. There has to be an acknowledgement of it, while also finding new ways, very seamless ways for fans to engage and celebrate rituals around games that they’ve established over years and decades.”
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Facebook Watch is getting 1.25B visitors each month
Facebook is sharing some new growth numbers around its video destination — namely, that Facebook Watch is now receiving more than 1.25 billion visitors every month.
The company isn’t saying specifically how those numbers have changed during the pandemic (when video services like Netflix have seen dramatic growth), but product lead Paresh Rajwat said there was “a really big surge” at the beginning of lockdown and social distancing, and that the surge has not subsided as society begins to reopen.
Facebook Watch launched in 2018. Back in June of last year, the company said that 720 million people were watching at least one minute of Watch content every month.
Rajwat noted that while Watch is built on “the social layer of Facebook,” with videos shareable across Facebook’s many products, the views are happening on Watch itself.
“It is super critical for us to have a destination,” he said, keeping videos from popular creators and publishers separate from the core Facebook experience of interacting with friends and family. “The moment we mix them together, it becomes a completely different product for people.”
Rajwat added that the company isn’t just looking at overall audience size. He argued that when you look at “the reactions and comments and shares” you can see that “the content we have is working.” (Advertisers have wondered about the true extent of audience engagement on Facebook Watch.)
Last year, as tech and media companies were all investing heavily to launch their own streaming services, we argued that Facebook’s efforts with unscripted shows and older content seemed pretty lackluster in comparison. But it sounds like the content that’s working on Watch isn’t the kind of thing you’d find on Netflix or Disney+ — as Rajwat put it, “The angle we’ve taken is to focus more on content that is around social topics to drive conversations.”
Image Credits: Facebook
For example, there’s “Red Table Talk” from Jada Pinkett Smith and family, a talk show that made headlines over the summer for bringing Will Smith and Jada together to discuss their marital issues. Facebook plans to launch another version of Red Table Talk in October, “Red Table Talk: The Estefans,” with Gloria Estefan, her niece Lily and her daughter Emily.
As another example of a successful original Facebook Watch show, Rajwat pointed to “Returning the Favor,” an Emmy-winning program where host Mike Rowe showcases everyday heroes.
Rajwat said that live programming has increased significantly during the pandemic. That includes live sports, with 13.7 million people watching the UEFA Champions League final, making it the most popular football broadcast ever on Facebook Watch. And Facebook recently announced that publishers and other businesses will be able to charge for access to live online events, with Facebook taking no fees for the next year.
The site also added licensed music videos over the summer, with Katy Perry premiering her music video for “Smile” exclusively on Facebook Watch, where it was watched by “millions” of fans.
Image Credits: Facebook
The company-highlighted successful publishers on Facebook Watch include organizations like UFC, large publishers like BuzzFeed and individual creators like Benito Skinner and Brandi Guice, a.k.a. Braannxo, who’s making 98% of her revenue from Facebook Stars and fan subscriptions.
Looking forward, Rajwat said that a big priority is making “more and more investment in showing people what they really are interested in.” To that end, users have already spotted that Facebook Watch is now allowing users to customize their feed by exploring and subscribing to different topics.
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FB Messenger chief Stan Chudnovsky is coming to Disrupt
Stan Chudnovsky last spoke at Disrupt in 2016, so we’ve got a lot to catch up on.
Chudnovsky remains in charge of Facebook Messenger — his current title is VP of Messenger — so he can tell us more about how the product has evolved at this year’s Disrupt 2020 on September 14-18.
One of the biggest changes has been the launch of Messenger Rooms, a service that allows you to start and join video calls from within Facebook or Messenger (and eventually other Facebook products). The product’s appeal is pretty easy to see in a time of social distancing, but Facebook still has a long way to go if it wants to challenge Zoom.
Meanwhile, we’ve also seen increasing scrutiny about the role that messaging apps can play in spreading hate speech and misinformation. Among Facebook’s apps, WhatsApp has struggled the most visibly with these issues, but Messenger has also been adding tools to help people share accurate information about the COVID-19 pandemic.
On top of all that, we can get general updates on how FB Messenger has been doing during the pandemic, and what the big priorities are moving forward. Chudnovsky might also have some thoughts to share on the messaging landscape, and on the startup world — after all, before joining Facebook, he co-founded startups including Jiff, NFX, Ooga Labs and Wonderhill.
Learn more about the future of messaging at our all-virtual Disrupt 2020, which runs from September 14-18. Get your front row seat to see this panel live with a Disrupt Digital Pro Pass or a Digital Startup Alley Exhibitor Package. We’re excited to see you there.
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TikTok’s rivals in India struggle to cash in on its ban
For years, India has served as the largest open battleground for Silicon Valley and Chinese firms searching for their next billion users.
With more than 400 million WhatsApp users, India is already the largest market for the Facebook-owned service. The social juggernaut’s big blue app also reaches more than 300 million users in the country.
Google is estimated to reach just as many users in India, with YouTube closely rivaling WhatsApp for the most popular smartphone app in the country.
Several major giants from China, like Alibaba and Tencent (which a decade ago shut doors for most foreign firms), also count India as their largest overseas market. At its peak, Alibaba’s UC Web gave Google’s Chrome a run for its money. And then there is TikTok, which also identified India as its biggest market outside of China.
Though the aggressive arrival of foreign firms in India helped accelerate the growth of the local ecosystem, their capital and expertise also created a level of competition that made it too challenging for most Indian firms to claim a slice of their home market.
New Delhi’s ban on 59 Chinese apps on June 30 on the basis of cybersecurity concerns has changed a lot of this.
Indian apps that rarely made an appearance in the top 20 have now flooded the charts. But are these skyrocketing download figures translating to sustaining users?
An industry executive leaked the download, monthly active users, weekly active users and daily active users figures from one of the top mobile insight firms. In this Extra Crunch report, we take a look at the changes New Delhi’s ban has enacted on the world’s second largest smartphone market.
TikTok copycats
Scores of startups in India, including news aggregator DailyHunt, on-demand video streamer MX Player and advertising giant InMobi Group, have launched their short-video format apps in recent months.
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Daily Crunch: TikTok’s CEO resigns
Turmoil continues at TikTok, Salesforce lays off 1,000 people and Warby Parker is now valued at $3 billion. This is your Daily Crunch for August 27, 2020.
The big story: TikTok’s CEO resigns
Kevin Mayer, the former Disney executive who joined TikTok as CEO just over 100 days ago, announced yesterday that he’s resigning. While Mayer was likely brought on to reassure U.S. legislators about the app’s Chinese owners, it seems he wasn’t expecting this level of conflict, with President Donald Trump signing an executive order that would ban TikTok in the U.S. unless it’s sold to another company.
“We appreciate that the political dynamics of the last few months have significantly changed what the scope of Kevin’s role would be going forward, and fully respect his decision,” a TikTok spokesperson said in a statement. “We thank him for his time at the company and wish him well.”
As for which company might acquire TikTok, Walmart has confirmed that it’s interested in teaming up with Microsoft to acquire the popular video app.
The tech giants
Salesforce confirms it’s laying off around 1,000 people in spite of monster quarter — Salesforce says it’s “reallocating resources to position the company for continued growth.”
Google Assistant app now uses your searches to make personalized recommendations — Those recommendations could include podcasts, restaurants, recipes and more.
Facebook isn’t happy about Apple’s upcoming ad tracking restrictions — The company says Audience Network revenue could decline by more than 50%.
Startups, funding and venture capital
Warby Parker, valued at $3 billion, raises $245 million in funding — The eyewear startup has launched a telehealth service for New York customers, allowing them to extend an existing glasses or contacts prescription.
Instacart faces lawsuit from DC attorney general over ‘deceptive’ service fees — The suit alleges that Instacart misled customers into thinking the 10% service fee was a tip for the delivery person.
Narrative raises $8.5 million as it launches a new data marketplace — The goal is to make buying data as easy as buying something on Amazon.
Advice and analysis from Extra Crunch
Alexa von Tobel: Eliminating risk is the key to building a startup during an economic downturn — Von Tobel says that one of the most important exercises in forming LearnVest was writing out a business plan.
To reach scale, Juni Learning is building a full-stack edtech experience — The startup’s path to $10 million in annual recurring revenue is inspired by Peloton, not Kumon.
What can growth marketers learn from lean product development? — Andrea Fryrear argues that marketers should begin creating minimum viable campaigns.
(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)
Everything else
A faster, easier, cheaper way of going public — The latest episode of Equity discusses direct listings and SPACs.
Here’s how you can get a second shot at Startup Battlefield — Your second chance comes in the form of two Wild Card entries for the upcoming Battlefield at Disrupt.
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.
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Facebook is bringing a Shop section to its app, while Instagram expands Live Shopping
Facebook is announcing a number of new e-commerce features both within the main Facebook app and on Instagram.
The pandemic has forced many businesses to shift online, and Facebook made a big announcement in May around the ability of merchants to create Facebook Shops that are viewable on both Facebook and Instagram. More recently, Instagram launched a redesigned Shop section, where users can browse products from their favorite brands and creators.
Now the company is bringing a similar experience to the main Facebook app. The company said that in the United States, it’s started testing a new section called Facebook Shop — like Instagram Shop, it’s basically a shopping destination where you can find products from a variety of different businesses. (This is distinct from Facebook Marketplace, which is designed for peer-to-peer sales.)
Director of Product Management George Lee told me the goal is to create something that’s “unique to the Facebook app and the Facebook community.”
Image Credits: Facebook
“That’s not to say that there aren’t learnings across the board,” he said. “[Instagram Shop and Facebook Shop] probably look like slightly different on day one, and the goal is not to have them be cookie cutters of the same experience.”
In addition, the company is announcing new tools for businesses running Facebook Shops, including new design layouts, the ability to see a real-time preview of collections, the ability to automatically create Shops if you’re a new seller and new data in Commerce Manager. Shops will also feature a new messaging option for customers to send sellers a message through Messenger, WhatsApp or Instagram Direct.
On the Instagram side, the company said all sellers in the United States will be able to use the Instagram checkout feature “in the coming weeks,” managed either through Facebook’s Commerce Manager or through partners platforms BigCommerce and Shopify (with more integrations planned). Instagram will waive its selling fee for checkout through the rest of the year.
The company has also been testing a live shopping experience, where businesses can show off products in a live video, while consumers can browse the highlighted products and make purchases. Instagram Live Shopping should now be available to all sellers using Instagram Live Shopping in the United States.
Image Credits: Facebook
“We’ve seen live shopping take off in other parts of the world,” said Instagram’s vice president of product Vishal Shah. “The pandemic has really changed behavior from a consumer perspective, so we’re moving as fast as we can to bring out these tools to help [businesses respond].”
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Just what would an enterprise company like Microsoft or Oracle do with TikTok?
By now you’ve probably heard that under pressure from the current administration, TikTok owner ByteDance is putting the viral video service up for sale, and surprisingly a couple of big name enterprise companies are interested. These organizations are better known for the kind of tech that would bore the average TikTok user to tears. Yet, stories have persisted that Microsoft and even Oracle are sniffing around the video social network.
As TechCrunch’s Danny Crichton pointed out last week, bankers involved in the sale have a lot of motivation to leak rumors to the press to drive up the price of TikTok. That means none of this might be true, yet the rumors aren’t going away. It begs the question: Why would a company like Oracle or Microsoft be interested in a property like TikTok?
For starters, Oracle is a lot more than the database company it was known for in the past. These days, it has its fingers in many, many pies, including marketing automation and cloud infrastructure services. In April, as the pandemic was just beginning to heat up, Zoom surprised just about everyone when it announced a partnership with Oracle’s cloud arm.
Oracle isn’t really even on the board when it comes to cloud infrastructure market share, where it is well behind rivals AWS, Microsoft, Google, Alibaba and IBM, wallowing somewhere in single-digit market share. Oracle wants to be a bigger player.
Meanwhile, Microsoft has successfully transitioned to the cloud as well as any company, but still remains far behind AWS in the cloud infrastructure market. It wants to close the gap with AWS, and owning TikTok could get it closer to that goal faster.
Simply put, says Holger Mueller, an analyst at Constellation Research, if Oracle combined Zoom and TikTok, it could have itself a couple of nice anchor clients. Yes, like the proverbial mall trying to attract Target and Nordstrom, apparently Oracle wants to do the same with its cloud service, and if it has to buy the tenant, so be it.
“TikTok will add plenty of load to their infrastructure service. That’s what matters to them with viral loads preferred. If Microsoft gets TikTok it could boost their usage by between 2% and 5%, while for Oracle it could be as much 10%,” he said. He says the difference is that Oracle has a much smaller user base now, so it would relatively boost its usage all the more.
As Mueller points out, with the government helping push TikTok’s owner to make the sale, it’s a huge opportunity for a company like Oracle or Microsoft, and why the rumors have weight. “It’s very plausible from a cloud business perspective, and plausible from a business opportunity perspective created by the U.S. government,” he said.
While it could make sense to attract a large user base to your systems to drive up usage and market share in that way, Brent Leary, founder and principal analyst at CRM Essentials, says that just by having a large U.S. tech company buy the video app could make it less attractive to the very users Microsoft or Oracle is hoping to capture.
“An old-guard enterprise tech company buying Tiktok would likely lessen the appeal of current users. Younger people are already leaving Facebook because the old folks have taken it over,” Leary said. And that could mean young users, who are boosting the platform’s stats today, could jump ship to whatever is the next big social phenomenon.
It’s worth pointing out that just today, the president indicated support for Oracle, according to a Wall Street Journal report. The publication also reported that Oracle’s billionaire owner Larry Ellison is a big supporter of the president, having thrown him a fundraiser for his reelection bid at his house earlier this year. Oracle CEO Safra Catz also has ties to the administration, having served on the transition team in 2016.
It’s unclear whether these companies have a genuine interest, but the general feeling is someone is going to buy the service, and whoever does could get a big boost in users simply by using some percentage of their cash hordes to get there. By the way, another company with reported interest is Twitter. Certainly putting the two social platforms together could create a mega platform to compete more directly with Facebook.
You might see other big names trying to boost cloud infrastructure usage, like IBM or Google, enter the fray. Perhaps even Amazon could make an offer to cement its lead, although if the deal has to go through the federal government, that makes it less likely, given the tense relationship between Amazon CEO Jeff Bezos and the president that surfaced during the Pentagon JEDI cloud contract drama.
Apple has already indicated that in spite of having the largest cash on hand of any company, with over $193 billion, give or take, it apparently isn’t interested. Apple may not be, but somebody surely is, even some companies you couldn’t imagine owning a property like this.
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Facebook pushes back against Apple’s App Store fees
Facebook joined the growing ranks of companies publicly complaining about the 30% fee that Apple collects on payments made through its App Store.
Those complaints came midway through a blog post about the social network’s new feature supporting paid online events. Facebook said that to support struggling businesses, it won’t be collecting any fees on those events, at least for the next year, which means that those businesses keep 100% of payments on the web and on Android.
But Facebook said that won’t be the case on iOS, due to App Store fees, and it took aim at Apple with surprisingly direct language (at least, direct for a corporate blog post):
We asked Apple to reduce its 30% App Store tax or allow us to offer Facebook Pay so we could absorb all costs for businesses struggling during COVID-19. Unfortunately, they dismissed both our requests and SMBs will only be paid 70% of their hard-earned revenue. Because this is complicated, as long as Facebook is waiving its fees, we will make all fees clear in our products.
iOS purchase flow on left, Android purchase flow on right. Image Credits: Facebook
To that end, the post includes screenshots of how the events payment flow will look on iOS and Android . On Android, it says, “Facebook doesn’t take a fee from this purchase,” while on iOS, it says, “Apple takes 30% of this purchase.”
Facebook said this language is included in the app update “which we submitted to Apple today for approval” — suggesting that there’s a possibility that the update won’t be approved.
This comes just about 24 hours after Fortnite was removed from the App Store, after Epic Games introduced direct payments into its hit title. It seemed like Epic was intentionally trying to provoke a fight, with the company quickly announcing a lawsuit against Apple and releasing a short in-game video parodying Apple’s famous 1984 commercial, with Apple cast as the villain. (The game publisher is in a similar battle with Google and Android.)
While Apple’s 30% fee has been around for as long as the App Store itself, the issue came to the forefront earlier this summer after Basecamp got into a public feud with the company over its subscription email app Hey, for which the developer tried to circumvent App Store fees by only accepting subscription payments on its website.
Apple’s Phil Schiller told us at the time that the controversy was not prompting the company to reconsider any of its rules, which he said were designed for a better app experience — to avoid situations where “you download the app and it doesn’t work.”
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