Philippines payment processing startup PayMongo lands $12 million Series A led by Stripe

Stripe has led a $12 million Series A round in Manila-based online payment platform PayMongo, the startup announced today.

PayMongo, which offers an online payments API for businesses in the Philippines, was the first Filipino-owned financial tech startup to take part in Y Combinator’s accelerator program. Y Combinator and Global Founders Capital, another previous investor, both returned for the Series A, which also included participation from new backer BedRock Capital.

PayMongo partners with financial institutions, and its products include a payments API that can be integrated into websites and apps, allowing them to accept payments from bank cards and digital wallets like GrabPay and GCash. For social commerce sellers and other people who sell mostly through messaging apps, the startup offers PayMongo Links, which buyers can click on to send money. PayMongo’s platform also includes features like a fraud and risk detection system.

In a statement, Stripe’s APAC business lead Noah Pepper said it invested in PayMongo because “we’ve been impressed with the PayMongo team and the speed at which they’ve made digital payments more accessible to so many businesses across the Philippines.”

The startup launched in June 2019 with $2.7 million in seed funding, which the founders said was one of the largest seed rounds ever raised by a Philippines-based fintech startup. PayMongo has now raised a total of almost $15 million in funding.

Co-founder and chief executive Francis Plaza said PayMongo has processed a total of almost $20 million in payments since launching, and grown at an average of 60% since the start of the year, with a surge after lockdowns began in March.

He added that the company originally planned to start raising its Series A in in the first half of next year, but the growth in demand for its services during COVID-19 prompted it to start the round earlier so it could hire for its product, design and engineering teams and speed up the release of new features. These will include more online payment options; features for invoicing and marketplaces; support for business models like subscriptions; and faster payout cycles.

PayMongo also plans to add more partnerships with financial service providers, improve its fraud and risk detection systems and secure more licenses from the central bank so it can start working on other types of financial products.

The startup is among fintech companies in Southeast Asia that have seen accelerated growth as the COVID-19 pandemic prompted many businesses to digitize more of their operations. Plaza said that overall digital transactions in the Philippines grew 42% between January and April because of the country’s lockdowns.

PayMongo is currently the only payments company in the Philippines with an onboarding process that was developed to be completely online, he added, which makes it attractive to merchants who are accepting online payments for the first time. “We have a more efficient review of compliance requirements for the expeditious approval of applications so that our merchants can use our platform right away and we make sure we have a fast payout to our merchants,” said Plaza.

If the momentum continues even as lockdowns are lifted in different cities, that means the Philippine’s central bank is on track to reach its goal of increasing the volume of e-payment transactions to 20% of total transactions in the country this year. The government began setting policies in 2015 to encourage more online payments, in a bid to bolster economic growth and financial inclusion, since smartphone penetration in the Philippines is high, but many people don’t have a traditional bank account, which often charge high fees.

Though lockdown restrictions in the Philippines have eased, Plaza said PayMongo is still seeing strong traction. “We believe the digital shift by Filipino businesses will continue, largely because both merchants and customers continue to practice safety measures such as staying at home and choosing online shopping despite the more lenient quarantine levels. Online will be the new normal for commerce.”

Indonesian cloud kitchen startup Yummy gets $12 million Series B led by SoftBank Ventures Asia

Yummy Corporation, which claims to be the largest cloud kitchen management company in Indonesia, has raised $12 million in Series B funding, led by SoftBank Ventures Asia. Co-founder and chief executive officer Mario Suntanu told TechCrunch that the capital will be used to expand into more major cities and on developing its tech platform, including data analytics.

Other participants in the round included returning investors Intudo Ventures and Sovereign’s Capital, and new backers Vectr Ventures, AppWorks, Quest Ventures, Coca Cola Amatil X and Palm Drive Capital. The Series B brings Yummy Corporation’s total raised so far to $19.5 million.

Launched in June 2019, Yummy Corporation’s network of cloud kitchens, called Yummykitchen, now includes more than 70 HACCP-certified facilities in Jakarta, Bandung and Medan. It partners with more than 50 food and beverage (F&B) companies, including major brands like Ismaya Group and Sour Sally Group.

During COVID-19 movement restrictions, Suntanu said Yummykitchen’s business showed “healthy growth” as people, confined mostly to their homes, ordered food for delivery. Funding will be used to get more partners, especially brands that want to digitize their operations and expand deliveries to cope with the continuing impact of COVID-19.

The number of cloud kitchens in Southeast Asia has grown quickly over the past year, driven by demand for food deliveries that began increasing even before the pandemic. But for F&B brands that rely on deliveries for a good part of their revenue, running their own kitchens and staff can be cost-prohibitive. Sharing cloud kitchens with other businesses can help increase their margins.

Other cloud kitchen startups serving Indonesia include Hangry and Everplate, but these companies and Yummy Corporation are all up against two major players: “super apps” Grab and Gojek, which both operate large networks of cloud kitchens that have the advantage of being integrated with their on-demand delivery services.

Suntanu said Yummy’s main edge compared to other cloud kitchens is that it also offers fully-managed location and kitchen operation services, in addition to kitchen facilities. This means Yummy’s partners, including restaurants and and F&B brands, don’t need to hire their own teams. Instead, food preparation and delivery is handled by Yummy’s workers. The company also provides its clients with a data analytics platform to help them with targeted ad campaigns and making their listings more visible on food delivery apps.

In a statement, Harris Yang, Souteast Asia associate at SoftBank Ventures Asia, said the firm invested in Yummy because “given the company’s strong expertise in the F&B industry and unique value proposition to brands, we believe that Yummy will continue to be the leader in this space. We are excited to support the team and help them scale their business in this emerging sector.”

Mobileye signs driver-assistance deal with Geely, one of China’s largest privately-held auto makers

Mobileye’s computer vision technology will be used in a new premium electric vehicle called Zero Concept from Geely Auto Group, one of China’s largest privately-held automobile manufacturers. Mobileye’s owner Intel made the announcement today at the Beijing Auto Show. Zero Concept is produced by Lynk & Co., the brand formed as a joint venture between Geely Auto and Volvo Car Group, and uses Mobileye’s SuperVision driving-assistance system.

Intel also announced that Mobileye and Geely Auto have signed a long-term, high-volume agreement for advanced driver-assistance systems that means more Geely Auto vehicles will be equipped with Mobileye’s computer vision technology.

In a post, Mobileye chief executive officer and Intel senior vice president Amnon Shashua wrote that the deal is the first time “Mobileye will be responsible for the full solution stack, including hardware and software, driving policy and control.”

He added “it also marks the first time that an OEM has publicly noted Mobileye’s plan to provide over-the-air updates to the system after deployment. While this capacity has always been in our repertoire, Geey and Mobileye want to assure customers that we can easily scale their driving-assistance features and keep everything up to date across the car’s lifetime.”

Based in Israel, Mobileye was acquired by Intel in 2017 for $15.3 billion. Its technology and services are used in vehicles from automakers including BMW, Audi, Volkswagen, Nissan, Honda and General Motors, and includes features that warn drivers about issues like blind spots, potential lane departures, collision risks and speed limits.

Geely Auto’s parent company is Zhejiang Geely Holding Group, also the parent company of Volvo Car Group. In 2019, Geely Auto Group says its brands sold a total of more than 1.46 million units. China is one of the fastest-growing electric vehicle markets in the world, and even though sales were hurt by the COVID-19 pandemic, government policies, including consumer subsidies and investment in charging infrastructure, are expected to help its EV market recover.

Facebook gives more details about its efforts against hate speech before Myanmar’s general election

About three weeks ago, Facebook announced will increase its efforts against hate speech and misinformation in Myanmar before the country’s general election on November 8, 2020. Today, it gave some more details about what the company is doing to prevent the spread of hate speech and misinformation. This includes adding Burmese language warning screens to flag information rated false by third-party fact-checkers.

In November 2018, Facebook admitted it didn’t do enough to prevent its platform from being used to “foment division and incite offline violence” in Myanmar.

This is an understatement, considering that Facebook has been accused by human rights groups, including the United Nations Human Rights Council, of enabling the spread of hate speech in Myanmar against Rohingya Muslims, the target of a brutally violent ethnic cleansing campaign. A 2018 investigation by the New York Times found that members of the military in Myanmar, a predominantly Buddhist country, instigated genocide against Rohingya, and used Facebook, one of the country’s most widely-used online services, as a tool to conduct a “systematic campaign” of hate speech against the minority group.

In its announcement several weeks ago, Facebook said it will expand its misinformation policy and remove information intended to “lead to voter suppression or damage the integrity of the electoral process” by working with three fact-checking partners in Myanmar—BOOM, AFP Fact Check and Fact Crescendo. It also said it would flag potentially misleading images and apply a message forwarding limit it introduced in Sri Lanka in June 2019.

Facebook also shared that it in the second quarter of 2020, it had taken action against 280,000 pieces of content in Myanmar that violated it Community Standards against hate speech, with 97.8% detected by its systems before being reported, up from the 51,000 pieces of content it took action against in the first quarter.

But, as TechCrunch’s Natasha Lomas noted, “without greater visibility into the content Facebook’s platform is amplifying, including country specific factors such as whether hate speech posting is increasing in Myanmar as the election gets closer, it’s not possible to understand what volume of hate speech is passing under the radar of Facebook’s detection systems and reaching local eyeballs.”

Facebook’s latest announcement, posted today on its News Room, doesn’t answer those questions. Instead, the company gave some more information about what its preparations for the Myanmar general election.

The company said it will use technology to identify “new words and phrases associated with hate speech” in the country, and either remove posts with those words or “reduce their distribution.”

It will also introduce Burmese language warning screens for misinformation identified as false by its third-party fact-checkers, make reliable information about the election and voting more visible, and promote “digital literacy training” in Myanmar through programs like an ongoing monthly television talk show called “Tea Talks” and introducing its social media analytics tool, CrowdTangle, to newsrooms.

Singapore-based Syfe, a robo-advisor with a human touch, raises $18.6 million led by Valar Ventures

Dhruv Arora, the founder and CEO of Singapore-based investment platform Syfe

Dhruv Arora, the founder and CEO of Singapore-based investment platform Syfe

Syfe, a Singapore-based startup that wants to make investing more accessible in Asia, announced today that it has closed a SGD $25.2 million (USD $18.6 million) Series A led by Valar Ventures, a fintech-focused investment firm.

The round also included participation from Presight Capital and returning investor Unbound, which led Syfe’s seed funding last year.

Founded in 2017 by chief executive officer Dhruv Arora, Syfe launched in July 2019. Like “robo-advisors” Robinhood, Acorns and Stash, Syfe’s goal is to make investing more accessible. There is no minimum amount required to start investing and its all-inclusive pricing structure ranges from .4% to .65% per year.

Syfe serves customers based in 23 countries, but currently only actively markets it services in Singapore, where it is licensed under the Monetary Authority of Singapore. Part of its new funding will be used to expand into new Asian countries. The startup hasn’t disclosed its exact user numbers, but says the number of its customers and assets under management have increased tenfold since the beginning of the year, and almost half of its new clients were referred by existing users.

Other Valar Ventures portfolio companies include TransferWise, Xero and digital bank N26. In a statement about Syfe, founding partner Andrew McCormack said, “The potential of Asia as a region, with a fast-growing number of mass-affluent consumers aiming to grow their wealth, combined with the pedigree of the team and strong traction, makes Syfe a very compelling opportunity.”

Before starting Syfe, Arora was an investment banker at UBS Investment Bank in Hong Kong before serving as vice president of product and growth at Grofers, one of India’s largest online grocery delivery services. While at UBS, Arora worked with exchange-traded funds, or ETFs.

“I could see how a lot of institutions and some ultra-high-net worth individuals who are clients of the bank were using the product, and I thought it was a great tool for individuals, too,” Arora told TechCrunch. “But what I realized was that people are actually not very aware of how to use ETFs.”

In many Asian countries, people prefer to put their money away in bank accounts or invest in real estate. As interest rates and property prices stagnate, however, consumers are looking for other ways to invest. Syfe currently offers three investment products. The first is a global diversified portfolio with a mix of stocks, bonds and ETFs that is automatically managed according to each investor’s chosen risk level. The second is a REIT portfolio based on the Singapore Exchange’s iEdge S-REIT Leaders Index. Finally, Syfe’s Equity100 portfolio consists of ETFs that include stocks from more than 1,500 companies around the world.

Other Asia-focused “robo-advisor” services include Stashaway and Kristal.ai, and Grab Financial also recently announced a “micro-investment” product. Arora acknowledges that in the future, there may be more entrants to the space. Right now, however, Syfe’s main competitor is the mindset that banks are still the best way to save money, he added. Part of Syfe’s work is consumer education, because “it was culturally ingrained in a lot of us, myself included, to keep your money in the bank.”

Syfe differentiates with a team of financial advisors, including former employees of Goldman Sachs, Citibank and Morgan Stanley, who are on hand for user consultations. Arora said most Syfe users talk to advisors when they first join the platform, and about 20% of them continue using the service. Questions have included if people should use a credit card to invest, which Arora said advisors dissuade them from doing because of high interest rates.

“We definitely want to be a tech-first platform, but we understand there is a value, especially as you deal with some of the older audiences who are in their 50s and 60s, who are still adapting to these technologies,” he said. “They need to know that you know there is somebody out there to look after their products.”

While Syfe’s average user is aged between 30 to 45, one growing bracket is people in their 50s who are motivated to save for retirement, or want to create a supplement to their pension plan. Users typically start with an initial investment of about SGD $10,000 (about USD $7,340), and about four out of five users regularly top up that amount.

Some users have tried other investment products, like investment-linked insurance plans, but for many, Arora says Syfe is their first introduction to investing in stocks, bonds and ETFs.

“We’ve realized that a fair number of them are quite well-to-do professionals in their field, in their mid- to late 30s, who amassed a significant amount of wealth but never really had a chance to invest, or the right advice on how to invest,” said Arora. “I think this has been one of the biggest revelations for us and it made us realize we should have a human touch in our platform.”

The platform manages its products with a mix of an investment team and algorithms that help avoid human bias, said Arora. Syfe’s algorithms take into account growth versus value, the market cap of a stock, volatility and sector momentum. To balance risk, it also analyzes how individual assets correlate with other assets in the same portfolio.

Arora said Syfe is currently in advanced talks with regulators in several countries and expects to be in at least two new markets by the end of next year. It also plans to double the size of its team and create more consumer financial products.

During COVID-19, Arora said Syfe’s portfolios experienced significantly lower corrections than indexes like the S&P, so only a few users withdrew their money. In fact, many invested more.

“I feel people have been rethinking their finances and the future,” he said. “As banks cut interest rates across the world, including in Singapore, many of them have started looking at other options.”

TikTok, WeChat and the growing digital divide between the U.S. and China

Over the past decade, the dynamic between Chinese and United States tech companies has undergone dramatic shifts. Once seen as a promising market for American companies, that narrative flipped as China’s tech innovation and investment power became increasingly evident, and the expanding reach of the Chinese Communist Party’s cybersecurity regulations fueled concerns about data privacy. For years, however, there still seemed to be room for a flow of ideas between the two countries. But that promise has eroded, against the backdrop of the tariff wars and, most recently, the Trump administration’s executive orders against TikTok and WeChat.

The U.S. Commerce Department was set to enforce the shutdown of TikTok and WeChat in the United States last weekend, but both apps got reprieves. In WeChat’s case, a U.S. district court judge issued a temporary stay against the ban, while TikTok owner ByteDance is in the process of finalizing a complicated deal with Oracle.

The TikTok and WeChat imbroglios underline how much America’s perception of Chinese tech has evolved. Not only is TikTok the first consumer app by a Chinese company to gain a major foothold in the United States, but it’s also had a significant impact on popular culture there. This would have been almost unimaginable just ten, or even five, years ago.

China as a target for expansion

For a long time, China, with its population of 1.4 billion people, was seen as a lucrative market by many foreign tech companies, even as government censorship began to expand. In 2003, China’s Ministry of Public Security launched the Golden Shield Project, commonly referred to as the Great Firewall of China, the apparatus that controls what overseas sites and apps Chinese internet users have access to. At first the Great Firewall mainly targeted access to Chinese-language sites with anti-Chinese Communist Party content. Then it began blocking more services.

A laptop computer screen in Beijing shows the homepage of Google.cn, 26 January 2006, a day after its debut in mainland China where the US online search engine launched a new service after agreeing to censor websites and content banned by the Beijing authorities (AFP PHOTO/Frederic J. BROWN)

A laptop computer screen in Beijing shows the homepage of Google.cn, 26 January 2006, a day after its debut in mainland China where the US online search engine launched a new service after agreeing to censor websites and content banned by the Beijing authorities (AFP PHOTO/Frederic J. BROWN)

Even as the Communist Party’s online censorship became more stringent, many American internet companies were still keen to expand into China. Perhaps the most prominent example from that era is Google, which added Chinese support to Google.com in 2000.

Though access to the search engine was spotty (according to a 2010 timeline from the Financial Times, this may have been because of “extensive filtering” by China’s licensed internet service providers) and it was briefly blocked in 2002, Google continued launching new services targeted to users in China, including a simplified Chinese language version of Google News.

Then in 2005, the company announced plans to set up a research and development center in China. The next year, it officially launched Google.cn. In order to do so, Google agreed to exclude search results on sensitive political topics, causing controversy.

Despite its concessions to the Chinese government, Google’s relationship with China began deteriorating, foreshadowing what other foreign tech companies, particularly those offering online services, would deal with when they tried to enter China. After being blocked on and off, access to YouTube was completely cut off in 2009 after footage was uploaded that appeared to show the brutal beatings of Tibetan protestors in Lhasa. That year, China also blocked access to Facebook and Twitter.

In January 2010, Google announced it was no longer willing to censor searches in China and would withdraw from the country if necessary. It also began redirecting all search queries on Google.cn to Google.com.hk.

But the company continued its R&D operations there and maintained a sales team. (In 2018, an investigation by The Intercept found that Google had started to work on a censored search engine for China again, code-named “Project Dragonfly”). Other big U.S. tech companies also continued courting China, even though their services were blocked there.

For example, Facebook chief executive Mark Zuckerberg made several trips to China in the mid-2010s, including a 2015 visit to Tsinghua University, a leading research university. Zuckerberg had joined the university’s board the previous year, and delivered several public talks in Mandarin. Speculation mostly focused on Facebook’s efforts to get a version of its service into China, but China-based companies were, and continue to be, one of Facebook’s most important sources of advertising revenue.

Chinese government policies designed to help domestic companies become more competitive also began to have an impact and by 2015, many American tech firms needed to find a local partner to enter China. The narrative that China needed American tech innovation began to turn on its head.

A shifting dynamic

Since Google Play was also blocked in China, that led the way for the rise of third-party Android app stores, including Chinese internet giant Tencent’s My App.

But Tencent’s most influential product is WeChat, the messenger that launched in 2011. Two years later, Tencent added mobile payments by integrating it with TenPay. In less than five years, WeChat became a vital part of daily life for hundreds of millions of users in China. WeChat Pay and Alibaba’s Alipay, its main competitor, have revolutionized payments in China, where about one-third of consumer payments are now cashless, according to research by think tank CGAP.

BEIJING, CHINA - SEPTEMBER 19: A Chinese customer uses his mobile to pay via a QR code with the WeChat app at a local market on September 19, 2020 in Beijing, China. (Photo by Kevin Frayer/Getty Images)

BEIJING, CHINA – SEPTEMBER 19: A Chinese customer uses his mobile to pay via a QR code with the WeChat app at a local market on September 19, 2020 in Beijing, China. (Photo by Kevin Frayer/Getty Images)

In 2017, Wechat launched “mini-programs,” that allows developers to create “apps within an app” that run on WeChat. The program took off quickly, and within less than two years, Tencent said it had reached one million mini-programs and 200 million daily users. Even Google quietly launched its own mini-program in 2018.

Despite its ubiquity in China, WeChat’s international presence is relatively small, especially when compared to other messengers like WhatsApp. WeChat claims more than one billion monthly active users in total, but only an estimated 100 million to 200 million are international users. Many are members of the Chinese diaspora who use it to keep in touch with family and associates in mainland China since many other popular messengers, including WhatsApp, Facebook Messenger and Line, are blocked there.

In the meantime, another company was gaining ascendancy, and would eventually succeed where Tencent hadn’t.

Founded in 2012 by Microsoft veteran Zhang Yiming, ByteDance had its own early run-ins with the Chinese government. The first app it launched, a social media platform called Neihan Duanzi that reached 200 million users by 2017, was shut down the next year after the National Radio and Television Administration accused it of hosting inappropriate content. Despite that early setback, ByteDance continued to grow, releasing apps like Toutiao, one of China’s top news aggregators.

But the product it is best known for launched in 2016. Called Douyin in China, ByteDance always planned to expand the short video-sharing app overseas. In an interview with Chinese tech news site 36Kr, Zhang said, “China is home to only one-fifth of the world’s internet users. If we don’t expand globally, we are bound to lose to our peers eyeing the rest of the world” — both echoing and contravening the viewpoint of U.S. internet companies that had seen China as a crucial market.

TikTok, the international version of Douyin, was launched in 2017. That year, ByteDance also bought Musical.ly, a lip-syncing app popular with teens, in a deal worth between $800 million to $1 billion. ByteDance merged Musical.ly with TikTok, consolidating their audiences.

By early 2019, TikTok had become popular among teens and people in their early 20s, though many older people still struggled to understand its appeal. But as TikTok was turning into a mainstay of Gen Z culture, it also began to face scrutiny by the U.S. government. In February 2019, the Federal Trade Commission fined TikTok $5.7 million for violating children’s privacy laws.

Then a few months later, the U.S. government reportedly began a national security review of TikTok, marking the first in a chain of events that led to Trump’s August executive order against the company, and ByteDance’s new, but confusing, agreement with “trusted technology partner” Oracle.

The impact of China’s 2017 cybersecurity law

The United States is not the only country where TikTok has been deemed a national security threat. In June, it was among 59 apps developed by Chinese companies banned in India for threatening the country’s “national security and defence.” It’s also under investigation by French data security watchdog CNIL over how it handles user data.

While some cybersecurity experts believe that TikTok’s data collection practices are similar to other social media apps that depend on targeted ads for revenue, the heart of the issue is a Chinese law, implemented in June 2017, that requires companies to comply with government requests for data stored in China. ByteDance has insisted repeatedly it would resist attempts by the Chinese government to access U.S. users’ data, which it says is stored in the United States and Singapore.

“Our data centers are located entirely outside of China, and none of our data is subject to Chinese law,” TikTok wrote in a October 2019 statement. “Further, we have a dedicated technical team focused on adhering to robust cybersecurity policies, and data privacy and security practices.”

In the same post, TikTok also addressed concerns that it censors content, including videos about the Hong Kong protests and China’s treatment of Uighurs and other Muslim groups. “We have never been asked by the Chinese government to remove any content and we would not do so if asked. Period,” the company said.

WeChat and TikTok’s uncertain future in the U.S.

But as a Chinese company, ByteDance is ultimately still beholden to Chinese laws. Earlier this week, ByteDance said it will retain an 80% stake in TikTok, after selling a total of 20% to Oracle and Walmart. Then Oracle executive vice president Ken Glueck said that Oracle and Walmart would make their investment upon the creation of a new entity called TikTok Global. He added that ByteDance will have no ownership in TikTok Global.

This creates more questions, but doesn’t answer the most pressing one: how close will the U.S. version of TikTok remain to ByteDance, and will it still be subject to the Chinese cybersecurity regulations that cause so much concern?

Around the same time that ByteDance’s proposed deal with Oracle and Walmart was announced, a U.S. district court judge temporarily stayed the nationwide ban on WeChat, as part of a case brought against the U.S. government by the U.S. WeChat Users Alliance, a nonprofit organization initiated by attorneys who want to preserve access to WeChat for users in America. In her opinion, Judge Laurel Beeler wrote, “while the government has established that China’s activities raise significant national-security concerns—it has put in scant little evidence that its effective ban of WeChat for all U.S. users addresses those concerns.”

On its site, the U.S. WeChat Users Alliance said it believes Trump’s August 6 executive order against WeChat “violates many provisions of the U.S. Constitution and the Administrative Procedure Act.” Furthermore, the group argued that a WeChat ban would “severely affect the lives and the work of millions of people in the U.S.” who use WeChat to talk to family, friends and business associates in China.

While WeChat is heavily censored, users have often found ingenious ways to bypass bans on topics deemed sensitive by the Chinese government. For example, people used emojis, PDFs and fictional languages like Klingon to share an interview with Ai Fen, the director of Wuhan Central Hospital’s emergency department and one of the first whistleblowers to sound the alarm about COVID-19 even as the government attempted to stifle information about the disease.

The growing divide

The U.S. government’s actions against TikTok and WeChat are taking place against an increasingly fraught political landscape. Huawei and ZTE were first identified as potential threats to U.S. national security in a 2012 bipartisan House committee report, but legal actions against Huawei, one of the world’s biggest telecom equipment suppliers, escalated under the Trump administration. These include criminal charges brought against Huawei by the Department of Justice, and the arrest and indictment of chief financial officer Meng Wanzhou.

The U.S. government’s actions in the name of national security doesn’t just affect the Chinese government or China’s biggest companies. It also impacts individuals, as in the case of increasingly stringent visa restrictions for Chinese students.

At the same time, the Great Firewall has become more restrictive under President Xi Jinping’s regime and China’s cybersecurity laws are becoming increasingly invasive, granting the government even more access to citizens’ data. Increasingly sophisticated surveillance technology has been used to monitor Uighurs and other ethnic minorities, and a crackdown on VPN services that began escalating in 2017 is making it harder for people in China to circumvent the Great Firewall.

When compared to these social issues, the future of a video-sharing app might seem relatively minor. But it underscores one of the most unsettling developments in the relationship between U.S. and China over the past ten years.

In a prescient 2016 Washington Post article titled “America wants to believe China can’t innovate. Tech tells a different story,” Emily Rauhala wrote “China’s tech scene is flourishing in a parallel universe.” TikTok’s deep cultural impact gave a glimpse of what is possible when two parallel universes connect. Along with geopolitical tensions, the furore over TikTok and WeChat uncovers something else: that the exchange of ideas and information between people in two of the world’s most powerful countries is becoming increasingly restricted due to circumstances beyond their control.

Ride-hailing was hit hard by COVID-19. Grab’s Russell Cohen on how the company adapted.

A contactless delivery performed by a Grab delivery driver

A contactless Grab delivery

Ride-hailing services around the world have been hit hard by the COVID-19 pandemic, and Grab was no exception. The company is one of the most highly-valued tech startups in Southeast Asia, where it operates in eight countries. Its transport business suffered a sharp decline in March and April, as movement restriction orders were implemented.

But the company had the advantage of already operating several on-demand logistics services. During Disrupt, Russell Cohen, Grab’s group managing director of operations, talked about how the company adapted its technology for an unprecedented crisis (the video is embedded below).

“We sat down as a leadership group at the start of the crisis and we could see, particularly in Southeast Asia, that the scale of the challenge was so immense,” said Cohen.

Grab’s driver app already allowed them to toggle between ride-hailing and on-demand delivery requests. As a result of COVID-19, over 149,000 drivers began performing on-demand deliveries for the first time, with Singapore, Malaysia and Thailand seeing the most conversions. That number included tens of thousands of new drivers who joined the platform to make up for lost earnings during the pandemic.

The challenge was scaling up its delivery services to meet the dramatic increase in demand by consumers, and also merchants who needed a new way to reach customers. In March and April, Cohen said just under 80,000 small businesses joined its platform. Many had never sold online before, so Grab expedited the release of a self-service feature, making it easier for merchants to on-board themselves.

“This is a massive sector of the Southeast Asian economy that effectively digitized within a matter of weeks,” said Cohen.

A lot of the new merchants had previously taken only cash payments, so Grab had to set them up for digital payments, a process made simpler because the company’s financial unit, Grab Financial, already offers services like Grab Pay for cashless payments, mobile wallets and remittance services.

Grab also released a new package of tools called Grab Merchant, which enabled merchants to set-up online businesses by submitting licenses and certification online, and includes features like data analytics.

Modeling for uncertainty in the “new normal”

Part of Grab’s COVID-19 strategy involved collaborating with local municipalities and governments in different countries to make deliveries more efficient. For example, it worked with the Singaporean government to expand a pilot program, called GrabExpress Car, originally launched in September, that enabled more of Grab’s ride-hailing vehicles to be used for food and grocery deliveries. Previously, many of those deliveries were handled only by motorbikes.

The situation in each of Grab’s markets–Singapore, Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Thailand and Vietnam—is still evolving. Some markets have lifted lockdown orders, while others continue to cope with new outbreaks.

Cohen said ride-hailing is gradually recovering in many of Grab’s markets. But the company is preparing for an uncertain future by modeling different scenarios, taking into account potential re-closings, and long-lasting changes in both consumer and merchant behavior.

“Unpredictability is something we think a lot about,” Cohen said. Its models include ones where deliveries are a significantly larger part of its business, because even in countries where movement restrictions have been lifted, customers still prefer to shop online.

COVID-19 has also accelerated the adoption of digital payments in several of Grab’s markets. For example, Grab launched its GrabPay Card in the Philippines three months ago, because more people are beginning to use contactless payments in response to COVID-19 concerns.

In terms of on-demand deliveries, the company is expanding GrabExpress, its same-day courier service, and adapting technology originally created for ride-pooling to help drivers plan pickups and deliveries more efficiently. This will help decrease the cost of delivery services as consumers remain price-conscious because of the pandemic’s economic impact.

“Purchasing behaviors have changed, so for us, when we think about the supply side, the drivers’ side, that means we’ve got to make sure our fleet is flexible,” he said.

SmartNews’ Kaisei Hamamoto on how the app deals with media polarization

Six years ago, SmartNews took on a major challenge. After launching in Japan in 2012, the news discovery app decided that its first international market would be the United States. During Disrupt, co-founder Kaisei Hamamoto talked about how SmartNews adapts its app for two very different markets (the video is embedded below). Hamamoto, who is also chief operating officer and chief engineer of the startup, which hit unicorn status last year, also dove into how the company deals with media polarization, especially in the United States.

At Disrupt, SmartNews announced a roster of major new features for the U.S. version of the app, including sections dedicated to voting information and articles related to local and national elections. Hamamoto said the SmartNews’ goal is to make the app a “one-stop solution for users’ participation in the election process.”

The media landscape has changed a lot since SmartNews was founded in 2012. In the U.S., SmartNews is tackling the same issues as many journalists are: increasing polarization, especially along political lines, and monetization (SmartNews currently has more than 3,000 publishing partners around the world and splits ad revenue with them). And, of course, it’s up against a host of new competitors, including Apple News and Google News.

While many Japanese startups focus on other Asian markets when expanding internationally, SmartNews decided to enter the United States because it is home to some of the most influential media companies in the world. On the engineering side, Hamamoto said the company also wanted to tap into the country’s AI and machine learning talent pool.

“The U.S. is not only an attractive market, but also an important development center for SmartNews,” he said.

The Japanese and American versions of SmartNews share the same code base and its offices in both countries work closely together. While the company’s machine learning-based algorithms drive the bulk of news discovery and personalized recommendations, publishers are first screened by SmartNews’ content team before being added to its platform. The company’s vice president of content is Rich Jaroslovsky, a veteran journalist who wrote for publications like Bloomberg News and the Wall Street Journal.

While AI-based algorithms can perform tasks like filtering out obscene images, “it does not have the ability to evaluate how each publisher meets certain standards,” Hamamoto said. “We are doing everything we can to ensure that our users can read the news with trust every day thanks to efforts led by our team of journalism experts.”

Breaking readers out of information bubbles

In addition to their code base, the two versions of the app share some of the same features. For example, each has SmartNews’ COVID-19 channel, with continuous updates about the pandemic. In the States, this includes visualizations of confirmed cases by county or state, and information about local closing or reopening orders.

In terms of adapting the apps’ user experience, Hamamoto said Japanese readers prefer to have a lot of news displayed on one screen, so it uses a layout algorithm that deliberately increases the density of information presented in its Japanese app. But testing showed Americans prefer a simpler, cleaner layout with more white space.

But the differences go beyond the apps’ user interface. In 2016, members of the U.S. and Japanese team spent three weeks traveling across 13 states, including Georgia, Tennessee, Mississippi, Oklahoma and Texas, to talk to people they met through Craiglist postings or in diners and cafes. SmartNews’ leaders decided to do this after the Japan team realized that most of their U.S. trips were to their offices in New York and the Bay Area.

“We knew we couldn’t get a get a true sense of America by only visiting the East Coast and West Coast,” he said.

Hamamato said one of his biggest takeaways from the 2016 trip was that “we tend to categorize people into just two segments, our side or the other side, and we tend to think of the other side as the enemy, but in reality the world is not that simple.”

In a bid to tackle political polarization in American media, the company launched a “News from All Sides” feature last year, that displays articles about one topic from publications displayed on a slider from “most conservative” to “most liberal.” The U.S. app also has a stronger emphasis on local news. Based on users’ locations, this can be as specific as information from county or even city news outlets.

Hamamoto added that one of SmartNews’ guiding principles is a belief that “having a willingness to listen to other people and not easily label them will help solve the division of our society.”

SmartNews’ U.S. app unveils new features for the elections, COVID-19 and local weather

News discovery app SmartNews' new election features for U.S. users

News discovery app SmartNews’ new election features for U.S. users

At TechCrunch Disrupt today, SmartNews announced the release of major new features for the American version of its news discovery app, designed to make it easier for users to get updates about the elections, COVID-19 and the weather.

Several features focus on the presidential race, and other candidates up for vote this year. SmartNews, which has spent the past two years building its coverage of local news, also added sections devoted to local elections and ballot measures, and information on how to register to vote and cast a ballot.

During his Disrupt session, SmartNews co-founder, chief operating officer and chief engineer Kaisei Hamamato said the goal of the app’s new election features is to make it the “one-stop solution” for voters seeking information.

Another new feature is centered on the COVID-19 pandemic, and includes an expanded case counter that now breaks them down by county; the latest information on local closings, re-opening and other pandemic-related policies; and a vaccine and drug development tracker with a timeline of news articles from different sources.

SmartNews' new COVID-19 vaccine and drug news tracker

SmartNews’ new COVID-19 vaccine and drug news tracker

The final new feature is a “hyper-localized” weather report. Launched as Americans in many states are coping with wildfires or extreme weather events like hurricanes, the SmartNews’ Weather Radar uses its patented radar map design to show neighborhood-specific forecasts, including the predicted onset and intensity of rainfall.

SmartNews' Weather Radar feature

SmartNews’ Weather Radar feature

Founded in 2012 in Japan, SmartNews launched its American version in 2014, and shows articles from 3,000 publishing partners around the world. While its news discovery is mostly driven by machine learning-based algorithms, the company’s team also includes veteran journalists who help develop new features. In the United States, SmartNews has focused on addressing increasing media polarization with features intended to help break readers out of the kind of information bubbles they encounter on social media apps.

SmartNews' News From All Sides feature for the U.S. presidential election

The News From All Sides feature for the U.S. presidential election

Last year, SmartNews launched its News From All Sides feature in the U.S., which shows articles on a single topic from publications across the political spectrum that users can toggle through using a slider. Created for readers who want to see other perspectives, but might be overwhelmed by online searches, News From All Sides has been adapted for the 2020 presidential election, displaying articles about Joe Biden and Donald Trump.

Justice Department says WeChat users won’t be penalized under Trump’s executive order

In a Wednesday filing in federal court, the United States government said that users who use or download WeChat “to convey personal or business information” will not be subject to penalties under President Donald Trump’s executive order banning transactions with the Tencent-owned messaging app.

Trump issued the executive order against WeChat on August 6, the same day he issued a similar one banning transactions with ByteDance, the parent company of TikTok, claiming national security concerns. Both orders caused confusion because they are set to go into effect 45 days after being issued, but said that Secretary of Commerce Wilbur Ross will not identify what transactions are covered until then.

With that deadline now looming at the end of this week, WeChat users in America are still uncertain about the app’s future. Though WeChat is the top messaging app by far in China, where it also serves as an essential conduit for payments and other services, the U.S. version of the app has relatively limited features. It is used by Chinese-Americans, and other members of the Chinese disapora in the U.S., to keep in touch with their family and other people in China. With other popular messaging apps, like Facebook Messenger and WhatsApp, banned in China, WeChat is often the most direct communication channel available to them.

The U.S. government’s filing (embedded below) was made as part of a request for a preliminary injunction against the executive order brought by the U.S. WeChat Users Alliance, a non-profit organization initiated by attorneys who want to preserve access to WeChat for users in the U.S. A hearing is scheduled for Thursday.

In it, attorneys from the Justice Department said the U.S. Commerce Department is continuing to review transactions and will clarify which ones are affected by Sept. 20, but “we can provide assurances that [Secretary Ross] does not intend to take actions that would target persons or groups whose only connection to WeChat is their use or downloading of the app to convey personal or business information between users, or otherwise define the relevant transaction in such a way that would impose criminal or civil liability on such users.”

But in a response (also embedded below), the U.S. WeChat Users Alliance said that the Department of Justice’s filing instead demonstrates why a preliminary injunction is necessary. “Having first failed to articulate any actual national security concerns, the administration’s latest ‘assurances’ that users can keep using WeChat, and exchange their personal and business information, only further illustrates the hollowness and pre-textual nature of the Defendants’ ‘national security rationales.'”

The U.S. WeChat Users Alliance filed for the injunction on August 21. In an open letter published on its site, it said a complete ban of WeChat “will severely affect the lives and the work of millions of people in the U.S. They will have a difficult time talking to family relatives and friends back in China. Countless people or businesses who use WeChat to develop and contact customers will also suffer significant economic losses.”

The group also believes that the executive order “violates many provisions of the U.S. Constitution,” and the Administrative Procedure Act.