Apple’s China stance makes for strange political alliances, as AOC and Ted Cruz slam the company

In a rare instance of bipartisanship overcoming the rancorous discord that’s been the hallmark of the U.S. Congress, senators and sepresentatives issued a scathing rebuke to Apple for its decision to take down an app at the request of the Chinese government.

Signed by Senators Ron Wyden, Tom Cotton, Marco Rubio, Ted Cruz, and Congressional Representatives Alexandria Ocasio-Cortez, Mike Gallagher and Tom Malinowski, the letter was written to “express… strong concern about Apple’s censorship of apps, including a prominent app used by protestors in Hong Kong, at the request of the Chinese government.”

In 2019, it seems the only things that can unite America’s clashing political factions are the decisions made by companies in one of its most powerful industries.

At the heart of the dispute is Apple’s decision to take down an app called HKMaps that was being used by citizens of the island territory to track police activity.

For several months protestors have been clashing with police in the tiny territory over what they see as the undue influence being exerted by China’s government in Beijing over the governance of Hong Kong. Citizens of the former British protectorate have enjoyed special privileges and rights not afforded to mainland Chinese citizens since the United Kingdom returned sovereignty over the region to China on July 1, 1997.

“Apple’s decision last week to accommodate the Chinese government by taking down HKMaps is deeply concerning,” the authors of the letter wrote. “We urge you in the strongest terms to reverse course, to demonstrate that Apple puts values above market access, and to stand with the brave men and women fighting for basic rights and dignity in Hong Kong.”

Apple has long positioned itself as a defender of human rights (including privacy and free speech)… in the United States. Abroad, the company’s record is not quite as spotless, especially when it comes to pressure from China, which is one of the company’s largest markets outside of the U.S.

Back in 2017, Apple capitulated to a request from the Chinese government that it remove all virtual private networking apps from the App Store. Those applications allowed Chinese users to circumvent the “Great Firewall” of China, which limits access to information to only that which is approved by the Chinese government and its censors.

Over 1,100 applications have been taken down by Apple at the request of the Chinese government, according to the organization GreatFire (whose data was cited in the Congressional letter). They include VPNs, and applications made for oppressed communities inside China’s borders (like Uighurs and Tibetans).

Apple isn’t the only company that’s come under fire from the Chinese government as part of their overall response to the unrest in Hong Kong. The National Basketball Association and the gaming company Blizzard have had their own run-ins resulting in self-censorship as a result of various public positions from employees or individuals affiliated with the sports franchises or gaming communities these companies represent.

However, Apple is the largest of these companies, and therefore the biggest target. The company’s stance indicates a willingness to accede to pressure in markets that it considers strategically important no matter how it positions itself at home.

The question is what will happen should regulators in the U.S. stop writing letters and start making legislative demands of their own.

Arianna Huffington’s Thrive Global is buying a startup that uses neuroscience to boost app usage

When Arianna Huffington stepped down from her role at the Huffington Post to start Thrive Global, she said the goal of her new business was to help a generation “avoid the burnout that all too often comes with success today.”

In practice, that has meant creating a business that sells mindfulness and general health and wellness tips and tricks to a cohort of corporations that believe increased mental and physical health can lead to greater on-the-job productivity.

Now, Thrive Global is adding a tech tool to its arsenal of cognitive behavioral therapies with the acquisition of the Los Angeles-based startup, Boundless Mind.

Originally called Dopamine Labs, the company was founded in 2015 to bring some of the same technologies that social media companies like Facebook used to boost engagement to a broader range of applications.

Terms of the deal were not disclosed, but the stock and cash acquisition will see all nine members of the current Boundless team join Thrive Global. Previous Boundless investors including Revolution’s Rise of the Rest Seed Fund and Esther Dyson will join Thrive Global’s cap table.

“We were very impressed by their neuroscience-based artificial intelligence that they used to power changes in behavior,” says Huffington. “We can use technology to hook people to unhook them from unhealthy behaviors.”

Boundless “epitomized the use of technology to encourage healthy habits,” Huffington says.

From Huffington’s perspective, most health problems in the U.S. are actually rooted in behavioral problems rather than biological ones. “Until 100 years ago, people died from infectious diseases… Now most people are dying from behaviors,” says Huffington, quoting Boundless Mind co-founder Dalton Combs.

Roughly 70% of healthcare spending in the U.S. goes to behavioral change and lifestyle-related conditions, says Huffington. Thrive Global tackles the issue through a combination of pop psychology and celebrity advice, while Boundless uses artificial intelligence and machine learning nudges.

The Boundless technology works by monitoring what activity is happening on the phone’s tap screen (similar to Apple’s screen time monitoring). What Boundless does on the back end is analyze that data and create prompts to encourage behavior — in much the same way that other companies’ apps have notifications to prompt re-engagement.

Going forward, the Boundless team is hoping to use more of the information coming from a phone’s increasing array of sensors to better refine its notifications. Results from the adoption of the company’s software vary, but Boundless points to data from apps spanning health, fitness, productivity, finance and e-commerce – including a 60% increase in walking, 30% increase in productivity and 21% increase in engagement around diet and exercise. 

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Arianna Huffington and the co-founders and staffers of Boundless Mind

Thrive Global has three pillars to its business: live workshops, a digital health program called Thriving Academy, and a newer mental health focused package called Thriving Mind.

The company has already signed corporate partners like Accenture, JPMorgan, Hilton, Bank of America and Procter & Gamble, and Huffington says customers have already seen results in lower rates of employee attrition and better employee satisfaction results on surveys. 

These kinds of correlations don’t mean causation and the company is still working to better quantify the benefits of adopting its workplace wellness protocols. One of the places where Thrive Global is putting its brain training regime to the test is in call centers in Central America, 

“You can imagine how the Boundless intervention will allow us to hyper-personalize,” says Danny Shea, Thrive Global’s head of global expansion. In call centers that could mean prompting an employee to take a break after a long or stressful call.

“We’re thrilled to see the continued growth and market expansion at Thrive Global” said Somesh Dash, General Partner at IVP and member of Thrive Global’s Board of Directors. “The combination of Thrive’s mission and Boundless Mind’s technology is truly remarkable and the integration will help Thrive scale a game-changing and differentiated behavior change technology platform to enterprises around the world.”

To date Thrive Global has raised over $65 million from investors including JAZZ Venture Partners, IVP, Marc Benioff, Ray Dalio, and Kevin Durant.

 

Source: Nike has picked up Russell Wilson’s Tally/TraceMe in a rare acquisition

Nike has long been synonymous with premium sneakers and other sports gear, but now it seems that the company could be extending its brand into another area — digital media — thanks to the rumored acquisition of a Seattle-based startup.

TechCrunch has learned from a source that the multibillion-dollar sports giant has acquired TraceMe, which originally built an app to let fans engage with sports stars and other celebrities before later pivoting into a service called Tally, a platform aimed at sports teams, broadcasters and venues to help fans engage around sporting events.

TraceMe was originally founded by Russell Wilson, the champion quarterback of the Seattle Seahawks, who was the executive chairman of the startup. The company had raised at least $9 million from investors that included the Seattle-based Madrona Venture Group and Bezos Expeditions (Amazon CEO Jeff Bezos’ fund), as well as YouTube co-founder Chad Hurley and others, and it was last valued, in 2017, at $60 million.

Our source said the deal closed in recent weeks and that “it was a good outcome” for the company and investors. It involved both IP — the main interest, the source said, was in TraceMe’s tech rather than Tally’s — and the team.

Indeed, at least eight of them, including TraceMe’s CEO Jason LeeKeenan, an ex-Hulu executive, are now listing Nike as their place of employment. LeeKeenan describes his new role as the head of Nike Seattle. Others on the team now have taken roles that include software engineers, head of product and product designers.

No one at TraceMe and Nike that we contacted has responded to our requests for comment, but just a little while ago GeekWire (which likely had the same tip we did) published a post noting that it had a source that confirmed the deal.

The athletic footwear giant Nike is no stranger to the world of technology: it has been a longtime collaborator with the likes of Apple to develop apps for its devices and has been an early mover on the concept of bringing and integrating cutting-edge (yes, possibly gimmicky) tech into its footwear and other gear. And that’s before you consider Nike as an e-commerce force.

But while the dalliance between sports, tech and fashion is well established, this deal opens up a different frontier for the company. It’s very rare for Nike to make an acquisition, but it makes sense that if it were going to do some M&A, it would be in the area of digital media and picking up engineers to execute on a wider vision in that area.

The company is best known, of course, for its shoes and related sporty clothes, which it has for a long time created in co-branding with the biggest sports stars and has more recently started to extend to a wider circle of celebrities and hot brands in a spirit of sporty street style. These have included the likes of so-cool Supreme, Travis Scott and seemingly tentative forays into music culture.

Nike overshadows all other sports shoe brands in size, with its current market cap at nearly $117 billion, more than twice that of its closest competitor, Adidas . But Adidas has been stealing a march when it comes to partnerships with a wide network of celebrities (even if Drake prefers checks over stripes).

While it isn’t clear yet how and if Nike will be using the startup’s existing services, you could see how a deal like this could help Nike start to think about how it might leverage the collaborations and endorsements it already has in place into experiences beyond shoes, advertising and athletic performance. In this age of Instagram and influencers playing a massive role in shifting consumer sentiment (and dollars), this could give Nike a shot at building its own media platform, independent of these, on its own terms.

This is a bigger trend that we’re seeing across a lot of digital media. Consider how companies like Spotify have extended beyond simple music streaming, investing in building tools to help artists on its platform with marketing and expanding their brands: selling shoes means selling a concept, and that concept needs to have a foothold in a digital experience. 

Africa e-tailer Jumia’s shares fall 4% day after IPO lockup expiration

Shares of Africa focused e-commerce company Jumia dropped 4% the day after the lockup period expired for its April IPO on the New York Stock Exchange.

The lockup provision prevents major shareholders — namely those who purchased equity pre-public listing — from selling their shares for a specified number of days following the IPO.

Jumia’s stock price began Thursday at $7.54, fell to an all-time low of $6.98 by 2pm, and then closed 35 cents down from opening, at $7.19. Jumia’s trading volume on Thursday moved up 19 percent over the daily average since the company went public.

Jumia Share Price October 10Sites that track SEC Form 4 trades, or sales by insiders, aren’t showing anything (at the moment) for Jumia.

What does this all mean? It appears there wasn’t an immediate big stock sell by Jumia’s early and large shareholders post lockup expiry. There was some speculation these investors could drop the company after several rough and tumble months for Jumia post IPO.

Founded in Lagos in 2012, Jumia currently operates multiple online verticals in 14 African countries — from B2C consumer retail to travel bookings.

For Jumia, going public has been an up and down affair. After becoming the first tech startup operating in Africa to list on a major exchange, the company saw its share price rise 70% after listing on the NYSE in April at $14.50.

Then in May, Jumia’s stock tumbled when it came under assault from a short-seller, Andrew Left, who accused the company of fraud in its SEC filings.

Jumia’s latest earnings reporting — delivered in August — had some downside beyond losses. The  company did post second-quarter revenue growth of 58% (≈$43 million) and increased its customer base to 4.8 million from 3.2 million over the same period a year ago.

But Jumia also posted greater losses for the period, 67.8 million euros, compared to 42.3 million euros in 2018.

On top of that, Jumia opened up about a sales related fraud (that it has reported in its original SEC IPO filing) committed by some of its employees and members of its JForce program “to benefit from differences between commissions charged to sellers and higher commissions paid to JForce agents,” according to a Jumia statement.

“The transactions in question generated approximately 1% of our GMV in each of 2018 and the first quarter of 2019 and had virtually no impact on our 2018 or 2019 financial statements,” the statement continued.

Collectively, this has added up to influence Jumia’s share-price falling some 50% from its opening price of $14.50 and 80% from its high of $46.99 on May 1.

As a public company now, the most direct way for Jumia to revive its share-price would be reducing its losses while maintaining or boosting revenues. Of course, that’s the common prescription for many a tech company.

Jumia believes expanding and generating more revenue through its JumiaPay product (with better margins than B2C e-commerce transactions) could help close the revenue vs. loss gap.

Investors and the market at large will be able to track Jumia’s progress during its next (Q3) earnings call, scheduled for November 12, Jumia confirmed to TechCrunch.

 

 

 

 

 

 

 

Toys R Us relaunches its website where online sales are powered by Target

Toys R Us is back online, thanks to a new deal with Target. Tru Kids, the parent company that acquired the defunct toy chain following its bankruptcy, has announced the relaunch of the ToysRUs.com website as it begins the process of opening its retail stores across the U.S. As a part of its comeback strategy, the Toys R Us website’s product pages will redirect to Target.com when consumers click the “buy” button to make an online purchase.

The retailers didn’t discuss the terms of the deal, but a revenue-sharing agreement is clearly involved in a scenario like this, given the mutual benefits. Toys R Us would be able to quickly establish cash flow from the still top-ranked, well-established domain name toysrus.com, while Target could get an influx of new sales from shoppers who visited ToysRUs.com, unaware of the toy chain’s bankruptcy and relaunch.

In addition to redirecting online shoppers to Target, the new website also features articles and videos about the latest toy trends and hot brands, plus in-depth product reviews, hot toy lists, and other brand experiences. These will be available on the ToysRUs website itself. Only when a customer is ready to make a purchase will they be sent over to Target for checkout.

The site’s “Buy” button is also clearly labeled so there’s no confusion at checkout. In Target’s red-and-white brand colors, it reads “buy now at [target].com” where the word “Target” is replaced with the Target logo icon.

Target shoppers sent to ToysRUs get the same benefits they would if shopping directly — meaning, they can place orders for delivery, curbside or store order pickup, and can earn loyalty points with Target Circle, or get 5% by paying with a Target REDcard.

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The new partnership between the retailers isn’t only focused on redirecting consumers’ traditional e-commerce product sales, however.

Target says it will also fulfill online sales when Toys R Us opens up its first experiential retail stores later this fall in Houston, Texas and Paramus, New Jersey.

Tru Kids had previously announced a deal with tech startup b8ta to create a modernized toy store experience featuring things like STEAM workshops, a treehouse for kids to play in, theaters for movies and games, and a way for brands to showcase their products in a more interactive environment.

At these stores, guests who want to purchase items that aren’t available in the store itself will be able to place their order with a store associate that gets fulfilled through Target.com.

“Target’s leadership in toys, digital and fulfillment are an unbeatable platform for ToysRUs to reconnect with their fans while we introduce them to the ease and convenience of shopping at Target,” said Nikhil Nayar, senior vice president of merchandising at Target, in a statement. “By applying our capabilities in a new way with ToysRUs, we can serve even more toy shoppers, drive new growth, and build on our toy leadership,” Nayar added.

The new deal with Toys R Us isn’t the only significant toy-related partnership Target has made in recent weeks. At the end of August, the retailer announced an agreement with Disney that sees it opening mini Disney stores within its retail stores, where shoppers can buy toys, apparel, collectibles, home items, and more. Twenty-five Disney “shop-in-shops” are open now and dozens more are planned for 2020.

“Our U.S. strategy is to bring back the ToysRUs brand in a modern way through a strong experiential and content-rich omnichannel concept,” Tru Kids CEO Richard Barry, a former Toys R Us exec, in a statement about the Target partnership.

“The foundation of that strategy requires the help of a retail industry leader and Target is the ideal retailer to support a new ToysRUs shopping experience, which is designed to provide families with endless ways to discover, play and enjoy toys. Target will help us deliver on that experience with its toy assortment, digital strength and ability to deliver orders to shoppers in a matter of hours,” he said.

 

PayPal is the first company to drop out of the Facebook-led Libra Association

PayPal has become the first company to walk away officially from Facebook’s Libra, a cryptocurrency and related association that it announced earlier this year with a chain of nearly 30 big names behind the effort to help build and operate services around it.

PayPal has made the decision to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations,” PayPal said in an emailed statement to TechCrunch. “We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.”

A high-profile, would-be partner like PayPal backing out from the effort before it’s even gotten off the ground is a big blow to Facebook and the Libra Association, which has been struggling under the weight of speculation that some of the big organizations, initially interested in collaborating on Libra, are now on the fence about the project, put off by wave of negative reaction from regulators and others that might lead to problems launching and ultimately growing the service.

In response, the Libra Association has come out with an understated but scathing statement of its own in response to PayPal’s announcement. (Facebook had referred our questions to the group and did not comment directly.)

“It requires a certain boldness and fortitude to take on an endeavor as ambitious as Libra – a generational opportunity to get things right and improve financial inclusion,” said a spokesperson. “The journey will be long and challenging. The type of change that will reconfigure the financial system to be tilted towards people, not the institutions serving them, will be hard. Commitment to that mission is more important to us than anything else. We’re better off knowing about this lack of commitment now, rather than later.”

PayPal is the first firm to walk away from the Libra Association, but it comes at a difficult time for the project, even before it has launched.

Both regulators and other government bodies on both sides of the Atlantic — already scrutinizing Facebook and cryptocurrency as separate issues — have honed in on the project with concerns of how a Facebook-backed and promoted currency could lead to anti-competitive behavior.

Facebook and other members of the Libra Association are due to meet this month in Geneva to appoint its first board of directors, but ahead of that it’s been reported that the government scrutiny has started to spook some who have only nominally backed the project at this point.

The WSJ reported earlier this week that Mastercard, Visa and other companies may join PayPal in backing away from the Libra project. Mastercard has not responded to a request for comment, but Visa’s CEO Al Kelly has made public statements that underscore Visa’s provisional support for Libra — a position we understand remains unchanged as of today, provided regulatory and other issues do not get in the way.

“It’s important to understand the facts here and not any of us get out ahead of ourselves,” Kelly said in the company’s most recent earnings call. “So we have signed a nonbinding letter of intent to join Libra. We’re one of – I think it’s 27 companies that have expressed that interest. So no one has yet officially joined. We’re in discussions and our ultimate decision to join will be determined by a number of factors, including obviously the ability of the association to satisfy all the requisite regulatory requirements… It’s really, really early days and there’s just a tremendous amount to be finalized. But obviously, given that we’ve expressed interest, we actually believe we could be additive and helpful in the association.”

As we reported when Libra first launched, Facebook doesn’t control the Libra organization or currency, but gets a single vote alongside the remaining partners. Those that have endorsed the association currently include, alongside Mastercard and Visa, Stripe, Uber and the VC firm Andreessen Horowitz. Each Libra Association partner invests at least $10 million in the project and the association will promote the open-sourced Libra Blockchain.

The partners would not only pitch the Libra Blockchain and developer platform with its own Move programming language, but sign up businesses to accept Libra for payment and even give customers discounts or rewards.

Facebook has a lot riding on the success of the Association beyond just its Libra stake. The company has also launched a subsidiary company called Calibra that handles crypto transactions on its platform that would use the Libra blockchain. (It’s been quietly developing this alongside the Libra effort, including making acquisitions to expand the functionality around how it will work.)

Governments around the world have been up in arms because they are concerned that, with Libra, Facebook and its partners will try to make an end run around existing financial services and their corresponding regulations.

Perhaps in response to these pressures and how they might play out, earlier this month, Facebook chief executive Mark Zuckerberg indicated that the company would be willing to delay the launch of the cryptocurrency — it is currently planned for 2020 — in an interview with the Japanese Nikkei news service. “Move fast and break things” won’t be getting applied here.

Zola, the $650M wedding portal, taps the travel market with an expansion into honeymoons

The wedding industry is estimated to be worth some $100 billion in the U.S. alone, and now one of the fastest-growing companies in that space — the wedding planning site Zola — is making a move to augment its position with a sidestep into travel. Today at Disrupt (our conference in San Francisco), the company is announcing Honeymoons, which will let couples plan, book and raise money for their post-nuptial travels at the same time that they plan the main event.

The beta invite is open for those interested from today. To start off, couples will be able to plan itineraries and book accommodations, with flights getting added in after the launch as part of a bigger effort to own the end-to-end marriage experience.

“Over time, we want to book all your travel needs, both before and after the wedding,” said Shan-Lyn Ma, the company’s CEO and founder.

Zola’s business today is based around pre-wedding organization: users can set up free websites, design and print (paid) wedding invitations, and create Zola-based gift registries for family and friends to buy goods for the couple through the site — a business that has been successful enough to net the company more than $140 million in funding and a $650 million valuation.

But the average time spent planning weddings is 13-18 months, and so Honeymoons will be one way for Zola to extend that relationship not just in terms of money spent — honeymoons is estimated to be a $12 billion industry in the U.S. — but time spent using Zola, which in turn can help build a tighter relationship for whatever moves the company might make in the future. (One very obvious next step: parenting-related content and products.)

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The Honeymoons feature also brings something else to Zola: a little breathing space. The online market for wedding planning is old and massive — it’s one of the first kinds of e-commerce sites that emerged with the rise of the world wide web itself, and as such there are a lot of large and incumbent competitors. However, “honeymoons” has been generally a more fragmented space, where people plan their own trips themselves via sites that cater to other kinds of travel like vacations, making “online honeymoon planning” far less of an industry per se, and making Zola’s move into the area relatively less pressured.

Ma said that the decision to launch the business came from couples requesting the feature, and it’s taking the rollout relatively slowly. The service will start with a limited number of markets that Zola chose based on them already being popular honeymoon destinations. The plan will be to expand the list to many more locations over time.

“We know where all the key destinations are based on demand from couples,” she added.

Within that list, Zola has negotiated special packages for accommodation and flights. It will also come with a personalized twist: couples input their preferences and are offered honeymoon packages designed to fit their tastes.

“Through our technology and our team of travel experts, couples can tell us, this is what they would love to do for their honeymoon,” explained Ma. “This is their general travel style, budget and dates. Then we will send back an itinerary…[and they can] book with us from there. At launch next month, it will be focused first and foremost on accommodation and experiences. Over time, we would aim to help you with everything you need to do on your honeymoon,” she said.

Ma said thousands of customers have already signed up for the waitlist for the new honeymoons product, which will officially launch next month.

Zola already has a strong connection to a wider marketplace that taps into how millennials and younger consumers, in general, like to shop today, offering a Houzz-style approach of letting users create “look books” for their aesthetics, and giving them flexibility to either register for specific items, or to cash out in gift cards that can be used on other goods and services.

The Honeymoons move will give the company an opening to working with other companies much more closely, specifically those in the travel industry, to create cohesive experiences. Given how many weddings today are focused around “destinations,” this also opens the door to planning events for more than just the couples involved.


Europe’s top court sets new line on policing illegal speech online

Europe’s top court has set a new line for the policing of illegal speech online. The ruling has implications for how speech is regulated on online platforms — and is likely to feed into wider planned reform of regional rules governing platforms’ liabilities.

Per the CJEU decision, platforms such as Facebook can be instructed to hunt for and remove illegal speech worldwide — including speech that’s “equivalent” to content already judged illegal.

Although any such takedowns remain within the framework of “relevant international law”.

So in practice it does not that mean a court order issued in one EU country will get universally applied in all jurisdictions as there’s no international agreement on what constitutes unlawful speech or even more narrowly defamatory speech.

Existing EU rules on the free flow of information on ecommerce platforms — aka the eCommerce Directive — which state that Member States cannot force a “general content monitoring obligation” on intermediaries, do not preclude courts from ordering platforms to remove or block illegal speech, the court has decided.

That decision worries free speech advocates who are concerned it could open the door to general monitoring obligations being placed on tech platforms in the region, with the risk of a chilling effect on freedom of expression.

Facebook has also expressed concern. Responding to the ruling in a statement, a spokesperson told us:

“This judgement raises critical questions around freedom of expression and the role that internet companies should play in monitoring, interpreting and removing speech that might be illegal in any particular country. At Facebook, we already have Community Standards which outline what people can and cannot share on our platform, and we have a process in place to restrict content if and when it violates local laws. This ruling goes much further. It undermines the long-standing principle that one country does not have the right to impose its laws on speech on another country. It also opens the door to obligations being imposed on internet companies to proactively monitor content and then interpret if it is “equivalent” to content that has been found to be illegal. In order to get this right national courts will have to set out very clear definitions on what ”identical” and ”equivalent” means in practice. We hope the courts take a proportionate and measured approach, to avoid having a chilling effect on freedom of expression.”

The legal questions were referred to the CJEU by a court in Austria, and stem from a defamation action brought by Austrian Green Party politician, Eva Glawischnig, who in 2016 filed suit against Facebook after the company refused to take down posts she claimed were defamatory against her.

In 2017 an Austrian court ruled Facebook should take the defamatory posts down and do so worldwide. However Glawischnig also wanted it to remove similar posts, not just identical reposts of the illegal speech, which she argued were equally defamatory.

The current situation where platforms require notice of illegal content before carrying out a takedown are problematic, from one perspective, given the scale and speed of content distribution on digital platforms — which can make it impossible to keep up with reporting re-postings.

Facebook’s platform also has closed groups where content can be shared out of sight of non-members, and where an individual could therefore have no ability to see unlawful content that’s targeted at them — making it essentially impossible for them to report it.

While the case concerns the scope of the application of defamation law on Facebook’s platform the ruling clearly has broader implications for regulating a range of “unlawful” content online.

Specifically the CJEU has ruled that an information society service “host provider” can be ordered to:

  • … remove information which it stores, the content of which is identical to the content of information which was previously declared to be unlawful, or to block access to that information, irrespective of who requested the storage of that information;
  • … remove information which it stores, the content of which is equivalent to the content of information which was previously declared to be unlawful, or to block access to that information, provided that the monitoring of and search for the information concerned by such an injunction are limited to information conveying a message the content of which remains essentially unchanged compared with the content which gave rise to the finding of illegality and containing the elements specified in the injunction, and provided that the differences in the wording of that equivalent content, compared with the wording characterising the information which was previously declared to be illegal, are not such as to require the host provider to carry out an independent assessment of that content;
  • … remove information covered by the injunction or to block access to that information worldwide within the framework of the relevant international law

The court has sought to balance the requirement under EU law of no general monitoring obligation on platforms with the ability of national courts to regulate information flow online in specific instances of illegal speech.

In the judgement the CJEU also invokes the idea of Member States being able to “apply duties of care, which can reasonably be expected from them and which are specified by national law, in order to detect and prevent certain types of illegal activities” — saying the eCommerce Direction does not stand in the way of states imposing such a requirement.

Some European countries are showing appetite for tighter regulation of online platforms. In the UK, for instance, the government laid out proposals for regulating a board range of online harms earlier this year. While, two years ago, Germany introduced a law to regulate hate speech takedowns on online platforms.

Over the past several years the European Commission has also kept up pressure on platforms to speed up takedowns of illegal content — signing tech companies up to a voluntary code of practice, back in 2016, and continuing to warn it could introduce legislation if targets are not met.

Today’s ruling is thus being interpreted in some quarters as opening the door to a wider reform of EU platform liability law by the incoming Commission — which could allow for imposing more general monitoring or content-filtering obligations, aligned with Member States’ security or safety priorities.

“We can trace worrying content blocking tendencies in Europe,” says Sebastian Felix Schwemer, a researcher in algorithmic content regulation and intermediary liability at the University of Copenhagen. “The legislator has earlier this year introduced proactive content filtering by platforms in the Copyright DSM Directive (“uploadfilters”) and similarly suggested in a Proposal for a Regulation on Terrorist Content as well as in a non-binding Recommendation from March last year.”

Critics of a controversial copyright reform — which was agreed by European legislators earlier this year — have warned consistently that it will result in tech platforms pre-filtering user generated content uploads. Although the full impact remains to be seen, as Member States have two years from April 2019 to pass legislation meeting the Directive’s requirements.

In 2018 the Commission also introduced a proposal for a regulation on preventing the dissemination of terrorist content online — which explicitly included a requirement for platforms to use filters to identify and block re-uploads of illegal terrorist content. Though the filter element was challenged in the EU parliament.

“There is little case law on the question of general monitoring (prohibited according to Article 15 of the E-Commerce Directive), but the question is highly topical,” says Schwemer. “Both towards the trend towards proactive content filtering by platforms and the legislator’s push for these measures (Article 17 in the Copyright DSM Directive, Terrorist Content Proposal, the Commission’s non-binding Recommendation from last year).”

Schwemer agrees the CJEU ruling will have “a broad impact” on the behavior of online platforms — going beyond Facebook and the application of defamation law.

“The incoming Commission is likely to open up the E-Commerce Directive (there is a leaked concept note by DG Connect from before the summer),” he suggests. “Something that has previously been perceived as opening Pandora’s Box. The decision will also play into the coming lawmaking process.”

The ruling also naturally raises the question of what constitutes “equivalent” unlawful content? And who and how will they be the judge of that?

The CJEU goes into some detail on “specific elements” it says are needed for non-identical illegal speech to be judged equivalently unlawful, and also on the limits of the burden that should be placed on platforms so they are not under a general obligation to monitor content — ultimately implying that technology filters, not human assessments, should be used to identify equivalent speech.

From the judgement:

… it is important that the equivalent information referred to in paragraph 41 above contains specific elements which are properly identified in the injunction, such as the name of the person concerned by the infringement determined previously, the circumstances in which that infringement was determined and equivalent content to that which was declared to be illegal. Differences in the wording of that equivalent content, compared with the content which was declared to be illegal, must not, in any event, be such as to require the host provider concerned to carry out an independent assessment of that content.

In those circumstances, an obligation such as the one described in paragraphs 41 and 45 above, on the one hand — in so far as it also extends to information with equivalent content — appears to be sufficiently effective for ensuring that the person targeted by the defamatory statements is protected. On the other hand, that protection is not provided by means of an excessive obligation being imposed on the host provider, in so far as the monitoring of and search for information which it requires are limited to information containing the elements specified in the injunction, and its defamatory content of an equivalent nature does not require the host provider to carry out an independent assessment, since the latter has recourse to automated search tools and technologies.

“The Court’s thoughts on the filtering of ‘equivalent’ information are interesting,” Schwemer continues. “It boils down to that platforms can be ordered to track down illegal content, but only under specific circumstances.

“In its rather short judgement, the Court comes to the conclusion… that it is no general monitoring obligation on hosting providers to remove or block equivalent content. That is provided that the search of information is limited to essentially unchanged content and that the hosting provider does not have to carry out an independent assessment but can rely on automated technologies to detect that content.”

While he says the court’s intentions — to “limit defamation” — are “good” he points out that “relying on filtering technologies is far from unproblematic”.

Filters can indeed be an extremely blunt tool. Even basic text filters can be triggered by words that contain a prohibited spelling. While applying filters to block defamatory speech could lead to — for example — inadvertently blocking lawful reactions that quote the unlawful speech.

The ruling also means platforms and/or their technology tools are being compelled to define the limits of free expression under threat of liability. Which pushes them towards setting a more conservative line on what’s acceptable expression on their platforms — in order to shrink their legal risk.

Although definitions of what is unlawful speech and equivalently unlawful will ultimately rest with courts.

It’s worth pointing out that platforms are already defining speech limits — just driven by their own economic incentives.

For ad supported platforms, these incentives typically demand maximizing engagement and time spent on the platform — which tends to encourage users to spread provocative/outrageous content.

That can sum to clickbait and junk news. Equally it can mean the most hateful stuff under the sun.

Without a new online business model paradigm that radically shifts the economic incentives around content creation on platforms the tension between freedom of expression and illegal hate speech will remain. As will the general content monitoring obligation such platforms place on society.

Worried about a ‘no deal’ brexit? UK startups should check this guide

UK startups concerned the country is about to leave the European Union in just a little over a month’s time with nothing agreed to ensure a smooth transition should point their eyes at this guide — put together by startup policy advocacy group, Coadec.

While a ‘no deal’ brexit is still not inevitable the chances of it happening have stepped up sharply in recent months as the clock winds down towards exit day with no withdrawal agreement in place. Such an outcome has major implications for technology businesses, given the cross-border nature of services startups tend to provide.

“With the UK potentially just over a month away from exiting the EU, no deal remains the default option,” warns Coadec. “We are clear that no deal would be disastrous for the startup community…but that doesn’t mean that it won’t happen. That’s why we have teamed up with the UK Tech Cluster Group & Tech Nation to put together this guidance for the startup community.”

Under current prime minister, Boris Johnson, the UK government has sharply dialled up the brexit rhetoric. Johnson has said — in typical flashy fashion — that he’d rather be “dead in a ditch” than ask for an extension to the October 31st deadline for agreeing a deal with the European Union.

He has also prorogued parliament — illegally — in an attempt to bypass parliamentary scrutiny, which he described in an internal memo as “a rigmarole“.

The prorogation was quashed by the Supreme Court. But since parliament resumed this week ministers have been refusing to clearly state whether the government will abide by a law it passed just before it got closed down — which requires the PM to ask the EU for an extension if he fails to secure a withdrawal deal before October 19.

Speculation is therefore rife over what political chicanery the government might seek to pull to wiggle out of complying with the law and crash the UK out regardless.

Former UK prime minister, John Major, gave a speech this week warning that such a move would be unforgivable. But there are no signs the government is rethinking its approach.

Johnson has been splashing public money on an advertising campaign that instructs the country to “Get ready for brexit” (such as the billboard pictured above). The government also claims to have substantially ramped up domestic preparations for a no deal exit.

While it’s possible this loud show of bullying bravado is a theatrical tactic to try to pressure the EU into shifting position on contested brexit issues (primarily the Irish back-stop) — so Johnson can grab a deal which could pass a vote in parliament — it’s also possible the government isn’t that interested in a deal, and just wants to deliver brexit “do or die”, as the PM has also put it.

Even if it’s theatrics it doesn’t mean the whole high stakes game of chicken might not backfire — resulting in the UK actually crashing out with nothing on Halloween. The only robust legal certainty is that without an extension to Article 50 the UK will indeed leave the EU on October 31, deal or no deal.

Given rising political turmoil in the UK combined with a hard and fast-approaching brexit deadline, startups are well advised to prepare for the worst — which means leaving the EU with no contingencies in place beyond those you’ve put in place yourself.

Coadec’s guide presents a concise overview of ten issues the policy advocacy group believes should be front of mind for startups and scaleups thinking about how to manage no deal risk.

The guide does not (and is not intended) to replace professional legal advice but it does cuts through a lot of the noise and fuzz around brexit — so it’s well worth a read, especially if you’re trying to get up to speed fast.

Top of their list is data flows — a major consideration for tech businesses that receive personal data from the EU or EEA.

“Startups will need to create contract-based legal structures to replace the free flows of data we took for granted under the European system,” Coadec writes, noting that the UK’s data protection agency is advising startups to look at model clauses, binding corporate rules, codes of conduct or certification mechanisms as alternatives for their data flows.

“These complicated legal structures have typically been the preserve of larger businesses and corporations, not startups and scaleups — so will take time to put in place,” it warns. “If you haven’t started preparations for your post-brexit data flows, they should be a priority now.”

Other issues the guide deals with include immigration & visas; taxation & VAT; and the impact of a no deal on specific pieces of EU legislation and strategy that are relevant to startups — such as the e-Commerce Directive and Digital Single Market — as well as related pieces of legislation (such as ePrivacy) that risk being caught in limbo by brexit as they’ve not yet been passed.

There’s also advice for startups that have .eu domain names, and for those who’ve received funding from the EU’s Horizon 2020 R&D fund, as well as links to relevant government resources.

The guide can be downloaded as a PDF here.

How is your startup preparing for brexit? What’s your biggest ‘no deal’ concern? How much is it costing you to manage brexit risk? Let us know by emailing [email protected] 

Alibaba unveils Hanguang 800, an AI inference chip it says significantly increases the speed of machine learning tasks

Alibaba Group introduced its first AI inference chip today, a neural processing unit called Hanguang 800 that it says makes performing machine learning tasks dramatically faster and more energy-efficient. The chip, announced today during Alibaba Cloud’s annual Apsara Computing Conference in Hangzhou, is already being used to power features on Alibaba’s e-commerce sites, including product search and personalized recommendations. It will be made available to Alibaba Cloud customers later.

As an example of what the chip can do, Alibaba said it usually takes Taobao an hour to categorize the one billion product images that are uploaded to the e-commerce platform each day by merchants and prepare them for search and personalized recommendations. Using Hanguang 800, Taobao was able to complete the task in only five minutes.

Alibaba is already using Hanguang 800 in many of its business operations that need machine processing. In addition to product search and recommendations, this includes automatic translation on its e-commerce sites, advertising and intelligence customer services.

Though Alibaba hasn’t revealed when the chip will be available to its cloud customers, the chip may help Chinese companies reduce their dependence on U.S. technology as the trade war makes business partnerships between Chinese and American tech companies more difficult. It can also help Alibaba Cloud grow in markets outside of China. Within China, it is the market leader, but in the Asia-Pacific region, Alibaba Cloud still ranks behind Amazon, Microsoft and Google, according to the Synergy Research Group.

Hanguang 800 was created by T-Head, the unit that leads the development of chips for cloud and edge computing within Alibaba DAMO Academy, the global research and development initiative that Alibaba is investing more than $15 billion in. T-Head developed the chip’s hardware and algorithms designed for business apps, including Alibaba’s retail and logistics apps.

In a statement, Alibaba Group CTO and president of Alibaba Cloud Intelligence Jeff Zhang (pictured above) said “The launch of Hanguang 800 is an important step in our pursuit of next-generation technologies, boosting computing capabilities that will drive both our current and emerging businesses while improving energy-efficiency.”

He added “In the near future, we plan to empower our clients by providing access through our cloud business to the advanced computing that is made possible by the chip, anytime and anywhere.”

T-Head’s other launches included the XuanTie 910 earlier this year, an IoT processor based on RISC-V, the open-source hardware instruction set that began as a project at U.C. Berkeley. XuanTie 910 was created for heavy-duty IoT applications, including edge servers, networking, gateway and autonomous vehicles.

Alibaba DAMO Academy collaborates with universities around the world that have included U.C. Berkeley and Tel Aviv University. Researchers in the program focus on machine learning, network security, visual computing and natural language processing, with the goal of serving two billion customers and creating 100 million jobs by 2035.