Africa Roundup: Nigerian fintech gets $360M, mints unicorn, draws Chinese VC

November 2019 could mark when Nigeria (arguably) became Africa’s unofficial capital for fintech investment and digital finance startups.

The month saw $360 million invested in Nigerian focused payment ventures. That is equivalent to roughly one-third of all the startup VC raised for the entire continent in 2018, according to Partech stats.

A notable trend-within-the-trend is that more than half — or $170 million — of the funding to Nigerian fintech ventures in November came from Chinese investors. This marks a pivot in China’s engagement with Africa to tech. We’ll get to that.

Before the big Chinese backed rounds, one of Nigeria’s earliest fintech companies, Interswitch, confirmed its $1 billion valuation after Visa took a minority stake in the company. Interswitch would not disclose the amount to TechCrunch, but Sky News reporting pegged it at $200 million for 20%.

Founded in 2002 by Mitchell Elegbe, Interswitch pioneered the infrastructure to digitize Nigeria’s then predominantly paper-ledger and cash-based economy.

The company now provides much of the tech-wiring for Nigeria’s online banking system that serves Africa’s largest economy and population. Interswitch offers a number of personal and business finance products, including its Verve payment cards and Quickteller payment app.

The financial services firm has expanded its physical presence to Uganda, Gambia and Kenya . The Nigerian company also sells its products in 23 African countries and launched a partnership in August for Verve cardholders to make payments on Discover’s global network.

Visa and Interswitch touted the equity investment as a strategic collaboration between the two companies, without a lot of detail on what that will mean.

One point TechCrunch did lock down is Interswitch’s (long-awaited) and imminent IPO. A source close to the matter said the company will list on a major exchange by mid-2020.

For the near to medium-term, Interswitch could stand as Africa’s sole tech-unicorn, as e-commerce venture Jumia’s volatile share-price and declining market-cap — since an April IPO — have dropped the company’s valuation below $1 billion.

Circling back to China, November was the month that signaled Chinese actors are all in on African tech.

In two separate rounds, Chinese investors put $220 million into OPay and PalmPay — two fledgling startups with plans to scale in Nigeria and the broader continent.

PalmPay, a consumer oriented payments product, went live last month with a $40 million seed-round (one of the largest in Africa in 2019) led by Africa’s biggest mobile-phone seller — China’s Transsion.

The startup was upfront about its ambitions, stating its goals to become “Africa’s largest financial services platform,” in a company release.

To that end, PalmPay conveniently entered a strategic partnership with its lead investor. The startup’s payment app will come pre-installed on Transsion’s mobile device brands, such as Tecno, in Africa — for an estimated reach of 20 million phones.

PalmPay also launched in Ghana in November and its UK and Africa based CEO, Greg Reeve, confirmed plans to expand to additional African countries in 2020.

OPay’s $120 million Series B was announced several days after the PalmPay news and came only months after the mobile-based fintech venture raised $50 million.

Founded by Chinese owned consumer internet company Opera — and backed by 9 Chinese investors — OPay is the payment utility for a suite of Opera developed internet based commercial products in Nigeria. These include ride-hail apps ORide and OCar and food delivery service OFood.

With its latest Series A, OPay announced it would expand in Kenya, South Africa, and Ghana.

Though it wasn’t fintech, Chinese investors also backed a (reported) $30 million Series B for East African trucking logistics company Lori Systems in November.

With OPay, PalmPay, and Lori Systems, startups in Africa have raised a combined $240 million from 15 Chinese investors in a span of months.

There are a number of things to note and watch out for here, as TechCrunch reporting has illuminated (and will continue to do in follow-on coverage).

These moves mark a next chapter in China’s engagement in Africa and could raise some new issues. Hereto, the country’s interaction with Africa’s tech ecosystem has been relatively light compared to China’s deal-making on infrastructure and commodities.

There continues to be plenty of debate (and critique) of China’s role in Africa. This new digital-phase will certainly add a fresh component to all that. One thing to track will be data-privacy and national-security concerns that may emerge around Chinese actors investing heavily in African mobile consumer platforms.

We’ve seen lines (allegedly) blur on these matters between Chinese state and private-sector actors with companies such as Huawei.

As OPera and PalmPay expand, they may need to do some reassuring of African regulators as countries (such as Kenya) establish more formal consumer protection protocols for digital platforms.

One more thing to follow on OPay’s funding and planned expansion is the extent to which it puts Opera (and its entire suite of consumer internet products) in competition with multiple actors in Africa’s startup ecosystem. Opera’s Africa ventures could go head to head with Uber, Jumia, and M-Pesa — the mobile money-product that put Kenya out front on digital finance in Africa before Nigeria.

Shifting back to American engagement in African tech, Twitter and Square CEO Jack Dorsey was on the continent in November. No sooner than he’d finished his first trip, Dorsey announced plans to move to Africa in 2020, for 3 to 6 months, saying on Twitter “Africa will define the future (especially the bitcoin one!).”

We still don’t know much about what this last trip — or his future foray — mean in terms of concrete partnerships, investment, or market moves in Africa from Dorsey and his companies.

He visited Nigeria, Ghana, South Africa and Ethiopia and met with leaders at Nigeria’s CcHub (Bosun Tijani), Ethiopia’s Ice Addis (Markos Lemming), and did some meetings with fintech founders in Lagos (Paga’s Tayo Oviosu).

I know most of the organizations and people Dorsey talked to pretty well and nothing has shaken out yet in terms of partnership or investment news from his recent trip.

On what could come out of Dorsey’s 2020 move to Africa, per his tweet and news highlighted in this roundup, a good bet would be it will have something to with fintech and Square.

More Africa-related stories @TechCrunch

African tech around the ‘net

Twitter’s political ads ban is a distraction from the real problem with platforms

Sometimes it feels as if Internet platforms are turning everything upside down, from politics to publishing, culture to commerce, and of course swapping truth for lies.

This week’s bizarro reversal was the vista of Twitter CEO Jack Dorsey, a tech CEO famed for being entirely behind the moral curve of understanding what his product is platforming (i.e. nazis), providing an impromptu ‘tweet storm’ in political speech ethics.

Actually he was schooling Facebook’s Mark Zuckerberg — another techbro renowned for his special disconnect with the real world, despite running a massive free propaganda empire with vast power to influence other people’s lives — in taking a stand for the good of democracy and society.

So not exactly a full reverse then.

In short, Twitter has said it will no longer accept political ads, period.

Whereas Facebook recently announced it will no longer fact-check political ads. Aka: Lies are fine, so long as you’re paying Facebook to spread them.

You could argue there’s a certain surface clarity to Facebook’s position — i.e. it sums to ‘when it comes to politics we just won’t have any ethics’. Presumably with the hoped for sequitur being ‘so you can’t accuse us of bias’.

Though that’s actually a non sequitur; by not applying any ethical standards around political campaigns Facebook is providing succour to those with the least ethics and the basest standards. So its position does actually favor the ‘truth-lite’, to put it politely. (You can decide which political side that might advantage.)

Twitter’s position also has surface clarity: A total ban! Political and issue ads both into the delete bin. But as my colleague Devin Coldewey quickly pointed out it’s likely to get rather more fuzzy around the edges as the company comes to defining exactly what is (and isn’t) a ‘political ad’ — and what its few “exceptions” might be.

Indeed, Twitter’s definitions are already raising eyebrows. For example it has apparently decided climate change is a ‘political issue’ — and will therefore be banning ads about science. While, presumably, remaining open to taking money from big oil to promote their climate-polluting brands… So yeah, messy.

There will clearly be attempts to stress test and circumvent the lines Twitter is setting. The policy may sound simple but it involves all sorts of judgements that expose the company’s political calculations and leave it open to charges of bias and/or moral failure.

Still, setting rules is — or should be — the easy and adult thing to do when it comes to content standards; enforcement is the real sweating toil for these platforms.

Which is also, presumably, why Facebook has decided to experiment with not having any rules around political ads — in the (forlorn) hope of avoiding being forced into the role of political speech policeman.

If that’s the strategy it’s already looking spectacularly dumb and self-defeating. The company has just set itself up for an ongoing PR nightmare where it is indeed forced to police intentionally policy-provoking ads from its own back-foot — having put itself in the position of ‘wilfully corrupt cop’. Slow hand claps all round.

Albeit, it can at least console itself it’s monetizing its own ethics bypass.

Twitter’s opposing policy on political ads also isn’t immune from criticism, as we’ve noted.

Indeed, it’s already facing accusations that a total ban is biased against new candidates who start with a lower public profile. Even if the energy of that argument would be better spent advocating for wide-ranging reform of campaign financing, including hard limits on election spending. If you really want to reboot politics by levelling the playing field between candidates that’s how to do it.

Also essential: Regulations capable of enforcing controls on dark money to protect democracies from being bought and cooked from the inside via the invisible seeding of propaganda that misappropriates the reach and data of Internet platforms to pass off lies as populist truth, cloaking them in the shape-shifting blur of microtargeted hyperconnectivity.

Sketchy interests buying cheap influence from data-rich billionaires, free from accountability or democratic scrutiny, is our new warped ‘normal’. But it shouldn’t be.

There’s another issue being papered over here, too. Twitter banning political ads is really a distracting detail when you consider that it’s not a major platform for running political ads anyway.

During the 2018 US midterms the category generated less than $3M for the company.

And, secondly, anything posted organically as a tweet to Twitter can act as a political call to arms.

It’s these outrageous ‘organic’ tweets where the real political action is on Twitter’s platform. (Hi Trump.)

Including inauthentically ‘organic’ tweets which aren’t a person’s genuinely held opinion but a planted (and often paid for) fake. Call it ‘going native’ advertising; faux tweets intended to pass off lies as truth, inflated and amplified by bot armies (fake accounts) operating in plain sight (often gaming Twitter’s trending topics) as a parallel ‘unofficial’ advertising infrastructure whose mission is to generate attention-grabbing pantomimes of public opinion to try and sway the real thing.

In short: Propaganda.

Who needs to pay to run a political ad on Twitter when you can get a bot network to do the boosterism for you?

Let’s not forget Dorsey is also the tech CEO famed for not applying his platform’s rules of conduct to the tweets of certain high profile politicians. (Er, Trump again, basically.)

So by saying Twitter is banning political ads yet continuing to apply a double standard to world leaders’ tweets — most obviously by allowing the US president to bully, abuse and threaten at will in order to further his populist rightwing political agenda — the company is trying to have its cake and eat it.

More recently Twitter has evolved its policy slightly, saying it will apply some limits on the reach of rule-breaking world leader tweets. But it continues to run two sets of rules.

To Dorsey’s credit he does foreground this tension in his tweet storm — where he writes [emphasis ours]:

Internet political ads present entirely new challenges to civic discourse: machine learning-based optimization of messaging and micro-targeting, unchecked misleading information, and deep fakes. All at increasing velocity, sophistication, and overwhelming scale.

These challenges will affect ALL internet communication, not just political ads. Best to focus our efforts on the root problems, without the additional burden and complexity taking money brings. Trying to fix both means fixing neither well, and harms our credibility.

This is good stuff from Dorsey. Surprisingly good, given his and Twitter’s long years of free speech fundamentalism — when the company gained a reputation for being wilfully blind and deaf to the fact that for free expression to flourish online it needs a protective shield of civic limits. Otherwise ‘freedom to amplify any awful thing’ becomes a speech chiller that disproportionately harms minorities.

Aka freedom of speech is not the same as freedom of reach, as Dorsey now notes.

Even with Twitter making some disappointing choices in how it defines political issues, for the purposes of this ad ban, the contrast with Facebook and Zuckerberg — still twisting and spinning in the same hot air; trying to justify incoherent platform policies that sell out democracy for a binary ideology which his own company can’t even stick to — looks stark.

The timing of Dorsey’s tweet-storm, during Facebook’s earnings call, was clearly intended to make that point.

“Zuckerberg wants us to believe that one must be for or against free speech with no nuance, complexity or cultural specificity, despite running a company that’s drowning in complexity,” writes cultural historian, Siva Vaidhyanathan, confronting Facebook’s moral vacuousness in a recent Guardian article responding to another Zuckerberg ‘manifesto’ on free speech. “He wants our discussions to be as abstract and idealistic as possible. He wants us not to look too closely at Facebook itself.”

Facebook’s position on speech does only stand up in the abstract. Just as its ad-targeting business can only run free of moral outrage in unregulated obscurity, where the baked in biases — algorithmic and user generated — are safely hidden from view so people can’t joins the dots on how they’re being damaged.

We shouldn’t be surprised at how quickly the scandal-prone company is now being called on its ideological BS. We have a savvier political class as a result of the platform-scale disinformation and global data scandals of the past few years. People who have have seen and experienced what Facebook’s policies translate to in real world practice. Like compromised elections and community violence.

With lawmakers like these turning their attention on platform giants there is a genuine possibility of meaningful regulation coming down the pipe for the antisocial media business.

Not least because Facebook’s self regulation has always been another piece of crisis PR, designed to preempt and steer off the real thing. It’s a cynical attempt to maintain its profitable grip on our attention. The company has never been committed to making the kind of systemic change necessary to fix its toxic speech issues.

The problem is, ultimately, toxicity and division drives engagement, captures attention and makes Facebook a lot of money.

Twitter can claim a little distance from that business model not only because it’s considerably less successful than Facebook at generating money by monopolizing attention, but also because it provides greater leeway for its users to build and follow their own interest networks, free from algorithmic interference (though it does do algorithms too).

It has also been on a self-proclaimed reform path for some time. Most recently saying it wants to be responsible for promoting “conversational health on its platform. No one would say it’s there yet but perhaps we’re finally getting to see some action. Even if banning political ads is mostly a quick PR win for Twitter.

The really hard work continues, though. Namely rooting out bot armies before their malicious propaganda can pollute the public sphere. Twitter hasn’t said it’s close to being able to fix that.

Facebook is also still failing to stem the tide of ‘organic’ politicized fake content on its platform. Fakes that profit at our democratic expense by spreading hate and lies.

For this type of content Facebook offers no searchable archive (as it now does for paid ads which it defines as political) — thereby providing ongoing cover for dark money to do its manipulative hack-job on democracy by free-posting via groups and pages.

Plus, even where Facebook claims to be transparently raising the curtain on paid political influence it’s abjectly failing to do so. Its political ads API is still being blasted by research academics as not fit for purpose. Even as the company policy cranks up pressure on external fact-checkers by giving politicians the green light to run ads that lie.

It has also been accused of applying a biased standard when it comes to weeding out “coordinated inauthentic behavior”, as Facebook euphemistically calls the networks of fake accounts set up to amplify and juice reach — when the propaganda in question is coming from within the US and leans toward the political right.

 

Facebook denies this, claiming for example that a network of pages on its platform reported to be exclusively boosting content from US conservative news site, The Daily Wire, arereal pages run by real people in the U.S., and they don’t violate our policies. (It didn’t offer us any detail on how it reached that conclusion.) 

A company spokesperson also said: “We’re working on more transparency so that in the future people have more information about Pages like these on Facebook.”

So it’s still promising ‘more transparency’ — rather than actually being transparent. And it remains the sole judge interpreting and applying policies that aren’t at all legally binding; so sham regulation then. 

Moreover, while Facebook has at times issued bans on toxic content from certain domestic hate speech preachers’, such as banning some of InfoWars’ Alex Jones’ pages, it’s failed to stop the self-same hate respawning via new pages. Or indeed the same hateful individuals maintaining other accounts on different Facebook-owned social properties. Inconsistency of policy enforcement is Facebook’s DNA.

Set against all that Dorsey’s decision to take a stance against political ads looks positively statesmanlike.

It is also, at a fundamental level, obviously just the right thing to do. Buying a greater share of attention than you’ve earned politically is regressive because it favors those with the deepest pockets. Though of course Twitter’s stance won’t fix the rest of a broken system where money continues to pour in and pollute politics.

We also don’t know the fine-grained detail of how Twitter’s algorithms amplify political speech when it’s packaged in organic tweet form. So whether its algorithmic levers are more likely to be triggered into boosting political tweets that inflame and incite, or those that inform and seek to unite.

As I say, the whole of Twitter’s platform can sum to political advertising. And the company does apply algorithms to surface or suppress tweets based on its proprietary (and commercial) determination of ‘engagement quality’. So its entire business is involved in shaping how visible (or otherwise) tweeted speech is.

That very obviously includes plenty of political speech. Not for nothing is Twitter Trump’s platform of choice.

Nothing about its ban on political ads changes all that. So, as ever, where social media self-regulation is concerned, what we are being given is — at best — just fiddling around the edges.

A cynical eye might say Twitter’s ban is intended to distract attention from more structural problems baked into these attention-harvesting Internet platforms.

The toxic political discourse problem that democracies and societies around the world are being forced to grapple with is as a consequence of how Internet platforms distribute content and shape public discussion. So what’s really key is how these companies use our information to program what we each get to see.

The fact that we’re talking about Twitter’s political ad ban risks distracting from the “root problems” Dorsey referenced in passing. (Though he would probably offer a different definition of their cause. In the tweet storm he just talks about “working hard to stop people from gaming our systems to spread misleading info”.)

Facebook’s public diagnosis of the same problem is always extremely basic and blame-shifting. It just says some humans are bad, ergo some bad stuff will be platformed by Facebook — reflecting the issue back at humanity.

Here’s an alternative take: The core issue underpinning all these problems around how Internet platforms spread toxic propaganda is the underlying fact of taking people’s data in order to manipulate our attention.

This business of microtargeting — or behavioral advertising, as it’s also called — turns everyone into a target for some piece of propaganda or other.

It’s a practice that sucks regardless of whether it’s being done to you by Donald Trump or by Disney. Because it’s asymmetrical. It’s disproportionate. It’s exploitative. And it’s inherently anti-democratic.

It also incentivizes a pervasive, industrial-scale stockpiling of personal data that’s naturally hostile to privacy, terrible for security and gobbles huge amounts of energy and computing resource. So it sucks from an environmental perspective too.

And it does it all for the very basest of purposes. This is platforms selling you out so others can sell you stuff. Be it soap or political opinions.

Zuckerberg’s label of choice for this process — “relevant ads” — is just the slick lie told by a billionaire to grease the pipes that suck out the data required to sell our attention down the river.

Microtargeting is both awful for the individual (meaning creepy ads; loss of privacy; risk of bias and data misuse) and terrible for society for all the same reasons — as well as grave, society-level risks, such as election interference and the undermining of hard-won democratic institutions by hostile forces.

Individual privacy is a common good, akin to public health. Inoculation — against disease or indeed disinformation — helps protect the whole of us from damaging contagion.

To be clear, microtargeting is also not only something that happens when platforms are paid money to target ads. Platforms are doing this all the time; applying a weaponizing layer to customize everything they handle.

It’s how they distribute and program the masses of information users freely upload, creating maximally engaging order out of the daily human chaos they’ve tasked themselves with turning into a compelling and personalized narrative — without paying a massive army of human editors to do the job.

Facebook’s News Feed relies on the same data-driven principles as behavioral ads do to grab and hold attention. As does Twitter’s ‘Top Tweets’ algorithmically ranked view.

This is programmed attention-manipulation at vast scale, repackaged as a ‘social’ service. One which uses what the platforms learn by spying on Internet users as divisive glue to bind our individual attention, even if it means setting some of us against each another.

That’s why you can publish a Facebook post that mentions a particular political issue and — literally within seconds — attract a violently expressed opposing view from a Facebook ‘friend’ you haven’t spoken to in years. The platform can deliver that content ‘gut punch’ because it has a god-like view of everyone via the prism of their data. Data that powers its algorithms to plug content into “relevant” eyeballs, ranked by highest potential for engagement sparks to fly.

It goes without saying that if a real friendship group contained such a game-playing stalker — who had bugged everyone’s phones to snoop and keep tabs on them, and used what they learnt to play friends off against each other — no one would imagine it bringing the group closer together. Yet that’s how Facebook treats its captive eyeballs.

That awkward silence you could hear as certain hard-hitting questions struck Zuckerberg during his most recent turn in the House might just be the penny dropping.

It finally feels as if lawmakers are getting close to an understanding of the real “root problem” embedded in these content-for-data sociotechnical platforms.

Platforms that invite us to gaze into them in order that they can get intimate with us forever — using what they learn from spying to pry further and exploit faster.

So while banning political ads sounds nice it’s just a distraction. What we really need to shatter the black mirror platforms are holding against society, in which they get to view us from all angles while preventing us from seeing what they’re doing, is to bring down a comprehensive privacy screen. No targeting against personal data.

Let them show us content and ads, sure. They can target this stuff contextually based on a few generic pieces of information. They can even ask us to specify if we’d like to see ads about housing today or consumer packaged goods? We can negotiate the rules. Everything else — what we do on or off the platform, who we talk to, what we look at, where we go, what we say — must remain strictly off limits.

Daily Crunch: Twitter is banning political ads

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. Jack Dorsey says Twitter will ban all political ads

Arguing that “internet political ads present entirely new challenges to civic discourse,” CEO Jack Dorsey announced that Twitter will be banning all political advertising — albeit with “a few exceptions” like voter registration.

Not only is this a decisive move by Twitter, but it also could increase pressure on Facebook to follow suit, or at least take steps in this direction.

2. Apple beats on Q4 earnings after strong quarter for wearables, services

Apple’s iPhone sales still make up over half of its quarterly revenues, but they are slowly shrinking in importance as other divisions in the company pick up speed.

3. Facebook shares rise on strong Q3, users up 2% to 2.45B

More earnings news: Despite ongoing public relations crises, Facebook kept growing in Q3 2019, demonstrating that media backlash does not necessarily equate to poor business performance.

4. Driving license tests just got smarter in India with Microsoft’s AI project

Hundreds of people who have taken the driver’s license test in Dehradun (the capital of the Indian state of Uttarakhand) in recent weeks haven’t had to sit next to an instructor. Instead, their cars were affixed with a smartphone that was running HAMS, an AI project developed by a Microsoft Research team.

5. Crunchbase raises $30M more to double down on its ambition to be a ‘LinkedIn for company data’

Good news for our friends at Crunchbase, which got its start as a part of TechCrunch before being spun off into a separate business several years ago. CEO Jager McConnell also says the site currently has tens of thousands of paying subscribers.

6. Deadspin writers quit after being ordered to stick to sports

The relationship between new management at G/O Media (formerly Gizmodo Media Group/Gawker Media) and editorial staff seems to have been deteriorating for months. This week, it turned into a full-on revolt over auto-play ads and especially a directive that Deadspin writers must stick to sports.

7. What Berlin’s top VCs want to invest in right now

As we gear up for our Disrupt Berlin conference in December, we check in with top VCs on the types of startups that they’re looking to back right now. (Extra Crunch membership required.)

Twitter banning political ads is the right thing to do, so it will be attacked mercilessly

Twitter founder and CEO Jack Dorsey announced abruptly — though the timing was certainly not accidental — that the platform would soon disallow any and all political advertising. This is the right thing to do, but it’s also going to be hard as hell for a lot of reasons. As usual in tech and politics, no good deed goes unpunished.

Malicious actors state-sponsored and otherwise have and will continue to attempt to influence the outcome of U.S. elections via online means including political ads and astroturfing. Banning such ads outright is an obvious, if rather heavy-handed solution — but given that online platforms seem to have made little progress on more targeted measures, it’s the only one realistically available to deploy now.

“Not allowing for paid disinformation is one of the most basic, ethical decisions a company can make,” wrote Representative Alexandria Ocasio-Cortez (D-NY) in a tweet following the news. “If a company cannot or does not wish to run basic fact-checking on paid political advertising, then they should not run paid political ads at all.”

One of the reasons Facebook has avoided restricting political ads and content is that by doing so it establishes itself as the de facto arbiter between “appropriate” and “inappropriate,” and the fractal-complex landscape that creates across thousands of cultures, languages, and events. Don’t cry for Mark Zuckerberg, though — this is a monster of his own creation. He should have retired when I suggested it.

But Twitter’s decision to use a sledgehammer rather than a scalpel doesn’t remove the inherent difficulties in the process. Twitter is just submitting itself for a different kind of punishment. Because instead of being the arbiter of what is appropriate, it will be the arbiter of what is political.

This is slightly less fraught than Facebook’s task, but Twitter will not be able to avoid accusations — perhaps even true ones — of partisanship and bias.

For instance, the fundamental decision to disallow political advertising seems pretty straightforward and nonpartisan. Incumbents rely on traditional media more and progressives tend to be younger and more social media–savvy. So is this taking away a tool suited to left-leaning challengers? But incumbents tend to have bigger budgets and their spend on social media has been increasing, so could this be considered a way to curb that trend? Who this affects and how is not a clear-cut fact but something campaigns and pundits will squabble about endlessly.

Or consider the announcement Dorsey made right off the bat that “ads in support of voter registration will still be allowed.” Voter registration is a good nonpartisan goal, right? In fact it’s something many conservative lawmakers have consistently opposed, because unregistered voters, for a multitude of reasons, skew toward the liberal side. So this too will be considered a partisan act.

Twitter will put out official guidelines in a few weeks, but it’s hard to see how they can be satisfactory. Will industry groups be able to promote tweets about how their new factory is thriving because of a government grant? Will an advocacy organization be able to promote a tweet about a serious situation on the border? Will news outlets be able to promote a story about the election? What about a profile of a single candidate? What about an op-ed on an issue?

The difference between patrolling the interior of the politics world, and patrolling its borders, so to speak, may appear significant — but it’s really just a different kind of trouble. Twitter is entering a world of pain.

But at least it’s moving forward. It’s the right decision, even if it’s a hard one and could hit the bottom line pretty hard (not that Twitter has ever cared about that). The decision to do this while Facebook is dismantling its credibility with a series of craven, self-interested actions is a canny one. Even if Twitter fails to get this right, it can at least say it’s trying.

And lastly it should be said that it also happens to be a good choice for users and voters, a rare exception to the parade of user-hostile decisions coming out of the big tech and media companies. Going into an election year, we can use all the good news we can get.

Zuckerberg defends political ads that will be 0.5% of 2020 revenue

As Jack Dorsey announced his company Twitter would drop all political ads, Facebook CEO Zuckerberg doubled-down on his policy of refusing to fact check politicians’ ads. “At times of social tension there has often been an urge to pull back on free expression . . . We will be best served over the long term by resisting this urge and defending free expression.”

Still, Zuckerberg failed to delineate between freedom of expression, and freedom of paid amplification of that expression which inherently favors the rich.

During today’s Q3 2019 earnings call where Facebook beat expectations and grew monthly users 2% to 2.45 billion, Zuckerberg spent his time defending the social network’s lenient political ad policy. You can read his full prepared statement here.

One clear objective was to dispel the idea that Facebook was motivated by greed to keep these ads. Zuckerberg explained “We estimate these ads from politicians will be less than 0.5% of our revenue next year.” For reference, Facebook earned $66 billion in the 12 months ending Q3 2019, so Facebook might earn around $330 million to $400 million in political ads next year. Unfortunately, it’s unclear if Zuckerberg meant 0.5% of ads were political or just from politicians without counting issue ads and PACs.

Zuckerberg also said that given Facebook removed 50 million hours per day of viral video watching from its platform to support well-being which hurt ad viewership and the company’s share price, Facebook clearly doesn’t act solely in pursuit of profit.

We just shared our community update and quarterly results. Here’s what I said on our earnings call. — Before we…

Posted by Mark Zuckerberg on Wednesday, October 30, 2019

Facebook’s CEO also tried to bat down the theory that Facebook is allowing misinformation in political ads to cater to conservatives or avoid calls of bias from them. “Some people say that this is just all a cynical political calculation and that we’re acting in a way that we don’t really believe because we’re just trying to appease conservatives” he said, responding that “frankly, if our goal was that we’re trying to make either side happy then we’re not doing a very good job because I’m pretty sure everyone is frustrated.” 

Instead of banning political ads, Zuckerberg voiced support for increasing transparency about how ads look, how much is spent on them, and where they’re run. “I believe that the better approach is to work to increase transparency. Ads on Facebook are already more transparent than anywhere else. We have a political ads archive so anyone can scrutinize every ad that’s run.” 

He mentioned that political ads are run by “Google, YouTube, and most internet platforms”, seeming to stumble for a second as he was likely prepared to cite Twitter too until it announced it would drop all political ads an hour earlier. He omitted that Pinterest and TikTok have also banned political ads.

It doesn’t help that hundreds of Facebook’s own employees have called on their CEO to change the policy. He concluded that no one could accuse Facebook of not deeply thinking through the question and its downstream ramifications. Zuckerberg did leave himself an out if he chooses to change the policy, though. “I’ve considered whether we should not [sell political ads] in the past, and I’ll continue to do so.”

Dorsey had tweeted that “We’ve made the decision to stop all political advertising on Twitter globally. We believe political message reach should be earned, not bought.” Democrat Representative Alexandria Ocasio-Cortez expressed support for Twitter’s move while Trump campaign manager Brad Parscale called it “a very dumb decision”

Twitter’s CEO took some clear swipes at Zuckerberg, countering his common arguments for allowing misinformation in politician’s ads. “Some might argue our actions today could favor incumbents. But we have witnessed many social movements reach massive scale without any political advertising. I trust this will only grow.” Given President Trump had outspent all Democratic candidates on Facebook ads as of March of this year, it’s clear that deep-pocketed incumbents could benefit from Facebook’s policy.

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Trump continues to massively outspend Democratic rivals on Facebook ads. Via NYT

Miming Facebook’s position, Dorsey tweeted “It‘s not credible for us to say: ‘We’re working hard to stop people from gaming our systems to spread misleading info, buuut if someone pays us to target and force people to see their political ad…well…they can say whatever they want!”

Twitter doesn’t earn much from political ads, citing only $3 million in revenue from the 2018 mid-term elections, or roughly 0.1% of its $3 billion in total 2018 revenue. That means there will be no major windfall for Facebook from Twitter dropping political ads. But now all eyes will be on Facebook and Google/YouTube. If Sundar Pichai and Susan Wojcicki move in line with Dorsey, it could make Zuckerberg even more vulnerable to criticism.

$330 million might not be a big incentive for Facebook or Zuckerberg, but it still sounds like a lot of money to earn from ads that potentially lie to voters. I respect Facebook’s lenient policy when it comes to speech organically posted to users, organizations, or politicians’ own accounts. But relying on the candidates, press, and public to police speech is dangerously idealistic. We’ve seen how candidates will do anything to win, partisan press will ignore the truth to support their team, and the public aren’t educated or engaged enough to consistently understand what’s false.

Zuckerberg greatest mistakes have come from overestimating humanity. Unfortunately, not everyone wants to bring the world closer together. Without safeguards, Facebook’s tools can help tear it apart. It’s time for Facebook and Zuckerberg to recognize the difference between free expression and paid expression.

Jack Dorsey says Twitter will ban all political ads

CEO Jack Dorsey just announced, via tweet, that Twitter will be banning all political advertising — albeit with “a few exceptions” like voter registration.

“We believe political message reach should be earned, not bought,” Dorsey said.

While it’s not totally clear how broad those exceptions will be, it sounds like the ban will apply to both ads endorsing candidates and ads advocating a position on political issues.

Dorsey said the company will share the final policy by November 15, and that it will start enforcing that policy on November 22.

“Internet political ads present entirely new challenges to civic discourse: machine learning-based optimization of messaging and micro-targeting, unchecked misleading information, and deep fakes,” he wrote. “All at increasing velocity, sophistication, and overwhelming scale.”

So why not continue accepting ads while trying to stamp out misinformation? He argued that the company “needs to focus our efforts on the root problems, without the additional burden and complexity taking money brings.”

A blanket policy could also help Twitter avoid the headache and controversy of making these determinations of truthfulness on a case-by-case basis.

This comes after Facebook, in particular, has faced heavy criticism around its refusal to fact-check political advertising (even as it took steps to fight election-related misinformation elsewhere), with Facebook employees writing an open letter objecting to the company’s stance.

At the same time, one of the ads that prompted the recent controversy — in which the Trump campaign promoted a conspiracy theory about Joe Biden — also ran on YouTube and Twitter (and on some TV networks, although CNN refused to air it).

So even though the discussion has focused on Facebook, the broader questions of permissiveness and responsibility are ones that all the major internet platforms have to face.

Over the summer, in fact, Twitter said it would start blocking state-run media outlets from running ads on its platform after it identified an operation to “sow political discord” around the protests in Hong Kong, which involved hundreds of accounts linked to the Chinese government.

The idea that Facebook should just ban all political ads is a solution that’s been floated by a number of pundits, including our own Josh Constine. Before today, that might have seemed like an extreme or unrealistic step. Suddenly, it looks much more possible — or at least like Mark Zuckerberg will have to keep answering questions about this for a while.

Dorsey didn’t mention Facebook by name in his tweets, but he seemed to allude to the company’s position when he wrote, “For instance, it‘s not credible for us to say: ‘We’re working hard to stop people from gaming our systems to spread misleading info, buuut if someone pays us to target and force people to see their political ad…well…they can say whatever they want! 😉'”

It’s also interesting that Twitter chose to announce this just as Facebook released its latest earnings report.

Dorsey also acknowledged that Twitter is “a small part of a much larger political advertising ecosystem,” but he said, “We have witnessed many social movements reach massive scale without any political advertising. I trust this will only grow.”

In a statement, eMarketer senior analyst Jasmine Enberg said the move is “in stark contrast to Facebook,” but also noted “it’s likely that political advertising doesn’t make up a critical part of Twitter’s core business.”

Trump gets on Twitch

The reelection campaign will be livestreamed. US president Donald Trump has joined Amazon-owned livestreaming platform Twitch.

Twitch is best known as a social video streaming platform for gamers but does host other content, including politics.

The verified DonaldTrump Twitch account, spotted earlier by Reuters, has just one video in the recent broadcast section so far: A livestream of a Trump rally which took place in Minneapolis yesterday evening.

Alongside the saved video of this broadcast is a growing selection of user generated clips culled from the stream, with titles such as “This is our president.”, “LOL”, “KEK” and “pepelaugh”.

Another clip remarks on how a single black man — who’s visible in the top corner of the shot of the audience behind Trump — vanishes as “they zoom him out of the picture”.

Trump is not the only high profile US politician to be taking to Twitch to broadcast campaign rallies in real time ahead of next year’s presidential election.

Democratic senator Bernie Sanders, who is making a pitch to be the party’s presidential candidate, joined the platform a few months ago. And at the time of writing Sanders still has more followers than Trump on Twitch (88,795 vs 37,754).

Over on Twitter, meanwhile — Trump’s go-to social media soapbox for skewering opponents and deflecting criticism, via his preferred medium of the early morning attack tweet — the president has ~65.6M followers.

So Twitter is very unlikely to be concerned that its highest profile user is flirting with Amazon’s social streaming platform. (Though it’s much less clear how happy “Jeff Bozo” will be about Trump getting on Twitch.)

Trump has dabbled with using Twitter’s own video streaming tool, Periscope. But the choice of Twitch for streaming his campaign rallies looks mostly like a case of horses for courses. Periscope is more for on-the-fly mobile streaming, whereas Twitch is a platform built for playing to (and building) a ‘lean back’ audience.

Troll culture also thrives on gamer Twitch. And Trump is of course edgelord of the trolls. Ergo he should fit right in.

With Periscope Twitter has been taking a stronger approach to tackling abusive comments in recent years (and also trying to fight fake and spam content) — in line with its stated desire to increase ‘conversational health’ on its platforms. So it’s probably happy to have dodged a bullet here.

Certainly Twitter CEO Jack Dorsey has more enough flying his way over whatever Trump choses to tweet next.

Twitter admits it used two-factor phone numbers and emails for serving targeted ads

Twitter has said it used phone numbers and email addresses, provided by users to set up two-factor authentication on their accounts, to serve targeted ads.

In a disclosure Tuesday, the social media giant said it did not know how many users were impacted.

The issue stemmed from the company’s tailored audiences program, which allows companies to target advertisements against their own marketing lists, such as phone numbers and email addresses. But Twitter found that when advertisers uploaded their marketing lists, it matched Twitter users to the phone numbers and email addresses users submitted to set up two-factor authentication on their account.

The issue was addressed as of September 17, the disclosure said.

Twitter finds itself in the same boat as Facebook, which last year was caught using users’ phone numbers and email addresses, which they gave Facebook for securing their accounts, for targeted advertising.

For its part, Twitter said its ad targeting was “an error” and apologized.

It’s the latest in a number of security lapses at Twitter in the past year. Last year, the company admitted to storing passwords in plaintext, disclosed a phone number leak bug despite knowing about it for two years, and confirmed a location data leak in May.

In August, Twitter chief executive Jack Dorsey had his own account hacked.

Diving into TED2019, the state of social media, and internet behavior

Extra Crunch offers members the opportunity to tune into conference calls led and moderated by the TechCrunch writers you read every day. Last week, TechCrunch’s Anthony Ha gave us his recap of the TED2019 conference and offered key takeaways from the most interesting talks and provocative ideas shared at the event.

Under the theme, ‘Bigger Than Us’, the conference featured talks, Q&A’s, and presentations from a wide array of high-profile speakers, including an appearance from Twitter CEO Jack Dorsey which was the talk of the week. Anthony dives deeper into the questions raised in his onstage interview that kept popping up: How has social media warped our democracy? How can the big online platforms fight back against abuse and misinformation? And what is the Internet good for, anyway?

“…So I would suggest that probably five years ago, the way that we wrote about a lot of these tech companies was too positive and they weren’t as good as we made them sound. Now the pendulum has swung all the way in the other direction, where they’re probably not as bad we make them sound…

…At TED, you’d see the more traditional TED talks about, “Let’s talk about the magic of finding community in the internet.” There were several versions of that talk this year. Some of them very good, but now you have to have that conversation with the acknowledgement that there’s much that is terrible on the internet.”

Ivan Poupyrev

Image via Ryan Lash / TED

Anthony also digs into what really differentiates the TED conference from other tech events, what types of people did and should attend the event, and even how he managed to get kicked out of the theater for typing too loud.

For access to the full transcription and the call audio, and for the opportunity to participate in future conference calls, become a member of Extra Crunch. Learn more and try it for free. 

Twitter makes ‘likes’ easier to use in its twttr prototype app. (Nobody tell Jack.)

On the one hand, you’ve got Twitter CEO Jack Dorsey lamenting the “like” button’s existence, and threatening to just kill the thing off entirely for incentivizing the wrong kind of behavior. On the other hand, you have twttr — Twitter’s prototype app where the company is testing new concepts including, most recently, a way to make liking tweets even easier than before.

Confused about Twitter’s product direction? Apparently, so is the company.

In the latest version of the twttr prototype, released on Thursday, users are now able to swipe right to left on any tweet in order to “like” it. Previously, this gesture only worked on tweets in conversation threads, where the engagement buttons had been hidden. With the change, however, the swipe works anywhere — including the Home timeline, the Notifications tab, your Profile page, or even within Twitter Search results. In other words, it becomes a more universal gesture.

This makes sense because once you got used to swiping right, it was confusing that the gesture didn’t work in some places, but did in others. Still, it’s odd to see the company doubling down on making “likes” easier to use — and even rolling out a feature that could increase user engagement with the “Like” button — given Jack Dorsey’s repeated comments about his distaste for “likes” and the conversations around the button’s removal.

Of course, twttr is not supposed to be Dorsey’s vision. Instead, it’s meant to be a new experiment in product development, where users and Twitter’s product teams work together, in the open, to develop, test, and then one day officially launch new features for Twitter.

For the time being, the app is largely focused on redesigning conversation threads. On Twitter today, these get long and unwieldy, and it’s not always clear who’s talking to who. On twttr, however, threads are nested with a thin line connecting the various posts.

The app is also rolling out other, smaller tweaks like labels on tweets within conversations that highlight the original “Author’s” replies, or if a post comes from someone you’re “following.”

And, of course, twttr introduced the “swipe to like” gesture.

While it’s one thing to want to collaborate more directly with the community, it seems strange that twttr is rolling out a feature designed to increase — not decrease — engagement with “likes” at this point in time.

Last August, for example, Dorsey said he wanted to redesign key elements of the social network, including the “like” button and the way Twitter displays follower counts.

“The most important thing that we can do is we look at the incentives that we’re building into our product,” Dorsey had said at the time. “Because they do express a point of view of what we want people to do — and I don’t think they are correct anymore.”

Soon after, at an industry event in October 2018, Dorsey again noted how the “like” button sends the wrong kind of message.

“Right now we have a big ‘like’ button with a heart on it, and we’re incentivizing people to want to drive that up,” said Dorsey. “We have a follower count that was bolded because it felt good twelve years ago, but that’s what people see us saying: that should go up. Is that the right thing?,” he wondered.

While these comments may have seemed like a little navel-gazing over Twitter’s past, a Telegraph report about the “like” button’s removal quickly caught fire. It claimed Dorsey had said the “like” button was going to go away entirely, which caused so much user backlash that Twitter comms had to respond. The company said the idea has been discussed, but it wasn’t something happening “soon.” (See above tweet).

Arguably, the “like” button is appreciated by Twitter’s user base, so it’s not surprising that a gesture that could increase its usage would become something that gets tried out in the community-led twttr prototype app. It’s worth noting, however, how remarkably different the development process is when it’s about what Twitter’s users want, not the CEO.

Hmmm.

Hey, twttr team? Maybe we can get that “edit” button now?