YC-backed Blabla raises $1.5M to teach English through short videos

Short, snappy, entertaining videos have become an increasingly common way for young people to receive information. Why not learn English through TikTok-like videos too? That was what prompted Angelo Huang to launch Blabla.

Originally from Taiwan, Huang relocated to Shanghai in 2019 to start Blabla after working in Silicon Valley for over a decade. A year later, Blabla was chosen as part of Y Combinator’s 2020 summer cohort. The coronavirus had begun to spread in the U.S. at the time, keeping millions at home, and interest in remote learning was reviving.

“It was my eighth time applying to YC,” Huang, who founded two companies before Blabla, told TechCrunch during an interview.

This week, Blabla announced it has raised $1.54 million in a seed round led by Amino Capital, Starling Ventures, Y Combinator, and Wayra X, the innovation arm of the Spanish telecoms giant Telefónica. While Y Combinator wasn’t particularly instrumental in Blabla’s expansion in China — one of the biggest English-learning markets — the famed accelerator was of great help introducing investors to the young company, said the founder.

The Blabla app pays native English speakers by the hour to create short, engaging videos tailored to English-learning students around the world. The content creators are aided by Blabla’s proprietary software that can recognize and tag their scenes, as well as third-party translation tools that can subtitle their videos. The students, in turn, pay a subscription fee to receive personalized video recommendations based on their level of proficiency. They can practice through the app’s built-in speech recognition, among other features like speaking contests and pop quizzes.

The startup is in a highly crowded space. In China, the online English-learning market is occupied by established companies like VIPKID, which is backed by Tencent and Sequoia Capital. Compared to VIPKID’s one-on-one tutoring model, Blabla is more affordable with its starting price of 39 yuan ($6) a month, Huang noted.

“The students [on mainstream English learning apps] might have to spend several thousands of RMB before they can have a meaningful conversation with their teachers. We instead recycle our videos and are able to offer lessons at much cheaper prices.”

The app has about 11,000 weekly users and 300-400 paid users at the moment, with 80-90% of its total users coming from China; the goal for this year is to reach 300,000 students. The funding will allow Blabla to expand in Southeast Asia and Latin America while Wayra X can potentially help it scale to Telefónica’s 340 million global users. It will be seeking brand deals with influencers on the likes of TikTok and Youtube. The new capital will also enable BlaBla to add new features, such as pairing up language learners based on their interests and profiles.

Blabla doesn’t limit itself to teaching English and has ambitions to bring in teachers of other languages. “We want to be a global online pay-for-knowledge platform,” said Huang.

App stores saw record 218 billion downloads in 2020, consumer spend of $143 billion

Mobile adoption continued to grow in 2020, in part due to the market forces of the COVID-19 pandemic. According to App Annie’s annual “State of Mobile” industry report, mobile app downloads grew by 7% year-over-year to a record 218 billion in 2020. Meanwhile, consumer spending grew by 20% to also hit a new milestone of $143 billion, led by markets that included China, the United States, Japan, South Korea and the United Kingdom.

Consumers also spent 3.5 trillion minutes using apps on Android devices alone, the report found.

In another shift, app usage in the U.S. surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours on their mobile device.

The increase in time spent is a trend that’s not unique to the U.S., but can be seen across several other countries, including both developing mobile markets like Indonesia, Brazil and India, as well as places like China, Japan, South Korea, the U.K., Germany, France and others.

The trend isn’t isolated to any one demographic, either, but is seen across age groups. In the U.S., for example, Gen Z, millennials and Gen X/Baby Boomers spent 16%, 18% and 30% more time in their most-used apps year-over-year, respectively. However, what those favorite apps looked like was very different.

For Gen Z in the U.S., top apps on Android phones included Snapchat, Twitch, TikTok, Roblox and Spotify.

Millennials favored Discord, LinkedIn, PayPal, Pandora and Amazon Music.

And Gen X/Baby Boomers used Ring, Nextdoor, The Weather Channel, Kindle and ColorNote Notepad Notes.

The pandemic didn’t necessarily change how consumers were using apps in 2020, but rather accelerated mobile adoption by two to three years’ time, the report found.

Investors were also eager to fuel mobile businesses as a result, pouring $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year. According to Crunchbase data, 26% of total global funding dollars in 2020 went to businesses that included a mobile solution.

From 2016 to 2020, global funding to mobile technology companies more than doubled compared with the previous five years, and was led by financial services, transportation, commerce and shopping.

Mobile gaming adoption also continued to grow in 2020. Casual games dominated the market in terms of downloads (78%), but Core games accounted for 66% of games’ consumer spend and 55% of the time spent.

With many stuck inside due to COVID-19 lockdowns and quarantines, mobile games that offered social interaction boomed. Among Us, for example, became a breakout game in several markets in 2020, including the U.S.

Other app categories saw sizable increases over the past year, as well.

Time spent in Finance apps in 2020 was up 45% worldwide, outside of China, and participation in the stock market grew 55% on mobile, thanks to apps like Robinhood in the U.S. and others worldwide, that democratized investing and trading.

TikTok had a big year, too.

The app saw incredible 325% year-over-year growth, despite a ban in India, and ranked in the top five apps by time spent. The average monthly time spent per user also grew faster than nearly every other app analyzed, including 65% in the U.S. and 80% in the U.K., surpassing Facebook. TikTok is now on track to hit 1.2 billion active users in 2021, App Annie forecasts.

Other video services boomed in 2020, thanks to a combination of new market entrants and a lot of time spent at home. Consumers spent 40% more hours streaming on mobile devices, with time spent in streaming apps peaking in the second quarter in the west as the pandemic forced people inside.

YouTube benefitted from this trend, as it became the No. 1 streaming app by time spent among all markets analyzed except China. The time spent in YouTube is up to 6x that of the next closet app at 38 hours per month.

Of course, another big story for 2020 was the rise of e-commerce amid the pandemic. This made the past year the biggest ever for mobile shopping, with an over 30% increase in time spent in Shopping apps, as measured on Android phones outside of China.

Mobile commerce, however, looked less traditional in 2020.

Social shopping was a big trend, with global downloads of Pinterest and Instagram growing 50% and 20% year-over-year, respectively.

Livestreaming shopping grew, too, led by China. Downloads of live shopping TaoBao Live in China, Grip in South Korea and NTWRK in the U.S. grew 100%, 245% and 85%, respectively. NTWRK doubled in size last year, and now others are entering the space as well — including TikTok, to some extent.

The pandemic also prompted increased usage of mobile ordering apps. In the U.S., Argentina, the U.K., Indonesia and Russia, the app grew by 60%, 65%, 70%, 80% and 105%, respectively, in Q4.

Business apps, like Zoom and Google Meet among others, grew 275% in Q4, for example, as remote work and sometimes school, continued.

The analysis additionally included lists of the top apps by downloads, spending and monthly active users (MAUs).

Although TikTok had been topping year-end charts, Facebook continued to beat it in terms of MAUs. Facebook-owned apps controlled the top charts by MAUs, with Facebook at No. 1 followed by WhatsApp, Messenger and Instagram.

TikTok, however, had more downloads than Facebook and ranked No. 2 by consumer spending, behind Tinder.

The full report is available only as an online interactive experience this year, not a download. The report largely uses data from both the iOS App Store and Google Play, except where otherwise noted.

Chinese facial recognition unicorn Megvii prepares China IPO

Megvii, one of China’s largest facial recognition startups, is gearing up for an initial public offering in Shanghai. The company is working with CITIC Securities to prepare for its planned listing, according to an announcement posted by the China Securities Regulatory Commission on Tuesday.

The move came more than a year after Megvii, known for its computer vision platform Face++, filed to go public in Hong Kong in August 2019. At the time, Reuters reported that the company could raise between $500 million and $1 billion. However, the firm’s IPO application in Hong Kong has lapsed for undisclosed reasons and its focus is now on Shanghai’s STAR board, a person with knowledge of the matter told TechCrunch.

In 2019, China established the STAR board to attract high-growth, unprofitable Chinese tech startups after losing them to the U.S. for years. In the meantime, a domestic flotation is increasingly appealing to Chinese firms, especially those that count on government contracts and are caught in the U.S.-China tech competition.

Megvii and its rivals SenseTime, Yitu, and CloudWalk are collectively recognized as the “Four AI Dragons” of China for their market dominance and fundings from highflying investors. Megvii’s technology can be found powering smart city infrastructure across China as well as many smartphones and mobile apps. Alibaba, Ant Group and the Bank of China are among the group of investors who have pumped about $1.4 billion into the ten-year-old company since its inception.

The AI Dragons are less celebrated outside their home market. Last year, Megvii, Yitu and SenseTime were added to the U.S. Entity List for their alleged roles in enabling the government’s mass surveillance of the Muslim minority groups in western China. CloudWalk was subsequently added to the blacklist in 2020 and cut off from its U.S. suppliers.

According to the notice posted by China’s securities authority, Megvii plans to issue Chinese depositary receipts (CDRs), which are similar to American depositary receipts and allow domestic investors to hold overseas shares. That suggests the Beijing-based AI unicorn has not ruled out listing outside mainland China.

Currently seeking guidance in the pre-application stage, Megvii’s planned listing still needs approval from Chinese regulators.

Vision Fund backs Chinese fitness app Keep in $360 million round

As Chinese fitness class provider Keep continues to diversify its offerings to include Peloton-like bikes, health-conscious snacks among other things, it’s bringing in new investors to fund its ambitions.

On Monday, Keep said it has recently closed a Series F financing round of $360 million led by SoftBank Vision Fund. Hillhouse Capital and Coatue Management participated in the round, as well as existing investors GGV Capital, Tencent, 5Y Capital, Jeneration Capital and Bertelsmann Asia Investments.

The latest fundraise values the six-year-old startup at about $2 billion post-money, people with knowledge told TechCrunch. Keep said it currently has no plans to go public, a company spokesperson told TechCrunch.

Keep started out in 2014 by providing at-home workout videos and signed up 100 million users within three years. As of late, it has served over 300 million users, the company claims. It has over time fostered an ecosystem of fitness influencers who give live classes to students via videos, and now runs a team of course designers, streaming coaches and operational staff dedicated to its video streaming business.

The company said its main revenue driver is membership fees from the 10 million users who receive personalized services. It’s also expanding its consumer product line. Last year, for instance, the firm introduced an internet-connected stationary bike that comes with video instructions like Peloton . It’s also rolled out apparel, treadmills and smart wristbands.

The company launched foreign versions of its Keep app in 2018 as it took aim at the overseas home fitness market. It was posting diligently on Western social networks including Instagram, Facebook and Twitter up until the spring of 2019.

According to Keep, the purpose of the latest funding is to let it continue doing what it has focused on in recent years: improving services and products for users and serving fitness professionals against a backdrop of the Chinese government’s campaign for “national fitness.”

“We believe fitness has become an indispensable part of Chinese people’s everyday life as their income rises and health awareness grows,” said Eric Chen, managing partner at SoftBank Vision Fund .

 

China’s search giant Baidu to set up an EV making venture

China’s search giant Baidu is extending its car ambitions from mere software to production. The company said Monday that it will set up a company to produce electric vehicles with the help of Chinese automaker Geely. Baidu, a dominant player in China’s internet search market for the last decade or so, will provide smart driving technologies while Geely, which has an impending merger with Sweden’s Volvo, will be in charge of car design and manufacturing.

The move marks the latest company in China’s internet industry to enter the EV space. In November, news arrived that Alibaba and Chinese state-owned carmaker SAIC Motor had joined hands to produce electric cars. Ride-share company Didi and EV maker BYD co-developed a model for ride-hailing, which is already attracting customers like Ideanomics. Meanwhile, the stocks of China’s Tesla challengers, such as Xpeng, Li Auto, and NIO, have been in a steady uptrend over the past year.

Baidu’s car push is part of its effort to diversify a business relying on search advertising revenue. New media platforms such as ByteDance’s Toutiao news aggregator and short-video app Douyin come with their own search feature and have gradually eroded the share of traditional search engines like Baidu. Short video services have emerged as the second-most popular channel for internet search in China, trailing after web search engines and coming ahead of social networks and e-commerce, data analytics firm Jiguang shows.

Baidu has been working aggressively on autonomous driving since 2017. Its Apollo ecosystem, which is billed as “an Android for smart driving,” has accumulated over a hundred manufacturing and supplier partners. Baidu has also been busy testing autonomous driving and recently rolled out a robotaxi fleet.

The new venture will operate as a Baidu subsidiary where Geely will serve as a strategic partner and Baidu units like Apollo and Baidu Maps will contribute capabilities. The firm will cover the entire industrial chain, including vehicle design, research and development, manufacturing, sales, and service.

It’s unclear how Baidu’s tie-up with Geely will affect Apollo’s operation, though Baidu promised in its announcement that it will “uphold its spirit of open collaboration across the AI technology industry, striving to work closely with its ecosystem partners to advance the new wave of intelligent transformation.”

“At Baidu, we have long believed in the future of intelligent driving and have over the past decade invested heavily in AI to build a portfolio of world-class self-driving services,” said Robin Li, co-founder and chief executive officer of Baidu.

“We believe that by combining Baidu’s expertise in smart transportation, connected vehicles and autonomous driving with Geely’s expertise as a leading automobile and EV manufacturer, the new partnership will pave the way for future passenger vehicles.”

Tencent investment stays on game in 2020

It’s no secret that Tencent, the Chinese tech giant behind WeChat and a handful of blockbuster video games, is an aggressive investor. Even during 2020 when the pandemic slowed down economic activity in many parts of the world, Tencent was charging ahead with its investment ambitions.

During the year, the company participated in more than 170 funding rounds that amounted to a total of 249.5 million yuan ($38 million), according to the Chinese startup database ITJuzi. That made 2020 the most active year to date for Tencent’s investment team, which had been delivering superior results in the last decade.

By January 2020, over 70 of Tencent’s 800 portfolio companies had gone public and more than 160 of them surpassed $100 million in valuation, Martin Lau, Tencent’s president, told a room of investees at the time. The achievement could well place Tencent side by side with some of the world’s top venture funds.

Tencent established an investment and M&A unit back in 2008 and began to seriously ramp up financing around 2012. Since 2015, it has been funding more than 100 companies per year, ITJuzi data shows.

The social and entertainment giant has for long kept its funding activity close to its chest and data gleaned by third-party organizations like ITJuzi is often not exhaustive. The company did not immediately respond to TechCrunch’s questions about its investment in 2020, and the story draws mainly from public disclosures and interviews with people of knowledge.

B2B interest

While Tencent’s overall investment strategy has remained consistent — a diversifying portfolio with a focus on digital entertainment — it has quietly stepped up efforts in areas outside its main gaming arena. For instance, the firm has paid more attention to enterprise services ever since it announced a B2B pivot in 2018, putting more focus on cloud computing, fintech and the likes. The number of investments it made in enterprise software went from five in 2015 to 28 in 2020, according to ITJuzi.

In line with its new focus on enterprise, Tencent has also upped its game in fintech. In 2019 and 2020, it backed 18 and 15 fintech startups, respectively, ITJuzi shows, up from only four in 2015. The rise, though incremental, reflects the firm’s increased interest in an area that’s both hugely lucrative but also comes with many constraints.

In China, Tencent has long been competing with Ant Group, the Alibaba fintech affiliate, to court users in payments, lending, wealth management, and even insurance. The regulatory troubles facing Ant are not exclusive to the Jack Ma empire and will likely come to daunt its smaller contenders, including Tencent’s fintech segments.

That said, Tencent is “not nearly as aggressive” as Ant when it comes to strengthening its position in China’s financial market, a person who partners with Tencent’s overseas fintech business told TechCrunch.

Fintech overseas

The company is also prudent with its fintech expansion overseas in times of geopolitical tensions. So far, it’s mostly limited its ambition to providing cross-border payment services to China’s outbound tourists, rather than serving locals directly.

“There’s a lot of scrutiny around what Tencent and Alibaba are doing within the United States and that presents challenges,” said the CEO of a Tencent-backed startup based in the U.S. who declined to be named.

Through investments, however, Tencent has familiarized itself with the foreign financial markets. In 2015, the company made one fintech investment outside China. In 2020, it funded eight, according to public data collected by Crunchbase.

A significant portion of Tencent’s outside investments doesn’t bear strategic significance, and the company tends to let its portfolio startups operate autonomously. Partly for that reason, Tencent was slammed for prioritizing investment and financial return over product development and innovation in a viral article in 2018, titled ominously “Tencent Has No Dream.” The hands-off attitude is a stark contrast to the stranglehold practice of Alibaba, which prefers buying controlling stakes in businesses and shaking up their top management, as it did for Lazada.

But many Tencent investments do add value to its business, even when the press announcements leave out the potential strategic synergies. Over the years, Tencent has made a series of small investments in the U.S. and other Western countries. Few of them appear to bring collaborative opportunities in the near term, but Tencent would still invite executives from these companies to China where they would learn from each other.

“Tencent made those investments really just to kind of learn what people are doing in the U.S. and how it might be able to be applied in China,” said the executive from the Tencent-backed startup.

“We don’t have any near term plans to do anything in China. But Tencent is a very reputable name, whether it’s in China or the U.S. And you know, it’s good to have the option to be able to do something more strategic in partnership with Tencent down the road.”

Tencent’s fintech investments outside China could also be conducive to the firm’s gaming expansion overseas, according to a Hong Kong-based fund manager. The goal is to have half of its gamers to be overseas users, Tencent pleged in 2019.

“For the gaming industry in Latin America and Southeast Asia, the biggest bottleneck is, surprisingly, not hardware but payments,” the fund manager told TechCrunch. “Of course, localization and compatibility are also important.”

California vegan egg startup Eat Just yokes itself to China’s fast food chain

Eat Just, a food startup from San Francisco making chicken-less eggs, has ambitions to crack the Chinese market where consumer appetite for plant-based food is growing and other Western vegan substitute brands like Beyond became available in recent quarters.

The startup said this week it will be suppling to fast-food chain Dicos, a local rival to McDonald’s and KFC in China. The agreement will see Eat Just add its plant-based eggs to the restaurant’s breakfast items across more than 500 locations. The eggs are derived from a legume called mung beans, which have long been a popular ingredient for soup, noodles and dessert in China.

At Dicos in major Chinese cities, consumers will find Eat Just eggs in breakfast burgers, bagel sandwiches and Western-style breakfast plates. That diversifies the Dicos plant-based menu which already includes a vegan chicken burger supplied by local startup Starfield. Dicos also offers a gateway into China’s low-tier cities where it has built a stronghold and can potentially help evangelize plant-based proteins in communities beyond China’s urban yuppies. The chain operates a total of 2,600 stores in China and serves 600 million customers a year.

Eat Just first entered China in 2019 and currently generates less than 5% of its revenue from the country, Andrew Noyes, head of global communications at Eat Just, told TechCrunch. But over time, the company expects China to account for more than half of its revenue. Ten of its 160 employees are based in China.

Eat Just’s vegan egg recipe / Photo: Eat Just

“We have been intentional about starting small, going slow and hiring people who know the market and understand how to build a sustainable business there. We’ve also been focused on finding the right partners to work with on downstream manufacturing, sales and distribution, and that work continues,” said Noyes.

The partnership with Dicos arrived on the heels of Eat Just’s announcement to set up an Asia subsidiary. The nine-year-old company, formerly Hampton Creek, has raised over $300 million from prominent investors including Li Ka-Shing, Peter Thiel, Bill Gates and Khosla Ventures. It was last valued at $1.2 billion.

Before its tie-up with Dicos, Eat Just had already been selling online in China through Alibaba and JD.com among other retail channels. Its China business is currently growing by 70% year-over-year.

While there’s no shortage of strong competition in the plant-based food race in China, Eat Just claims it’s taken a unique angle by zeroing in on eggs.

“Plant-based meat companies offer products that pair deliciously with Just Egg,” the brand name of the startup’s main product, Noyes noted.

“Plant-based foods are increasing in popularity among Chinese consumers and more sustainable eating is becoming part of a national dialogue about the feeding of the country in the future. China produces about 435 billion eggs per year and demand for protein is increasing.”

Indeed, Euromonitor predicted that China, the world’s largest meat-consuming country, would see its “free from meat” market size grow to $12 billion by 2023, compared to $10 billion in 2018.

Jack Ma’s absence from public eye sparks Twitter discussions

The world’s attention is on Jack Ma’s whereabouts after reports noted the billionaire founder of Alibaba and Ant Group had been absent from public view since late October.

On October 24, Ma delivered fiery remarks against China’s financial system to an audience of high-rank officials. Days later the Chinese authorities abruptly halted Ant’s initial public offering, an act believed to be linked to Ma’s controversial speech. The Chinese government subsequently told the fintech behemoth, which had thrived in a relatively lax regulatory environment, to “rectify” its business according to the law. The future of Ant hangs in the air.

Concurrently, Chinese regulators have launched an unprecedented probe into Alibaba over suspected monopolistic behavior.

Ma is known for his outspoken personality and love for the limelight, so it’s no surprise that his missing from recent events, including the final episode of an African TV program he created, is sparking widespread chatter. From economists to journalists, the Twitter world has tuned in:

“Regarding the Africa’s Business Heroes competition, Mr. Ma had to miss the finale due to a scheduled conflict,” an Alibaba spokesperson said.

While China’s Twitter equivalent Weibo has not blocked searching for “Jack Ma missing,” the posts it surfaced barely have any like or repost. Elsewhere on the Chinese internet, users are speculating inside WeChat groups that Ma was either “made vanished” or has fled the country.

It’s worth noting that Ma has long stepped back from day-to-day operations at Alibaba. In September 2019, he officially handed his helm as the company’s chairman to his successor Daniel Zhang. That said, the billionaire still holds considerable sway over the e-commerce business as a lifetime partner at the so-called Alibaba Partnership, a group comprising senior management ranks who can nominate a majority of the directors to the board.

It’s not unusual to see Chinese tycoons choosing to lie low in tough times. After Richard Liu was accused of rape, the flamboyant founder of JD.com, Alibaba’s archrival, skipped a key political event in China last year. Tencent founder Pony Ma, who already keeps a low profile, has been absent from the public eye for about a year, though the cause is his chronic “back problems,” a source told TechCrunch, and the tech boss has made virtual appearances at events by sending voice messages in the past year.

China’s adaptive robot maker Flexiv raises over $100 million

As businesses around the world look to automate production lines and supply chains, companies making the robots are attracting great investor interest. The latest to get funded is Flexiv, which closed a Series B round north of $100 million from investors including China’s on-demand services giant Meituan, TechCrunch learned.

Other major investors in the strategic round are Chinese venture capital firm Meta Capital (元知资本), major Chinese agricultural company New Hope Group, private equity firm Longwood, Jack Ma’s YF Capital, prominent Chinese venture capital firms Gaorong Capital and GSR Ventures, as well as Plug and Play’s China and U.S. ventures. The new round boosted the startup’s capital raised so far to over $120 million.

The company operates out of several major Chinese cities and California with two-thirds of its staff stationed in China, a common strategy for AI startups helmed by Chinese founders who have worked or studied in the U.S.

In 2016, Wang Shiquan, an alumus of Stanford’s Biomimetics and Dexterous Manipulation Lab, founded Flexiv with a focus on building adaptive robots for the manufacturing industry. With the new capital, the startup plans to implement its AI-driven, general-purpose robots in other areas such as services, agriculture, logistics and medical care.

Through Meituan’s strategic investment, for instance, Flexiv could deploy its solutions to the investor’s core food delivery business, one that involves repetitive, high-volume tasks and is primed for automation.

Curved surface processing by Flexiv’s robot Rizon / Photo: Flexiv

In the meantime, there is still ample room for automation in traditional manufacturing, Wang said in an interview with TechCrunch. Consumer electronics especially require high-precision, delicate manufacturing processes, which means the production line often needs to be revamped for a new product. Flexiv’s robots, equipped with force feedback and computer vision systems, can adjust to new circumstances and potentially save factory bosses some time and money in setting up new machinery, Wang claimed.

The company’s flexible robots are what distinguishes it from many existing players, the founder added.

“Conventional robotic arms can safely perform tasks when there are no barriers around, but they are less capable of operating in complicated environments… Many seemingly simple tasks such as washing dishes actually require a lot of AI-based recognition and decision-making power.”

The company began mass production in the second half of this year and has so far produced around 100 robots. It plans to monetize by selling robots, licensing software, and providing after-sale services. The challenge then lies in finding partners and customers across a wide range of industries to trust its nascent technologies.

China remains Flexiv’s largest market while North America is a key market in its expansion plan. “Each country has its own competitive edge in robotics,” Wang suggested. “China’s advantage is in manufacturing, supply chains, and labor costs.”

“In the area of traditional and adaptive robotics, the gap between different countries is certainly narrowing,” the founder said.

From the U.S. to China, Korea, India and Europe, antitrust action against tech is gaining serious momentum

After decades of global expansion and consolidation in the tech sector, antitrust is now a headline issue for the industry across the world.

What has been a slow and sputtering series of disparate actions over the past decade has coalesced in just the past few weeks into a rapid and comprehensive series of actions against the industry, with the United States being a notable laggard worldwide.

Nowhere are these actions more prominent than in China, where the competition authorities have — after many years of a reasonably laissez-faire policy to its internet giants — suddenly decided to take sweeping action against its largest tech companies.

That movement started after Chinese regulators thwarted Ant’s record-shattering IPO in early November. Ant is one of China’s most important tech companies, a fintech company that was looking at a valuation north of $300 billion and that has 1.3 billion active users globally centered on China and the overseas Chinese diaspora.

That regulatory action led to a $60 billion dollar immediate drop in Alibaba’s market cap, given Alibaba’s 33% stake in Ant.

The bad news from Beijing has continued for the tech industry though. Earlier this week, market regulators laid out a “rectification” plan for Ant, including tougher lending standards that are expected to deeply impact the high-flying company’s revenues, margins, and growth. The Wall Street Journal reported this morning that China also specifically intends to “shrink” Jack Ma’s own influence over his business empire, with the government itself potentially acquiring larger ownership stakes in tech companies.

Furthermore, Beijing seems ready to force Alibaba and Tencent to play nicer with each other and create breathing space for startups outside of their two inter-locking corporate webs. Earlier this month, authorities fined Alibaba a nominal amount and also reviewed a Tencent acquisition, actions that were perceived by analysts as the opening shots in a new round of antitrust intervention. More action is expected in 2021.

It’s not just China though that has been bringing tech companies to heel. Almost exactly a year ago, Germany-based Delivery Hero announced a $4 billion takeover of Seoul-based Baedal Minjok, a popular food delivery app. Yesterday, South Korean competition authorities ordered Delivery Hero to divest its existing local delivery assets to get approval for the acquisition — a demand that undermined one of the reasons for acquiring Baedal Minjok in the first place. Delivery Hero has said that it will sell its unit to complete the transaction.

Meanwhile this month, Europe and soon-to-be-Brexited Britain announced a spate of new policies and regulations designed to heighten competition in the tech sector, including increasing legal liabilities for illegal content, broadening transparency around services, and mandating open competition on major platforms. Those policies have been a long-time coming, but now that they are starting to gain traction, they portend huge changes on how the highest-scale tech companies can operate on the Old Continent.

While many of these global policies are designed to undo the consolidation and scale of the industry, in India, regulators are working to prevent such scale in the first place. Local competition authorities there announced in November a framework that would prevent any company from owning more than 30% of local payments volume, and also mandating financial interoperability standards. That policy appears to be designed to avoid the kind of fintech duopoly seen in China between Alipay and WeChat Pay.

With all this global antitrust action bubbling, the laggard has actually been the United States, perhaps since the largest tech giants are all headquartered domestically. While Congress, the president, and dozens of state attorneys general have become increasingly strident on the scope of companies like Amazon, Google, and Facebook, action remains very early against the giants.

The largest and most notable action so far has been a massive lawsuit by 46 states against Facebook that was filed earlier this month. As we reported then, the lawsuit “alleges that the company bought competitors ‘illegally’ and in a ‘predatory manner’ in order to grow and preserve its market power. The suit cites Facebook’s acquisitions of Instagram and WhatsApp as prominent examples.”

Of course, as some of us remember from the 1990s with the U.S. government’s case against Microsoft, antitrust lawsuits often take years to full wend their way through the courts — and often don’t even lead to much if any change in the end anyway.

Whether a Biden administration will dramatically change the course of these actions remains unclear, with the transition offering very limited insight as it prepares to take office next month.

Nonetheless, all of these antitrust actions happening simultaneously across the globe within weeks of each other portends huge regulatory fights for tech in 2021.