Tech News

Netflix founder and co-CEO Reed Hastings announced Thursday that he would step down after more than two decades at the company.

While news of his departure comes as a shock, Hastings noted that Netflix has planned its next era of leadership “for many years” in the announcement, which was shared on the company’s blog.

In 2020, Netflix named Ted Sarandos, who has long led content efforts at the company, as co-CEO alongside Hastings. At the time, Netflix characterized the change as formalizing the way that the company was already operating.

Netflix will maintain the co-CEO structure in Hasting’s absence, promoting COO Greg Peters to the tandem role with Sarandos.

“It was a baptism by fire, given COVID and recent challenges within our business,” Hastings said of Sarandos and Peters taking the reins.

“But they’ve both managed incredibly well, ensuring Netflix continues to improve and developing a clear path to reaccelerate our revenue and earnings growth. So the board and I believe it’s the right time to complete my succession.”

Hastings will stay involved with the company as executive chairman of the board, following a precedent shared by other prominent major tech company founders including Amazon’s Jeff Bezos and Microsoft’s Bill Gates.

Netflix founder Reed Hastings steps down as co-CEO by Taylor Hatmaker originally published on TechCrunch

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Welcome back to Chain Reaction.

Do you believe in second chances? Well, FTX’s new CEO John J. Ray III hopes so. The disgraced crypto exchange’s new chief is open to the idea of restarting operations and possibly reviving the bankrupt company, according to a new report by WSJ. Time will tell if that happens and works out for both FTX and the company’s customers and creditors.

In other news, if you hadn’t heard of a little eight-letter crypto exchange called Bitzlato before Wednesday, you’re not alone. But apparently the U.S. Department of Justice knew what it was, and followed it so closely that they uncovered enough information to arrest the founder, Anatoly Legkodymov, for allegedly processing over $700 million of illicit funds.

While this arrest brought forth a number of jokes and confusion from crypto community members, who had no idea what Bitzlato was before the announcement, it also brought on a bit of annoyance that the DOJ isn’t taking action toward bigger players in the space.

Events like FTX’s bankruptcy shook the crypto industry, but longtime crypto players didn’t seem to know what Bitzlato was before the DOJ’s announcement. According to data of known wallets from Arkham, a crypto intelligence tool, wallets associated with Bitzlato contain just over $11,000; at its peak, they contained over $6 million, making Bitzlato a very small player in the industry.

All in all, this arrest points to the DOJ — and the U.S. government in general — cracking down on the crypto space. Like the rapper Biggie Smalls once said, “It’s like the more money we come across, the more problems we see.”

More details below.

This week in web3

Solana co-founder sees potential for devs to lead its network in 2023 (TC+)

As the crypto developer ecosystem expands, major ecosystems outside of the top two cryptocurrencies — Bitcoin and Ethereum — are growing, according to a new report. Solana saw the highest number of new developers contributing to the ecosystem, with its developer count rising by 83%, the fastest of any major blockchain. “2023 might just be the year when other devs already building on Solana collectively lead the direction of the network,” Raj Gokal, co-founder of Solana, said to TechCrunch.

DOJ charges founder of crypto exchange Bitzlato for processing $700M of illegal funds

As mentioned above, little-known crypto exchange Bitzlato is in hot water. According to the DOJ, Bitzlato allowed users to trade cryptocurrencies without verifying their identity. The Hong Kong-registered exchange advertised itself to customers by saying that “neither selfies nor passports [are] required.” The government said that this lack of know-your-customer procedures turned Bitzlato into a hotbed for criminal activity.

Ethereum’s shift to proof-of-stake draws increasing institutional interest (TC+)

Ethereum’s shift from proof-of-work (PoW) to proof-of-stake (PoS) in September 2022 increased interest in staking across a number of parties — including institutions. The success of the Merge propelled Ethereum from “a smart contract platform lagging behind” into “something that was doing things right,” Diogo Mónica, co-founder and president of Anchorage Digital, a crypto bank last valued at over $3 billion, said to TechCrunch. “Interest from investors grew and the appetite changed dramatically.”

Crypto.com cuts 20% jobs amid ‘significant damage’ to industry from FTX

Crypto exchange Crypto.com is cutting its global workforce by 20%, it said on Friday, as it navigates ongoing economic headwinds and “unforeseeable” industry events. This is the second major layoff at the Singapore-headquartered Crypto.com, which cut 250 jobs in mid-last year. The company did not say which roles were being eliminated in the new round of layoffs but blamed the collapse of FTX, whose misappropriation of customers’ funds and bankruptcy “significantly damaged trust in the industry.”

Crypto in for a ‘choppy year’ of slow capital deployment, investors say (TC+)

While some crypto-focused venture capitalists are bullish for 2023, others see it as a hazardous time. Many investors are trying to put last year’s chaotic market behind them and look forward to the future in a still investor-centric environment. But the competition in the market will heat up as investors write fewer checks and become more selective.

The latest pod

Last week, Chain Reaction launched Season 2 with an episode with Ryan Wyatt, president of Polygon Labs, one of the biggest market shakers and layer-2 blockchains in the crypto space that’s building on top of the Ethereum ecosystem.

Next week, we’ll be releasing our second episode with Mo Shaikh, co-founder and CEO of Aptos, a new-ish layer-1 blockchain that raised a total of $350 million in funding in 2022.

Stay tuned.

Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to keep up with the latest episodes, and please leave us a review if you like what you hear!

Follow the money

ZK proof-focused startup Ulvetanna raises $15 million in a seed round
Obol Labs raises $12.5 million in a Series A round
The =nil; Foundation raises $22 million to build out a proof-based marketplace
Metahood raises $3 million to build a metaverse-based real estate portal
Sleepagotchi raises $3.5 million to gamify and reward people for sleeping

This list was compiled with information from Messari as well as TechCrunch’s own reporting.

More money, more problems for crypto by Jacquelyn Melinek originally published on TechCrunch

The clock is ticking for Uber to electrify its fleet, and the rideshare company wants automakers to help by designing cheaper electric vehicles for its drivers.

Lawmakers are setting deadlines for rideshare companies to ditch fossil fuels (California‘s Air Resources Board among them), and Uber has its own electrification deadlines, which range from 2025 to 2030. That’s all well and good, but electric vehicles are still too pricey for most people, including rideshare drivers.

So, chief executive Dara Khosrowshahi says Uber is in talks with automakers to build EVs that sacrifice speed, or even a wheel or two, to drive down the sticker price. The CEO didn’t name the specific automakers that Uber is apparently working with, but last year the company debuted a rideshare-focused prototype from U.K.-based automaker Arrival.

“Top speeds that many cars have are not necessary for city driving that’s associated with rideshare,” Khosrowshahi said on Thursday at a Wall Street Journal event. “We’re also talking about vehicles that are purpose-built” for delivering things like groceries, he added. “You can imagine smaller vehicles — two-wheelers, three-wheelers — that have trunk space that can get through traffic easier that have a much smaller footprint, both in terms of environmental and also traffic footprint, than let’s say a car.”

The CEO also said the passenger area could change, with riders potentially “facing each other.” (The executive also didn’t say if Uber would cover detailing costs from the bouts of motion sickness I assume this would trigger.)

When it comes to meal and grocery delivery, Uber isn’t the only company to see potential in much smaller vehicles with fewer wheels. Even in markets like the U.S., where auto rickshaws aren’t common, several companies have talked up this idea in recent years, including Arcimoto and ElectraMeccanica.

In race to electrify, Uber wants EVs that sacrifice top speeds, wheels by Harri Weber originally published on TechCrunch

There’s no shortage of tools for brainstorming, collaboration and keeping all your knowledge in one place. Still, judging from the number of new tools that come to market on a regular basis, it seems that people are frustrated with the available tools.

Scrintal recently raised $1 million to build its visual collaborative knowledge base tool and shared its deck for us to take a peek under the hood.

We’re looking for more unique pitch decks to tear down, so if you want to submit your own, here’s how you can do that.

Slides in this deck

Cover slide
Problem slide part 1
Problem slide part 2
Solution slide part 1
Solution slide part 2
Value proposition slide
User testimonials slide
Traction slide
Revenue slide
Retention slide
User profile slide
Growth projection slide
Vision slide
The ask slide
Contact slide
Appendices cover slide
Appendix 1: Why now?
Appendix 2: Competitive landscape
Appendix 3: Product and growth model

Three things to love

Scrintal is entering a crowded and chaotic market; without really trying, I can name five or six well-established competitors in that space. The good news is that the company seems to know that and tackles its advantages head-on.

Clarity of value proposition

Promising a 10x increase in work speed is a hell of a claim, and as a would-be investor I’d want to see some proof — but the story is told very well. This value proposition slide comes after a pretty thorough examination of the problem space and the solution the company is building, and puts great clarity around what the tool does and who it does it for.

Storytelling to explain the benefits

Getting your users to tell your story for you is such an obvious storytelling technique, often used in sales decks. It’s remarkably rarely used in VC pitch decks, which I think is a tremendous shame. Here, Scrintal is using its customer testimonials to highlight various selling points and benefits in a way that feels seamless and elegant.

The stats shown on the slide (66% fewer apps used, 50% less time spent, 30% fewer meetings) tell one part of the story. The headlines tell another. The quotes are helpful for filling out the story even further, and even doing a quick skim of the job titles of the people sharing the testimonials helps give an impression of the breadth of how the companies are able to draw benefits from Scrintal.

I presume that the places it says “user name” are redacted and that the “real” deck shows the names and businesses that are using the product, but even without that, it shows how well you can use testimonials and user interviews to your favor.

For startups, this slide is a lesson in how to think creatively about sharing your journey to date with potential investors.

I’m not in love with how much text there is on this slide — you wouldn’t want to use this for a presentation deck — but it’s a great slide for a send-home deck. It adds a lot of context and does so in a way that is super easy to understand even without a voice-over or additional information.

A bold vision

This slide isn’t strictly a vision slide — it does a lot more than that. It shows off what some of the competitor valuations are and explores the nature of the business models of those competitors. It shares the trajectory of its plan (although the step functions from visual OS to machine learning to workspace to visual knowledge base are a little unclear to me). Having said that, in a pitch context, I can see this being a helpful slide to guide some of the conversations with the investors in the right direction.

This slide isn’t a complete slam dunk, however, and there are a few things that could be improved. I wish the vision was clearer: “transform the way 1B+ people create ideas” is pretty fluffy. Yes, the company wants to transform it, but from what to what, and why? It’s also a little confusing to me why the company is talking about the European market only — it’s a big world out there, and the company’s pricing is in U.S. dollars, so seeing the “platform expansion” limit itself is confusing.

In the rest of this teardown, we’ll take a look at three things Scrintal could have improved or done differently, along with its full pitch deck!

Three things that could be improved

One of the big things investors are looking for when evaluating a startup is whether it is able to gradually de-risk what it is doing, stage by stage. A million dollars isn’t a huge fundraising round by most standards, and the company is likely at the earliest stages of its value-creation journey. That means that the deck needs to make something pretty clear: What is it doing in the current stage to prove some of its hypotheses? Sadly, the Scrintal deck is a little lacking on that front.

Pitch Deck Teardown: Scrintal’s $1M seed deck by Haje Jan Kamps originally published on TechCrunch

Facebook parent Meta announced today it’s further centralizing various user settings across its suite of apps — Facebook, Instagram, and Messenger. As a result, several existing settings will be relocated to Meta’s “Accounts Center” feature, first launched in 2020. Specifically, the changes will see Meta moving settings related to personal details, passwords, security options and ad preferences to this area, which is accessible from the Settings page within each app.

Meta says the update is aimed at making its settings experience easier for consumers to use. But in reality, the constant relocation of apps’ settings — something Facebook, in particular, has been notorious for re-arranging over the years — can lead to consumer confusion. In this case, however, it may not be too difficult to find the newly moved items, as they’re still going to be in the Settings section.

Now over a couple years old, Meta’s Accounts Center was introduced at a time when multiple regulators and governments had been investigating the company for its antitrust behavior. Though the feature in some ways highlights the extensive data collection practices across Meta’s family of apps, it can also be used as a means of demonstrating to lawmakers how Meta is making it simpler for consumers to manage their data — or so the company hopes.

With the update, consumers will be able to make choices about their data that are more consistent across platforms, Meta argues in its announcement about the new features. For instance, users could set their ad topic preferences across both Facebook and Instagram in one place, it says.

In addition to the relocated settings, Meta is updating data about users’ activity from Partners’ control, it adds, now calling this Activity information from ad partners. This is intended to help people see how their activity is sent to other websites and apps to power ads, Meta explains. The company says it’s also making changes aimed at allowing people to better understand their options when it comes to ads shown by Meta on other websites and apps and is exploring different ways of allowing users to customize these experiences — including through options that allow them to see fewer ads of things that don’t interest them.

These latter updates follow the rollout of Apple’s App Tracking Transparency (ATT) privacy changes on iOS, which impacted Meta’s ad business and its revenues. Since then, companies have been looking to find other ways to continue to personalize ads for their users, as doing so leads to a more effective and profitable ad business. As Meta’s changes are only today being announced, it’s too early to make comments on how these revised tools for configuring the user’s interests and ad preferences could be tied to a larger attempt to workaround ATT using direct user input, but it’s likely that’s been a part of the reasoning here.

Meta says the changes will launch today but “gradually” roll out to Facebook, Messenger and Instagram over the months ahead.

Meta centralizes more user and privacy settings across its apps, announces changes to ads controls by Sarah Perez originally published on TechCrunch

I managed to squeeze the remaining vestiges out of CES 2023 in last week’s Actuator. The good news is that things are starting to pick up again like clockwork. If you’ve emailed me about work stuff in the past week, I apologize for the delay — I’ve been out of one frying pan and into the next. Anecdotally, I’ll say this is a net positive. Robotics news took a brief respite over the holidays, but things are coming fast and furious again.

It’s not all good news, of course. The calendar reset a couple weeks back — but unfortunately, all of the economic doom and gloom doesn’t get a fresh start with it. This year is going to be a reckoning. As ominous as it sounds, this is not a wholly good or bad thing, mind. It’s more that, after two years of relentless optimism for robotics and automation, the check is coming due for many.

This will be a year of sink or swim for many. As VC becomes harder to come by, runways suddenly shorten, and to sufficiently stretch the metaphor, no one wants to deal with a shrinking runway at takeoff. If you can’t rope in that $20 million round you were banking on, suddenly you’re faced with some extremely hard decisions. That could take the form of a pivot, a severe belt tightening (layoffs, thinning out the roadmap), exploring a sell-off or other worst-case scenario.

All of the above options involve an existential change for everyone involved. Again, it doesn’t necessarily have to be a bad thing. Some well-positioned firms will come out of it better, as a clear front runner in the category. It could mean acquiring a smaller firm, combining teams and coming out stronger for it. Heck, even those who have had to take the extremely unfortunate (and life-altering) action of layoffs could ultimately come out the other side with a kind of renewed sense of focus.

All of this is top of mind, in part, because of the recent Intrinsic news, which just missed the deadline for last week’s newsletter. It’s a weird one. I’m hoping to catch up with the Alphabet team soon to discuss a series of events that included a couple of acquisitions followed by a 20% staff reduction, amounting to around 40 people. Certainly I’m aware that the timeline for acquisitions and personnel decisions don’t always line up in an ideal fashion.

I’m always keenly aware of how big companies like Alphabet make these sorts of decisions for their bottom line. The fact is that it can be a lot harder to justify long-tail commitments — particularly those that aren’t deemed essential to the company’s core mission. None of this should be taken as a repudiation of Intrinsic’s mission, of course — the work it and other companies are doing in the robotics software space is key to the future of industrial implementation. If I had to venture a guess (as I am contractually obligated to do), I would say that it’s more a reprioritization on Alphabet’s part.

An Intrinsic spokesperson told TechCrunch:

Intrinsic’s leadership has made the difficult decision to let go a number of our team members. We have communicated the news directly with them. We fully acknowledge how hard this will be and are offering as much proactive support as possible. This decision was made in light of shifts in prioritization and our longer-term strategic direction. It will ensure Intrinsic can continue to allocate resources to our highest priority initiatives, such as building our software and AI platform, integrating the recent strategic acquisitions of Vicarious and OSRC (commercial arm Open Robotics), and working with key industry partners. While incredibly tough to do, we believe this decision is necessary for us to continue our mission.

No question in my mind this was a difficult decision. Among other things, it’s not the sort of vote of confidence a young company is hoping for out the gate. But Intrinsic has a lot of smart folks on board — even more so after those acquisitions — and in spite of the downsizing, Alphabet does, of course, have tremendous resources if and when it turns that faucet back on.

The other bit of news I wanted to touch on off the top was yesterday’s Boston Dynamics news. One thing’s for sure — the Massachusetts firm makes a mean video. A few dropped this week showcasing new grippers for Atlas. The humanoid robot utilizes its new appendages to lend a couple of hands at a makeshift construction site. Here’s a breakdown from BD:

Atlas’ ability to pick up and move objects of different sizes, materials, and weights (the wooden plank and tool bag) while staying balanced is enabled by improved locomotion and sensing capabilities. For this video the team installed utility “claw” grippers with one fixed finger and one moving finger. These simple grippers are designed for heavy lifting tasks and first appeared in the Samuel Adams [Super Bowl] commercial where Atlas held a keg over its head.
Improved control systems in order to 180-degree jump while holding the wooden plank.
Performing a spinning jump while throwing the tool bag. To accomplish this task the team extended the model predictive controller (MPC) to consider the coupled motion of both the robot and object together.
Pushing the wooden box from the platform, which meant Atlas needed to generate enough power to cause the box to fall without sending itself off of the platform.
Atlas’ concluding move, an inverted 540-degree, multi-axis flip, adds a symmetry to the robot’s movement making it a much more difficult skill than previously performed parkour.

I would caution that nothing Boston Dynamics shows should be read as anything more than proof of concept. That’s doubly the case with Atlas, which is a research robot, through and through. The caveat here, of course, is that new(ish) owner, Hyundai, has been very aggressive about commercializing these products. Imagining some more productized Atlas offspring helping out around their automotive factories doesn’t seem far out of the realm of possibility, for example.

Atlas certainly has a sizable head start on Tesla’s promised (threatened?) all-purpose humanoid. It remains to be seen what Figure is working on as well. Most of all, I look forward to a renewed, spirited debate around making robots in our own image.

Here’s a fun piece from Devin about a drone from Swiss scientists designed to collect “external DNA” from treetops. That means cruising around picking up evidence like skin, feathers and waste to determine what animals have been hanging out in the area. Devin here:

The drone looks a bit like a modernist light fixture, with a beautifully crafted wood frame and plastic shielding, and strips of adhesive tape or “humidified cotton” mounted on its lower surfaces. After being guided to a generally favorable position, it hovers above a branch to be sampled and monitors any movement like swaying or bouncing, synchronizing its approach. When it makes contact, it pushes with enough pressure to cause loose eDNA materials to transfer to the strips, but not so much that it pushes the branch out of the way. Essentially, it leans on the tree.

This week, German firm United Robotics Group announced last week that it’s acquiring Spanish mobile robotics and manipulation startup/video game hedgehog antagonizer, Robotnik Automation. URG cites the company’s strong foothold in markets like Korea, Japan, China, Singapore, the U.S., France, Germany and Italy as a key motivator in the acquisition.

Says United Robotics co-CEO Thomas Linkenheil:

We have been working with Robotnik as our strategic partner and I am delighted to see the company join our group. We will benefit from 70 highly experienced robotics experts, especially in the areas of R&D and Software. This investment will support us in the development of further applications for CobiotX, the third generation of robots for humans. We look forward to working with the local management team around Roberto Guzmán and Rafael López who are leading the company since the very beginning. We are very confident to leverage synergies.”

If there’s one thing we’re passionate about here at Actuator HQ, it’s leveraging synergies.

Lastly for the week is me trying to find a way to convince the T&E team to get me back to Pittsburgh for the week, to check out the nonprofit “Robotics Factory.” With backing from CMU and the Pittsburgh Robotics Network, it’s definitely a space worth watching in the coming year.

Per the official site:

The Robotics Factory, an array of robotics programs led by Innovation Works and the Pittsburgh Robotics Network, is a part of the $63 million Build Back Better Regional Challenge grant awarded by the U.S. Economic Development Administration (EDA) to the Southwestern Pennsylvania New Economy Collaborative. The Robotics Factory will create, accelerate and scale robotics startups in the Pittsburgh region.

All right, back to work for me. I’ve got a bunch of stories in the works that will be popping up in future Actuators. Be the first to see ’em by signing up here.

Building up and tearing down by Brian Heater originally published on TechCrunch

A date has been set for a trial by jury in a significant antitrust case against Google involving its alleged abuses of power in the Android app market. Fortnite maker Epic Games and dating app giant Match Group, joined by over three dozen state Attorneys General, have accused Google of unfairly leveraging its market dominance and harming competition through its Google Play Store terms and practices. In particular, the plaintiffs take issue with the commissions Google requires on app sales and in-app purchases as well as the control Google has over Android app distribution, in general. The case will now proceed to a jury trial on November 6, 2023, a judge in the Northern District of California has ruled.

Epic Games began its path to suing the app store giants, Apple and Google, back in 2020 when it introduced a direct payment option in Fortnite to its iOS and Android apps, prompting Apple and Google to boot the mobile game from their respective app stores.

Epic then sued both companies for antitrust abuses. Apple largely won its case, but both sides appealed the ruling as Epic still wants Apple held accountable for anti-competitive practices, while Apple didn’t want to change its terms to permit third-party payments, as the district judge had decided would be required. In an appeal hearing in November, the DoJ voiced its concerns over how the lower court had misinterpreted U.S. antitrust law — a signal of the increased interest the U.S. government has in the prosecutions of the tech giants. (The DoJ is also said to be in the early stages of filing its own suit against Apple.)

Epic’s claims against Google, while largely similar to Apple’s, have to take into account the differences with Google’s app distribution platform. Unlike Apple, which prevents any other means of installing apps on iOS devices outside its own App Store, Google permits apps to be sideloaded on Android devices. In fact, Epic Games chose to distribute Fortnite to users outside the Play Store when it launched on Android, and after the game was kicked out of Google Play for terms violations.

To aid its case, Epic has focused part of its antitrust claim on the other alleged means Google used to maintain market power, including an internal program where Google paid game developers hundreds of millions of dollars in incentives to keep their games on the Play Store. Google, however, maintains the program is “proof that Google Play competes fairly with numerous rivals for developers,” it said.

Match Group had also sued Google over its Play Store practices, accusing Google of charging developers “exorbitant fees.” Google shot back, saying Match just wants to get out of paying for the services it provides the company as part of its platform.

Epic and Match filed to amend their complaint in October by adding new antitrust counts to their case. Google last month asked the court to disallow these requests saying, among other things, the claims were filed too late.

In a more recent hearing related to this case, a California federal judge criticized Google for not preserving evidence from employee chats, after learning internal communications were taking place in Google Chat, where messages were automatically deleted after 24 hours. Though employees can change the auto-delete setting, Google apparently did not enforce this setting to be turned on. The U.S. District Judge James Donato asked the parties how many of the 260 Google employees who received a litigation hold notice had chosen not to preserve their chats, according to a report from Law360.

The judge also threatened Google with a “substantial, trial-related penalty,” if the court found evidence related to the trial was destroyed.

“I think there’s little doubt from the evidence that I’ve heard so far that Google’s chat function could in fact have contained evidence relevant … to this case,” the judge said.

Dkt 373 – 2022.11.10 -Google Chat Deletions by TechCrunch on Scribd

Epic and Match’s lawsuit against Google also includes participation from 39 Attorneys General (38 states plus the District of Columbia). A consumer class action is involved, too, and is seeking $4.7 billion in damages, Reuters reported. The amount is based on what the plaintiffs believe consumers were overcharged due to the Play Store’s fees — increases that developers passed along to their own customers. This number is likely going to be disputed, given that it’s not clear if developers would have offered consumers any additional savings if developers could sidestep fees, rather than keeping the money for themselves.

The case is one of two notable antitrust complaints involving Google. The other is the Department of Justice’s lawsuit against Google over its search engine practices. In this one, the DoJ alleges that Google illegally maintains its position as the No. 1 search engine by paying out billions of dollars to Apple, Samsung, and other telecoms to be the default search engine on mobile devices.

Epic and Match’s antitrust case against Google heads to jury trial on November 6 by Sarah Perez originally published on TechCrunch

Another bill has come in for Meta for failing to comply with the European Union’s General Data Protection Regulation (GDPR) — but this one’s a tiddler! Meta-owned messaging platform, WhatsApp, has been fined €5.5 million (just under $6M) by the tech giant’s lead data protection regulator in the region for failing to have a lawful basis for certain types of personal data processing.

Back in December, Meta’s chief regulator, the Irish Data Protection Commission (DPC), was given orders to issue a final decision on this complaint (which dates back to May 2018) — via a binding decision from the European Data Protection Board (EDPB) — along with two other complaints, against Facebook and Instagram.

Those two final decision emerged from the DPC earlier this month, when it announced a total of €310M in penalties; and gave Meta three months to find a valid legal basis for that ads processing. But while the latter pair of GDPR decisions tackled Meta’s lack of a valid legal basis for processing user data to run behavioral advertising (aka, its core business model), with the WhatsApp decision Ireland appears to have skirted the ads processing legality issue entirely — since its enquiry has focused on the legal basis Meta claimed for “service improvements” and “security”.

Here Meta had (similarly) sought to rely on a claim of contractual necessity — but Ireland has now found (via EDPB order) that it can’t.

The DPC has given WhatsApp six months to mend its ways for these purposes of data processing. Meaning it will need to find a way to lawfully process the data (perhaps by asking users if they consent to such purposes and not processing their data if they don’t).

But the regulator has simply declined to act on a parallel EDPB instruction telling the DPC to investigate whether WhatsApp processes user (meta)data for ads. And this has led to fresh cries, by the original complainant, of yet another stitch-up by the much criticized Irish regulator.

In a press release, noyb, the privacy rights not-for-profit behind the original strategic complaints pulls no punches — arguing that Ireland is essentially giving the EDPB the finger at this point.

“We are astonished how the DPC simply ignores the core of the case after a 4.5 year procedure. The DPC also clearly ignores the binding decision of the EDPB. It seems the DPC finally cuts loose all ties with EU partner authorities and with the requirements of EU and Irish law,” said its honorary chairman, Max Schrems, in a typically pithy and punchy statement.

While messaging content on WhatsApp is end-to-end encrypted — which means, assuming you trust Meta’s implementation of the Signal protocol, that this information should be protected from its prying eyes — the social media giant can still glean insights on users by tracking their WhatsApp metadata (aka, who’s talking to who, how often etc) — and also by connecting the dot and users to accounts and public (or otherwise non-E2EE digital activity) across other services it owns (and, potentially, third party services it’s seeded with tracking technologies)… So, basically, Meta’s data-gathering net is long (and wide).

That means there are certainly questions to be asked about how it might be processing WhatsApp users’ data for marketing purposes — and what legal basis it’s relying on for any such processing.

WhatsApp users may remember the major controversy that kicked off back in 2021 — when the platform announced an update to its T&Cs that it said users had to accept in order to carry on using the service. It wasn’t clear exactly what was changing in the updated terms. But, whatever was going on, Meta sure wasn’t giving WhatsApp users a free choice over the matter! And while regulatory attention on that issue led to what appeared to be a bit of a climbdown by Meta, which stopped sending aggressive pop-ups demanding EU users agree (or leave), the whole episode led to widespread confusion about what exactly it was doing with WhatsApp user data (and how it was doing it, legally speaking).

The episode also sparked some consumer protection complaints. Which led, last summer, to the European Commission giving the company a month to fix the confusing T&Cs and “clearly inform” consumers about its business model.

None of the confusion and mistrust around WhatsApp’s T&Cs was helped by a much earlier U-turn on syncing user data with Facebook — when the platform flipped a founder pledge never to cross those streams. In short, it’s a mess — and a mess that Europe’s regulators can’t claim to have cleaned up.

Yet despite all the ongoing confusion and privacy concerns, the DPC appears spectacularly uninterested in taking a proper look at how WhatsApp may be processing user data for ads.

“The DPC has now limited the 4.5 year procedure to the minor issues of the legal basis for using data for security purposes and for service improvement,” writes noyb, accusing the regulator of essentially ignoring this major component of its complaint. “The DPC thereby ignores the major issues of sharing WhatsApp data with Meta’s other companies (Facebook and Instagram) for advertisement as well as other purposes.”

The DPC’s press release announcing its final decision almost entirely avoids making mention of behavioral advertising — until the finale, when the phrase does crop up. But only because it quotes the EDPB’s instruction to it — to conduct a fresh investigation of “WhatsApp IE’s [Ireland’s] processing operations in its service in order to determine if it processes special categories of personal data (Article 9 GDPR), processes data for the purposes of behavioural advertising, for marketing purposes, as well as for the provision of metrics to third parties and the exchange of data with affiliated companies for the purposes of service improvements, and in order to determine if it complies with the relevant obligations under the GDPR.”

So the opportunity was there for Ireland to grasp the nettle on WhatsApp users’ behalf and follow the data streams to draw a clear picture of what Meta’s ownership of the E2EE messaging platform really means for users’ privacy. (And, remember, Meta’s behavioral ad targeting empire currently lacks a lawful basis for ads processing on Facebook and Instagram in the EU.)

But instead of getting on with investigating WhatsApp’s data processing, the Irish regulator has opted to instruct its lawyers to challenge the EDPB’s binding decision and seek to get it annulled in court.

Update: Meta has now responded to the DPC decision — sending us this statement, attributed to a WhatsApp spokesperson, in which it confirms it will appeal:

WhatsApphas led the industry on private messaging by providing end-to-end encryption and layers of privacy that protect people. We strongly believe that the way the service operates is both technically and legally compliant. We rely upon contractual necessity for service improvement and security purposes because we believe helping keep people safe and offering an innovative product is a fundamental responsibility in operating our service. We disagree with the decision and we intend to appeal.

WhatsApp slapped for processing data without a lawful basis under EU’s GDPR by Natasha Lomas originally published on TechCrunch

Successful startup founders do not spring fully formed from the head of whatever god or goddess keeps tabs on entrepreneurs. It takes time to educate yourself, learn essential skills and acquire a smart, connected network. Here’s the great news — TechCrunch Early Stage, taking place April 20 in Boston, Massachusetts, is designed to help both early and future founders accelerate the learning curve.

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Prepare for a full day packed with expert-led workshops and panel discussions, plus small-group roundtable discussions with Q&As that really let you dig into a specific topic. All of it’s designed to give you the tips, skills and understanding you need to kick off those bootstraps and grow with your sight set on unicorn status. Take a look at some of the topics from TC Early Stage(s) Past.

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TechCrunch Early Stage takes place on April 20, 2023, in Boston. Buy your early-bird ticket and save $200. Then get ready to learn new skills, accelerate your learning curve and move your startup dream forward.

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Connect and collaborate with new founders at TechCrunch Early Stage 2023 by Lauren Simonds originally published on TechCrunch

In late-2020, Presso pivoted. It made a lot of sense at the time. People weren’t traveling much and therefore weren’t particularly hung up on getting their business attire dry-cleaned. Certainly the hospitality industry — which had been identified as a major potential revenue sort –0 had effectively ground to a screeching halt.

Around that time, the film industry was looking for a quick, safe and efficient way to clean wardrobes at the height of the pandemic, and as it happens, Presso’s hometown of Atlanta is among the top two or three filming locations in the U.S. Ultimately, however, that partnership would prove short-lived.

“What we found out a few months into it was most of these productions only shoot for a few months out of the year,” co-founder and CEO Nishant Jain said on a call with TechCrunch. “So, every few months, we have to do reverse logistics, which, for an early-stage company, economically, just doesn’t make sense.”

It was a good temporary partnership and a proving ground for Presso’s robotic dry-cleaning kiosk. Amid widespread reopenings, however, Presso is returning to its initial client base of hospitality/hotel companies and real estate firms. The startup’s newfound focus is being propelled by an $8 million seed raise from a slew of high-profile backers, including Uncork Capital, 1517 Fund, AME Cloud Ventures, HAX, SOSV, Pathbreaker Ventures, VSC Ventures and YETI Capital.

The round brings Presso’s total to-date funding up to $10.1 million. It’s a lot for what is still an extremely small company with a headcount of 14. Certainly no one can blame the company for a conservative approach to growth over the past three years. The new funding will be used, in part, to grow the team, bringing its number up to around 20-25 people within the next year. It will also go toward scaling its product and meeting its 80+ bookings.

Presso is using a hardware-as-a-service model to effectively lease its offering to clients. The businesses both set pricing to have an article of clothing dry-cleaned and take a revenue share out of the bottom line. The latter is adjustable, based on the amount they pay up front.

In additional to developing its own hardware and leasing its machines, Presso is creating other key pieces of the puzzle, including a newer, greener fluid for the dry-cleaning process. “We had chemical engineers to develop our own liquids,” says Jain. “They’re far more organic; 70% of the industry still uses industrial solvents. We invented something that is orders of magnitudes better than we’ve ever seen.”

In the future, it could potentially license the liquid to third parties. For now, however, Presso is focused on building — and distributing — its dry-cleaning kiosks.

Dry-cleaning robotics startup Presso pulls in another $8M by Brian Heater originally published on TechCrunch