Alibaba has reshuffled the leadership at Lazada, its e-commerce firm in Southeast Asia, after CEO Lucy Peng — an original Alibaba co-founder — stepped down to be replaced by Lazada executive president Pierre Poignant after just nine months in the role.
Alibaba owns more than 90 percent of Lazada but it has been involved in the business since April 2016 when it bought 51 percent of Lazada for $1 billion from Rocket Internet. It invested a further $1 billion last year to increase its equity to around 83 percent and earlier this year it raised its stake even higher with an additional $2 billion injection.
That last investment saw Peng, formerly executive chairman of Ant Financial, become Lazada CEO in place of Max Bittner, who had been installed by former owner Rocket Internet back in 2012. Poignant also arrived at the company in 2012 and he worked alongside Bittner as Lazada’s COO. Since then, he has been head of its logistics division before a brief five-month stint as executive president prior to this new role.
Lazada operates in six countries across Southeast Asia, but there are very few indicators of how the business is performing.
Alibaba’s own financial reports bundle Lazada with the firm’s other international businesses. Collectively, they grossed RMB 4.5 billion ($650 million) in the last quarter. That’s an impressive 55 percent revenue jump but it accounts for a small portion of Alibaba’s total revenue of RMB 85.15 billion ($12.4 billion) in Q2 2019.
Lazada took part in the recent 11/11 Singles’ Day sale mega day. Alibaba as a whole grossed $31 billion in GMV during the 24-hour period but the company did not break out numbers for Lazada. Lazada itself said it broke records, but the only data it provided was that 20 million shoppers were “browsing and grabbing” deals on its site — you’ll note that statement doesn’t explicitly provide sales. We did ask at the time but Lazada declined to give sales or revenue numbers.
Against that backdrop, it is hard to say whether Peng was brought in as a stop-gap while Lazada searched for a new CEO, or whether her original remit was to preside over a revamp of the business. Lazada has certainly gone about installing new executive teams in many local markets, according to sources within the company, but it isn’t clear whether Peng is being recalled as planned or whether things didn’t work out as expected.
The news follows Alibaba’s second investment in Tokopedia, Indonesia’s leading e-commerce platform, yesterday.
Speaking on the rivalry, Tokopedia CEO William Tanuwijaya told TechCrunch that he sees differences between the two.
“We see Lazada having a different business model than us: Lazada is a hybrid of retail and marketplace model, whereas Tokopedia is a pure marketplace. Lazada is [a] regional player, we are a national player in Indonesia,” he said.
Smart security camera maker Lighthouse AI is calling it a day. The news, first reported by The Information, has since been confirmed by CEO Alex Teichman.
“I am incredibly proud of the groundbreaking work the Lighthouse team accomplished – delivering useful and accessible intelligence for our homes via advanced AI and 3D sensing,” the executive writes on the company’s homepage. “Unfortunately, we did not achieve the commercial success we were looking for and will be shutting down operations in the near future.”
Teichman also promises the company will provide refund details to those customers who have already bought into the product.
Lighthouse’s offering certainly showed promise. Andy Rubin’s Playground Global was among those companies throwing their support behind the device, helping the startup raise ~$17 million, by Crunchbase’s count.
I was given a demo at Playground’s offices earlier this year and was impressed by its implementation of 3D sensing and artificial intelligence to get a much more focused picture of what the device is recording. From Greg’s initial writeup:
One aspect of Lighthouse that’s particularly unique is in how you’re meant to peruse your footage; it’s aiming to be less of a security camera and more of an assistant. Rather than scrubbing a timeline, you ask the in-app natural language processing system (think Google Assistant or Alexa, but it only cares about what’s going on in your house) for what you want. You ask it things like “Did the dog walker come on Wednesday?”, or “When did the kids get home yesterday?” and it responds with relevant footage.
Of course, some things just can’t be overcome. An overcrowded market is one. The space is flooded with products, while being mostly dominated by Netgear spin-off, Arlo. And then there was the $300 price tag. That’s well out of the range of much of the competition.
Teichman ends the write-up on a hopeful note, however, “We remain strong believers in a future with AI at your service, and look forward to inventing that future with you.” Perhaps we’ll see the company’s impressive technology implemented on another smart camera in the future?
We’ve reached out to Playground for additional comment.
A security researcher has claimed a new vulnerability in the latest version of macOS — just hours before the software is due to be released.
Patrick Wardle, chief researcher officer at Digita Security, tweeted a video Monday of an apparent privacy feature bypass that’s designed to prevent apps from improperly accessing a user’s personal data.
For years, Macs have forced apps to ask for permission before accessing your contacts and calendar after some iOS apps were caught uploading private data. Apple said at its annual developer conference this year that it would expand the feature to include apps asking for permission to access the camera, microphone, email and backups.
Wardle told TechCrunch that his findings are “not a universal bypass” of the feature, but that the bug could allow a malicious app to grab certain protected data, such as a user’s contacts, when a user is logged in.
Mojave's 'dark mode' is gorgeous …but its promises about improved privacy protections? kinda #FakeNews
btw if anybody has a link to 's macOS bug bounty program I'd to report this & other 0days -donating any payouts to charity
— patrick wardle (@patrickwardle) September 24, 2018
The video shows the operating system initially rejecting access to his stored contacts, but later copying his entire address book to the desktop after running an unprivileged script simulating a malicious app.
Wardle isn’t releasing specifics of the bug yet, he said, because he doesn’t want to put users at risk, but dropped the video out of frustration at the company’s lack of bug bounty, which he said disincentives security researchers from reporting bugs to the company.
“Other operating system vendors have acknowledged that any software is going to have vulnerabilities,” but that Apple is “sticking its head in the sand.”
Apple was one of the last major companies to roll out a bug bounty program — giving security researchers money in exchange for responsibly disclosed vulnerabilities. Apple began offering cash bounties of up to $200,000 for the most severe iOS bugs. But the company has neglected to port the program over to macOS, for reasons unknown.
“Unfortunately until there’s a reason for Apple to change its approach to security, it’s not going to,” he said. “Generally, companies don’t change something until they realize it’s broken.”
We reached out to Apple for comment and will update if we hear back.
It’s the second time Wardle released details of a serious vulnerability in macOS on launch day — the most recent case was almost exactly a year ago at the launch of macOS High Sierra.
Wardle is expected to talk more of the technical details of the Mojave bug at the Objective-by-the-Sea conference in November, he said.
Apple will release macOS Mojave later on Monday.
The best security and privacy features in iOS 12 and macOS Mojave
XS is the normal one. XR is the cheap one. XS Max is the big one. That’s a good start to understanding Apple’s confusing naming scheme for its new line of iPhones. Apparently jealous of Android’s fragmentation, Apple decided it needed three different models, three different storage sizes and nine different colors.
You can think of the XS as the updated iPhone X, the Max as the new Plus and the XR as a revival of the great-for-kids budget iPhone SE. Here’s a comparison of their features, prices, options and release dates.
The iPhone XS — standard, smaller, sooner
Apple’s new flagship phone is the iPhone XS. If you want the best Apple has to offer that will still fit in your pocket, this is the one for you.
It’s got a 5.8-inch diagonal OLED “Super Retina” HDR screen with 458 pixels per inch, which is actually taller than the old 8 Plus’s 5.5-inch screen, but it’s a little thinner, so it has less total screen volume. Dual 12 megapixel cameras offer stabilization and 2X optical zoom, plus the new depth control Portrait mode feature. It’s $999 for the 64GB, $1,149 for the 256GB, or $1,349 for the 512GB.
It comes in silver, gold and space gray, all in stainless steel that’s waterproof to two meters. Pre-orders start Friday, September 14th, and they ship and hit stores on September 21st.
The iPhone XS Max — bigger screen, bigger price
If you love watching movies, browsing photos and shooting videos on your phone, you’ll want the iPhone XS Max.
The 6.5-inch OLED “Super Retina” HDR screen is the biggest ever on an iPhone, dwarfing the 8 Plus’s screen, yet with a similar device size since the XS Max takes up more of the phone’s face. The twin 12 megapixel lenses stabilize your images and offer 2X optical zoom, as well as Portrait mode depth control.
It also comes in stainless steel silver, gold and space gray that are all waterproof to two meters, and costs $100 more than the XS at $1,099 for 64GB, $1,249 for 256GB or a whopping $1,449 for 512GB. As with the XS, pre-orders start Friday, September 14th, and you can get it in your hands on September 21st.
The iPhone XR — colorful, cheaper, duller
Don’t need the sharpest or biggest new screen and want to save some cash? Grab an iPhone XR. Its size comes in between the XS and XS Max, with a 6.1-inch diagonal LCD “Liquid Retina” screen with 326 pixels per square inch.
Fewer pixels and no HDR display means the XR won’t look quite as brilliant as the XS models. The XR also only has one 12 megapixel camera lens, so it doesn’t offer stabilization or 2X optical zoom like its XS siblings, but it still gets the cool Bokeh-changing Portrait mode depth control.
The XR is only waterproof to one meter instead of two like its expensive sisters, and lacks 3D Touch for quick access to deeper features.
As a bonus with the XR, you do get 1.5 hours of additional battery life and six color options in the aluminum (“aloominium” if you’re Jonny Ive) finish: white, black, blue, yellow, coral and red. And it’s cheaper at $749 for 64GB, with $799 for 128GB and $899 for 256GB.
If that’s not cheap enough, you can now get the iPhone 7 for $449 and the iPhone 8 costs $599 — though there are no more iPhones with headphone jacks now that the 6S and SE are getting retired. In hopes that you’ll buy a pricier one, the XR arrives a month later than the XS models, with pre-orders on October 19th and shipping October 26th.
Apple may find this level of customization lets everyone find the right iPhone for them, though it could simultaneously produce decision paralysis in buyers who aren’t confident enough to pay. While it’s a headache at first, you’ll end up with a phone fit for your style and budget. Though without a ton of improvements over the iPhone X, you might not need an “iPhone Excess.”
Clearbanc is disrupting startup funding by loaning companies cash to buy ads in exchange for a revenue share so they don’t have to sell as much equity to venue capitalists. That idea has proven so appealing that 1000 companies seeking up to $1 billion total hit up Clearbanc since we reported it raised $70 million last month. So to meet the demand of the most eligible startups asking for marketing cash, Clearbanc has just raised a $50 million fund from Seamless co-founder Jason Finger’s new firm Upper90.
If a company’s Facebook ads and Stripe sales metrics show it’s a sure bet, Clearbanc can provide $5,000 to $10 million in funding to pour fuel on the fire. Startups invest that into ad spend, and then split the revenue with Clearbanc from the sales triggered by those ads. Essentially, Clearbanc offers an alternative to selling valuable equity and control to venture capitalists by offering loans based on new data sources traditional banks aren’t looking at.
Alibaba Group announced today that it has agreed to sell several of the healthcare categories on Tmall, its B2C shopping platform, to digital healthcare subsidiary Alibaba Health Information Technology. In exchange, Alibaba Group will receive $10.6 billion HKD (about $1.35 billion) in newly issued shares of Alibaba Health and increase its equity stake in the company, which is listed on the Hong Kong stock exchange, from 48.1% to 56.2%.
If you have followed Alibaba Group for a while and this news is giving you a feeling of déjà vu, there’s a reason why. In April 2015, Alibaba Group made a similar announcement, saying that it had agreed to integrate Tmall’s pharmacy business into Alibaba Health in exchange for a majority stake.
The next year, however, Alibaba Health disclosed to the Hong Kong Stock Exchange that it had let the proposed deal lapse because of regulatory uncertainties as the Chinese government reviewed legislation related to online drug sales. In that disclosure, it also said that Alibaba Group “continues to support [Alibaba Health] to execute an organic growth and investment strategy as the healthcare flagship company for Alibaba Group,” with the two companies exploring service agreements between Tmall and Alibaba Health.
While the deal announced today is still subject to shareholder and regulatory approval, it furthers Alibaba Group’s goal of consolidating more of Tmall’s pharmacy and healthcare business operations into Alibaba Health. These include Tmall categories like medical devices and healthcare products and medical services, which in total cover 3,300 vendors and generated 20.6 billion RMB (about $3.2 billion) in gross merchandise volume in the fiscal year that ended in March.
Vendors moving over to Alibaba Health will now have access to its ecosystem, including data analytics, hospitals, doctors, healthcare consultants and equipment suppliers, creating more growth and synergy opportunities, an Alibaba spokesperson told TechCrunch.
In a press statement, Daniel Zhang said “Healthcare is a strategically important area for Alibaba Group with strong growth potential. This transaction is a logical evolution for the continued development of Alibaba Health into our healthcare flagship platform.”
Auris Health (née Auris Surgical Robots) has done a pretty good job flying under the radar, in spite of raising a massive amount of capital and listing one of the key people behind the da Vinci surgical robot among its founders. With FDA clearance finally out of the way, however, the Redwood City-based startup medical startup is ready to start talking.
This week, Auris revealed the Monarch Platform, which swaps the da Vinci’s surgical approach for something far less invasive. The system utilizes the common endoscopy procedure to a insert a flexible robot into hard to reach places inside the human body. A doctor trained on the system uses a video game-style controller to navigate inside, with help from 3D models.
Monarch’s first target is lung cancer, the which tops the list of deadliest cancers. More deaths could be stopped, if doctors were able to catch the disease in its early stages, but the lung’s complex structures, combined with current techniques, make the process difficult. According to the company, “More than 90-percent of people diagnosed with lung cancer do not survive, in part because it is often found at an advanced stage.”
“A CT scan shows a mass or a lesion,” CEO Frederic Moll tells TechCrunch. “It doesn’t tell you what it is. Then you have to get a piece of lung, and if it’s a small lesion. It isn’t that easy — it can be quite a traumatic procedure. So you’d like to do it a very systematic and minimally invasive fashion. Currently it’s difficult with manual techniques and 40-percent of the time, there is no diagnosis. This is has been a problem for many years and [inhibits] the ability of a clinician to diagnose and treat early-stage cancer.
Auris was founded half a dozen years ago, in which time the company has managed to raise a jaw-dropping $500 million, courtesy of Mithril Capital Management, Lux Capital, Coatue Management and Highland Capital. The company says the large VC raise and long runway were necessary factors in building its robust platform.
“We are incredibly fortunate to have an investor base that is supportive of our vision and committed to us for the long-term,” CSO Josh DeFonzo tells TechCrunch. “The investments that have been made in Auris are to support both the development of a very robust product pipeline, as well as successful clinical adoption of our technology to improve patient outcomes.”
With that funding and FDA approval for Monarch out of the way, the company has an aggressive timeline. Moll says Auris is hoping to bring the system to hospitals and outpatient centers by the end of the year. And once it’s out in the wild, Monarch’s disease detecting capabilities will eventually extend beyond lung cancer.
“We have developed what we call a platform technology,” says Moll. “Bronchoscopy is the first application, but this platform will do other robotic endoscopies.”
There is nothing meritocratic about sales. A startup may have the best product, the best vision, and the most compelling presentation, only to discover that their sales team is talking to the wrong decision-maker or not making the right kind of small talk. Unfortunately, that critical information — that network intelligence — isn’t written down in a book somewhere or on an online forum, but generally is uncovered by extensive networking and gossip.
For David Hammer and his team at Emissary, that is a problem to solve. “I am not sure I want a world where the best networkers win,” he explained to me.
Emissary is a hybrid SaaS marketplace which connects sales teams on one side with people (called emissaries, naturally) who can guide them through the sales process at companies they are familiar with. The best emissaries are generally ex-executives and employees who have recently left the target company, and therefore understand the decision-making processes and the politics of the organization. “Our first mission is pretty simple: there should be an Emissary on every deal out there,” Hammer said.
Expert networks, such as GLG, have been around for years, but have traditionally focused on investors willing to shell out huge dollars to understand a company’s strategic thinking. Emissary’s goal is to be much more democratized, targeting a broader range of both decision-makers and customers. It’s product is designed to be intelligent, encouraging customers to ask for help before a sales process falters. The startup has raised $14 million to date according to Crunchbase, with Canaan leading the last series A round.
While Emissary is certainly a creative startup, its the questions spanning knowledge arbitrage, labor markets, and ethics it poses that I think are most interesting.
Sociologists of science generally distinguish between two forms of knowledge, concepts descended from the work of famed scholar Michael Polanyi. The first is explicit knowledge — the stuff you find in books and on TechCrunch. These are facts and figures — a funding round was this size, or the CEO of a company is this individual. The other form is tacit knowledge. The quintessential example is riding a bike — one has to learn by doing it, and no number of physics or mechanics textbooks are going to help a rider avoid falling down.
While org charts may be explicit knowledge, tacit knowledge is the core of all organizations. It’s the politics, the people, the interests, the culture. There is no handbook on these topics, but anyone who has worked in an organization long enough knows exactly the process for getting something done.
That knowledge is critical and rare, and thus ripe for monetization. That was the original inspiration for Hammer when he set out to build a new startup.“Why does Google ever make a bad decision?” Hammer asked at the time. Here you have the company with the most data in the world and the tools to search through it. “How do they not have the information they need?” The answer is that it has all the explicit knowledge in the world, but none of the implicit knowledge required.
That thinking eventually led into sales, where the information asymmetry between a customer and a salesperson was obvious. “The more I talked to sales people, the more I realized that they needed to understand how their account thinks,” Hammer said. Sales automation tools are great, but what message should someone be sending, and to who? That’s a much harder problem to solve, but ultimately the one that will lead to a signed deal. Hammer eventually realized that there were individuals who could arbitrage their valuable knowledge for a price.
That monetization creates a new labor market for these sorts of consultants. For employees at large companies, they can now leave, take a year off or even retire, and potentially get paid to talk about what they know about an organization. Hammer said that “people are fundamentally looking for ways to be helpful,” and while the pay is certainly a major highlight, a lot of people see an opportunity to just get engaged. Clearly that proposition is attractive, since the platform has more than 10,000 emissaries today.
What makes this market more fascinating long-term though is whether this can transition from a part-time, between-jobs gig into something more long-term and professional. Could people specialize in something like “how does Oracle purchase things,” much as how there is an infrastructure of people who support companies working through the government procurement system?
Hammer demurred a bit on this point, noting that “so much of that is being on the other side of those walls.” It’s not any easier for a potential consultant to learn the decision-making outside of a company than it is for a salesperson. Furthermore, the knowledge of an internal company’s processes degrades, albeit at different rates depending on the organization. Some companies experience rapid change and turnover, while knowledge of other companies may last a decade or more.
All that said, Hammer believes that there will come a tipping point when companies start to recommend emissaries to help salespeople through their own processes. Some companies who are self-aware and acknowledge their convoluted procurement procedures may eventually want salespeople to be advised by people who can smooth the process for all sides.
Obviously, with money and knowledge trading hands, there are significant concerns about ethics. “Ethics have to be at the center of what we do,” Hammer said. “They are not sharing deep confidential information, they’re sharing knowledge about the culture of the organization.” Emissary has put in place procedures to monitor ethics compliance. “Emissaries can not work with competitors at the same time,” he said. Furthermore, emissaries obviously have to have left their companies, so they can’t influence the buying decision itself.
Networking has been the millstone of every salesperson. It’s time consuming, and there is little data on what calls or coffees might improve a sale or not. If you take Emissary’s vision to its asymptote though, all that could potentially be replaced. Under the guidance of people in the know, the fits and starts of sales could be transformed into a smooth process with the right talking points at just the right time. Maybe the best products could win after all.
Kate Merton, PhD, is the head of NYC + Boston @JLABS, a global life sciences and health innovation hub.
Access to connections with industry and market know-how is critical for ventures looking to scale beyond a Series A funding round. Startups operating in the health and life sciences space — where innovations may take years to see the light of day — commonly require support navigating a heightened regulatory environment and evolving end-user or beneficiary expectations. Young healthcare companies also need reliable sources of ecosystem knowledge as they enter crowded markets with powerful incumbents and attempt to court potential partners. That’s why the need for more specialized incubators to develop capabilities, talent and opportunities for deeply technical fields, like healthcare, which improve lives and help solve the world’s toughest problems, will persist.
Bring innovation under one roof — literally or digitally
Achieving results with the incubator model of innovation depends on geography, environment and access to informed industry resources. For instance, Y Combinator continues to churn out high-impact startups. Techstars employs a market-adaptable model that dives deep on key global industry verticals, with domain experts as partners.
In Toronto, for instance, MaRS Discovery District provides critical startup and innovation infrastructure under one roof (Disclaimer: JLABS is a resident and partner of MaRS). All three incubators employ subject matter advisors that support new companies and help them navigate crowded markets with well-known competitors.
Look to the public and nonprofit sectors for partnerships
Successful incubators also benefit from business-friendly public and academic sectors. In Canada, the government champions open immigration policies that present technology startups and talent with an opportunity to draw success from the world’s best people.
Universities in Toronto, Waterloo, Montreal, Edmonton and Vancouver churn out educated computer and data scientists with design to use their talents for noble pursuits. The onus is on local companies to attract and retain them. That’s where incubators can play a crucial role. The country’s academic scene complements the incubators by partnering with startups to conduct research — especially in the fields of healthcare, biotechnology, clean energy and artificial intelligence.
Keep your friends close and fellow startups closer
The healthcare industry still struggles with diversity in leadership: less than 1 percent of CEOs in the life science industry are women; minority ownership of STEM companies is only 8 percent. Incubators can help change that by bringing diverse groups together to share ideas and build technologies.
Supporting early-stage innovators with a place to work and resources to run their business ultimately benefits the global life science ecosystem overall.
In general, a key feature of incubators that helps sell the model to prospects is proximity to fellow entrepreneurs and subject matter experts. That’s why it is especially important for incubators to understand the nuances of the industry or technology they select. Incubators with focused offerings — specializing in launching healthcare startups with hefty or opaque go-to-market requirements, for instance — will have a better chance of success if they deliver quality services to a smaller, more targeted brand of startup that aligns with their expertise. Incubators fail when they over-extend and over-promise offerings — something to avoid at all costs.
Indeed, supporting early-stage innovators with a place to work and resources to run their business ultimately benefits the global life science ecosystem overall. I believe this will persist and the next generation of startups that launch to tackle the world’s biggest — and smallest — healthcare issues will need financial, regulatory and technological support to achieve their goals.
Thanks to advances in both medicine and technology, the opportunities to make a real impact on the world will continue to grow. Achieving results through incubators will require focus on quality of services, expertise of subject matter advisors and access to potential partnerships with industry, academic and public sector peers.
The goal when launching, and sustaining, an incubator for science-driven fields like healthcare should be to enable innovators to deliver much-needed healthcare solutions that reach people all over the world. Importantly, incubators should aim to help entrepreneurs do so at the speed of innovation experienced by other industries like transportation or finance. Ultimately, by removing operations, facility management, technical support and equipment needs common among independent companies, incubator-resident entrepreneurs can focus their time and money on what matters most — world-changing health innovation.
Google Calendar is the latest Google app to get an update focused on improving users’ “digital wellbeing.” The company announced today it’s rolling out a new “Out of Office” feature in Google Calendar, alongside a setting for customizable working hours. The working hours signal to others when you’re unavailable, and allows Google Calendar to automatically decline meetings on your behalf outside those hours.
For starters, you’ll find there’s a new “Out of Office” calendar entry type you can select when you’re creating an event via Google Calendar on the web.
For example, if you’re scheduling the dates of your vacation, you could mark that event as “Out of Office.” If others send you meeting invites during this period, Google Calendar will decline them without your involvement.
It’s a feature users have requested for years to complement Gmail’s Vacation Responder.
Google also says it will attempt to automatically detect when event types should be denoted “Out of Office,” based on the event title.
Another new feature will allow you to better customize your working hours in Google Calendar.
Currently, you can set working hours to one interval for all days of the week, but now you’ll be able to customize your hours for each day separately. This will help people who have irregular availability — not the usual 9 to 5, so to speak.
Google Calendar will also try to infer your working hours based on your prior scheduling patterns, and may prompt you to confirm them in the app’s Settings.
The changes, while seemingly small, are part of a broader movement at Google to promote digital wellbeing across its platforms.
In recent months, the company has introduced a number of features focused on helping people better manage their time, and fight back against the addictive nature of smartphones and digital services.
For example, at its I/O developer conference in May, Google introduced new time management controls for Android users, and it has a set of screen time tools for parents to use with children via Family Link.
It even rolled out new tools to help YouTube users cut down the time they spend mindlessly watching videos.
Other services, like Gmail and Google Photos, utilize machine learning and AI to reduce the time spent in-app, by doing things like prioritizing the important mail, or automatically editing your photos.
The new Google Calendar tools are rolling out now to G Suite users, Google says. Presumably, a broader consumer release will soon follow.
Apple CEO Tim Cook issued a letter today, revising guidance for the company’s Q1 fiscal results. The note highlights a number of reasons for dropping the number, including, perhaps most notably, lower than expected results in emerging markets.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook says in the letter. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”
Apple has invested a lot of future growth in markets like China, and a series of factors have made for disappointing results. Among them a slowed economy and tensions with the U.S. spurred on by tariffs that many believe will spur on a full-fledged trade war. India has also been a tough nut for the company to crack.
But that’s only one piece of the puzzle here. As Cook notes in the letter, there have been fewer iPhone upgrades than expected. The executive notes, however, that non-phone categories (including the Mac, Apple Watch and iPad) did manage to grow 19 percent, but the smartphone has long been a driving force in the company’s economic fortunes, so a blow to those sales can have a substantial impact on the company’s bottom line.
2018 marked the first down year for smartphone numbers since analyst began tracking them, and not even the might iPhone is immune from the larger trends. Pricees are going up, phone quality has improved and new features haven’t been enough to keep consumers to a shortened upgrade cycle. The industry at large is going through a reckoning as it grapples to determine the next major consumer electronics trend. Apple has continued to be a rare bright spot in a stagnant world of wearables, but the Watch alone isn’t enough to right that ship.
The letter features an unusually dour tone from the chief executive, but Cook rightly notes that Apple has been through plenty of tough times before. “As we exit a challenging quarter, we are as confident as ever in the fundamental strength of our business. We manage Apple for the long term, and Apple has always used periods of adversity to re-examine our approach, to take advantage of our culture of flexibility, adaptability and creativity, and to emerge better as a result.”
After two years coming down the pipe at tech giants, Europe’s new privacy framework, the General Data Protection Regulation (GDPR), is now being applied — and long time Facebook privacy critic, Max Schrems, has wasted no time in filing four complaints relating to (certain) companies’ ‘take it or leave it’ stance when it comes to consent.
The complaints have been filed on behalf of (unnamed) individual users — with one filed against Facebook; one against Facebook-owned Instagram; one against Facebook-owned WhatsApp; and one against Google’s Android.
Schrems argues that the companies are using a strategy of “forced consent” to continue processing the individuals’ personal data — when in fact the law requires that users be given a free choice unless a consent is strictly necessary for provision of the service. (And, well, Facebook claims its core product is social networking — rather than farming people’s personal data for ad targeting.)
“It’s simple: Anything strictly necessary for a service does not need consent boxes anymore. For everything else users must have a real choice to say ‘yes’ or ‘no’,” Schrems writes in a statement.
“Facebook has even blocked accounts of users who have not given consent,” he adds. “In the end users only had the choice to delete the account or hit the “agree”-button — that’s not a free choice, it more reminds of a North Korean election process.”
We’ve reached out to all the companies involved for comment and will update this story with any response. Update: Facebook has now sent the following statement, attributed to its chief privacy officer, Erin Egan: “We have prepared for the past 18 months to ensure we meet the requirements of the GDPR. We have made our policies clearer, our privacy settings easier to find and introduced better tools for people to access, download, and delete their information. Our work to improve people’s privacy doesn’t stop on May 25th. For example, we’re building Clear History: a way for everyone to see the websites and apps that send us information when you use them, clear this information from your account, and turn off our ability to store it associated with your account going forward.”
Schrems most recently founded a not-for-profit digital rights organization to focus on strategic litigation around the bloc’s updated privacy framework, and the complaints have been filed via this crowdfunded NGO — which is called noyb (aka ‘none of your business’).
As we pointed out in our GDPR explainer, the provision in the regulation allowing for collective enforcement of individuals’ data rights in an important one, with the potential to strengthen the implementation of the law by enabling non-profit organizations such as noyb to file complaints on behalf of individuals — thereby helping to redress the imbalance between corporate giants and consumer rights.
That said, the GDPR’s collective redress provision is a component that Member States can choose to derogate from, which helps explain why the first four complaints have been filed with data protection agencies in Austria, Belgium, France and Hamburg in Germany — regions that also have data protection agencies with a strong record defending privacy rights.
Given that the Facebook companies involved in these complaints have their European headquarters in Ireland it’s likely the Irish data protection agency will get involved too. And it’s fair to say that, within Europe, Ireland does not have a strong reputation for defending data protection rights.
But the GDPR allows for DPAs in different jurisdictions to work together in instances where they have joint concerns and where a service crosses borders — so noyb’s action looks intended to test this element of the new framework too.
Under the penalty structure of GDPR, major violations of the law can attract fines as large as 4% of a company’s global revenue which, in the case of Facebook or Google, implies they could be on the hook for more than a billion euros apiece — if they are deemed to have violated the law, as the complaints argue.
That said, given how freshly fixed in place the rules are, some EU regulators may well tread softly on the enforcement front — at least in the first instances, to give companies some benefit of the doubt and/or a chance to make amends to come into compliance if they are deemed to be falling short of the new standards.
However, in instances where companies themselves appear to be attempting to deform the law with a willfully self-serving interpretation of the rules, regulators may feel they need to act swiftly to nip any disingenuousness in the bud.
“We probably will not immediately have billions of penalty payments, but the corporations have intentionally violated the GDPR, so we expect a corresponding penalty under GDPR,” writes Schrems.
Only yesterday, for example, Facebook founder Mark Zuckerberg — speaking in an on stage interview at the VivaTech conference in Paris — claimed his company hasn’t had to make any radical changes to comply with GDPR, and further claimed that a “vast majority” of Facebook users are willingly opting in to targeted advertising via its new consent flow.
“We’ve been rolling out the GDPR flows for a number of weeks now in order to make sure that we were doing this in a good way and that we could take into account everyone’s feedback before the May 25 deadline. And one of the things that I’ve found interesting is that the vast majority of people choose to opt in to make it so that we can use the data from other apps and websites that they’re using to make ads better. Because the reality is if you’re willing to see ads in a service you want them to be relevant and good ads,” said Zuckerberg.
He did not mention that the dominant social network does not offer people a free choice on accepting or declining targeted advertising. The new consent flow Facebook revealed ahead of GDPR only offers the ‘choice’ of quitting Facebook entirely if a person does not want to accept targeting advertising. Which, well, isn’t much of a choice given how powerful the network is. (Additionally, it’s worth pointing out that Facebook continues tracking non-users — so even deleting a Facebook account does not guarantee that Facebook will stop processing your personal data.)
Asked about how Facebook’s business model will be affected by the new rules, Zuckerberg essentially claimed nothing significant will change — “because giving people control of how their data is used has been a core principle of Facebook since the beginning”.
“The GDPR adds some new controls and then there’s some areas that we need to comply with but overall it isn’t such a massive departure from how we’ve approached this in the past,” he claimed. “I mean I don’t want to downplay it — there are strong new rules that we’ve needed to put a bunch of work into making sure that we complied with — but as a whole the philosophy behind this is not completely different from how we’ve approached things.
“In order to be able to give people the tools to connect in all the ways they want and build committee a lot of philosophy that is encoded in a regulation like GDPR is really how we’ve thought about all this stuff for a long time. So I don’t want to understate the areas where there are new rules that we’ve had to go and implement but I also don’t want to make it seem like this is a massive departure in how we’ve thought about this stuff.”
Zuckerberg faced a range of tough questions on these points from the EU parliament earlier this week. But he avoided answering them in any meaningful detail.
So EU regulators are essentially facing a first test of their mettle — i.e. whether they are willing to step up and defend the line of the law against big tech’s attempts to reshape it in their business model’s image.
Privacy laws are nothing new in Europe but robust enforcement of them would certainly be a breath of fresh air. And now at least, thanks to GDPR, there’s a penalties structure in place to provide incentives as well as teeth, and spin up a market around strategic litigation — with Schrems and noyb in the vanguard.
Schrems also makes the point that small startups and local companies are less likely to be able to use the kind of strong-arm ‘take it or leave it’ tactics on users that big tech is able to use to extract consent on account of the reach and power of their platforms — arguing there’s a competition concern that GDPR should also help to redress.
“The fight against forced consent ensures that the corporations cannot force users to consent,” he writes. “This is especially important so that monopolies have no advantage over small businesses.”
Image credit: noyb.eu