Baidu beats estimates on strong video streaming growth

Chinese search giant Baidu on Monday posted a revenue of 26.33 billion yuan ($3.73 billion) for the quarter that ended in June, beating analysts’ estimates of 25.77 billion yuan ($3.65 billion) as its video streaming service iQiyi style="font-weight: 400;"> continues to see strong growth. The 19-year-old firm’s shares were up over 8% in extended trading.

The company, which is often called Google of China, said revenue of its core businesses grew 12% since the same period last year “despite the weak macro environment, our self-directed healthcare initiative, industry-specific policy changes and large influx of ad inventory.”

Net income for the second quarter dropped to 2.41 billion yuan ($344 million).

“With Baidu traffic growing robustly and our mobile ecosystem continuing to expand, we are in a good position to focus on capitalizing monetization and ROI improvement opportunities to deliver shareholder value,” Herman Yu, CFO of Baidu, said in a statement.

Today’s results for Baidu, which has been struggling of late, should help calm investors’ worries. In recent years, as users move from desktop to mobile and rivals such as ByteDance win hundreds of millions of users through their mobile apps, many have cast serious doubts on Baidu’s ability to maintain its growth and hold onto its grip on advertising business. (On desktop, Baidu continues to command over three quarters of the Chinese market share.)

In the quarter that ended in March this year, Baidu posted its first quarterly loss since 2015, the year it went public.

Baidu’s shares were trading at about $114 in extended hours, pushing its market cap to about $40 billion — still less than half of about $100 billion in mid-May last year.

Robin Li, Baidu co-founder and CEO, said Baidu app was being used by 188 million users everyday, up 27% from the same period last year. “In-app search queries grew over 20% year over year and smart mini program MAUs reached 270 million, up 49% sequentially,” he added.

Baidu’s video streaming service iQiyi style="font-weight: 400;"> has now amassed over 100.5 million subscribers, up from about 87 million late last year, the company said. Revenue from iQiyi stood at 7.11 billion yuan ($1.01 billion), up 15% since last year.

iQiyi inked a deal with Netflix in 2017, which does not operate in China, to cross-license portion of one another’s content. But the partnership has since ended because the “results weren’t as good as iQiyi had expected,” a company top executive said earlier this year. iQiyi continues to maintain its relationship with all six of the major local movie studios.

“On Baidu’s AI businesses, DuerOS voice assistant continues to experience strong momentum with installed base surpassing 400 million devices, up 4.5 fold year over year, and monthly voice queries surpassing 3.6 billion, up 7.5 fold year over year, in June. As mobile internet penetration in China slows, we are excited about the huge opportunity to provide content and service providers a cross-platform distribution channel beyond mobile, into smart homes and automobiles,” he added.

Revenue from online marketing services, which makes a significant contribution to overall sales, fell about 9% to 19.2 billion yuan ($2.72 billion).

More to follow…

Twitter blocks state-controlled media outlets from advertising on its social network

Twitter is now blocking state-run media outlets from advertising on its platform.

The new policy was announced just hours after the company identified an information operation involving hundreds of accounts linked to China as part of an effort to “sow political discord” around events in Hong Kong after weeks of protests in the region. Over the weekend over 1 million Hong Kong residents took to the streets to protest what they see as an encroachment by the mainland Chinese government over their rights.

State-funded media enterprises that do not rely on taxpayer dollars for their financing and don’t operate independently of the governments that finance them will no longer be allowed to advertise on the platform, Twitter said in a statement. That leaves a big exception for outlets like the Associated Press, the British Broadcasting Corp., Public Broadcasting Service, and National Public Radio, according to reporting from BBC reporter, Dave Lee.

 

The affected accounts will be able to use Twitter, but can’t access the company’s advertising products, Twitter said in a statement.

“We believe that there is a difference between engaging in conversation with accounts you choose to follow and the content you see from advertisers in your Twitter experience which may be from accounts you’re not currently following. We have policies for both but we have higher standards for our advertisers,” Twitter said in its statement.

The policy applies to news media outlets that are financially or editorially controlled by the state, Twitter said. The company said it will make its policy determinations on the basis of media freedom and independence including editorial control over articles and video, the financial ownership of the publication, the influence or interference governments may exert over editors, broadcasters and journalists, and political pressure or control over the production and distribution process.

Twitter said the advertising rules wouldn’t apply to entities that are focused on entertainment, sports, or travel, but if there’s news in the mix, the company will block advertising access.

Affected outlets have 30 days before they’re removed from Twitter and the company is halting all existing campaigns.

State media has long been a source of disinformation and was cited as part of the Russian campaign to influence the 2016 election. Indeed, Twitter has booted state-financed news organizations before. In October 2017, the company banned Russia Today and Sputnik from advertising on its platform (although a representative from RT claimed that Twitter encouraged it to advertise ahead of the election).

 

Twitter says accounts linked to China tried to ‘sow political discord’ in Hong Kong

Twitter says a significant state-backed information operation involving hundreds of accounts linked to China were part of an effort to deliberately “sow political discord” in Hong Kong after weeks of protests in the region.

In a blog post, the social networking site said the 936 accounts it found tried to undermine “the legitimacy and political positions of the protest movement on the ground.”

More than a million protesters took to the streets this weekend to demonstrate peacefully against the Chinese government, which took over rule from the British government in 1997. Protests erupted months ago following a bid by Hong Kong leader Carrie Lam to push through a highly controversial bill that would allow criminal suspects to be extradited to mainland China for trial. The bill was suspended, effectively killing it from reaching the law books, but protests have continued, pushing back at claims that China is trying to meddle in Hong Kong’s affairs.

Although Twitter is banned in China, the social media giant says the latest onslaught of fake accounts is likely “a coordinated state-backed operation.

“Specifically, we identified large clusters of accounts behaving in a coordinated manner to amplify messages related to the Hong Kong protests,” the statement said.

china tweets

Two of the tweets supplied by Twitter.

Twitter said many of the accounts are using virtual private networks — or VPNs — which can be used to tunnel through China’s vast domestic censorship system, known as the Great Firewall. The company added that the accounts its sharing represent the “most active” portions of a wider spam campaign of about 200,000 accounts.

“Covert, manipulative behaviors have no place on our service — they violate the fundamental principles on which our company is built,” said Twitter.

News of the fake accounts come days after Twitter user @Pinboard warned that China was using Twitter to send and promote tweets aimed at discrediting the protest movement.

Facebook said in its own post it also took down five Facebook accounts, seven pages and three groups on its site “based on a tip shared by Twitter.” The accounts frequently posted about local political news and issues including topics like the ongoing protests in Hong Kong, said Nathaniel Gleicher, Facebook’s head of cybersecurity policy.

“Although the people behind this activity attempted to conceal their identities, our investigation found links to individuals associated with the Chinese government,” said Gleicher.

Some of the posts, Facebook said, referred Hong Kong residents are “cockroaches.”

Twitter said it’s adding the complete set the accounts’ tweets to its archive of information operations.

Twitter is blocked in China, but its state news agency is buying promoted tweets to portray Hong Kong protestors as violent

Twitter is being criticized for running promoted tweets by China’s largest state news agency that paint pro-democracy demonstrations in Hong Kong as violent, even though the rallies, including one that drew an estimated 1.7 million people this weekend, have been described as mostly peaceful by international media.

Promoted tweets from China Xinhua News, the official mouthpiece of the Chinese Communist Party, were spotted and shared by the Twitter account of Pinboard, the bookmarking service founded by Maciej Ceglowski, and other users.

The demonstrations began in March to protest a now-suspended extradition bill, but have grown to encompass other demands including the release of imprisoned protestors, inquiries into police conduct, the resignation of current Chief Executive of Hong Kong Carrie Lam and a more democratic process for electing Legislative Council members and the Chief Executive.

While China Xinhua News has repeatedly described demonstrators as violent, international observers have criticized the Hong Kong police’s use of excessive force against peaceful protestors, including incidents documented in footage verified by Amnesty International.

The irony of China Xinhua News’ tweets is that they let the Chinese Communist Party disseminate its version of events to a worldwide audience even though Twitter is officially banned in China (along with other U.S. social media platforms like Facebook, Instagram, Google, YouTube, Tumblr and Snapchat).

The Chinese government has also recently begun to keep a closer eye on citizens who use VPNs to access blocked services. For example, the Washington Post reported in January that even though there are only an estimated 10 million Chinese citizens on Twitter, its role as a platform for critics of the Chinese government means users are under increased scrutiny.

In June, Twitter was accused of censoring critics of the Chinese government after numerous Chinese-language user accounts were removed days before the thirtieth anniversary of the Tiananmen Square massacre. The company said that the accounts had been removed by error and, despite speculation, “were not mass reported by the Chinese authorities.”

It is unknown how much China Xinhua News has spent on promoted tweets or where they are being targeted. Twitter has been contacted for comment.

Week in Review: Snapchat beats a dead horse

Hey. This is Week-in-Review, where I give a heavy amount of analysis and/or rambling thoughts on one story while scouring the rest of the hundreds of stories that emerged on TechCrunch this week to surface my favorites for your reading pleasure.

Last week, I talked about how Netflix might have some rough times ahead as Disney barrels towards it.


3d video spectacles 3

The big story

There is plenty to be said about the potential of smart glasses. I write about them at length for TechCrunch and I’ve talked to a lot of founders doing cool stuff. That being said, I don’t have any idea what Snap is doing with the introduction of a third-generation of its Spectacles video sunglasses.

The first-gen were a marketing smash hit, their sales proved to be a major failure for the company which bet big and seemingly walked away with a landfill’s worth of the glasses.

Snap’s latest version of Spectacles were announced in Vogue this week, they are much more expensive at $380 and their main feature is that they have two cameras which capture images in light depth which can lead to these cute little 3D boomerangs. One one hand, it’s nice to see the company showing perseverance with a tough market, on the other it’s kind of funny to see them push the same rock up the hill again.

Snap is having an awesome 2019 after a laughably bad 2018, the stock has recovered from record lows and is trading in its IPO price wheelhouse. It seems like they’re ripe for something new and exciting, not beautiful yet iterative.

The $150 Spectacles 2 are still for sale, though they seem quite a bit dated-looking at this point. Spectacles 3 seem to be geared entirely towards women, and I’m sure they made that call after seeing the active users of previous generations, but given the write-down they took on the first-generation, something tells me that Snap’s continued experimentation here is borne out of some stubbornness form Spiegel and the higher-ups who want the Snap brand to live in a high fashion world and want to be at the forefront of an AR industry that seems to have already moved onto different things.

Send me feedback
on Twitter @lucasmtny or email
[email protected]

On to the rest of the week’s news.

tumblr phone sold

Trends of the week

Here are a few big news items from big companies, with green links to all the sweet, sweet added context:

  • WordPress buys Tumblr for chump change
    Tumblr, a game-changing blogging network that shifted online habits and exited for $1.1 billion just changed hands after Verizon (which owns TechCrunch) unloaded the property for a reported $3 million. Read more about this nightmarish deal here.
  • Trump gives American hardware a holiday season pass on tariffs 
    The ongoing trade war with China generally seems to be rough news for American companies deeply intertwined with the manufacturing centers there, but Trump is giving U.S. companies a Christmas reprieve from the tariffs, allowing certain types of hardware to be exempt from the recent rate increases through December. Read more here.
  • Facebook loses one last acquisition co-founder
    This week, the final remnant of Facebook’s major acquisitions left the company. Oculus co-founder Nate Mitchell announced he was leaving. Now, Instagram, WhatsApp and Oculus are all helmed by Facebook leadership and not a single co-founder from the three companies remains onboard. Read more here.

GAFA Gaffes

How did the top tech companies screw up this week? This clearly needs its own section, in order of badness:

  1. Facebook’s turn in audio transcription debacle:
    [Facebook transcribed users’ audio messages without permission]
  2. Google’s hate speech detection algorithms get critiqued:
    [Racial bias observed in hate speech detection algorithm from Google]
  3. Amazon has a little email mishap:
    [Amazon customers say they received emails for other people’s orders]

Adam Neumann (WeWork) at TechCrunch Disrupt NY 2017

Extra Crunch

Our premium subscription service had another week of interesting deep dives. My colleague Danny Crichton wrote about the “tech” conundrum that is WeWork and the questions that are still unanswered after the company filed documents this week to go public.

WeWork’s S-1 misses these three key points

…How is margin changing at its older locations? How is margin changing as it opens up in places like India, with very different costs and revenues? How do those margins change over time as a property matures? WeWork spills serious amounts of ink saying that these numbers do get better … without seemingly being willing to actually offer up the numbers themselves…

Here are some of our other top reads this week for premium subscribers. This week, we published a major deep dive into the world’s next music unicorn and we dug deep into marketplace startups.

Sign up for more newsletters in your inbox (including this one) here.

China’s Transsion and Kenya’s Wapi Capital partner on Africa fund

Chinese mobile-phone and device maker Transsion is teaming up with Kenya’s Wapi Capital to source and fund early-stage African fintech startups.

Headquartered in Shenzhen, Transsion is a top-seller of smartphones in Africa that recently confirmed its imminent IPO.

Wapi Capital is the venture fund of Kenyan fintech startup Wapi Pay—a Nairobi based company that facilitates digital payments between African and Asia via mobile money or bank accounts.

Investments for the new partnership will come from Transsion’s Future Hub, an incubator and seed fund for African startups opened by Transsion in 2019.

Starting September 2019, Transsion will work with Wapi Capital to select early-stage African fintech companies for equity-based investments of up to $100,000, Transsion Future Hub Senior Investor Laura Li told TechCrunch via email.

Wapi Capital won’t contribute funds to Transsion’s Africa investments, but will help determine the viability and scale of the startups, including due diligence and deal flow, according to Wapi Pay co-founder Eddie Ndichu.

Wapi Pay and Transsion Future Hub will consider ventures from all 54 African countries and interested startups can reach out directly to either organization, Ndichu and Li confirmed.

The Wapi Capital fintech partnership is not Transsion’s sole VC focus in Africa. Though an exact fund size hasn’t been disclosed, the Transsion Future Hub will also make startup investments on the continent in adtech, fintech, e-commerce, logistics, and media and entertainment, according to Li.

Transsion Future Hub’s existing portfolio includes Africa focused browser company Phoenix, content aggregator Scoop, and music service Boomplay.

Wapi Capital adds to the list of African located and run venture funds—which have been growing in recent years—according to a 2018 study by TechCrunch and Crunchbase. Wapi Capital will also start making its own investments and is looking to raise $1 million this year and $10 million over the next three years, according to Ndichu, who co-founded the fund and Wapi Pay with his twin brother Paul.

Transsion’s commitment to African startup investments comes as the company is on the verge of listing on China’s new Nasdaq-style STAR Market tech exchange. Transsion confirmed to TechCrunch this month the IPO is in process and that it could raise up to 3 billion yuan (or $426 million).

Transsion sold 124 million phones globally in 2018, per company data. In Africa, Transsion holds 54% of the feature phone market — through its brands Tecno, Infinix and Itel — and in smartphone sales is second to Samsung and before Huawei, according to International Data Corporation stats.

Transsion has R&D centers in Nigeria and Kenya and its sales network in Africa includes retail shops in Nigeria, Kenya, Tanzania, Ethiopia and Egypt. The company also has a manufacturing facility in Ethiopia.

Transsion’s move into venture investing tracks greater influence from China in African tech.

China’s engagement with African startups has been light compared to China’s deal-making on infrastructure and commodities.

Transsion’s Wapi Pay partnership is the second recent event — after Chinese owned Opera’s big venture spending in Nigeria — to reflect greater Chinese influence and investment in the continent’s digital scene.

 

 

 

 

 

 

 

UPS takes minority stake in self-driving truck startup TuSimple

UPS said Thursday it has taken a minority stake in self-driving truck startup, TuSimple, just months after the two companies began testing the use of autonomous trucks in Arizona.

The size of minority investment, which was made by the company’s venture arm UPS Ventures, was not disclosed. The investment and the testing comes as UPS looks for new ways to remain competitive, cut costs and boost its bottom line.

TuSimple, which launched in 2015 and has operations in San Diego and Tucson, Arizona, believes it can deliver. The startup says it can cut average purchased transportation costs by 30%.

TuSimple, which is backed by Nvidia, ZP Capital and Sina Corp., is working on a “full-stack solution,” a wonky industry term that means developing and bringing together all of the technological pieces required for autonomous driving. TuSimple is developing a Level 4 system, a designation by the SAE that means the vehicle takes over all of the driving in certain conditions.

An important piece of TuSimple’s approach is its camera-centric perception solution. The system has a vision range of 1,000 meters, the company says.

The days of when highways will be filled with autonomous trucks are years away. But UPS believes it’s worth jumping in at an early stage to take advantage of some of the automated driving such as advanced braking technology that TuSimple can offer today.

“UPS is committed to developing and deploying technologies that enable us to operate our global logistics network more efficiently,” Scott Price, chief strategy officer at UPS said in a statement. “While fully autonomous, driverless vehicles still have development and regulatory work ahead, we are excited by the advances in braking and other technologies that companies like TuSimple are mastering. All of these technologies offer significant safety and other benefits that will be realized long before the full vision of autonomous vehicles is brought to fruition — and UPS will be there, as a leader implementing these new technologies in our fleet.”

UPS initially tapped TuSimple to help it better understand how Level 4 autonomous trucking might function within its network. That relationship expanded in May when the companies began using self-driving tractor trailers to carry freight on a freight route between Tucson and Phoenix to test if service and efficiency in the UPS network can be improved. This testing is ongoing. All of TuSimple’s self-driving trucks operating in the U.S. have a safety driver and an engineer in the cab.

TuSimple and UPS monitor all aspects of these trips, including safety data, transport time and the distance and time the trucks travel autonomously, the companies said Thursday.

UPS isn’t the only company that TuSimple is hauling freight for as part of its testing. TuSimple has said its hauling loads for for several customers in Arizona.  The startup has a post-money valuation of $1.095 billion (aka unicorn status).

Another day, another reversal in stock fortunes as recession fears grow

U.S. stock markets plummeted today as recession fears continue to grow.

Yesterday’s good news about a reprieve on tariffs for U.S. consumer imports was undone by increasing concerns over economic indicators pointing to a potential global recession coming within the next year.

The Dow Jones Industrial Average dropped more than 800 points on Wednesday — its largest decline of the year — while the S&P 500 fell by 85 points and the tech-heavy Nasdaq dropped 240 points.

The downturn in the markets came a day after the Dow closed up 373 points after the U.S. Trade Representative announced a delay in many of the import taxes imposed by the Trump administration planned to impose on Chinese goods.

In the U.S. it was concerns over the news that the yield on 10-year U.S. Treasury notes had dipped below the yield of two-year notes. It’s an indicator that investors think the short term prospects for a country’s economic outlook are better than the long-term outlook for economic health.

China’s industrial and retail sectors both slowed significantly in July. Industrial production including manufacturing, mining and utilities grew by 4.8 percent in July (a steep decline from 6.3% growth in June).  Meanwhile retail sales in the country slowed to 7.6 percent, down from 9.8 percent in June.

Germany also posted declines over the summer months indicating that its economy had contracted by 0.1% in the three months to June.

Globally, the protracted trade war between the U.S. and China are weighing on economies — as are concerns about what a hard Brexit would mean for the economies in the European Union .

The stocks of Alphabet, Amazon, Apple, Facebook, Microsoft, Netflix, and Salesforce, were all off by somewhere between 2.5% and 4.5% in today’s trading.

Tech companies get a reprieve thanks to a reversal from the President on tariffs

President Donald Trump and the Office of the U.S. Trade Representative have issued technology companies some temporary tariff relief.

Citing an unwillingness to hit consumers with higher prices on things like computers, mobile phones, laptops, video game consoles, computer monitors, clothes and shoes before the holidays, the President and his trade reps are holding off on slapping additional tariffs on those products coming from China.

The President could also have been motivated by growing concerns that the ongoing trade war could trigger a global recession and hurt his chances for re-election in 2020.

Whatever the reason, the news sparked a stock market rally on Tuesday with investors ignoring the rising prices that 10% tariffs on imports that don’t include consumer goods would cause.

The Dow Jones Industrial Average and S&P 500 indices were both up 1.4% on the day, while the Nasdaq rose 1.9% — thanks in large part to a surge of Apple stock. The company’s stock rose $8.49 or over 4.2% to close at $208.97.

At the beginning of the month, President Trump said he would slap a 10% tariff on $300 billion worth of Chinese goods, which sent markets tumbling. An ensuing slight devaluation of the Chinese currency further pushed markets into a tailspin before they began to recover.

The news on Tuesday all but erased those earlier losses.

These market whipsaws between fear and trembling and irrational exuberance won’t end until the U.S. and China come to some sort of agreement in the trade war.

Earlier in the day, Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer spoke with their Chinese counterparts Vice Premier Liu He and Commerce Minister Zhong Shan about the ongoing trade battle. The two Chinese officials issued a protest against the duties that were set to take effect in September. The two trade representatives have a called scheduled for another two weeks.

Phones, laptops and game consoles get tariff reprieve until December

Electronics manufacturers are no doubt breathing a collective sigh of relief this morning at the news that the United States Trade Representative (USTR) has delayed tariffs on a number of categories.

A long list of exports, including livestock, foodstuff and clothing will have the additional 10 percent tariff imposed on September 1. Others, including “cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing” have simply been delayed until December 15.

It seems the fees are an inevitability, but many might be able to scrape through just in time for the holidays.

“Certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent,” the USTR writes. “Further, as part of USTR’s public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles.”

That list includes a wide range of electronics, from “telephones for cellular networks or for other wireless networks” to “telephone answering machines” and “cassette players (non‐recording) designed exclusively for motor‐vehicle installation.”

Stock prices for companies like Apple have already seen a positive bump following the news. The White House is expected to have additional trade talks with China next month in Washington, though Trump has since cast some doubt.

Asked by reporters whether he might cancel talks, the President answered, “Maybe. We’ll see what happens.”