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Facebook and Twitter CEOs to testify before Congress in November on how they handled the election

Shortly after voting to move forward with a pair of subpoenas, the Senate Judiciary Committee has reached an agreement that will see the CEOs of two major social platforms testify voluntarily in November. The hearing will be the second major congressional appearance by tech CEOs arranged this month.

Twitter’s Jack Dorsey and Facebook’s Mark Zuckerberg will answer questions at the hearing, set for November 17 — two weeks after election day. The Republican-led committee is chaired by South Carolina Senator Lindsey Graham, who set the agenda to include the “platforms’ censorship and suppression of New York Post articles.”

According to a new press release from the committee, lawmakers also plan to use the proceedings as a high-profile port-mortem on how Twitter and Facebook fared on and after election day — an issue that lawmakers on both sides will undoubtedly be happy to dig into.

Republicans are eager to press the tech CEOs on how their respective platforms handled a dubious story from the New York Post purporting to report on hacked materials from presidential candidate Joe Biden’s son, Hunter Biden. They view the incident as evidence of their ongoing claims of anti-conservative political bias in platform policy decisions.

While Republicans on the Senate committee led the decision to pressure Zuckerberg and Dorsey into testifying, the committee’s Democrats, who sat out the vote on the subpoenas, will likely bring to the table their own questions about content moderation, as well.

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‘The Real Facebook Oversight Board’ launches to counter Facebook’s ‘Oversight Board’

Today a group of academics, researchers and civil rights leaders go live on with ‘The Real Facebook Oversight Board’ which is designed to criticize and discuss the role of the platform in the upcoming US election. The group includes Facebook’s ex-head of election security, leaders of the #StopHateForProfit campaign and Roger McNamee, early Facebook investor. Facebook launched its own ‘Oversight Board’ last November to deal with thorny issues of content moderation, but Facebook has admitted it will not be overseeing any of Facebook’s content or activity during the course of the US election, and will only adjudicate on issues after the event.

The press conference for the launch is streamed live today, below:
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Facebook founder Mark Zuckerberg claimed last November that the Oversight Board was “an incredibly important undertaking” and would “prevent the concentration of too much decision-making within our teams” and promote “accountability and oversight”.

The move was seen as an acknowledgment of the difficulty of decision-making inside Facebook. Decisions on what controversial posts to remove fall on the shoulders of individual executives, hence why the Oversight Board will act like a ‘Supreme Court’ for content moderation.

However, the Oversight Board has admitted it will take up to three months to make a decision and will only make judgments about content that has been removed from the platform, not what stays up. 

Facebook has invested $130 million in this board and announced its first board members in May, including ex-prime minister of Denmark, Helle Thorning-Schmidt and the ex-editor-in-chief of the Guardian, Alan Rusbridger.

The activist-led ‘Real Facebook Oversight Board’ includes the ex-President of Estonia, Toomas Henrik Ilves, an outspoken critic of Facebook and Maria Ressa, the journalist currently facing imprisonment in the Philippines for cyberlibel.

Board members also include Shoshana Zuboff, author of Surveillance Capitalism, Derrick Johnson, president of the NAACP, Yael Eisenstat, former head of election integrity at Facebook, Rashad Robinson, president of Color of Change, and Jonathan Greenblatt, CEO of the Anti-Defamation League .

This issue of how Facebook moderates its content and allows its users to be targetted by campaigns has become ever more pressing as the US election looms closer. It’s already been revealed by Channel 4 News in the UK that 3.5 million Black Americans were profiled and categorized on Facebook, and other social media, as needing to be deterred from voting by the Trump campaign.

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Writer Anand Giridharadas on tech’s billionaires: “Are they even on the same team as us?”

Since the start of the coronavirus pandemic, America’s roughly 640 billionaires have seen their fortunes soar by $845 billion in combined assets or 29% collectively, widening the already yawning gap between the very richest and the rest of the U.S.

Many of those billions were made by tech founders, including Mark Zuckerberg, Jeff Bezos, and Elon Musk, whose companies have soared in value and, in tandem, their net worth. In fact, so much has been made so fast and by so few relatively, that it’s easy to wonder if greater equality is now forever out of reach.

To talk about the question, we reached out earlier this week to Anand Giridharadas, a former New York Times correspondent whose 2018 book, “Winners Take All: The Elite Charade of Changing the World,” became a best-seller.

Giridharadas’s message at the time was largely that the generosity of the global elite is somewhat laughable — that many of the same players who say they want to help society are creating its most intractable problems. Think, for example of Bezos, whose company paid zero in federal tax in 2017 and 2018 and who is now on the cusp of opening a tuition-free preschool for underserved children called the Bezos Academy.

Given the aggressive escalation over the last six months of the same trends Giridharadas has tracked for years, we wondered how he views the current situation. Our chat has been edited for length and clarity.

TC: You have a weekly newsletter where you make the point that Jeff Bezos could give every one of Amazon’s 876,000 employees a ‘pandemic’ bonus of $105,000 and he would still have as much money as he did in March.

AG: There’s this way in which these crises are not merely things that rich and powerful survive. They’re things that they leverage and exploit, and it starts to raise the question of: are they even on the same team as us? Because when you have discussions about stimulus relief around what kind of policy responses you could have to something like the 2008 financial crisis or the pandemic, there’s initially some discussion and clamor for universal basic income, or substantial monthly checks for people, or even the French approach of nationalizing people salaries… and those things usually die. And they die thanks to corporate lobbyists and advocates of the rich and powerful, and are replaced by forms of relief that are upwardly redistributive that essentially exploit a crisis to transfer wealth and power to the top.

TC: Earlier in the 20th century, there was this perception that industry would contribute to solving a crisis with government. In this economy, we didn’t see a lot of the major tech companies, or a lot of the companies that were benefiting from this crisis, really sacrificing something to help the U.S. Do you see things that way?

AG: I think that’s right. I’m always wary of idealizing certain periods in the past, and I think there were a lot of problems in that time. But I think there’s no question that it was not as difficult back then, as it is today, to summon some kind of sense of common purpose and even the need to sacrifice values like profit seeking for other values.

I mean, after 9/11, President George W. Bush told us all to go shopping as the way to advance the common good. Donald Trump is now 18 levels of hell further down that path, not even telling us that we need to do anything for each other and [instead describing earlier this week] a pandemic that has killed 200,000 people as being something that doesn’t really affect most people.

So there’s just been a coarsening. And that kind of selfish trajectory of our culture, after 40 years of being told that what we do alone is better than what we do together, that what we do to create wealth is more important than what we do to advance shared goals — that quite dismal, dull message has had its consequences. And when you get a pandemic like this, and you suddenly need to be able to summon people to all socially distance at a minimum or, more ambitiously, pull for the common good or pay higher taxes or things that might even cost them a little bit, it’s very hard to do because the groundwork isn’t there.

TC: You’ve talked quite a bit over the years about “fake change.”

AG: Silicon Valley is the new Rome of our time, meaning a place in the world that ends up deciding how a lot of the rest of the world lives. No matter where you lived on the planet Earth, when the Roman Empire started to rise, it had plans for you one way or another, through your legal system, or your language, or culture, or something else. The Roman Empire was coming for you.

Silicon Valley is that for our time. It’s the new Rome [in] that you can’t live on planet Earth and be unaffected, directly or indirectly, by the decisions made in this relatively small patch of [of the world]. So the question then becomes, what does that new Rome want? And my impression of having reported on that world is that it’s an incredibly homogeneous world of people at the top of this new Rome. It’s white male dominated in a way that even other white male dominated sectors of the American economy are not . . . and it’s a lot of a certain kind of man who often is actually more obtuse about understanding human society and sociological dynamics and human beings than the average person.

Maybe they didn’t spend a lot of time negotiating human dynamics at sleepovers, which is fine. But when you end up with a new Rome and it’s hyper dominated by people of one race and one gender, many of whom are disproportionately socially unintelligent, running the platforms through which most human sociality now occurs — democratic discourse, family community, so on and so forth — we all start to live in a world created by people who are just quite limited. They are smart at the thing they’re smart at and they’ve become in charge of a lot of how the world works. And there’s simply not up to the task. And we see evidence of that every day.

TC: Are you speaking about empathy?

AG: Empathy is absolutely one of [the factors]. The ability to understand the more amorphous, non technological, non quantifiable things . . . it’s so interesting, because it’s people who are clearly very smart in a certain area but  just honestly do not understand democratic theory. There’s just so much work that’s been done — deep, complicated thinking going back to Plato and Aristotle, but also modern sociological work, including why a safety net and welfare is complicated. And there’s a certain kind of personality type that I have found very dominant in Silicon Valley, where it’s these men who just don’t really have a lens for that.

They’re often geniuses. It’s a certain kind of particular personality type where you care a lot about one thing and you go deep on that one thing, and it’s probably the same personality type that Beethoven had. It’s a great thing, actually. It’s just not great for governing us, and what these people are doing is privately governing us, and they have no humility about the limitations of their worldview

TC: We’re talking largely about social media here. Is it reasonable to expect some kind of government action. Do you think that’s naive? 

AG: It’s absolutely essential that the tech industry be brought into the same kind of sensible regulatory regime. I mean, you have kids, I have kids. If you’ve ever read the side of their car seats or any of the other products in their lives, you understand how much regulation there is for our benefit. . . I often say that the government at its best is like a lawyer for all of us. The government is like ‘Why don’t we check out these car seats for you and create some rules around them and then you can just buy a car seat and not have to wonder whether it’s the kind that protects your child or crumbles?’ That’s what the government does for all kinds of things.

TC: You’ve talked about billionaires who don’t want to pay taxes yet don’t hesitate to make a donation because they have control over where their money is spent and they get their name on a building, and it’s true. Many companies whose founders also consider themselves philanthropists, like Salesforce and Netflix, paid no federal tax in 2018, which amounts to billions of dollars lost. If you had to prioritize between taking antitrust action or closing the tax loopholes, what would you choose?

AG: They’re both important. But I think I would prioritize taxation.

One way to think about it is this pre distribution and redistribution. The monopoly issue in a way is pre distribution, which is how much money you get to make in the first place. If you get to be a monopoly because we don’t enforce antitrust laws, you’re going to end up making pre tax a lot more money than you would otherwise have made if you had to compete in an actual free market.

Once you’ve made that money, the tax question comes up. So both are important, but I think you can’t overestimate the extent to which the tax thing is just totally foundational. If you look at the report that the 400 richest families in America pay a lower effective tax rate than the bottom half of families, it’s appalling.

We live in a complicated world. A lot of different things have been going on, including just in the last few months. But if you have to really summarize the drift and the shift of the last 40 years, it’s been a war on taxation. And it’s been a massive redistribution of wealth from the bottom to the top of American life through taxation. Since the ’80s, the top 1% has gained $21 trillion of wealth, and the bottom half of Americans have lost $900 billion of wealth on average —  and much of that was prosecuted through the tax code.

Awkward! Above, Giridharadas shaking hands with Amazon founder Jeff Bezos at a Wired event in 2018.

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Facebook changes name of its annual VR event and its overall AR/VR organization

Facebook is moving further away from the Oculus brand.

The company says it is changing the name of their augmented reality and virtual reality division to “Facebook Reality Labs,” a division which will encompass the company’s AR/VR products under the Oculus, Spark and Portal brands.

The company’s AR/VR research division had its title changed from Oculus Research to Facebook Reality Labs back in 2018. That division will now be known as FRL Research.

Facebook has also announced that Oculus Connect, its annual virtual reality developer conference, will be renamed Facebook Connect and will be occurring entirely virtually on September 16.

Oculus has held a very different existence inside Facebook than other high-profile acquisitions like Instagram or WhatsApp . The org has been folded deeper into the core of the company, both in terms of leadership and organizational structure. The entire AR/VR org is run by Andrew Bosworth, a long-time executive at the company who is a close confidant of CEO Mark Zuckerberg.

Bosworth

In some sense, the name change is just an indication that the product ambitions of Facebook in the AR/VR world have grown larger since its 2014 Oculus acquisition.

Facebook is now no longer just building headsets, they’re also building augmented reality glasses, they’re adding AR software integrations into their core app and Instagram through Spark AR and, yes, they’re still doing some stuff with Facebook Portal.

In another sense, adding the term “Labs” to the end of a division that’s several years old with several products you’ve spent billions of dollars to realize, seems to be Facebook doubling down on the idea that everything contained therein is (1) pretty experimental and (2) not contributing all that much to the Facebook bottom line. This seems like the likely home for future Facebook moonshots.

The change will likely upset some Oculus users. Facebook’s reputation problems anecdotally seem to have a particularly strong hold among PC gamers leaving some Oculus fans generally unhappy with any news that showcases the Oculus brand coming further beneath the core Facebook org. Last week, the company shared that new Oculus headset users will need to sign into the platform with their Facebook account and that they would be phasing out Oculus accounts over time, a change that was met with hostility from insiders who believed that Facebook would keep more distance between the core social app and its virtual reality platform.

At this point, Oculus is still the brand name of the VR headsets Facebook sells and the company maintains that the brand isn’t going anywhere, but directionally it seems that Facebook is aiming to bring the brand closer beneath its wing.

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Zuckerberg unconvincingly feigns ignorance of data-sucking VPN scandal

Facebook’s Mark Zuckerberg appeared less than entirely truthful at today’s House Judiciary hearing, regarding last year’s major Onavo controversy, in which his company paid teenagers to use a VPN app that reported detailed data on their internet use. Though he may not have outright lied about it, his answers were evasive and misleading enough to warrant a rushed clarification shortly afterward.

Rep. Hank Johnson (D-GA) was asking Zuckerberg to confirm a series events last year first reported by TechCrunch: A VPN app called Onavo, owned by Facebook, was kicked out of Apple’s App Store for collecting and reporting usage data while purporting to provide a protective service.

Soon afterward, Facebook quietly began paying people — 18 percent of whom were teenagers — to install the “Facebook Research” app, which did much the same thing as Onavo under a different name. TechCrunch reported this and Apple issued a ban before the end of that day; Facebook claimed to have removed it voluntarily, but this was shown not to be true.

Rep. Johnson questioned Zuckerberg along these lines, and the latter repeatedly expressed his unsureness about and lack of familiarity with these issues.

Johnson: When it became public that Facebook was using Onavo to conduct digital surveillance, your company got kicked out of Apple’s App store, isn’t that true?

Zuckerberg: Congressman, I’m not sure I’d characterize it in that way.

Johnson: I mean, Onavo did get kicked out of the app store, isn’t that true?

Zuckerberg: Congressman, we took the app out after Apple changed their policies on VPN apps.

Johnson: And it was because of the use of the surveillance tools.

Zuckerberg: Congressman, I’m not sure the policy was worded that way or that it’s exactly the right characterization of it… [The policies are explained below.]

Johnson: Let me ask you this question, after Onavo was booted out of the app store, you turned to other surveillance tools, such as Facebook Research App, correct?

Zuckerberg: Congressman, in general, yes, we do a broad variety—

Johnson: Isn’t it true, Mr. Zuckerberg, that Facebook paid teenagers to sell their privacy by installing Facebook Research App?

Zuckerberg: Congressman, I’m not familiar with that, but I think it’s a general practice that companies use to, uh, have different surveys and understand data from how people are using different products and what their preferences are.

Johnson: Facebook Research app got thrown out of the App Store too, isn’t that true?

Zuckerberg: Congressman, I’m not familiar with that.

Image Credits: YouTube

Of course, the idea that Zuckerberg was not familiar with events that made headlines, took down Facebook’s internal apps for days, and prompted an angry letter to him from a senator is absurd. (After all, Facebook responded.)

Perhaps intuiting that this particular claim of ignorance was a bridge too far (and perhaps in response to some frantic off-screen action in the CEO’s barnlike virtual testimony HQ), Zuckerberg took the opportunity to backpedal a few minutes later:

In response to Congressman Johnson’s question, before I said that I wasn’t familiar with the Facebook research app when I wasn’t familiar with that name for it. I just want to be clear that I do recall we used an app for research and it’s since been discontinued.

Of course, although Zuckerberg may plausibly have been unsure about the name, it’s not to be believed that he was not familiar with the events of that time, as they were both highly publicized and very costly for Facebook. Naturally he would also have been refreshed on them during preparation for this testimony.

That Zuckerberg is unfamiliar with the exact wording of Apple’s rules is possible, even probable, but it was no secret that the rules were changed basically in response to reports of Facebook’s Onavo shenanigans. Here is what Apple said at the time:

We work hard to protect user privacy and data security throughout the Apple ecosystem. With the latest update to our guidelines, we made it explicitly clear that apps should not collect information about which other apps are installed on a user’s device for the purposes of analytics or advertising/marketing and must make it clear what user data will be collected and how it will be used.

Later, when TechCrunch showed that Facebook had been using an enterprise deployment tool to essentially sideload spyware onto teenagers’ phones, Apple said this:

We designed our Enterprise Developer Program solely for the internal distribution of apps within an organization. Facebook has been using their membership to distribute a data-collecting app to consumers, which is a clear breach of their agreement with Apple. Any developer using their enterprise certificates to distribute apps to consumers will have their certificates revoked, which is what we did in this case to protect our users and their data.

So Facebook was the reason, implicitly first, then later explicitly, for these App Store lockdowns. Rep. Johnson put the whole thing quite plainly at the end of his questions.

Johnson: You tried one thing and then you got caught, made some apologies, then you did it all over again. [long pause]… Isn’t that true?

Zuckerberg: Congressman, I respectfully disagree with that characterization.

You can watch the full hearing here:

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Google and Walmart’s PhonePe establish dominance in India’s mobile payments market as WhatsApp Pay struggles to launch

In India, it’s Google and Walmart-owned PhonePe that are racing neck-and-neck to be the top player in the mobile payments market, while Facebook remains mired in a regulatory maze for WhatsApp Pay’s rollout.

In May, more than 75 million users transacted on Google Pay app, ahead of PhonePe’s 60 million users, people familiar with the companies’ figures told TechCrunch. More than 10 million users transact on SoftBank -backed Paytm’s app everyday, according to internal data seen by TechCrunch.

Google still lags Paytm’s reach with merchants, but the Android -maker has maintained its overall lead in recent months despite every player losing momentum due to one of the most stringent lockdowns globally in place in India. The company is facing an antitrust probe in India over allegations that it is abusing its market position to unfairly promote its mobile payments app in the country, Reuters reported last month.

Paytm, once the dominant player in India, has been struggling to sustain its user base for nearly two years. The company had about 60 million transacting users in January last year, said people familiar with the matter.

Paytm had over 50 million monthly active users on its app in May, a spokesperson told TechCrunch.

Data sets consider transacting users to be those who have made at least one payment through the app in a month. It’s a coveted metric and is different from the much more popular monthly active users (MAU), or daily active users (DAU) that various firms use to share their performance. A portion of those labeled as monthly active users do not make any transaction on the app.

India’s homegrown payment firm, Paytm, has struggled to grow in recent years in part because of a mandate by India’s central bank to mobile wallet firms — the middlemen between users and banks — to perform know-your-client (KYC) verification of users, which created confusion among many, some of the people said. These woes come despite the firm’s fundraising success, which amounts to more than $3 billion.

In a statement, a Paytm spokesperson said, “When it comes to mobile wallets one has to remember the fact that Paytm was the company that set up the infrastructure to do KYC and has been able to complete over 100 million KYCs by physically meeting customers.”

Paytm has long benefited from integration with popular services such as Uber, and food delivery startup Swiggy, but fewer than 10 million of Paytm’s monthly transacting users have relied on this feature in recent months.

Two executives, who like everyone else spoke on the condition of anonymity because of fear of retribution, also said that Paytm resisted the idea of adopting Unified Payments Interface. That’s the nearly two-year-old payments infrastructure built and backed by a collation of banks in India that enables money to be sent directly between accounts at different banks and eliminates the need for a separate mobile wallet.

Paytm’s delays in adopting the standard left room for Google and PhonePe, another early adopter of UPI, to seize the opportunity.

Paytm, which adopted UPI a year after Google and PhonePe, refuted the characterization that it resisted joining UPI ecosystem.

“We are the company that cherishes innovation and technology that can transform the lives of millions. We understand the importance of financial technology and for this very reason, we have always been the champion and supporter of UPI. We, however, launched it on Paytm later than our peers because it took a little longer for us to get the approval to start UPI based services,“ a spokesperson said.

A sign for Paytm online payment method, operated by One97 Communications Ltd., is displayed at a street stall selling accessories in Bengaluru, India, on Saturday, Feb. 4, 2017. Photographer: Dhiraj Singh/Bloomberg via Getty Images

Missing from the fray is Facebook, which counts India as its biggest market by user count. The company began talks with banks to enter India’s mobile payments market, estimated to reach $1 trillion by 2023 (according to Credit Suisse), through WhatsApp as early as 2017. WhatsApp is the most popular smartphone app in India with over 400 million users in the country.

Facebook launched WhatsApp Pay to a million users in the following year, but has been locked in a regulatory battle since to expand the payments service to the rest of its users. Facebook chief executive Mark Zuckerberg said WhatsApp Pay would roll out nationwide by end of last year, but the firm is yet to secure all approvals — and new challenges keep cropping up. The company, which invested $5.7 billion in the nation’s top telecom operator Reliance Jio Platforms in April, declined to comment.

PhonePe, which was conceived only a year before WhatsApp set eyes to India’s mobile payments, has consistently grown as it added several third-party services. These include leading food and grocery delivery services Swiggy and Grofers, ride-hailing giant Ola, ticketing and staying players Ixigo and Oyo Hotels, in a so-called super app strategy. In November, about 63 million users were active on PhonePe, 45 million of whom transacted through the app.

Karthik Raghupathy, the head of business at PhonePe, confirmed the company’s transacting users to TechCrunch.

Three factors contributed to the growth of PhonePe, he said in an interview. “The rise of smartphones and mobile data adoption in recent years; early adoption to UPI at a time when most mobile payments firms in India were betting on virtual mobile-wallet model; and taking an open-ecosystem approach,” he said.

“We opened our consumer base to all our merchant partners very early on. Our philosophy was that we would not enter categories such as online ticketing for movies and travel, and instead work with market leaders on those fronts,” he explained.

“We also went to the market with a completely open, interoperable QR code that enabled merchants and businesses to use just one QR code to accept payments from any app — not just ours. Prior to this, you would see a neighborhood store maintain several QR codes to support a number of payment apps. Over the years, our approach has become the industry norm,” he said, adding that PhonePe has been similarly open to other wallets and payments options as well.

But despite the growth and its open approach, PhonePe has still struggled to win the confidence of investors in recent quarters. Stoking investors’ fears is the lack of a clear business model for mobile payments firms in India.

PhonePe executives held talks to raise capital last year that would have valued it at $8 billion, but the negotiations fell apart. Similar talks early this year, which would have valued PhonePe at $3 billion, which hasn’t been previously reported, also fell apart, three people familiar with the matter said. Raghupathy and a PhonePe spokesperson declined to comment on the company’s fundraising plans.

For now, Walmart has agreed to continue to bankroll the payments app, which became part of the retail group with Flipkart acquisition in 2018.

As UPI gained inroads in the market, banks have done away with any promotional incentives to mobile payments players, one of their only revenue sources.

At an event in Bangalore late last year, Sajith Sivanandan, managing director and business head of Google Pay and Next Billion User Initiatives, said current local rules have forced Google Pay to operate without a clear business model in India.

Coronavirus takes its toll on payments companies

The coronavirus pandemic that prompted New Delhi to order a nationwide lockdown in late March preceded a significant, but predictable, drop in mobile payments usage in the following weeks. But while Paytm continues to struggle in bouncing back, PhonePe and Google Pay have fully recovered as India eased some restrictions.

About 120 million UPI transactions occurred on Paytm in the month of May, down from 127 million in April and 186 million in March, according to data compiled by NPCI, the body that oversees UPI, and obtained by TechCrunch. (Paytm maintains a mobile wallet business, which contributes to its overall transacting users.)

Google Pay, which only supports UPI payments, facilitated 540 million transactions in May, up from 434 million in April and 515 million in March. PhonePe’s 454 million March figure slid to 368 million in April, but it turned the corner, with 460 million transactions last month. An NPCI spokesperson did not respond to a request for comment.

PhonePe and Google Pay together accounted for about 83% of all UPI transactions in India last month. UPI itself has over 117 million users.

Industry executives working at rival firms said it would be a mistake to dismiss Paytm, the one-time leader of the mobile payments market in India.

Paytm has cut its marketing expenses and aggressively chased merchants in recent quarters. Earlier this year, it unveiled a range of gadgets, including a device that displays QR check-out codes that comes with a calculator and USB charger, a jukebox that provides voice confirmations of transactions and services to streamline inventory management for merchants.

Merchants who use these devices pay a recurring fee to Paytm, Vijay Shekhar Sharma, co-founder and chief executive of the firm told TechCrunch in an interview earlier this year. Paytm has also entered several businesses, such as movie and travel ticketing, lending, games and e-commerce, and set up a digital payments bank over the years.

“Everyone knows Paytm. Paytm is synonymous with digital payments in India. And outside, there’s a perceived notion that it’s truly the Alipay of India,” an executive at a rival firm said.

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Europe asks for views on platform governance and competition tools

The European Commission is asking for views on how online platforms should be regulated in future, launching a public consultation today on the forthcoming Digital Services Act (DSA).

This pan-EU legislative proposal, due before the end of the year, is slated to rework the regional rulebook for digital services, including tackling controversial issues such as liability for user-generated content and online disinformation.

Modernising and updating rules related to ecommerce and online marketplaces to foster competitive by ensuring a level playing field in digital markets is another stated aim. 

Whether the DSA will prove as divisive as the EU’s copyright reform remains to be seen — but the stakes are high indeed.  

In parallel today, the Commission is soliciting views on possible updates to pan-EU competition regulation, asking whether a new tool is needed to beef up enforcement powers in the digital era.

Rebooting Europe’s digital regulation

The DSA consultation, which runs until September 8, covers issues including safety online, freedom of expression, fairness and a level-playing field in the digital economy, per the Commission, which says it’s seeking input from people, businesses, online platforms, academics, civil society and “all interested parties” to shape the planned governance framework for digital services.

Of course it’s already heard plenty on this topic from tech giant lobbyists.

Facebook CEO Mark Zuckerberg even sat down for a livestreamed discussion alongside European commissioner Thierry Breton last month — only to be lectured on the need for digital giants to pay their fair share of taxes.

But the Commission wants businesses of all stripes and sizes to chip into the consultation. After all, the most dominant platforms have the most to lose from any change of pan-EU rules.

And perhaps especially from changes that result in defining a specific set of “responsibilities” for the largest platforms.

Commenting in a statement, Commission EVP, Margrethe Vestager, said: The Internet presents citizens and businesses with great opportunities, which they balance against risks that come with working and interacting online. At this time, we are asking for the views of interested citizens and stakeholders on how to make a modern regulatory framework for digital services and online platforms in the EU. Many of these questions impact the day-to-day lives of citizens and we are committing to build a safe and innovative digital future with purpose for them.”

“Online platforms have taken a central role in our life, our economy and our democracy. With such a role comes greater responsibility, but this can happen only against the backdrop of a modern rulebook for digital services,” said Breton in another statement. “We will listen to all views and reflect together to find the right balance between a safe Internet for all, protecting freedom of expression and ensuring space to innovate in the EU single market.”

The DSA package will contain a number of strands, with one set of rules focused on updating the EU’s existing eCommerce Directive — which dates back two decades at this point.

“Building on these principles, we aim to establish clearer and modern rules concerning the role and obligations of online intermediaries, including non-EU ones active in the EU, as well as a more effective governance system to ensure that such rules are correctly enforced across the EU single Market while guaranteeing the respect of fundamental rights,” the Commission said today.

A second component is aimed at ensuring fairness in European digital markets which have become dominated by a few large online platforms that act as gatekeepers.

EU institutions have already adopted one legislative measure aimed at platform marketplace fairness — due to come into force next month. But the Commission believes more is needed and is now exploring building on that foundation with additional rules to foster competition — potentially around (non-personal) data sharing.

“We will explore rules to address these market imbalances, to ensure that consumers have the widest choice and that the EU single market for digital services remains competitive and open to innovation. This could be through additional general rules for all platforms of a certain scale, such as rules on self-preferencing, and/or through tailored regulatory obligations for specific gatekeepers, such as non-personal data access obligations, specific requirements regarding personal data portability, or interoperability requirements,” it said today.

The consultation is also asking for views on other “emergent” issues related to online platforms — including working conditions for platform workers who are providing a service via these marketplaces.

Gig economy platforms continue to face legal challenges in Europe over their classification of platform workers as ‘self employed’, a status that reduces the benefits they are entitled to as a result of their labor.

On competition policy, the Commission has today published an inception impact assessment and opened up another public consultation — inviting comments on whether EU regulators need a new competition tool to allow them to address structural competition problems in a timely and effective manner.

The pace of competition enforcement vs the speed of Internet-enabled disruption has led to criticism that current remedies applied to problematic digital business practices come far too late to be effective.

Commenting on this in another supporting statement, Vestager, who also heads up EU competition policy, said: “The world is changing fast and it is important that the competition rules are fit for that change. Our rules have an inbuilt flexibility which allows us to deal with a broad range of anti-competitive conduct across markets. We see, however, that there are certain structural risks for competition, such as tipping markets, which are not addressed by the current rules. We are seeking the views of stakeholders to explore the need for a possible new competition tool that would allow addressing such structural competition problems, in a timely and effective manner ensuring fair and competitive markets across the economy.”

The Commission says it has concluded that ensuring the “contestability” and “fair functioning” of markets is likely to require a “holistic and comprehensive approach” — emphasizing that this should involve continued vigorous enforcement of existing EU rules (including the use of so-called ‘interim measures’, where appropriate; an old tool Vestager has recently dusted off and unboxed).

But — additionally — it’s considering supplementing existing antitrust rules with ex-ante regulation of digital platforms (“including additional requirements for those that play a gatekeeper role”); and the aforementioned possible new competition tool for dealing with structural competition problems that have proven tricky to tackle with current measures (such as preventing markets from tipping).

“The new competition tool should enable the Commission to address gaps in the current competition rules and to intervene against structural competition problems across markets in a timely and effective manner,” it writes.

“After establishing a structural competition problem through a rigorous market investigation during which rights of defence are fully respected, the new tool should allow the Commission to impose behavioural and where appropriate, structural remedies. However, there would be no finding of an infringement, nor would any fines be imposed on the market participants.”

Stakeholders have until June 30 to submit views on the Commission’s inception impact assessment, while the public consultation on the potential new competition tool is taking submissions until September 8.

Subject to the outcome of the impact assessment the Commission adds that a legislative proposal is scheduled for Q4.

Interestingly, for Commission watchers, the consultation on the possibility of ex-ante regulation of digital platforms — which is clearly forming part of Vestager’s thinking on ensuring functionally competitive markets, given it’s included in the competition reform discussion — has not been included in the competition consultation — but rather slotted into the DSA consultation, which is being led by Breton.

The two commissioners not only have very different personal styles but appear opposed on policy substance, with Vestager being comfortable voicing support for regulating digital technologies while Breton continues to express reluctance to do so, preferring to court industry engagement — and couching regulation as a last, unwelcome resort.

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Mark Zuckerberg commits Facebook to $10 million donation to ‘groups working on racial justice’

Even as Facebook continues to take a hands-off approach to monitoring violent rhetoric and disinformation on its platform, the company will make a $10 million donation “to groups working on racial justice” in the U.S., according to a late Sunday night post from chief executive Mark Zuckerberg.

The commitment from Facebook follows a week of protests around the country challenging police brutality — spurred by the dissemination of a video on Facebook showing the death of George Floyd, an African American man who was killed by police officers in Minneapolis.

Zuckerberg’s pledge comes after several prominent Facebook employees expressed their frustration with their company’s response on Twitter and only a few hours before a number of the company’s workers staged a virtual walkout.

“I work at Facebook and I am not proud of how we’re showing up,” Jason Toff, a director of product management at Facebook, wrote on Twitter. “The majority of coworkers I’ve spoken to feel the same way. We are making our voices heard.”

Zuckerberg’s statement comes as several technology companies have issued their own messages of solidarity with the protests and the systemic injustices they are challenging.

In his Facebook message, Zuckerberg calls attention to the fact that the video capturing George Floyd’s murder was posted on his platform.

“… it’s clear Facebook also has more work to do to keep people safe and ensure our systems don’t amplify bias,” wrote Zuckerberg. “The organizations fighting for justice also need funding, so Facebook is committing an additional $10 million to groups working on racial justice. We’re working with our civil rights advisors and our employees to identify organizations locally and nationally that could most effectively use this right now.”

The commitment from Facebook is in addition to roughly $40 million that Zuckerberg has invested “annually for several years” in organizations working to combat racial injustice.

For critics like Anand Giridharadas, the commitments from Facebook’s coffers don’t outweigh the problems with the company’s business model and its inability to adequately address the ways in which the company’s service amplifies disinformation.

“And so the giving back that he’s doing isn’t just a negligible contribution that won’t really make much difference,” Giridharadas writes. “It actually helps to make things worse, by buying his toxic business model a little more breathing room and political capital.”

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Daily Crunch: Facebook embraces remote work

Facebook takes more steps to support and expand a remote workforce, IBM announces layoffs and TechCrunch’s big annual conference is going virtual. (I know, I know — I have mixed feelings about it, too.)

Here’s your Daily Crunch for May 22, 2020.

1. Facebook makes big remote work moves with plan for new hubs in Dallas, Denver and Atlanta

Facebook CEO Mark Zuckerberg estimated that over the course of the next decade, half of the company could be working fully remotely. As the next step toward that goal, Facebook will be setting up new company hubs in Denver, Dallas and Atlanta.

For Menlo Park employees looking for greener pastures, there’s one sizable catch. Starting on January 1 of next year, the company will localize all salaries, which means scaling compensation to the local cost of living.

2. IBM confirms layoffs are happening, but won’t provide details

IBM isn’t sharing details, but analyst Patrick Moorhead said. “I’m hearing it’s a balancing act between business units. IBM is moving as many resources as it can to the cloud.”

3. TechCrunch Disrupt 2020 is going virtual

As you can imagine, this is largely due to the impact that the coronavirus has had on the world. But it also gives us a chance to make our event even more accessible to more people than ever before, and Disrupt will now stretch over five days — September 14-18.

4. Netflix to start cancelling inactive customers’ subscriptions

Netflix said it will ask customers who have not watched anything in a year or more if they want to maintain their subscription. If it doesn’t hear back, it will cancel their membership.

5. API startups are so hot right now

Alex Wilhelm looks at FalconX, Treasury Prime, Spruce, Daily.co, Skyflow and Evervault — all API-focused startups that are experiencing some early success. (Extra Crunch membership required.)

6. Magic Leap has apparently raised another $350 million, in spite of itself

Magic Leap has reportedly received a $350 million lifeline, a month after slashing 1,000 jobs and dropping its consumer business. Noted by Business Insider and confirmed by The Information, CEO Rony Abovitz sent a note to staff announcing the funding, courtesy of unnamed current and new investors.

7. Cake brings a Swedish take on e-motorcycle design to the US

The Stockholm-based mobility startup’s debut, the Kalk OR, is a 150-pound, battery-powered two-wheeler engineered for agile off-road riding and available in a street-legal version.

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.

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Facebook appoints Treasury’s Kimmitt as lead independent board director

Facebook has filled the lead independent board director role with former Deputy Secretary of the Treasury and U.S. Ambassador to Germany Robert M. Kimmitt. His job will be to serve as the go-between connecting Facebook CEO and controlling shareholder Mark Zuckerberg with the rest of the board.
Meanwhile, the …

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