Tech giants are ignoring questions over the legality of their EU-US data transfers

A survey of responses from more than 30 companies to questions about how they’re approaching EU-US data transfers in the wake of a landmark ruling (aka Schrems II) by Europe’s top court in July, which struck down the flagship Privacy Shield over US surveillance overreach, suggests most are doing the equivalent of burying their head in the sand and hoping the legal nightmare goes away.

European privacy rights group, noyb, has done most of the groundwork here — rounding up in this 45-page report responses (some in English, others in German) from EU entities of 33 companies to a set of questions about personal data transfers.

It sums up the answers to the questions about companies’ legal basis for transferring EU citizens’ data over the pond post-Schrems II as “astonishing” or AWOL — given some failed to send a response at all.

Tech companies polled on the issue run the alphabetic gamut from Apple to Zoom. While Airbnb, Netflix and WhatsApp are among the companies that noyb says failed to respond about their EU-US data transfers.

Responses provided by companies that did respond appear to raise many more questions than they answer — with lots of question-dodging ‘boilerplate responses’ in evidence and/or pointing to existing privacy policies in the hope that will make the questioner go away (hi Facebook!) .

Facebook also made repeat claims that sought for info falls outside the scope of the EU’s data protection framework…

noyb also highlights a response by Slack which said it does not “voluntarily” provide governments with access to data — which, as the privacy rights group points out, “does not answer the question of whether they are compelled to do so under surveillance laws such as FISA702”.

A similar issue affects Microsoft. So while the tech giant did at least respond specifically to each question it was asked, saying it’s relying on Standard Contractual Clauses (SCCs) for EU-US data transfers, again it’s one of the companies subject to US surveillance law — or as noyb notes: “explicitly named by the documents disclosed by Edward Snowden and publicly numbering the FISA702 requests by the US government it received and answered”.

That, in turn, raises questions about how Microsoft can claim to (legally) use SCCs if users’ data cannot be adequately protected from US mass surveillance… 

The Court of Justice of the EU made it clear that use of SCCs to take data outside the EU is contingent on a case by case assessment of whether the data will in fact be safe. If it is not the data controller is legally required to suspend the transfer. EU regulators also have a clear duty to act to suspend transfers where data is at risk.

“Overall, we were astonished by how many companies were unable to provide little more than a boilerplate answer. It seems that most of the industry still does not have a plan as to how to move forward,” noyb adds.

In August the group filed 101 complaints against websites it had identified as still sending data to the US via Google Analytics and/or Facebook Connect integrations — with, again, both tech giants clearly subject to US surveillance laws, such as FISA 702.

noyb founder Max Schrems — whose surname has become synonymous with questions over EU-US data transfers — also continues to push the Irish Data Protection Commission (DPC) to take enforcement action over Facebook’s use of SCCs in a case that dates back some seven years.

Earlier this month it emerged the DPC had written to Facebook — issuing a preliminary order to suspend transfers. However Facebook filed an appeal for a judicial review in the Irish courts and was granted a stay.

In an affidavit filed to the court the tech giant appeared to claim it could shut down its service in Europe if the suspension order is enforced. But last week Facebook’s global VP and former UK deputy PM, Nick Clegg, denied it could shut down in Europe over the issue. Though he warned of “profound effects” on scores of digital businesses if a way is not found by lawmakers on both sides of the pond to resolve the legal uncertainty around U.S. data transfers. (A Privacy Shield 2 has been mooted but the European Commission has warned there’s no quick fix, suggesting reform of US surveillance law will be required.)

For his part Schrems has suggested the solution for Facebook at least is to federate its service — splitting its infrastructure in two. But Thierry Breton, EU commissioner for the internal market, has also called for “European data…[to] be stored and processed in Europe” — arguing earlier this month this data “belong in Europe” and “there is nothing protectionist about this”, in a discussion that flowed from US president Trump’s concerns about TikTok.

Back in Ireland, Facebook has complained to the courts that regulatory action over its EU-EU data transfers is being rushed (despite the complaint dating back to 2013); and also that it’s being unfairly singled out.

But now with data transfer complaints filed by noyb against scores of companies on the desk of every EU data supervisor, and regulators under explicit ECJ instruction they have a duty to step in a lot of pressure is being exerted to actually enforce the law and uphold Europeans’ data rights.

The European Data Protection Board’s guidance on Schrems II — which Facebook had also claimed to be waiting for — also specifies that the ability to (legally) use SCCs to transfer data to the U.S. hinges on a data controller being able to offer a legal guarantee that “U.S. law does not impinge on the adequate level of protection” for the transferred data. So Facebook et al would do well to lobby the US government on reform of FISA. 

Apple is (temporarily) waiving its App Store fee for Facebook’s online events

Last month, Facebook introduced support for paid online events — and since many of the businesses offering those events have struggled during the coronavirus pandemic, the company also said it would not collect fees for the next year. At the same time, it complained that Apple had “dismissed” its requests to waive the App Store’s customary 30% fee on in-app purchases.

Today, Facebook is announcing a reversal on Apple’s part: Online event fees will be processed through Facebook Pay, without Apple collecting its 30% cut, meaning businesses will receive all of the earnings from their online events, minus taxes. This arrangement will last until December 31 and will not apply to gaming creators.

The news comes after Facebook publicly pressured Apple to change its stance. It even submitted an iOS app update stating that “Apple takes 30% of this purchase” in the events payments flow. (Facebook said Apple rejected the update for including information that’s “irrelevant” to users.)

And while the two companies appear to have come to an agreement, today’s statements from Facebook are still a bit barbed.

“This is a difficult time for small businesses and creators, which is why we are not collecting any fees from paid online events while communities remain closed for the pandemic,” said Facebook spokesperson Joe Osborne. “Apple has agreed to provide a brief, three-month respite after which struggling businesses will have to, yet again, pay Apple the full 30% App Store tax.”

Similarly, in discussing the exception for gaming creators, Facebook Gaming Vice President Vivek Sharma said, “We unfortunately had to make this concession to get the temporary reprieve for other businesses.”

When asked about the change, Apple provided the following statement: “The App Store provides a great business opportunity for all developers, who use it to reach half a billion visitors visitors each week across 175 countries. To ensure every developer can create and grow a successful business, Apple maintains a clear, consistent set of guidelines that apply equally to everyone.”

More specifically, Apple said it’s giving Facebook until the end of the year to implement in-app payments for these events and bring them into compliance with App Store rules.

This also comes as Fortnite-maker Epic Games is waging a legal battle and publicity campaign against Apple’s App Store fees, with Fortnite removed Fortnite from the iOS App Store. Epic is also part of a just-announced group of publishers called the Coalition for App Fairness, which is pushing for app store changes or regulation.

Apple is (temporarily) waiving its App Store fee for Facebook’s online events

Last month, Facebook introduced support for paid online events — and since many of the businesses offering those events have struggled during the coronavirus pandemic, the company also said it would not collect fees for the next year. At the same time, it complained that Apple had “dismissed” its requests to waive the App Store’s customary 30% fee on in-app purchases.

Today, Facebook is announcing a reversal on Apple’s part: Online event fees will be processed through Facebook Pay, without Apple collecting its 30% cut, meaning businesses will receive all of the earnings from their online events, minus taxes. This arrangement will last until December 31 and will not apply to gaming creators.

The news comes after Facebook publicly pressured Apple to change its stance. It even submitted an iOS app update stating that “Apple takes 30% of this purchase” in the events payments flow. (Facebook said Apple rejected the update for including information that’s “irrelevant” to users.)

And while the two companies appear to have come to an agreement, today’s statements from Facebook are still a bit barbed.

“This is a difficult time for small businesses and creators, which is why we are not collecting any fees from paid online events while communities remain closed for the pandemic,” said Facebook spokesperson Joe Osborne. “Apple has agreed to provide a brief, three-month respite after which struggling businesses will have to, yet again, pay Apple the full 30% App Store tax.”

Similarly, in discussing the exception for gaming creators, Facebook Gaming Vice President Vivek Sharma said, “We unfortunately had to make this concession to get the temporary reprieve for other businesses.”

When asked about the change, Apple provided the following statement: “The App Store provides a great business opportunity for all developers, who use it to reach half a billion visitors visitors each week across 175 countries. To ensure every developer can create and grow a successful business, Apple maintains a clear, consistent set of guidelines that apply equally to everyone.”

More specifically, Apple said it’s giving Facebook until the end of the year to implement in-app payments for these events and bring them into compliance with App Store rules.

This also comes as Fortnite-maker Epic Games is waging a legal battle and publicity campaign against Apple’s App Store fees, with Fortnite removed Fortnite from the iOS App Store. Epic is also part of a just-announced group of publishers called the Coalition for App Fairness, which is pushing for app store changes or regulation.

Cambridge Analytica’s former boss gets 7-year ban on being a business director

The former CEO of Cambridge Analytica, the disgraced data company that worked for the 2016 Trump campaign and shut down in 2018 over a voter manipulation scandal involving masses of Facebook data — has been banned from running limited companies for seven years.

Alexander Nix signed a disqualification undertaking earlier this month which the UK government said yesterday it had accepted. The ban commences on October 5.

“Within the undertaking, Alexander Nix did not dispute that he caused or permitted SCL Elections Ltd or associated companies to market themselves as offering potentially unethical services to prospective clients; demonstrating a lack of commercial probity,” the UK insolvency service wrote in a press release.

Nix was suspended as CEO of Cambridge Analytica at the peak of the Facebook data scandal after footage emerged of him, filmed by undercover reporters, boasting of spreading disinformation and entrapping politicians to meet clients’ needs.

Cambridge Analytica was a subsidiary of the SCL Group, which included the division SCL Elections, while Nix was one of the key people in the group — being a director for SCL Group Ltd, SCL Social Ltd, SCL Analytics Ltd, SCL Commercial Ltd, SCL Elections and Cambridge Analytica (UK) Ltd. All six companies entered into administration in May 2018, going into compulsory liquidation in April 2019.

The “potentially unethical” activities that Nix does not dispute the companies offered, per the undertaking, are:

  • bribery stings and honey trap stings designed to uncover corruption
  • voter disengagement campaigns
  • the obtaining of information to discredit political opponents
  • the anonymous spreading of information

Last year the FTC also settled with Nix over the data misuse scandal — with the former Cambridge Analytica boss agreeing to an administrative order restricting how he conducts business in the future. The order also required the deletion/destruction of any personal information collected via the business.

Back in 2018 Nix was also grilled by the UK parliament’s DCMS committee — and in a second hearing he claimed Cambridge Analytica had licensed “millions of data points on American individuals from very large reputable data aggregators and data vendors such as Acxiom, Experian, Infogroup”, arguing the Facebook data had not been its “foundational data-set”.

It’s fair to say there are still many unanswered questions attached to the data misuse scandal. Last month, for example, the UK’s data watchdog — which raided Cambridge Analytica’s UK offices in 2018, seizing evidence, before going on to fine and then settle with Facebook (which did not admit any liability) over the scandal — said it would no longer be publishing a final report on its data analytics investigation.

Asked about the fate of the final report on Cambridge Analytica, an ICO spokesperson told us: “As part of the conclusion to our data analytics investigation we will be writing to the DCMS select committee to answer the outstanding questions from April 2019. We have committed to updating the select committee on our final findings but this will not be in the form of a further report.”

It’s not clear whether the DCMS committee — which has reformed with a different chair vs the one who in 2018 led the charge to dig into the Cambridge Analytica scandal as part of an enquiry into the impact of online disinformation — will publish the ICO’s written answers. Last year its final report called for Facebook’s business to be investigated over data protection and competition concerns.

You can read a TechCrunch interview with Nix here, from 2017 before the Facebook data scandal broke, in which he discusses how his company helped the Trump campaign.

Daily Crunch: Amazon unveils its own game-streaming platform

Amazon announces a new game service and plenty of hardware upgrades, tech companies team up against app stores and United Airlines tests a program for rapid COVID-19 testing. This is your Daily Crunch for September 24, 2020.

The big story: Amazon unveils its own game-streaming platform

Amazon’s competitor to Google Stadia and Microsoft xCloud is called Luna, and it’s available starting today at an early access price of $5.99 per month. Subscribers will be able to play games across PC, Mac and iOS, with more than 50 games in the library.

The company made the announcement at a virtual press event, where it also revealed a redesigned Echo line (with spherical speakers and swiveling screens), the latest Ring security camera and a new, lower-cost Fire TV Stick Lite.

You can also check out our full roundup of Amazon’s announcements.

The tech giants

App makers band together to fight for App Store changes with new ‘Coalition for App Fairness’ — Thirteen app publishers, including Epic Games, Deezer, Basecamp, Tile, Spotify and others, launched a coalition formalizing their efforts to force app store providers to change their policies or face regulation.

LinkedIn launches Stories, plus Zoom, BlueJeans and Teams video integrations as part of wider redesignLinkedIn has built its business around recruitment, so this redesign pushes engagement in other ways as it waits for the job economy to pick up.

Facebook gives more details about its efforts against hate speech before Myanmar’s general election — This includes adding Burmese language warning screens to flag information rated false by third-party fact-checkers.

Startups, funding and venture capital

Why isn’t Robinhood a verb yet? — The latest episode of Equity discusses a giant funding round for Robinhood.

Twitter-backed Indian social network ShareChat raises $40 million — Following TikTok’s ban in India, scores of startups have launched short-video apps, but ShareChat has clearly established dominance.

Spotify CEO Daniel Ek pledges $1Bn of his wealth to back deeptech startups from Europe — Ek pointed to machine learning, biotechnology, materials sciences and energy as the sectors he’d like to invest in.

Advice and analysis from Extra Crunch

3 founders on why they pursued alternative startup ownership structures — At Disrupt, we heard about alternative approaches to ensuring that VCs and early founders aren’t the only ones who benefit from startup success.

Coinbase UX teardown: 5 fails and how to fix them — Many of these lessons, including the need to avoid the “Get Started” trap, can be applied to other digital products.

As tech stocks dip, is insurtech startup Root targeting an IPO? — Alex Wilhelm writes that Root’s debut could clarify Lemonade’s IPO and valuation.

(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)

Everything else

United Airlines is making COVID-19 tests available to passengers, powered in part by Color — United is embarking on a new pilot project to see if easy access to COVID-19 testing immediately prior to a flight can help ease freedom of mobility.

Announcing the final agenda for TC Sessions: Mobility 2020 — TechCrunch reporters and editors will interview some of the top leaders in transportation.

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.

Here’s everything Amazon announced at its latest hardware event

From new Ring flying indoor drone cameras to an adorable new kids version of one of its most popular Amazon home products, Jeff Bezos’ Seattle retailer unveiled a slew of new hardware goodies just ahead of the holiday shopping season.

Echo updates

Image Credits: Amazon

Amazon kicked off its latest hardware showcase by unveiling a new version of the company’s Echo devices, which now include spherical speakers (with a version for kids featuring cute animal graphics). Amazon also unveiled an updated, more personalized Echo capabilities and a new tracking feature for its Show 10 that mirrors Facebook’s Portal in its ability to follow users as they move around a room.

Ring’s new things

Ring also had plenty to pitch at the Amazon hardware show. The security camera company is updating its line with the Always Home Cam, a diminutive drone that can be scheduled to fly preset paths, which users can determine themselves.

It also rolled out new hardware for the automotive market with three different devices focused on car owners. A Ring Car Alarm that will retail for $59.99; and the Car Cam and Car Connect will both be $199.99. Ring Car Alarm provides basic features that work with the Ring app, sending alerts to trigger a series of potential responses. The alarm also integrates with other Ring devices or Amazon Alexa hardware and connects using Amazon’s low-bandwidth Sidewalk wireless network protocol.

Meanwhile, the Car Cam allows users to check in on their car via video as long as users are in range of a wifi network, or opt-in to the additional LTE companion plan Ring is selling. The cam also includes an Emergency Crash Assist feature that alerts first responders, and a recording feature that turns on if a user says “Alexa, I’m being pulled over”. Finally, the car connect is an API that manufacturers, starting with Tesla, can use to provide Ring customers with mobile alerts for events detected around vehicles or watch footage recorded with onboard cameras.

Ring also added new opt-in end-to-end video encryption for those users who want it.

New ways to Fire TV

Image Credits: Amazon

The company’s TV platform got several updates. The biggest is probably the addition of the new, lower cost Fire TV Stick Lite at $29.99. For $39.99, meanwhile, you can pick up the new Fire TV Stick, which features a process that’s 50% faster. The platform is also adding Video Calling — a nice addition in the era of working from home — along with a new, improved layout.

Amazon goes ga-ga for gaming

Last, but certainly not least, Amazon announced its new game-streaming platform, Luna.

The long-awaited gaming competitor to Google Stadia and Microsoft xCloud is launching an early access version at a price of $5.99 per-month, the company said. Users will be able to stream titles wirelessly without downloading games and can play across PC, Mac, and iOS (via the web).

Initially, the company will have more than 50 titles in the Luna+ app, including at least one Sonic title and Remedy Entertainment’s control. There’s a partnership with Ubisoft in the works, but access to those games may require a separate subscription.

 

Here’s everything Amazon announced at its latest hardware event

From new Ring flying indoor drone cameras to an adorable new kids version of one of its most popular Amazon home products, Jeff Bezos’ Seattle retailer unveiled a slew of new hardware goodies just ahead of the holiday shopping season.

Echo updates

Image Credits: Amazon

Amazon kicked off its latest hardware showcase by unveiling a new version of the company’s Echo devices, which now include spherical speakers (with a version for kids featuring cute animal graphics). Amazon also unveiled an updated, more personalized Echo capabilities and a new tracking feature for its Show 10 that mirrors Facebook’s Portal in its ability to follow users as they move around a room.

Ring’s new things

Ring also had plenty to pitch at the Amazon hardware show. The security camera company is updating its line with the Always Home Cam, a diminutive drone that can be scheduled to fly preset paths, which users can determine themselves.

It also rolled out new hardware for the automotive market with three different devices focused on car owners. A Ring Car Alarm that will retail for $59.99; and the Car Cam and Car Connect will both be $199.99. Ring Car Alarm provides basic features that work with the Ring app, sending alerts to trigger a series of potential responses. The alarm also integrates with other Ring devices or Amazon Alexa hardware and connects using Amazon’s low-bandwidth Sidewalk wireless network protocol.

Meanwhile, the Car Cam allows users to check in on their car via video as long as users are in range of a wifi network, or opt-in to the additional LTE companion plan Ring is selling. The cam also includes an Emergency Crash Assist feature that alerts first responders, and a recording feature that turns on if a user says “Alexa, I’m being pulled over”. Finally, the car connect is an API that manufacturers, starting with Tesla, can use to provide Ring customers with mobile alerts for events detected around vehicles or watch footage recorded with onboard cameras.

Ring also added new opt-in end-to-end video encryption for those users who want it.

New ways to Fire TV

Image Credits: Amazon

The company’s TV platform got several updates. The biggest is probably the addition of the new, lower cost Fire TV Stick Lite at $29.99. For $39.99, meanwhile, you can pick up the new Fire TV Stick, which features a process that’s 50% faster. The platform is also adding Video Calling — a nice addition in the era of working from home — along with a new, improved layout.

Amazon goes ga-ga for gaming

Last, but certainly not least, Amazon announced its new game-streaming platform, Luna.

The long-awaited gaming competitor to Google Stadia and Microsoft xCloud is launching an early access version at a price of $5.99 per-month, the company said. Users will be able to stream titles wirelessly without downloading games and can play across PC, Mac, and iOS (via the web).

Initially, the company will have more than 50 titles in the Luna+ app, including at least one Sonic title and Remedy Entertainment’s control. There’s a partnership with Ubisoft in the works, but access to those games may require a separate subscription.

 

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.

Facebook denies it will pull service in Europe over data transfer ban

Facebook’s head of global policy has denied the tech giant could close its service to Europeans if local regulators order it to suspend data transfers to the US following a landmark Court of Justice ruling in July that has cemented the schism between US surveillance laws and EU privacy rights.

Press reports emerged this week of a Dublin court filing by Facebook, which is seeking a stay to a preliminary suspension order on its EU-US data transfers, that suggested the tech giant could pull out of the region if regulators enforce a ban against its use of a data transfer mechanism known as Standard Contractual Clauses.

The court filing is attached to Facebook’s application for a judicial review of a preliminary suspension order from Ireland’s Data Protection Commission earlier this month, as Facebook’s lead EU data supervisor responded to the implications of the CJEU ruling.

“We of course won’t [shut down in Europe] — and the reason we won’t of course is precisely because we want to continue to serve customer and small and medium sized businesses in Europe,” said Facebook VP Nick Clegg during a livestreamed EU policy debate yesterday.

However he also warned of “profound effects” on scores of digital businesses if a way is not found by lawmakers on both sides of the pond to resolve the legal uncertainty around US data transfers — making a pitch to politicians to come up with a new legal ‘sticking plaster’ for EU-US data transfers now that a flagship arrangement, called Privacy Shield, is dead.

“We have a major issue — which is that for various complex, legal, political and other reasons question marks are being raised about the current legal basis under which data transfers occur. If those legal means of data transfer are removed — not by us, but by regulators — then of course that will have a profound effect on how, not just our services, but countless other companies operate. We’re trying to avoid that.”

The Facebook VP was speaking during an EBS panel debate on rebooting the regional economy “towards a green, digital and resilient union” — which included the EU’s commissioner for the economy, Paolo Gentiloni, and others.

Discussing the Dublin legal filing, Clegg suggested that an overenthusiastic reporter “slightly overwrote” in their interpretation of the document. “We’ve taken legal action in the Dublin courts to — in a sense — to try to send a signal that this is a really big issue for the whole European economy, for all small and large companies that rely on data transfers,” he said.

Clegg went on to claim that while Facebook being forced to suspend data transfers from the EU to the US “would of course be very bad for Facebook” the impact of such an order “would be absolutely disastrous for the economy as a whole”.

“What is at stake here is quite a big issue that in the end can only be resolved politically between a continued negotiation between the US and the EU that clearly is not going to happen until there’s a new US administration in place after the transition period in the early part of next year,” he said, indicating Facebook is using Ireland’s courts to try to buy time for a political fix.

“We need the time and the space for the political process between the EU and the US to work out so that companies can have confidence going fwd that they’re able to transfer data going forward,” he added.

Clegg also sought to present Facebook’s platform as a vital component of any regional economy recovery — talking up its utility to European SMEs for reaching customers.

Some 25M European companies use its apps and tools, he said — impressing that the “vast majority” do so for free and further claiming activity on Facebook’s ad platform could be linked to sales of 208BN, and 3M+ jobs, per independent estimates.

“In terms of the economic recovery, our most important role is to continue to provide that extraordinary capacity for small businesses to do something which in the past only big businesses could do,” he said. “In the past only big businesses had the fancy marketing budgets and could take out bill boards and television and radio ads. The transformational effect of social media and Facebook in part economically speaking is that it’s levelled the playing field.”

Clegg went further on this point — linking the mass exploitation of Internet users’ personal data to the economic value generated by regional businesses via what he badged “personalized advertising” — aka “Facebook’s business model”.

“The personalized advertising model allows us to do that — allows us to level the playing field,” he claimed.

The tech giant’s processing of Europeans’ personal data remains under investigation on multiple fronts by EU regulators — meaning that as well as the clear threat to its US transfers Facebook’s core business model risks being unpicked by regulatory action if it faces enforcement action over data protection violations in future.

“I’m acutely aware that it is a business model that has plenty of criticism aimed at it and there’s a totally legitimate debate which rages in Brussels and elsewhere about how Facebook gathers, stores and monetizes data — and that is a totally legitimate and ongoing debate — but I hope people will not overlook that that business model has one ingenious benefit, amongst others, which is that it allows small businesses to operate on the same basis as big businesses in reaching their customers,” he said.

Never one to waste a lobbying opportunity, Clegg argued the pandemic has made this capacity “even more important” with EU populations under lockdown and fewer opportunities for businesses to engage in face to face selling.

Taxing times

The knotty issue of digital tax reform also came up during the debate.

Gentiloni reiterated the Commission position that it wants to see global agreement on reforming tax rules to take account of the shift to online business but he said the bloc is willing to go ahead with a European digital tax if that effort fails.

“We can’t remain with the model of the previous century,” he said, before going on to flesh out the challenges facing global accord on the issue. “We don’t want to be the one breaking this OECD process. To be honest, there was a lot of progress in this thing that we call ‘inclusive framework’ — more than dozens of countries working together and reaching something like an agreement on a new form of digital tax but then one single country — but a very important one — is not agreeing with this solution, is proposing a different one. But this different solution, the so called ‘Safe Harbor’, appears a little bit like an optional solution and it’s a bit difficult to conceive of an optional solution because of course you don’t pay ‘optional taxes’, I don’t think so. But we are still committed towards the end of this year to try to find this solution.

“My absolute preferred solution would be a global one. For many reasons — for avoiding tensions among different countries, and for facilitating for business the payment of taxes — but I want to say very clearly that we have a second best solution which is a European digital taxation because the alternative to this would be to have, as we already have in legislation, a French one, an Italian one, a Spanish one and I don’t think this is a good solution for Facebook or other companies. So we’re working for global but if global is not possible we will go European.”

Facebook’s Clegg said the company “will pay the taxes that are due under the rules that operate”, adding that if there is a European digital tax it will “of course” abide by it. But he too said Facebook’s preference is for a global arrangement.

Daily Crunch: Facebook unveils the Oculus Quest 2

Facebook makes its next steps in VR, Apple releases iOS 14 and the PlayStation 5 gets a launch date. This is your Daily Crunch for September 16, 2020.

The big story: Facebook unveils the Oculus Quest 2

Facebook announced the smaller, more affordable follow-up to the Oculus Quest VR headset launching on October 13 at a starting price of $299. At the same time, Lucas Matney has already tried out the device and sounded very impressed in his review:

This is the most convincing argument Oculus has made for VR since its inception … It’s still largely for gamers and will still be in danger of getting mainstream users excited for a few weeks and then spending the rest of its life in the closet.

The announcement was part of today’s Facebook Connect event, where the company also debuted a virtual office space called Infinite Office, announced a fitness tracking device and revealed plans to launch smart glasses next year.

Meanwhile, R.I.P. Oculus Rift.

The tech giants

Apple burns developer goodwill with surprise release of iOS 14 — iOS 14 is now available for download, with yesterday’s surprise announcement leaving many developers scrambling to prepare their apps.

Amazon Music adds podcasts, including its own original shows — The first slate of originals on Amazon Music will include shows hosted by creators like DJ Khaled, Becky G, Will Smith, Dan Patrick and others.

Dropbox CEO Drew Houston says the pandemic forced the company to reevaluate what work means — Houston spoke at TechCrunch Disrupt, arguing that COVID has accelerated a shift to distributed work that will not go away.

Startups, funding and venture capital

Zwift, maker of a popular indoor training app, just landed a whopping $450 million in funding led by KKR — Zwift has now raised $620 million altogether and is valued at north of $1 billion.

Volocopter kicks off pre-sales for its first air taxi flights, with a wait time of 2-3 years — If your sad-faced technology mantra is “we were promised flying cars and all we got were these shitty internet trolls,” never fear, Volocopter is here.

Kerry Washington explains why she became a startup investor — She also discussed her investment in The Wing, the female co-working startup that’s faced some recent scandals.

Advice and analysis from Extra Crunch

Four perspectives on Apple’s new service bundle — For one thing, Cupertino is engaging in a form of future-proofing to offset slowing hardware sales and potentially a loss of App Store income.

Dear Sophie: How can I get my 2-year foreign residency requirement for my J-1 waived? — Another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

JFrog and Snowflake’s aggressive IPO pricing point to strong demand for cloud shares — At their final IPO prices, the two debuts are aggressively valued, showing continued optimism amongst public investors that cloud shares are an attractive bet.

(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)

Everything else

Sony’s PlayStation 5 arrives November 12, priced at $500 — On that date, the console will be available in North America, Japan, Australia, New Zealand and South Korea.

China tops 110 million 5G users in less than a year — This makes China the largest 5G market in terms of user size, according to the China Academy for Information and Communications Technology.

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