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Scale AI, the San Francisco-based company that uses software and people to label image, text, voice and video data for companies building machine learning algorithms, laid off 20% of its workforce this week.

The decision, which was announced by founder and CEO Alexandr Wang via a company blog post, was made after rapid hiring in 2021 and 2022 came crashing into present-day macro economic challenges. The company did not say how many people work at Scale AI. However, back in February 2022, the company told TechCrunch it employed about 450 people.

Scale AI, which was last valued at $7.3 billion and is backed by a slew of investors such as Tiger Global, Coatue Management and Founders Fund, has been a rising starin the AI industry.

The seven-year-old company got its start supplying autonomous vehicle companies with the labeled data needed to train machine learning models to develop and eventually commercialize robotaxis, self-driving trucks and automated bots used in warehouses and on-demand delivery.

In 2020, that changed as e-commerce, enterprise automation, government, insurance, real estate and robotics companies turned to Scale’s visual data labeling platform to develop and apply artificial intelligence to their respective businesses. The company has since expanded into synthetic data to enhance its real world data sets. Its customer base is vast and varied, including the Department of Defense, Pinterest, Nuro, Zoox and General Motors.

Interest from enterprises and governments in AI grew rapidly in the past few years, according to Wang.

“As a result, I made the decision to grow the team aggressively in order to take advantage of what I thought was our new normal,” he wrote in the blog. “For a time, this seemed to prove out–we saw strong sales growth through 2021 and 2022. As a result, we increased headcount assuming the massive growth would continue. However, the macro environment has changed dramatically in recent quarters, which is something I failed to predict. Many of the industries we serve, such as e-commerce and consumer technology, have been buoyed by the pandemic and are now experiencing a painful market correction. As a result, we need to prepare ourselves for a very different economic environment.”

Wang said he takes “full responsibility for the decisions that have led us to this point.”

Workers who are affected will receive a minimum of eight weeks of severance and three months of healthcare. The company is also waiving the one-year equity cliff for employees with less than one year of tenure and is providing immigration support for those on visas that require continued employment.

Wang added that Scale AI is also cutting its expenses, adjusted its hiring practices and is re-assessing new offices.

Scale AI cuts 20% of its workforce by Kirsten Korosec originally published on TechCrunch

Xfinity announced today that customers using the Xfinity Stream app can now use Apple AirPlay to stream and share content directly to Apple TV 4K and other AirPlay-supported devices, such as Samsung smart TVs, LG, Sony, Vizio, and smart speakers like Bose and Sonos.

AirPlay functionality is important for a pay TV streaming app, so it’s about time Comcast finally added the capability. Charter, one of Comcast’s biggest competitors, has supported AirPlay on its Spectrum TV app for a few years now.

The Xfinity Stream app launched in 2017 and gives Xfinity TV subscribers access to live broadcast channels, such as ABC, CBS, CW, FOX, NBC, PBS, Univision and Telemundo, as well as linear TV channels, video on demand and more.

Starting today, Xfinity TV customers will finally be able to switch devices more smoothly, moving a title from their phone to their compatible smart TV or speaker.

The announcement comes on the heels of Comcast launching the Xfinity Stream app on Apple TV devices in June 2022. Comcast also rolled out the Apple TV+ app across Xfinity platforms in March of last year, including Xfinity X1, Xfinity Flex and XClass TV.

Last week, Comcast announced “Free This Week,” a year-long promotion that gives Xfinity customers free programming from streaming services and networks like HBO Max, Showtime and Lifetime Movie Club, among others.

Comcast’s Xfinity Stream app adds support for Apple’s AirPlay by Lauren Forristal originally published on TechCrunch

Salesforce has been in the news a lot recently, and largely not for positive reasons. It has been an unusually dramatic and turbulent period for the cloud CRM leader, and the first of the year brought little relief: The company announced last week it was laying off 10% of its approximately 80,000 employees.

Layoff news is never good, but it comes on the heels of a slew of other negative reports. There have been key executive exits, like co-CEO Bret Taylor announcing he was leaving the company and Slack co-founder and CEO Stewart Butterfield departing as soon as his two-year post-acquisition commitment expired.

On top of all that, Salesforce announced at its most recent earnings that it would not be projecting revenue for the next fiscal year for the first time in its history due to an uncertain economic environment.

Then there was the business of activist investor Starboard Value, which took a stake in October. One of the firm’s demands was more operational discipline, and perhaps the layoffs are part of that — or at least a convenient excuse to cut back.

If that weren’t enough, after positioning itself as Digital HQ throughout the pandemic (a big reason for its purchase of Slack), company chairman and CEO Marc Benioff sent out confusing signals last month that newer employees weren’t as productive because they didn’t benefit from the office culture.

Perhaps Benioff was just frustrated about spending all that money on fancy office space that so few employees were actually using: Salesforce is cutting back on office expenditures at a time when fewer workers are spending significant time there, with Fortune reporting that some offices had as low as 10% occupancy.

But why layoffs now? Perhaps it was simply time to pump the brakes amid mixed economic signals. We spoke to several industry analysts who follow Salesforce to get their opinions.

Salesforce turmoil continues into new year, as recent layoffs attest by Ron Miller originally published on TechCrunch

It appears that Roblox, a major player in the metaverse space, could be getting its moment to shine on Meta’s virtual reality headset. According to The Verge’s Command Line newsletter, sources say that Roblox might be planning to come to Quest in late 2023.

Roblox declined to comment to TechCrunch. Meta was not immediately available to comment.

This isn’t the first time someone has mentioned Roblox coming to Quest. During an investor call in 2021, CEO and co-founder of Roblox, Dave Baszucki, said that Quest makes “perfect sense for Roblox,” which was a hint that the company had VR plans for the future.

While Roblox is already compatible with various VR headsets, including Oculus Rift and HTC Vive, gamers currently need to connect their PC to a VR headset to play. The virtual world gaming platform isn’t available as a Quest game. If Roblox were to get support for Meta Quest, it would be a significant move for both companies.

If the rumor turns out to be true, it will likely satisfy investors as well. Roblox and Meta both reported disappointing earnings results, with Roblox experiencing a loss of $297.8 million and Meta’s virtual reality division losing $3.67 billion. Meta anticipates more losses in 2023.

However, Meta also confirmed in its earnings call that a consumer-grade follow-up to Quest 2 is coming in 2023. So, with Meta’s new VR headset arriving sometime this year, it’s possible Roblox could be the launch title.

The company announced Quest Pro at Meta Connect 2022, so it’s likely we’ll learn more about the new VR headset at Meta’s next Connect conference in fall 2023. The price of the upcoming headset is expected to be around the same as Quest 2, which increased by $100 to $500 in August 2022.

Roblox may arrive on Meta Quest later this year by Lauren Forristal originally published on TechCrunch

Last year, French startup Qonto acquired its German competitor Penta. Both companies offer business bank accounts for small and medium companies as well as freelancers. Today, Qonto shared some details about the integration process.

At the time of the acquisition, Penta was serving 50,000 companies in Germany while Qonto had 300,000 customers in France, Spain, Italy and Germany. While Penta is no longer accepting new customers, new German companies looking for a bank account can sign up to Qonto directly.

As for existing customers, Qonto now expects to move all Penta customers to Qonto’s banking platform by the end of 2023. Once this is done, the company will operate under a single brand — Qonto.

Similarly, there are some internal changes. The Qonto and Penta teams are going to merge with Penta’s co-founder Lukas Zörner acting as the new VP of Germany for Qonto. And just like that, Qonto is going to add tens of thousands of customers to its platform.

“Germany was Qonto’s fastest growing market in both 2021 and 2022 and we’ll keep building on this momentum in 2023. The union of Qonto and Penta is a starting signal for a new era of consolidation in the European fintech industry. By integrating Penta, we’re combining the strengths of two companies to enhance Qonto’s position as the digital business finance leader European SMEs and freelancers expect and need,” Qonto co-founder and CEO Alexandre Prot said in a statement.

So if you’re a Penta customer, keep an eye on your email inbox as you will soon receive an invitation to move your account to Qonto. Customers will still have a German IBAN. Qonto also offers virtual and physical corporate cards, several ways to export and sync your bank statements with your accounting solution (including Datev support), instant SEPA transfers and more.

When it comes to pricing, freelancers should pay more or less the same subscription fee as both Penta’s and Qonto’s plans started at €9 per month. Bigger companies with multiple users could end up paying more though as Penta’s enterprise plan offered 15 cards for €49 per month. Companies on the cheapest Qonto plan (€29 per month) have to pay another €5 per card per month to get more than two cards.

In January 2022, Qonto announced a massive €486 million Series D funding round ($522 million at today’s exchange rate). It was a different time for the tech industry as there are a lot less late-stage rounds.

This acquisition is probably the first one of a long series of fintech acquisitions. There will be more consolidation moves in the fintech industry in 2023 due to the current slowdown in venture funding and overaggressive expansion plans in 2021 and early 2022.

Qonto plans to move Penta customers to its platform by the end of 2023 by Romain Dillet originally published on TechCrunch

We’re only in the second week of 2023, but demo days have already begun as founders try to keep momentum alive in the ever-changing crypto market.

Beacon, a web3-focused early-stage accelerator program, launched last year, and its flagship cohort just graduated. The teams in the first cohort, known as Cohort 0, presented their ideas on Tuesday during a demo day, exclusively covered by TechCrunch.

“For Cohort 0, we spoke with over 1,000 projects to end up at 15 companies in Cohort 0 with 13 graduating at our Demo Day,” Sandeep Nailwal, core contributor of Beacon and co-founder of Polygon, said to TechCrunch. “With the current rate of applications for Cohort 1, we’re planning to land at a similar 1% acceptance rate.”

The three-month program runs twice a year and accepts about 15 to 20 applicants for its fall and spring cohorts.

“We feel like Cohort 0 is our MVP of Beacon,” Nailwal said. “So for this cohort, we hand-picked our favorite teams through taking calls with founders sourced through our networks.”

Mentors include Jack Lu, CEO and co-founder of Magic Eden; a handful of venture capitalists; Rob Behnke, co-founder of Halborn; Brendan Farmer, co-lead at Polygon Zero; Dan Kim, VP of business development and listing at Coinbase; and Miles Anthony, CEO and co-founder of Decentral Games, to name a few.

For the next cohort, there will be a standard $250,000 investment, with an $8 million post-money valuation from Beacon for each company in the program, Nailwal noted. In Cohort 0, investments were done on a case-by-case basis as the team was refining its process, he added.

Beacon is “chain-agnostic,” which means most of the teams in Cohort 0 were building cross-chain applications, Nailwal said. However, Ethereum topped the list for the most teams building on that blockchain. Of the 13 companies, there were 29 founders across nine countries and 13 cities, Kenzi Wang, core contributor at Beacon and co-founder of Symbolic Capital, said during the demo day.

The startups focused on a range of crypto subsectors, like gaming, infrastructure, decentralized lending and borrowing, and developer tooling, to name a few. Almost all of the startups in the cohort are seed stage, with the exception of one company, Community Gaming, at Series A.

Here are the details behind Cohort 0’s 13 startups:

Company name: Arcana

What it does: Web3 toolkit for developers
Founders: Mayur Relekar, Aravindh Kumar
Stage: Seed
The pitch: Arcana wants to help supplement the technological stack for developers with tools to help build secure decentralized applications (dApps). Its core tools include user authentication, storage of data on its decentralized network and access control. The platform aims to provide developers building applications on “almost any chain” the ability to leverage its services and tools.

Company name: Blinkmoon

What it does: Game development studio
Founders: Hugh Behroozy, Hajeir Mazinani
Stage: Seed
The pitch: Blinkmoon is building an independent gaming development studio to focus on the growing web3 sector. Prior to this, its team members helped create the visuals for “Guardians of the Galaxy” and “Game of Thrones,” as well as worked on gaming franchises like League of Legends: Wild Rift, NBA, the Dead Rising and Rainbow Six, to name a few.

Company name: ChapterX

What it does: Web3 event experience
Founders: Chase Guo
Stage: Seed
The pitch: ChapterX is a web3 event experience platform that aims to provide organizers the ability to transform their events into unique experiences. The startup provides options to engage attendees through either physical events or customizable virtual worlds in the metaverse with aspects like decentralized autonomous organization (DAO) governance or GameFi. Users can also convert their 2D NFTs into 3D avatars through its re-skin system and discover new worlds and join communities through its network.

Company name: Colexion

What it does: GameFi ecosystem
Founders: Abhay Aggarwal
Stage: Seed
The pitch: Colexion is a card-based GameFi ecosystem that aims to bring Web 2.0 games into the web3 ecosystem through fantasy-focused content. Its system, Colexion Core, provides a host of services like minting, marketplaces, bridges, wallets and more to help traditional games navigate the web3 world. The company is focused on the Asia-Pacific region and has over 15 million active users across more than 10 nations, according to its website. Colexion is backed by Polygon, Brevan Howard, Jump Capital, Symbolic Capital, Firestarter and GSR.

Company name: Community Gaming

What it does: Esports platform
Founders: Chris Gonsalves
Stage: Series A
The pitch: Community Gaming aims to be an all-in-one esports competition platform that offers infrastructure to industry players. The platform is backed by Ethereum- and Solana-based blockchain payment technologies and provides players, organizers and game developers tools to create, facilitate and participate in esports tournaments. It also provides users the ability to monetize their gameplay by completing quests, a daily content engine for earnings and game discovery.

Company name: Cubist

What it does: Web3 developer tools and infrastructure
Founders: Ann Stefan, Deian Stefan, Riad Wahby, Fraser Brown
Stage: Seed
The pitch: Cubist is a developer tools and infrastructure provider that aims to bring today’s software engineering practices and security to web3 builders. Its toolkit focuses on providing safer and more secure options so developers can build, test and deploy easily across multi-chain and cross-chain dApps. Its founders include a former fintech COO and computer science professors from Carnegie Mellon University and UC San Diego. The team members have spent their careers retrofitting security for real-world systems and have collectively published over 80 research papers on related topics like computer systems, programming languages, security and cryptography.

Company name: FastLane

What it does: MEV solutions for Ethereum-based blockchains and rollups
Founders: Alex Watts, Jordan Hagan
Stage: Seed
The pitch: The FastLane protocol focuses on generating revenue for validators, increasing effectiveness for algorithmic traders and reducing the stress on network participants when overwhelmed with redundant transactions without the need to install or manage custom software on validating nodes. The protocol aims to reduce transaction spam and improve the overall Ethereum network health by monetizing propagation bottlenecks in the layer-2 blockchain Polygon and distributing the rewards to validators involved.

Company name: Meta Apes

What it does: Web3 game
Founders: Taylor Shim, Nicholas Carr
Stage: Seed
The pitch: Meta Apes is a free-to-play and win-to-earn mobile web3 game built on the BNB Application Sidechain (BAS). Players have the ability to build their own cities and communities while competing and exploring others to win the “race to space.” The game aims to combine traditional gaming elements like massively multiplayer online (MMO) strategies and web3 elements such as in-game currencies. The team has worked at places like Ubisoft, Gameloft, Zynga, AppLovin and Epic.

Company name: Mystic Moose

What it does: Web3 gaming developer
Founders: Mike Levine
Stage: Seed
The pitch: Mystic Moose is a web3 platform, gaming studio and publisher that was formed by a team of gaming veterans who have worked at Activision, LucasArts and Electronic Arts. Its first game, Planet Mojo, was built on top of its scalable backend platform Sumatra and is a browser-based server of interconnected games. Its auto chess game, Mojo Melee, is currently in alpha playtesting and plans to launch fully in the first quarter of this year on browsers and mobile. The studio is backed by Animoca Brands, Republic Crypto and Polygon Studios, among others.

Company name: Nillion

What it does: Web3 infrastructure
Founders: Alex Page, Andrew Yeoh, Andrew Masanto
Stage: Seed
The pitch: Nillion is a web3 infrastructure startup focused on securing storage, computation and fragmentation of data on the internet. “Nillion is a deep technology infrastructure project,” Andrew Yeoh, the company’s founding chief marketing officer, previously told TechCrunch. “While blockchains decentralize finance, Nillion aims to decentralize everything else and the rest of data.” The founders include ex-Uber, Indiegogo and Hedera Hashgraph employees, as well as executives from Coinbase and Nike. The company raised more than $20 million in December 2022 from over 150 investors in a “conscious decision” to prevent concentrated ownership, Nillion CEO Alex Page said in a statement.

Company name: Davos Protocol

What it does: Stable asset lending protocol
Founders: Varun Satyam, Julian Hayward, Filipe Gonçalves
Stage: Seed
The pitch: Davos Protocol is home to its stable asset, DAVOS, which is stabilized by its monetary policy that balances yield generation and price stability on a weekly basis by leveraging liquid staking, according to its website. It provides users the ability to borrow DAVOS using liquid staking tokens as collateral. Users can also supply stable asset pairs to provide liquidity, yield farm and earn rewards. The team aims to promote blockchain technology in mainstream adoption by incentivizing borrowers and stakers through its protocol. Its strategic partners include Polygon and Ankr.

Company name: Timeswap

What it does: Decentralized lending and borrowing protocol
Founders: Ameeth Devadas, Harshita Singh, Ricsson Ngo
Stage: Seed
The pitch: Timeswap is a decentralized lending and borrowing platform as well as an automated market maker (AMM) protocol powered by Polygon. Its key features include flexible interest rates and collateral factors so users can have the flexibility to decide their risk-return profile as well as allowing users to create any Ethereum-based ERC20 token pool by providing the proper liquidity. Since launching in August 2020, the platform has done over $4 million of lending, borrowing and liquidity volume on its protocol without any token incentives, according to a post from August.

Company name: Ylide

What it does: Decentralized protocol for wallet communication
Founders: Ignat Shapkin, Kirill Zubkov, Danila Simonov
Stage: Seed
The pitch: Ylide is a decentralized protocol for wallet-to-wallet communication that allows multichain messaging, data storage into smart contracts and end-to-end encryption. It also has its own mail client as well as tools for developers to integrate communication features into their projects, “as easily as building a Lego set,” the team said.

Web3-focused Beacon launches flagship demo day with 13 crypto startups by Jacquelyn Melinek originally published on TechCrunch

You don’t need to be an economist to appreciate the myriad forces placing downward pressure on startups today.

Setting aside the legions of investors keeping their powder dry, is your yearly revenue growing faster than the inflation rate? What percentage of your sales team has experience working during a downturn?

Amidst the angst, there’s some good news: Investors are adjusting expectations to meet the new reality, which means “crisper methods for evaluating success will emerge,” predicts Lonne Jaffe, managing director at Insight Partners.

Instead of chasing growth like a plant reflexively bending toward the strongest light, he says founders should prioritize more meaningful “efficiency metrics,” such as:

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Gross retention rates
Lower CAC
Average revenue per sales rep
High gross margins

Looking ahead, he recommends that founders start considering M&A options now before a predicted wave of consolidation hits the private markets in the coming months and also examines why startups in “areas of tangible innovation” like generative AI will have a “relatively” easy time fundraising.

“We’re entering 2023 with a great number of known issues and a constrained ability to forecast what’s ahead,” says Jaffe. “One thing’s for certain, though: This year will be more about nailing it than scaling it.”

Thanks very much for reading,

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

A timeline for startup M&A processes: Key steps and factors to consider

I’ve worked with many early-stage founders, and they all had one thing in common: Each was absolutely, completely convinced that they could successfully build and scale our company.

In reality, “not all companies are best positioned to go it alone, and that’s okay,” writes Vishal Lugani, general partner and co-founder at Acrew Capital.

In a detailed guide to the M&A process, Lugani offers a week-by-week deal timeline that breaks down every step between sourcing offers and post-close integration.

A lot can happen over the months it can take for a deal to close, so the article includes strategies for selecting an acquirer, maintaining product momentum and managing your team (and investors!).

How can fintech startups outlast the VC winter?

“Everything else being equal, embedded banking startups and new fintechs will live and die on the basis of the user experience they provide,” says Peter Hazlehurst, CEO and co-founder of Synctera.

Because so many fintech investors are seeking startups that already have “concrete customer traction,” Hazlehurst shares proven tactics for gathering user feedback that can help companies get an MVP out the door in weeks instead of months.

“By drilling down to a lean, mean, meaningful MVP, startups can position themselves to reach the next leg of their journey,” he writes.

5 cloud trends to track in 2023

Despite the downturn, Gartner estimates that global IT spending will reach $4.6 trillion this year, a year-over-year increase of 5.1%.

Josh Berman, president of C2C Global, has identified five trends that cloud technology startups should keep in mind as they create product, fundraising and hiring plans for the new year.

“The promise of these technologies is too significant to ignore,” writes Berman.

A flat year for crowdfunding isn’t a bad sign at all for early-stage startups

The global equity crowdfunding market slowed in 2022, but it certainly did better than venture funding, reports Rebecca Szkutak.

Even though crowdfunding fell from $486 million in 2021 to $426 million last year, “I’ve seen a lot more Y Combinator companies, Techstars and venture-backed companies,” said Krishan Arora, CEO and founder of the Arora Project.

“They look at it for getting another $2 million, $3 million, in a bridge round,” he said. “There is more higher quality deal flow trickling into this space.”

TechCrunch+ roundup: New success metrics, M&A timeline, 5 cloud trends for 2023 by Walter Thompson originally published on TechCrunch

A live-action series based on the tabletop roleplaying game Dungeons & Dragons is coming to Paramount+. The pilot of the show was written and directed by Rawson Marshall Thurber, who wrote films like “Dodgeball” and “Red Notice.”

The series will be co-produced by Hasbro’s eOne and Paramount Pictures, who are also working together on the upcoming movie “Dungeons & Dragons: Honor Among Thieves.”

Hasbro acquired Dungeons & Dragons publisher Wizards of the Coast in 1999, but in the last few years, Hasbro has reorganized the subsidiary into a more prominent division at the games company. These television and movie adaptations of the game are part of the company’s longterm plan to drum up more money from the popular roleplaying game.

“The brand is really undermonetized,” said Wizards of the Coast president Cynthia Williams about Dungeons & Dragons in a December investor call. But she also added that the game has never been more popular. Paramount+ says that more than 50 million fans have played or interacted with the franchise since its release almost half a century ago.

“The D&D strategy is a broad four-quadrant strategy, where we have this powerful brand that has similar awareness, say like ‘Lord of the Rings’ or ‘Harry Potter,’” said Hasbro CEO Chris Cocks on the same call. “And we’re going to imbue it with blockbuster entertainment, like we have with the movie coming up.”

A potential problem with this plan, though, is that Dungeons & Dragons is a framework through which people create their own fantasy-inspired stories and games — there isn’t really a core canon or plot that unifies the interest of all players of the game. You could surmise that most “Harry Potter” fans feel an emotional attachment to the story of the orphaned boy wizard and his friends, but you can’t really have a favorite character or scene in Dungeons & Dragons. For the most part, every group’s game has different fan-made characters and events. While Wizards of the Coast does publish some books with “official” lore and ideas, they’re not essential to gameplay.

Since the Hasbro acquisition, there have been a few attempts to bring the popularity of “Dungeons & Dragons” to the big screen. In 2000, the film “Dungeons & Dragons” hit theaters, but it was a box office bomb. This was followed by two direct-to-DVD “Dungeons & Dragons” films in 2005 and 2012, which also performed poorly.

As Hasbro invests in blockbuster content like a movie and TV series, Dungeons & Dragons fans and content creators are currently protesting the company’s changing gaming license. Since 2000, fans have been able to make a living by selling their own additions to the game under an open gaming license, but Wizards of the Coast has confirmed that it will alter this license soon. Under the new gaming license, all creators making more than $50,000 annually from licensed content will have to report their revenue to Wizards of the Coast, and those making more than $750,000 per year will pay royalties starting in 2024.

Paramount+ orders a live-action ‘Dungeons & Dragons’ series by Amanda Silberling originally published on TechCrunch

A meeting between TikTok’s CEO, Shou Zi Chew, and senior European Union lawmakers which took place today saw the video sharing platform’s chief executive quizzed on a range of topics — including its preparations to comply with incoming pan-EU rules focused on content governance and safety (aka the Digital Services Act; or DSA), and its approach to existing rules on privacy and data protection (including the General Data Protection Regulation).

Other topics the EU said its commissioners brought up in the meetings with Chew included child safety, Russian disinformation and the transparency of paid political content.

TikTok has faced a range of regulatory scrutiny across the bloc in recent years, including complaints from consumer protection authorities and a number of interventions by data protection authorities — as well as having two open GDPR enquiries in Ireland (one into TikTok’s processing of children’s data; and another into its data transfers to China), which beganin 2021.

In recent years it has also sought to respond to regional concerns about data security by opening one of its so-called “transparency and accountability centers” to host visitors from the bloc and field their questions. Plus it’s undertaking a data localization project — that will see EU users’ information stored in a Dublin based data center — as another response to data protection and security concerns (although that project has faced delays and can’t entirely fix the data transfer issue since TikTok has admitted some non-EU-based staffers can access EU user data).

More regulatory scrutiny is coming as this year TikTok could also face direct oversight by the European Commission itself — if it’s deemed to meet “gatekeeper” criteria under the Digital Markets Act (DMA).

The DMA, which came into force at the start of November and is set to start to apply from early May, is intended to supplement traditional ‘after the fact of abuse’ antitrust regulation by applying a proactive set of operational ‘dos and don’ts’ to the most powerful, intermediating platforms and will put some hard limits on anti-competitive practices like self-preferencing (as well as introducing some firm requirements in areas like interoperability and data portability). So EU compliance requirements for platforms that fall under the DMA regime will step up considerably.

While it’s not yet confirmed whether TikTok will be designated a core platform service subject to the DMA, there’s no doubt that fostering a solid working relationship with the bloc’s executive is in its strategic interests — as the Commission will be making designations and overseeing compliance for both the DMA and for a layer of additional obligations that will apply to a subset of larger platforms (so called VLOPs) under the DSA — a category TikTok is almost certain to fall into (even if it avoids being designated a DMA gatekeeper).

The DSA also entered into force last November but the bulk of provisions won’t apply before February 2024. However VLOPs have a shorter implementation period — with compliance expected to be up and running later this year; platforms are given four months for implementation after a VLOP designation is made (so by mid year the DSA is likely to be force for a first wave of VLOPs).

Talking of strategic interests, the chaos of Elon Musk’s erratic leadership of rival social network Twitter also arguably creates an opportunity for TikTok to present a more cooperative face to the Commission — and seek to win friends (or at least avoid making enemies) among commissioners who are gaining powerful new oversight capabilities (and enforcement powers) atop digital platforms this year.

It’s clear the Commission is dining out on the photo opportunities of a Big Tech CEO coming in person to Brussels to press commissioner flesh.

In a statement following a meeting between TikTok’s CEO and the EU’s EVP and head of digital strategy, Margrethe Vestager, the Commission said:

The objective of the meeting with TikTok was to review how the company is preparing for complying with its obligations under the European Commission’s regulation, namely the Digital Services Act (DSA) and possibly under the Digital Markets Act (DMA). At the meeting the parties also discussed GDPR and matters of privacy and data transfer obligations with a reference to the recent press reporting on aggressive data harvesting and surveillance in the US.

The EU’s VP for values and transparency, Věra Jourová, also had a face-to-face meeting with Chew — and the EU said she asked about several concerns, including the protection of personal data of Europeans and steps TikTok is taking to address disinformation on its platform, as well as raising a recent controversy when TikTok was accused of using the data of journalists to try to identify the source of internal leaks.

In a read-out of the meeting, the EU said Jourová “appreciated” the fact that TikTok joined the bloc’s Code of Practice on Disinformation (2020) and how it “swiftly implemented EU sanctions against Russian propaganda outlets”, as it put it.

(One wonders if this flavor of public praise by the EU is also a subtle sideswipe at Musk and Twitter — given some blatant snubs the latter has doled out to Brussels in recent months, such as the shuttering of its local policy office.)

The EU’s read out also notes that it acknowledges TikTok “recognises that non-EU state actors try to manipulate the content on the platform to spread disinformation and puts efforts to address this issue”, adding the company informed it it is investing in Ukraine and will deliver a detailed report under the Disinformation Code.

(That might make interesting reading — given a study last spring found Russian state propaganda to be flourishing on TikTok in spite of a claimed ban on uploads.)

After being questioned by Jourová about the awkward issue of the (ab)use of the data of journalists to try to identify internal leakers, the EU said Chew confirmed this was wrong and told it the people responsible for the incident no longer work for the company. (And there’s also a tacit contrast with the EU recently warning Musk about the arbitrary suspension of journalists who had been reporting on Musk’s decision making at Twitter.)

Per the EU, the TikTok CEO also discussed TikTok’s efforts around GDPR compliance — and talked about its investment in content moderation practices, which he told it aim to limit the effect of hate speech and other “toxic content”.

Chew also used the opportunity of facetime with EU commissioners to claim TikTok’s “mission is to inspire creativity and bring joy” — rather than, y’know, dwelling on awkward accusations (and/or moral panic) that the platform is a societal manipulation project/’tool of cultural control’ targeted as Western kids and with authoritarian links to the Chinese state…

In a statement after the meeting, Jourová avoided direct reference to such concerns — opting instead for more diplomatic language about the need for TikTok to ‘regain regulatory trust’:

I count on TikTok to fully execute its commitments to go the extra mile in respecting EU law and regaining trust of European regulators. There cannot be any doubt that data of users in Europe are safe and not exposed to illegal access from third-country authorities. It is important for TikTok and other platforms to swiftly get ready for compliance with the new EU digital rulebook, the Digital Services Act and the Digital Markets Act. I am also looking forward to seeing the first report under the new anti-disinformation Code to be delivered by the end of January. Transparency will be a key element in this regard.

The two current GDPR probes of TikTok in Ireland remain ongoing — with, per the regulator, the prospect of the children’s data enquiry being wrapped up by (or before) the middle of this year (depending on how quickly disputes between DPAs can be settled). While the China data transfers enquiry could also reach a decision around mid year — but, again, we understand there are a variety of factors in play that could spin out the process so a final decision might not appear until the end of the year.

TikTok was contacted for its view on the EU meetings but at the time of writing the company had not responded.

Europe quizzes TikTok on data safety, disinformation and DSA compliance by Natasha Lomas originally published on TechCrunch

ChatGPT, a new artificial intelligence tool that achieved virality with its savvy messaging ability, has certainly struck a chord. The tool, made available to the general public just last month, is smart enough to answer serious and silly questions about profound topics, which has landed it in debates led by writers, educators, artists and more.

But for investors, ChatGPT’s surge isn’t just an inspiration for them to run and back the next big AI tool. Some are thinking through ways to integrate the technology into their workflows to do their jobs better, smarter and maybe even cheaper.

Many investors shrugged at the idea of artificial intelligence replacing the more monotonous parts of their work. After all, in a business driven by value-add and personality, who would want to admit that AI could do their job?

But stigma aside, venture has tried to automate itself for years, whether in deal discovery or even investment support. But ChatGPT being a specifically text-based support tool, automation could be making its way to rejection letters, market maps, or even bits of due diligence — all in order to stay afloat in a changing venture landscape.

The use cases

Kate McAndrew, general partner at Baukunst, said she would be “shocked” if associates weren’t using ChatGPT given that the AI is a “natural evolution of snippets.” As for herself, she admits to not even using Google’s AI autocomplete, writing all of her emails from scratch. She said that method is slow, “but feels genuine in a way that is important to me.”

Some investors expressed that ChatGPT could be used for fact-checking purposes around market size claims or growth potential; at the same time, so could Google. The argument for AI, of course, would be that the content would be original and perhaps more targeted toward someone’s exact questions, while a general Google search may require extra digging and piecing different articles together.

Hustle Fund general partner Eric Bahn is a proponent of ChatGPT and used it to write his end-of-year essay for his investors last month. He shared the prompt he used and the output and said investors responded well to it.

Bahn hasn’t used it for pass responses, though it made sense to him that associates might.

Some investors are (cautiously) implementing ChatGPT in their workflows by Natasha Mascarenhas originally published on TechCrunch