Facebook warned over ‘very small’ indicator LED on smart glasses, as EU DPAs flag privacy concerns

Facebook’s lead privacy regulator in Europe has raised concerns about a pair of ‘smart’ Ray-Ban sunglasses the tech giant is now selling. The glasses include a face-mounted camera which can be used to take pictures and short videos with a verbal cue.

Ireland’s Data Protection Commission (DPC) said Friday that it’s asked the tech giant to demonstrate that an LED indicator light also mounted on the specs — which lights up when the user is taking a video — is an effective way of putting other people on notice that they are being recorded by the wearer.

Italy’s privacy watchdog, the Garante, already raised concerns about Facebook’s smart glasses — but Ireland has an outsized role as a regulator for the tech giant owing to where the company’s regional base is located.

Facebook announced what it couched as the “next step” on the road to making a pair of augmented reality ‘smart’ glasses a full year ago — saying initial specs would not include any AR but announcing a multi-year partnership luxury eyewear giant Luxottica, as it seemingly planned for a pipeline of increasingly feature-loaded ‘smart’ eyewear.

The first Facebook Ray-Ban-branded specs went on sale earlier this month — looking mostly like a standard pair of sunglasses but containing two 5 MP cameras mounted on the front that enable the user to take video of whatever they’re looking at and upload it to a new Facebook app called View. (The sunglasses also contain in-frame speakers so the user can listen to music and take phone calls.)

The specs also include a front mounted LED light which is supposed to switch on to indicate when a video is being recorded. However European regulators are concerned that what the DPC describes as a “very small” indicator is an inadequate mechanism for alerting people to the risk they are being recorded.

Facebook has not demonstrated it conducted comprehensive field testing of the device with a view to assessing the privacy risk it may pose, it added.

“While it is accepted that many devices including smart phones can record third party individuals, it is generally the case that the camera or the phone is visible as the device by which recording is happening, thereby putting those captured in the recordings on notice. With the glasses, there is a very small indicator light that comes on when recording is occurring. It has not been demonstrated to the DPC and Garante that comprehensive testing in the field was done by Facebook or Ray-Ban to ensure the indicator LED light is an effective means of giving notice,” the DPC wrote.

Facebook’s lead EU data protection regulator goes on to say it is calling on the tech giant to “confirm and demonstrate that the LED indicator light is effective for its purpose and to run an information campaign to alert the public as to how this new consumer product may give rise to less obvious recording of their images”.

Facebook has been contacted with questions.

It is not clear whether Facebook engaged with any EU privacy regulators during the design of the smart glasses.

Nor whether or when they might launch in Europe.

The specs sent on sale in the US earlier this month — costing $299. The price to Americans’ privacy is tbc.

Over the years, Facebook has delayed (or even halted) some of its product launches in Europe following regulatory concerns — including a facial tagging feature (which it later reintroduced in another form).

The launch of Facebook’s dating service in Europe was also delayed for more than nine months — and arrived with some claimed changes after an intervention by the DPC.

There are also ongoing limits on how the Facebook-owned messaging platform WhatsApp can share data with Facebook itself in Europe, again owing to regulatory push back. Although plenty of data does still flow from WhatsApp to Facebook in the EU and — zooming out — scores of privacy complaints against the tech giant remain under investigation in the region, meaning these issues are undecided and unenforced.

Earlier this month Ireland’s DPC did announce its first decision against a Facebook company (under the EU’s GDPR)  — hitting WhatsApp with a $267 penalty related to transparency failures. However the DPC has multiple unresolved complaints against Facebook or Facebook-owned businesses still on its desk.

In January the Irish regulator also agreed to “swiftly” resolve a (pre-GDPR) 2013 complaint against Facebook’s data transfers out of the EU to the US. That decision is still pending too.

#data-protection-commission, #europe, #european-union, #eyewear, #facebook, #gadgets, #gdpr, #glasses, #ireland, #italy, #luxottica, #privacy, #ray-ban, #smartglasses, #sunglasses, #united-states, #whatsapp

Facebook forced troll farm content on over 40% of all Americans each month

Facebook forced troll farm content on over 40% of all Americans each month

Enlarge (credit: Chesnot | Getty Images)

In the wake of the 2016 election, Facebook knew it had a problem. Pages and fake accounts created by the Kremlin-backed Internet Research Agency had spread through the social network and drawn massive engagement from real users. Facebook knew it had to get things under control.

But years later, Facebook’s own internal research teams revealed that troll farms were still reaching massive audiences, even if they didn’t have large direct followings. The company’s own algorithms pushed the troll content onto users who had not expressed interest in the pages, expanding the trolls’ reach exponentially. A report detailing the research was leaked to MIT Technology Review by a former employee.

When the report was published in 2019, troll farms were reaching 100 million Americans and 360 million people worldwide every week. In any given month, Facebook was showing troll farm posts to 140 million Americans. Most of the users never followed any of the pages. Rather, Facebook’s content-recommendation algorithms had forced the content on over 100 million Americans weekly. “A big majority of their ability to reach our users comes from the structure of our platform and our ranking algorithms rather than user choice,” the report said.

Read 15 remaining paragraphs | Comments

#facebook, #internet-research-agency, #policy, #social-media, #troll-farms

Facebook knows that Instagram harms teens. Now, its plan to open the app to kids looks worse than ever

Facebook is in the hot seat again.

The Wall Street Journal published a powerful multi-part series on the company this week, drawing from internal documents on everything from the company’s secretive practice of whitelisting celebrities to its knowledge that Instagram is taking a serious toll on the mental health of teen girls.

The flurry of investigative pieces makes it clear that what Facebook says in public doesn’t always reflect the company’s knowledge on known issues behind the scenes. The revelations still managed to shock even though Facebook has been playing dumb about the various social ills it sows for years. (Remember when Mark Zuckerberg dismissed the notion that Facebook influenced the 2016 election as “crazy?”) Facebook’s longstanding PR playbook is to hide its dangers, denying knowledge of its darker impacts on society publicly, even as research spells them out internally.

That’s all well and good until someone gets ahold of the internal research.

One of the biggest revelations from the WSJ’s report: The company knows that Instagram poses serious dangers to mental health in teenage girls. An internal research slide from 2019 acknowledged that “We make body image issues worse for one in three teen girls” — a shocking admission for a company charging ahead with plans to expand to even younger and more vulnerable age groups.

As recently as May, Instagram’s Adam Mosseri dismissed concerns around the app’s negative impact on teens as “quite small.”

But internally, the picture told a different story. According to the WSJ, from 2019 to 2021, the company conducted a thorough deep dive into teen mental health including online surveys, diary studies, focus groups and large-scale questionnaires.

According to one internal slide, the findings showed that 32 percent of teenage girls reported that Instagram made them have a worse body image. Of research participants who experienced suicidal thoughts, 13 percent of British teens and 6 percent of American teens directly linked their interest in killing themselves to Instagram.

“Teens blame Instagram for increases in the rate of anxiety and depression,” another internal slide stated. “This reaction was unprompted and consistent across all groups.”

Following the WSJ report, Senators Marsha Blackburn (R-TN) and Richard Blumenthal (D-CT) announced a probe into Facebook’s lack of transparency around internal research showing that Instagram poses serious and even lethal danger to teens. The Senate Subcommittee on Consumer Protection, Product Safety, and Data Security will launch the investigation.

“We are in touch with a Facebook whistleblower and will use every resource at our disposal to investigate what Facebook knew and when they knew it – including seeking further documents and pursuing witness testimony,” Senators Blackburn and Blumenthal wrote. “The Wall Street Journal’s blockbuster reporting may only be the tip of the iceberg.”

Blackburn and Blumenthal weren’t the only U.S. lawmakers alarmed by the new report. Sen. Ed Markey (D-MA), Rep. Kathy Castor (D-FL), and Lori Trahan (D-MA) sent Facebook their own letter demanding that the company walk away from its plan to launch Instagram for kids. “Children and teens are uniquely vulnerable populations online, and these findings paint a clear and devastating picture of Instagram as an app that poses significant threats to young people’s wellbeing,” the lawmakers wrote.

 

In May, a group of 44 state attorneys general wrote to Instagram to encourage the company to abandon its plans to bring Instagram to kids under the age of 13. “It appears that Facebook is not responding to a need, but instead creating one, as this platform appeals primarily to children who otherwise do not or would not have an Instagram account,” the group of attorneys general wrote. They warned that an Instagram for kids would be “harmful for myriad reasons.”

In April, a collection of the same Democratic lawmakers expressed “serious concerns” about Instagram’s potential impact on the well-being of young users. That same month, a coalition of consumer advocacy organizations also demanded that the company reconsider launching a version of Instagram for kids.

According to the documents obtained by the WSJ, all of those concerns look extremely valid. In spite of extensive internal research and their deeply troubling findings, Facebook has downplayed its knowledge publicly, even as regulators regularly pressed the company for what it really knows.

Instagram’s Mosseri may have made matters worse Thursday when he made a less than flattering analogy between social media platforms and vehicles. “We know that more people die than would otherwise because of car accidents, but by and large, cars create way more value in the world than they destroy,” Mosseri told Peter Kafka on Recode’s media podcast. “And I think social media is similar.”

Mosseri dismissed any comparison between social media and drugs or cigarettes in spite of social media’s well-researched addictive effects, likening social platforms to the auto industry instead. Naturally, the company’s many critics jumped on the car comparison, pointing to their widespread lethality and the fact that the auto industry is heavily regulated — unlike social media.

#adam-mosseri, #facebook, #instagram, #mark-zuckerberg, #marsha-blackburn, #mental-health, #richard-blumenthal, #social-media, #social-media-platforms, #tc, #teens, #the-wall-street-journal

For the love of the loot: Blockchain, the metaverse and gaming’s blind spot

The speed at which gaming has proliferated is matched only by the pace of new buzzwords inundating the ecosystem. Marketers and decision makers, already suffering from FOMO about opportunities within gaming, have latched onto buzzy trends like the applications of blockchain in gaming and the “metaverse” in an effort to get ahead of the trend rather than constantly play catch-up.

The allure is obvious, as the relationship between the blockchain, metaverse, and gaming makes sense. Gaming has always been on the forefront of digital ownership (one can credit gaming platform Steam for normalizing the concept for games, and arguably other media such as movies), and most agreed upon visions of the metaverse rely upon virtual environments common in games with decentralized digital ownership.

Whatever your opinion of either, I believe they both have an interrelated future in gaming. However, the success or relevance of either of these buzzy topics is dependent upon a crucial step that is being skipped at this point.

Let’s start with the example of blockchain and, more specifically, NFTs. Collecting items of varying rarities and often random distribution form some of the core “loops” in many games (i.e. kill monster, get better weapon, kill tougher monster, get even better weapon, etc.), and collecting “skins” (e.g. different outfits/permutation of game character) is one of the most embraced paradigms of micro-transactions in games.

The way NFTs are currently being discussed in relation to gaming are very much in danger of falling into this very trap: Killing the core gameplay loop via a financial fast track.

Now, NFTs are positioned to be a natural fit with various rare items having permanent, trackable, and open value. Recent releases such as “Loot (for Adventurers)” have introduced a novel approach wherein the NFTs are simply descriptions of fantasy-inspired gear and offered in a way that other creators can use them as tools to build worlds around. It’s not hard to imagine a game built around NFT items, à la Loot.

But that’s been done before… kind of. Developers of games with a “loot loop” like the one described above have long had a problem with “farmers”, who acquire game currencies and items to sell to players for real money, against the terms of service of the game. The solution was to implement in-game “auction houses” where players could instead use real money to purchase items from one another.

Unfortunately, this had an unwanted side-effect. As noted by renowned game psychologist Jamie Madigan, our brains are evolved to pay special attention to rewards that are both unexpected and beneficial. When much of the joy in some games comes from an unexpected or randomized reward, being able to easily acquire a known reward with real money robbed the game of what made it fun.

The way NFTs are currently being discussed in relation to gaming are very much in danger of falling into this very trap: Killing the core gameplay loop via a financial fast track. The most extreme examples of this phenomena commit the biggest cardinal sin in gaming — a game that is “pay to win,” where a player with a big bankroll can acquire a material advantage in a competitive game.

Blockchain games such as Axie Infinity have rapidly increased enthusiasm around the concept of “play to earn,” where players can potentially earn money by selling tokenized resources or characters earned within a blockchain game environment. If this sounds like a scenario that can come dangerously close to “pay to win,” that’s because it is.

What is less clear is whether it matters in this context. Does anyone care enough about the core game itself rather than the potential market value of NFTs or earning potential through playing? More fundamentally, if real-world earnings are the point, is it truly a game or just a gamified micro-economy, where “farming” as described above is not an illicit activity, but rather the core game mechanic?

The technology culture around blockchain has elevated solving for very hard problems that very few people care about. The solution (like many problems in tech) involves reevaluation from a more humanist approach. In the case of gaming, there are some fundamental gameplay and game psychology issues to be tackled before these technologies can gain mainstream traction.

We can turn to the metaverse for a related example. Even if you aren’t particularly interested in gaming, you’ve almost certainly heard of the concept after Mark Zuckerberg staked the future of Facebook upon it. For all the excitement, the fundamental issue is that it simply doesn’t exist, and the closest analogs are massive digital game spaces (such as Fortnite) or sandboxes (such as Roblox). Yet, many brands and marketers who haven’t really done the work to understand gaming are trying to fast-track to an opportunity that isn’t likely to materialize for a long time.

Gaming can be seen as the training wheels for the metaverse — the ways we communicate within, navigate, and think about virtual spaces are all based upon mechanics and systems with foundations in gaming. I’d go so far as to predict the first adopters of any “metaverse” will indeed be gamers who have honed these skills and find themselves comfortable within virtual environments.

By now, you might be seeing a pattern: We’re far more interested in the “future” applications of gaming without having much of a perspective on the “now” of gaming. Game scholarship has proliferated since the early aughts due to a recognition of how games were influencing thought in fields ranging from sociology to medicine, and yet the business world hasn’t paid it much attention until recently.

The result is that marketers and decision makers are doing what they do best (chasing the next big thing) without the usual history of why said thing should be big, or what to do with it when they get there. The growth of gaming has yielded an immense opportunity, but the sophistication of the conversations around these possibilities remains stunted, due in part to our misdirected attention.

There is no “pay to win” fast track out of this blind spot. We have to put in the work to win.

#blockchain, #column, #cryptocurrencies, #cryptocurrency, #facebook, #gaming, #loot, #mark-zuckerberg, #metaverse, #nfts, #opinion, #roblox, #startups, #virtual-reality

Facebook revamps its business tool lineup following threats to its ad targeting business

Facebook today is announcing the launch of new products and features for business owners, following the threat to its ad targeting business driven by Apple’s new privacy features, which now allow mobile users to opt out of being tracked across their iOS apps. The social networking giant has repeatedly argued that Apple’s changes would impact small businesses that relied on Facebook ads to reach their customers. But it was not successful in getting any of Apple’s changes halted. Instead, the market is shifting to a new era focused more on user privacy, where personalization and targeting are more of an opt-in experience. That’s required Facebook to address its business advertiser base in new ways.

As the ability to track consumers declines — very few consumers are opting into tracking, studies find — Facebook is rolling out new features that will allow businesses to better position themselves in front of relevant audiences. This includes updates that will let them reach customers, advertise to customers, chat with customers across Facebook apps, generate leads, acquire customers and more.

The company earlier this year began testing a way for customers to explore businesses from underneath News Feed posts by tapping on topics they were interested in — like beauty, fitness, and clothing, and explore content from other related businesses. The feature allows people to come across new businesses that may also like, and would allow Facebook to create its own data set of users who like certain types of content. Over time, it could possibly even turn the feature into an ad unit, where businesses could pay for higher placement.

But for the time being, Facebook will expand this feature to more users across the U.S., and launch it in Australia, Canada, Ireland, Malaysia, New Zealand, Philippines, Singapore, South Africa, and the U.K.

Image Credits: Facebook

Facebook is also making it easier for businesses to chat with customers. They’re already able to buy ads that encourage people to message them on Facebook’s various chat platforms — Messenger, Instagram Direct, or WhatsApp. Now, they’ll be able to choose all the messaging platforms where they’re available, and Facebook will default the chat app showcased in the ad based on where the conversation is most likely to happen.

Image Credits: Facebook

The company will tie WhatsApp to Instagram, as well, as part of this effort. Facebook explains that many businesses market themselves or run shops across Instagram, but rely on WhatsApp to communicate with customers and answer questions. So, Facebook will now allow businesses to add a WhatsApp click-to-chat button to their Instagram profiles.

This change, in particular, represents another move that ties Facebook’s separate apps more closely together, at a time when regulators are considering breaking up Facebook over antitrust concerns. Already, Facebook interconnected Facebook’s Messenger and Instagram messaging services, which would make such a disassembly more complicated. And more recently, it’s begun integrating Messenger directly into Facebook’s platform itself.

Image Credits: Facebook

In a related change, soon businesses will be able to create ads that send users directly to WhatsApp from the Instagram app. (Facebook also already offers ads like this.)

Separately from this news, Facebook announced the launch of a new business directory on WhatsApp, allowing consumers to find shops and services on the chat platform, as well.

Another set of changes being introduced involve an update to Facebook Business Suite. Businesses will be able to manage emails through Inbox and sending remarketing emails; use a new File Manager for creating, managing, and posting content; and access a feature that will allow businesses to test different versions of a post to see which one is most effective.

Image Credits: Facebook

Other new products include tests of paid and organic lead generation tools on Instagram; quote requests on Messenger, where customers answer a few questions prior to their conversations; and a way for small businesses to access a bundle of tools to get started with Facebook ads, which includes a Facebook ad coupon along with free access to QuickBooks for 3 months or free access to Canva Pro for 3 months.

Image Credits: Facebook

Facebook will also begin testing something called “Work Accounts,” which will allow business owners to access their business products, like Business Manager, separately from their personal Facebook account. They’ll be able to manage these accounts on behalf of employees and use single-sign-on integrations.

Work Accounts will be tested through the remainder of the year with a small group of businesses, and Facebook says it expects to expand availability in 2022.

Other efforts it has in store include plans to incorporate more content from creators and local businesses and new features that let users control the content they see, but these changes were not detailed at this time.

Most of the products being announced are either rolling out today or will begin to show up soon.

#advertising-tech, #app-store, #australia, #canada, #canva, #computing, #facebook, #instagram, #ireland, #malaysia, #messenger, #new-zealand, #philippines, #private-message, #singapore, #social, #social-media, #software, #south-africa, #technology, #united-kingdom, #united-states, #whatsapp

In growth marketing, signal determines success

Unlike a weak phone signal solely causing a grainy sound, in growth marketing, it can mean the difference between a successful program or a massive cash bleed. As we move toward an increasingly privacy-centric world, it is even more necessary for companies to nail down signal early on.

So what exactly is “signal” in growth marketing? It can carry many different meanings, but holistically speaking, it’s the event data in our arsenal to help guide decisions. When it comes to paid acquisition, it’s vital to optimize and pass back the correct event data to paid channels. This is so that targeting and bidding algorithms have the most enriched data to utilize.

I’ve seen startups spend thousands of dollars inefficiently as a result of not having optimal signal in their paid acquisition campaigns. I’ve also spent millions at companies such as Postmates refining our signal to the best possible state. I’d like every startup to avoid the painful mistake of not having this set up correctly, instead making the most of every important ad dollar.

The selection

When starting out, it may seem obvious to optimize toward a north-star metric such as a purchase. If spend is very minimal, that could mean that the conversion volume will be low across campaigns. On the flip side, if the optimization event is set at a top-of-funnel event such as a landing page view, the signal strength may be very weak. The reason that the strength may be weak is due to passing back a low-intent event as successful to the paid channels. By marking a landing page view as successful, paid channels such as Facebook will continue to find users that are similar to these lower-propensity users that are converting.

Let’s take an example of a health-and-wellness app with a goal of driving memberships to their coaching program. They’re just starting out with exploring paid acquisition and spending $5,000 per week on Facebook. Below is a look at their events in the funnel, weekly volume and cost per event:

Example of a health-and-wellness app and their weekly conversion volume at $5,000 spend. Image Credits: Jonathan Martinez

In the above example, we can see that there’s significant volume for landing page views. As we go down the simplified flow, there is less volume as users drop off the funnel. Almost everyone’s instinct would be to optimize for either the landing page view, because there’s so much data, or the subscription event, because it’s the strongest. I would argue (after extensive testing across multiple ad accounts) that neither of these events would be the correct pick. With landing page views as an optimization event, the users have an egregiously low propensity since the landing page view to subscription conversion rate is 0.61%.

The correct event to optimize for here would either be sign up or trial start because they have sufficient enough volume and are strong signals of a user converting to the north-star metric (subscription). Looking at the conversion rate between sign up and subscription, it’s a much healthier 10.21%, versus the 0.61% from landing page view.

I’m always a huge proponent of testing all events, as there can definitely be big surprises in what may work best for you. When testing events, make sure that there’s a stat-sig baseline that’s being followed to make decisions. Additionally, I think it’s a great practice to test events regularly early on because conversion rates can change as other channel variables are adjusted.

Flow adjustments

In certain cases, the current events that are set up aren’t optimal for paid acquisition campaigns. I’ve seen this happen frequently with startups that have long windows of time between conversion events. Take a startup such as Thumbtack, which provides a marketplace of providers who can help with home repairs. After someone signs up to their app, the user may place a request but not hire someone until a few weeks later. In this case, making flow adjustments could potentially improve the signal and data that you collect from users.

A solution that Thumbtack could implement to gather a stronger signal would be to add another step between the request being placed and hiring someone. This could potentially be a survey with propensity check questions that could ask how soon the user needs help or how important their project is from a 1–10.

Example of in-app survey responses to “How important is your project?” Image Credits: Jonathan Martinez.

After accumulating the data, if there’s a high correlation between survey answers and someone starting their project, we can start to explore optimizing for that event.

In the above example, we see that users who responded with “9” have a 7.66% likelihood to convert. Therefore, this should be the event we optimize for. Artificially adding steps that qualify users in a longer flow can help steer optimization targeting in the right direction.

Enhancing signal

Let’s imagine that you have the most ideal flow that captures large volumes of event signal without much of a delay to your optimization event. That’s still far from perfect. There are myriad solutions that can be implemented to further enhance the signal.

For Facebook specifically, there are connections such as CAPI that can be integrated to pass back data in a more accurate way. CAPI is a method of passing back web events server-to-server rather than relying on cookies and the Facebook pixel. This helps mitigate browsers that block cookies or users who may delete their web history. This is just one example. I won’t run through all the channels, but each has its own solution to help enhance event signal being passed back to it.

iOS 14 signal

This wouldn’t be a column written in 2021 without mention of iOS 14 and the strategies that can be leveraged for this growing user segment. I’ve written another piece about iOS-14-specific tactics, but I’ll cover it here on a broad level. If the north-star metric (i.e., purchase) event can be triggered within 24 hours of the initial app launch, then that’s golden.

This would bring large volumes of high-intent data that would not be at the mercy of the SKAD 24-hour event timer. For most companies, this may sound like a lofty goal, so the target should be to have an event fire within 24 hours that is a high-likelihood indicator of someone completing your north-star metric. Think of which events happen in the flow that lead to someone eventually purchasing. Maybe someone adding a payment method happens within 24 hours and historically has a 90% conversion rate to someone purchasing. An “add payment info” event would be a great conversion event to use in this case. The landscape of iOS 14 is constantly changing but this should apply for the immediate future.

Incrementality and staying ahead

As a rule of thumb, incrementality checks should constantly be performed in growth marketing. It gives an important read on whether advertising dollars are bringing in users that wouldn’t have converted had they not seen an ad.

When comparing optimization events, this rule still applies. Make sure that costs per action aren’t the only metric that’s being used as a measure of success, but instead, use the incremental lift on each conversion event as the ultimate key performance indicator. In this piece, I detail how to run lean incrementality tests without swarms of data scientists.

So how do you stay ahead and continue moving the needle on your growth marketing campaigns? First and foremost, constantly question the events you’re optimizing for. And second, leave no stone unturned.

If you’re using the same optimization event forever, it will be a disservice to your campaign performance potential. By experimenting with flow changes and running tests on new events, you’ll be way ahead of the curve. When iterating on the flow, think about user behavior and events from the user’s perspective. Which flow events, if added, would correlate to a high propensity conversion segment?

#column, #digital-marketing, #facebook, #growth-marketing, #marketing, #online-advertising, #social-media, #startups, #targeted-advertising, #tc, #verified-experts

The FDA should regulate Instagram’s algorithm as a drug

The Wall Street Journal on Tuesday reported Silicon Valley’s worst-kept secret: Instagram harms teens’ mental health; in fact, its impact is so negative that it introduces suicidal thoughts.

Thirty-two percent of teen girls who feel bad about their bodies report that Instagram makes them feel worse. Of teens with suicidal thoughts, 13% of British and 6% of American users trace those thoughts to Instagram, the WSJ report said. This is Facebook’s internal data. The truth is surely worse.

President Theodore Roosevelt and Congress formed the Food and Drug Administration in 1906 precisely because Big Food and Big Pharma failed to protect the general welfare. As its executives parade at the Met Gala in celebration of the unattainable 0.01% of lifestyles and bodies that we mere mortals will never achieve, Instagram’s unwillingness to do what is right is a clarion call for regulation: The FDA must assert its codified right to regulate the algorithm powering the drug of Instagram.

The FDA should consider algorithms a drug impacting our nation’s mental health: The Federal Food, Drug and Cosmetic Act gives the FDA the right to regulate drugs, defining drugs in part as “articles (other than food) intended to affect the structure or any function of the body of man or other animals.” Instagram’s internal data shows its technology is an article that alters our brains. If this effort fails, Congress and President Joe Biden should create a mental health FDA.

Researchers can study what Facebook prioritizes and the impact those decisions have on our minds. How do we know this? Because Facebook is already doing it — they’re just burying the results.

The public needs to understand what Facebook and Instagram’s algorithms prioritize. Our government is equipped to study clinical trials of products that can physically harm the public. Researchers can study what Facebook privileges and the impact those decisions have on our minds. How do we know this? Because Facebook is already doing it — they’re just burying the results.

In November 2020, as Cecilia Kang and Sheera Frenkel report in “An Ugly Truth,” Facebook made an emergency change to its News Feed, putting more emphasis on “News Ecosystem Quality” scores (NEQs). High NEQ sources were trustworthy sources; low were untrustworthy. Facebook altered the algorithm to privilege high NEQ scores. As a result, for five days around the election, users saw a “nicer News Feed” with less fake news and fewer conspiracy theories. But Mark Zuckerberg reversed this change because it led to less engagement and could cause a conservative backlash. The public suffered for it.

Facebook likewise has studied what happens when the algorithm privileges content that is “good for the world” over content that is “bad for the world.” Lo and behold, engagement decreases. Facebook knows that its algorithm has a remarkable impact on the minds of the American public. How can the government let one man decide the standard based on his business imperatives, not the general welfare?

Upton Sinclair memorably uncovered dangerous abuses in “The Jungle,” which led to a public outcry. The free market failed. Consumers needed protection. The 1906 Pure Food and Drug Act for the first time promulgated safety standards, regulating consumable goods impacting our physical health. Today, we need to regulate the algorithms that impact our mental health. Teen depression has risen alarmingly since 2007. Likewise, suicide among those 10 to 24 is up nearly 60% between 2007 and 2018.

It is of course impossible to prove that social media is solely responsible for this increase, but it is absurd to argue it has not contributed. Filter bubbles distort our views and make them more extreme. Bullying online is easier and constant. Regulators must audit the algorithm and question Facebook’s choices.

When it comes to the biggest issue Facebook poses — what the product does to us — regulators have struggled to articulate the problem. Section 230 is correct in its intent and application; the internet cannot function if platforms are liable for every user utterance. And a private company like Facebook loses the trust of its community if it applies arbitrary rules that target users based on their background or political beliefs. Facebook as a company has no explicit duty to uphold the First Amendment, but public perception of its fairness is essential to the brand.

Thus, Zuckerberg has equivocated over the years before belatedly banning Holocaust deniers, Donald Trump, anti-vaccine activists and other bad actors. Deciding what speech is privileged or allowed on its platform, Facebook will always be too slow to react, overcautious and ineffective. Zuckerberg cares only for engagement and growth. Our hearts and minds are caught in the balance.

The most frightening part of “The Ugly Truth,” the passage that got everyone in Silicon Valley talking, was the eponymous memo: Andrew “Boz” Bosworth’s 2016 “The Ugly.”

In the memo, Bosworth, Zuckerberg’s longtime deputy, writes:

So we connect more people. That can be bad if they make it negative. Maybe it costs someone a life by exposing someone to bullies. Maybe someone dies in a terrorist attack coordinated on our tools. And still we connect people. The ugly truth is that we believe in connecting people so deeply that anything that allows us to connect more people more often is de facto good.

Zuckerberg and Sheryl Sandberg made Bosworth walk back his statements when employees objected, but to outsiders, the memo represents the unvarnished id of Facebook, the ugly truth. Facebook’s monopoly, its stranglehold on our social and political fabric, its growth at all costs mantra of “connection,” is not de facto good. As Bosworth acknowledges, Facebook causes suicides and allows terrorists to organize. This much power concentrated in the hands of one corporation, run by one man, is a threat to our democracy and way of life.

Critics of FDA regulation of social media will claim this is a Big Brother invasion of our personal liberties. But what is the alternative? Why would it be bad for our government to demand that Facebook accounts to the public its internal calculations? Is it safe for the number of sessions, time spent and revenue growth to be the only results that matters? What about the collective mental health of the country and world?

Refusing to study the problem does not mean it does not exist. In the absence of action, we are left with a single man deciding what is right. What is the price we pay for “connection”? This is not up to Zuckerberg. The FDA should decide.

#column, #facebook, #food-and-drug-administration, #government, #health, #instagram, #joe-biden, #mark-zuckerberg, #opinion, #policy, #section-230, #sheryl-sandberg, #social, #social-media, #the-wall-street-journal

The network effect is anti-competitive

A U.S. federal judge last week struck down Apple rules restricting app developers from selling directly to customers outside the App Store.

Apple’s stock fell 3% on the news, which is being regarded as a win for small and midsize app developers because they’ll be able to build direct billing relationships with their customers. But Apple is just one of many Big Tech companies that dominate their sector.

The larger issue is how this development will impact Amazon, Facebook, Grubhub and other tech giants with online marketplaces that use draconian terms of service to keep their resellers subservient. The skirmish between Apple and small and midsize app developers is just a smaller battle in a much larger war.

App makers pay up to 30% on every sale they make on the Apple App Store. Resellers on Amazon pay a monthly subscription fee, a sales commission of 8% to 15%, fulfillment fees and other miscellaneous charges. Grubhub charges restaurants 15% of every order, a credit card processing fee, an order processing fee and a 10% delivery commission.

Like app developers, online resellers and social media influencers are all falling for the same big lie: that they can build a sustainable business with healthy margins on someone else’s platform. The reality is the App Store, online marketplaces and even social networks that dominate their sectors have the unilateral power to selectively deplatform and squeeze their users, and there’s not much to be done about it.

Healthy competition exists inside the App Store and among marketplace resellers and aspiring social media influencers. But no one seems to be talking about the real elephants in the room, which are the social networks and online marketplace providers themselves. In some respects, they’ve become almost like digital dictators with complete control over their territories.

It’s something every small and midsize business that gets excited about some new online service catering to their industry should be aware of because it directly impacts their ability to grow a stable business. The federal judge’s decision suggests the real goal in digital business is a direct billing relationship with the end user.

On the internet, those who are able to lead a horse to water and make them drink — outside the walled gardens of digital marketplace operators like Uber, Airbnb and Udemy — are the true contenders. In content and e-commerce, this is what most small and midsize companies don’t realize. Your own website or owned media, at a top-level domain that you control, is the only unfettered way to sell direct to end users.

Mobile app makers on Apple’s App Store, resellers on Amazon and aspiring content creators on Instagram, YouTube and TikTok are all subject to the absolute control of digital titans who are free to govern by their own rules with unchecked power.

For access to online marketplaces and social networks, we got a raw deal. We’re basically plowing their fields like digital sharecroppers. Resellers on Amazon are forced to split their harvest with a landlord who takes a gross percentage with no caps. Amassing followers on TikTok is building an audience that’s locked inside their venue.

These tech giants — all former startups that built their audiences from scratch — are free to impose and selectively enforce oppressive rules. If you’re a small fry, they can prohibit you from asking for your customer’s email address and deplatform you for skimming, but look the other way when Spotify and The New York Times do the same thing. Both were already selling direct and through the App Store prior to Friday’s ruling.

How is that competitive? Even after the ruling, Big Tech still gets to decide who they let violate their terms of service and who they deplatform. It’s not just their audience. It’s their universe, their governance, their rules and their enforcement.

In the 1948 court case United States v. Paramount Pictures, the Supreme Court ruled that film studios couldn’t own their own theaters because that meant they could exclusively control what movies were screened. They stifled competition by controlling what films made it to the marquee, so SCOTUS broke them up.

Today, social networks control what gets seen on their platforms, and with the push of a button, they can give the hook to whoever they want, whenever they want. The big challenge that the internet poses to capitalism is that the network effect is fundamentally anti-competitive. Winner-take-all markets dominated by tech giants look more like government-controlled than free-market economies.

On the one hand, the web gives us access to a global marketplace of buyers and sellers. On the other, a few major providers control the services that most people use to do business, because they don’t have the knowledge or resources to stand up a competitive website. But unless you have your own domain and good search visibility, you’re always in danger of being deplatformed and losing access to your customers or audience members with no practical recourse.

The network effect is such that once an online marketplace becomes dominant, it neutralizes the competitive market, because everyone gravitates to the dominant service to get the best deal. There’s an inherent conflict between the goals of a winner-takes-all tech company and the goals of a free market.

Dominant online marketplaces are only competitive for users. Meanwhile, marketplace providers operate with impunity. If they decide they want to use half-baked AI or offshore contractors to police their terms of service and shore up false positives, there’s no practical way for users to contest. How can Facebook possibly govern nearly 3 billion users judiciously with around 60,000 employees? As we’ve seen, it can’t.

For app makers, online resellers and creators, the only smart option is open source on the open web. Instead of relying on someone else’s audience (or software for that matter), you own your online destination powered by software like WordPress or Discord, and you never have to worry about getting squeezed when the founders go public or their platform gets bought by profit-hungry investment bankers. Only then can you protect your profit margins. And only then are the terms of service the laws of the land.

Politics aside, as former President Donald Trump’s deplatforming demonstrated, if you get kicked off Facebook and Twitter, there’s really nowhere else to go. If they want you out, it’s game over. It’s no coincidence Trump lost his Facebook and Twitter accounts on the same day the Republicans lost the Senate. If the GOP takes back the Senate, watch Trump get his social media accounts back. Social networks ward off regulators by appeasing the legislative majority.

So don’t get too excited about the new Amazon Influencer Program. If you want to build a sustainable digital business, you need an owned media presence powered by software that doesn’t rake commissions, have access to your customer contact information and has an audience that can’t be commandeered with an algorithm tweak.

#airbnb, #amazon, #apple, #apple-app-store, #apple-inc, #column, #e-commerce, #ecommerce, #facebook, #online-marketplace, #opinion, #social, #social-media, #social-networks, #tc, #tiktok, #uber

LinkedIn is launching its own $25M fund and incubator for creators

When LinkedIn first launched Stories format, and later expanded its tools for creators earlier this year, one noticeable detail was that the Microsoft-owned network for professionals hadn’t built any kind of obvious monetization into the program — noticeable, given that creators earn a living on other platforms like Instagram, YouTube and TikTok, and those apps had lured creators, their content, and their audiences in part by paying out.

“As we continue to listen to feedback from our members as we consider future opportunities, we’ll also continue to evolve how we create more value for our creators,” is how LinkedIn explained its holding pattern on payouts to me at the time. But that strategy may have backfired for the company — or at least may have played a role in what came next: last month, LinkedIn announced it would be scrapping its Stories format and going back to the proverbial drawing board to work on other short-form video content for the platform.

Now comes the latest iteration in that effort. To bring more creators to the platform, the company today announced that it would be launching a new $25 million creator fund, which initially will be focused around a new Creator Accelerator Program.

It’s coming on the heels of LinkedIn also continuing to work on one of its other new-content experiments: a Clubhouse-style live conversation platform. As we previously reported, LinkedIn began working on this back in March of this year. Now, we are hearing that the feature will make an appearance as part of a broader events strategy for the company.

Notably, in a blog post announcing the creator fund, LinkedIn also listed a number of creator events coming up. Will the Clubhouse-style feature pop up there? Watch this space. Or maybe… listen up.

In any case, the creator accelerator that LinkedIn is announcing today could help feed into that wider pool of people that LinkedIn is hoping to cultivate on its platform as a more dynamic and lively set of voices to get more people talking and spending time on LinkedIn.

Andrei Santalo, global head of community at LinkedIn, noted in the blog post that the accelerator/incubator will be focused on the whole creator and the many ways that one can engage on LinkedIn.

“Creating content on LinkedIn is about creating opportunity, for yourselves and others,” he writes. “How can your words, videos and conversations make 774+ million professionals better at what they do or help them see the world in new ways?”

The incubator will last for 10 weeks and will take on 100 creators in the U.S. to coach them on building content for LinkedIn. It will also give them chances to network with like-minded individuals (naturally… it is LinkedIn), as well as a $15,000 grant to do their work. The deadline for applying (which you do here) is October 12.

The idea of starting a fund to incentivize creators to build video for a particular platform is definitely not new — and that is one reason why it was overdue for LinkedIn to think about its own approach.

Leading social media platforms like TikTok, Snapchat, Instagram and Facebook, and YouTube all have announced hundreds of millions of dollars in payouts in the form of creator funds to bring more original content to their platforms.

You could argue that for mass-market social media sites, it’s important to pay creators because competition is so fierce among them for consumer attention.

But on the other hand, those platforms have appeal for creators because of the potential audience size. At 774 million users, LinkedIn isn’t exactly small, but the kind of content that tends to live on there is so different, and maybe drier — it’s focused on professional development, work, and “serious” topics — that perhaps it might need the most financial incentive of all to get creators to bite.

LinkedIn’s bread and butter up to now has been around professional development: people use it to look for work, to get better jobs, to hire people, and to connect with people who might help them get ahead in their professional lives.

But it’s done so in a very prescribed set of formats that do not leave much room for exploring “authenticity” — not in the modern sense of “authentic self”, and not in the more old-school sense of just letting down your guard and being yourself. (Even relatively newer initiatives like its education focus directly play into this bigger framework.)

With authenticity becoming an increasing priority for people — and maybe more so as we have started to blur the lines between work and home because of Covid-19 and the changes that it has forced on us — I can’t help but wonder whether LinkedIn will use this opportunity to rethink, or at least expand the concept of, what it means to spend time on its platform.

#clubhouse, #coach, #enterprise, #facebook, #linkedin, #recruitment, #snapchat, #social, #social-media, #social-media-platforms, #social-networks, #software, #stories, #tiktok, #united-states

Leaked documents reveal the special rules Facebook uses for 5.8M VIPs

Close-up photograph of a man in a suit looking concerned.

Enlarge / Facebook CEO Mark Zuckerberg. (credit: Chip Somodevilla/Getty Images)

Facebook had a problem on its hands. People were posting things to their accounts that would get caught in the company’s automated moderation system or taken down by its human moderators. The problem wasn’t that the moderators, human or otherwise, were wrong to take down the posts. No, the problem was the people behind the posts were famous or noteworthy and the company didn’t want a PR mess on its hands.

So Facebook came up with a program called XCheck, or cross check, which in many instances became a de facto whitelist that, over the years, has allowed celebrities, politicians, athletes, activists, journalists, and even animal influencers like “Doug the Pug” to post whatever they want with few to no consequences for violating the company’s rules.

“For a select few members of our community, we are not enforcing our policies and standards,” reads an internal Facebook report published as part of a Wall Street Journal investigation. “Unlike the rest of our community, these people can violate our standards without any consequences.”

Read 12 remaining paragraphs | Comments

#content-moderation, #facebook, #instagram, #policy, #social-media

Instagram is building a ‘Favorites’ feature so you don’t miss important posts

Instagram confirmed it’s developing a new feature called “Favorites,” which would allow users to select certain accounts whose posts they would like to see higher in their feed. A similar feature already exists on Facebook where it gives users a bit more control over the News Feed algorithm. On Facebook, users can select up to 30 friends or Facebook Pages whose posts get shown higher in the News Feed. It’s unclear what limit an Instagram Favorites feature would have, however.

The Instagram Favorites feature was recently spotted in development by reverse engineer Alessandro Paluzzi, who found a new pushpin icon for Favorites in the Instagram Settings menu, and other details about how the feature may work.

According to screenshots Paluzzi posted on Twitter, users will be able to search across the Instagram accounts they are currently following to create a list of Favorites. This list can be edited at any time, and Instagram notes that users would not be notified when they’re added to someone’s Favorites.

This is a similar level of privacy as offered by Instagram’s several years-old “Close Friends” feature, which instead focuses on allowing users to create a separate list of followers so they can share their more private and personal Instagram Stories with a select group of their own choosing.

Paluzzi tells us he was able to add contacts to the Favorites list, but didn’t yet notice any changes to the Instagram feed after doing so. That implies the feature is still being built and a launch is not imminent.

“This feature is an internal prototype that’s still in development, and not testing externally,” an Instagram spokesperson told TechCrunch. They declined to share any other specifics about the feature.

A Favorites feature could play into Instagram’s larger plans to better establish itself as a home for creator content. In other leaks, Paluzzi had also found the company was building out “Fan Subscriptions,” which would allow users to pay for elevated access to creator content — like exclusive live videos or Stories, for example. Paid subscribers may also be given a special badge that would highlight their name when they commented, DM’ed, or viewed the creator’s Stories.

Given that users who were paying for content would not want to miss a moment, it would make sense to give them tools to designate those creators as “Favorites” whose posts were also more highly ranked in their Feed.

A Favorites feature could also be useful to those who had taken a break from Instagram and would rather see the important photos and videos they missed from favorite accounts upon their return, rather than just the most recent or interesting updates from across all of the accounts they follow.

And while not likely the main goal, the new feature could help to address users’ complaints about the algorithmic feed in general.

Today, there are still a number of people who want to be able to see Instagram posts in chronological order, preferring to not have posts re-ordered by an algorithm they can’t control. Favorites wouldn’t give in to this demand (though Instagram has tested a chronological feed in the past). But it would at least give users the ability to ensure they weren’t missing the posts from those whose updates they wanted to see the most.

Though Instagram did say it’s working on the development of Favorites, it doesn’t necessarily mean such a feature will launch to the public. Companies of Instagram’s size often prototype new ideas, but only some of those tests make it to a general release.

#apps, #computing, #facebook, #instagram, #like-button, #news-feed, #operating-systems, #social, #social-media, #social-software, #software, #spokesperson

WhatsApp will finally let users encrypt their chat backups in the cloud

WhatsApp said on Friday it will give its two billion users the option to encrypt their chat backups to the cloud, taking a significant step to put a lid on one of the tricky ways private communication between individuals on the app can be compromised.

The Facebook-owned service has end-to-end encrypted chats between users for more than a decade. But users have had no option but to store their chat backup to their cloud — iCloud on iPhones and Google Drive on Android — in an unencrypted format.

Tapping these unencrypted WhatsApp chat backups on Google and Apple servers is one of the widely known ways law enforcement agencies across the globe have been able to access WhatsApp chats of suspect individuals for years.

Now WhatsApp says it is patching this weak link in the system.

“WhatsApp is the first global messaging service at this scale to offer end-to-end encrypted messaging and backups, and getting there was a really hard technical challenge that required an entirely new framework for key storage and cloud storage across operating systems,” said Facebook’s chief executive Mark Zuckerberg said in a post announcing the new feature.

Store your own encryption keys

The company said it has devised a system to enable WhatsApp users on Android and iOS to lock their chat backups with encryption keys. WhatsApp says it will offer users two ways to encrypt their cloud backups, and the feature is optional.

In the “coming weeks,” users on WhatsApp will see an option to generate a 64-digit encryption key to lock their chat backups in the cloud. Users can store the encryption key offline or in a password manager of their choice, or they can create a password that backs up their encryption key in a cloud-based “backup key vault” that WhatsApp has developed. The cloud-stored encryption key can’t be used without the user’s password, which isn’t known by WhatsApp.

(Image: WhatsApp/supplied)

“We know that some will prefer the 64-digit encryption key whereas others want something they can easily remember, so we will be including both options. Once a user sets their backup password, it is not known to us. They can reset it on their original device if they forget it,” WhatsApp said.

“For the 64-digit key, we will notify users multiple times when they sign up for end-to-end encrypted backups that if they lose their 64-digit key, we will not be able to restore their backup and that they should write it down. Before the setup is complete, we’ll ask users to affirm that they’ve saved their password or 64-digit encryption key.”

A WhatsApp spokesperson told TechCrunch that once an encrypted backup is created, previous copies of the backup will be deleted. “This will happen automatically and there is no action that a user will need to take,” the spokesperson added.

Potential regulatory pushback?

The move to introduce this added layer of privacy is significant and one that could have far-reaching implications.

End-to-end encryption remains a thorny topic of discussion as governments continue to lobby for backdoors. Apple was reportedly pressured to not add encryption to iCloud Backups after the FBI complained, and while Google has offered users the ability to encrypt their data stored in Google Drive, the company allegedly didn’t tell governments before it rolled out the feature.

When asked by TechCrunch whether WhatsApp, or its parent firm Facebook, had consulted with government bodies — or if it had received their support — during the development process of this feature, the company declined to discuss any such conversations.

“People’s messages are deeply personal and as we live more of our lives online, we believe companies should enhance the security they provide their users. By releasing this feature, we are providing our users with the option to add this additional layer of security for their backups if they’d like to, and we’re excited to give our users a meaningful advancement in the safety of their personal messages,” the company told TechCrunch.

WhatsApp also confirmed that it will be rolling out this optional feature in every market where its app is operational.  It’s not uncommon for companies to withhold privacy features for legal and regulatory reasons. Apple’s upcoming encrypted browsing feature, for instance, won’t be made available to users in certain authoritarian regimes, such as China, Belarus, Egypt, Kazakhstan, Saudi Arabia, Turkmenistan, Uganda, and the Philippines.

At any rate, Friday’s announcement comes days after ProPublica reported that private end-to-end encrypted conversations between two users can be read by human contractors when messages are reported by users.

“Making backups fully encrypted is really hard and it’s particularly hard to make it reliable and simple enough for people to use. No other messaging service at this scale has done this and provided this level of security for people’s messages,” Uzma Barlaskar, product lead for privacy at WhatsApp, told TechCrunch.

“We’ve been working on this problem for many years, and to build this, we had to develop an entirely new framework for key storage and cloud storage that can be used across the world’s largest operating systems and that took time.”

#apple, #apps, #facebook, #google, #google-drive, #icloud, #mark-zuckerberg, #privacy, #signal, #social, #tc, #telegram, #whatsapp

Ray-Ban Stories: These are Facebook’s first mass-market smart glasses

As previously rumored, Facebook has partnered with EssilorLuxottica to produce Ray-Ban Stories, one of the first potentially viable attempts at mass-market smart glasses. They are similar in some ways to early iterations of Snapchat Spectacles but with a more stylish aesthetic that looks right in line with other Ray-Ban glasses.

The glasses have two front-facing cameras, each at 5 megapixels. Users can take a photo either with a touch gesture or with a “Hey Facebook” voice command. So people in the room can tell that pictures or video are being taken, a white LED on the front of the frames will light up. Videos can be as long as 30 seconds.

Photos and videos taken with the glasses are sent to a new smartphone app called Facebook View, which offers essential editing and sharing capabilities. In addition to photo and video capture, the glasses allow you to take calls or listen to music and podcasts or with built-in speakers and microphones.

Read 8 remaining paragraphs | Comments

#ar, #augmented-reality, #facebook, #ray-ban, #smart-glasses, #tech, #wearables

Investors are doubling down on Southeast Asia’s digital economy

Southeast Asian tech companies are drawing the attention of investors around the world. In 2020, startups in the region raised over $8.2 billion, about four times more than they did in 2015. This trend continued in 2021, with regional M&A hitting a record high of $124.8 billion in the first half of 2021, up 83% from a year earlier.

This begs the question: Who exactly is investing in Southeast Asia?

Let’s explore the three key types of investors pouring money into and driving the growth of Southeast Asia’s tech ecosystem.

Over 229 family offices have been registered in Singapore since 2020, with total assets under management of an estimated $20 billion.

Big tech

Southeast Asia has become an attractive market for U.S. and Chinese tech firms. Internet penetration here stands at 70%, higher than the global average, and digital adoption in the region remains nascent — it wasn’t until the pandemic that adoption of digital services such as e-wallets and online shopping took off.

China’s tech giants Tencent and Alibaba were among the first to support early e-commerce growth in Southeast Asia with investments in Sea Limited and Lazada, and have since expanded their footprint into other internet verticals. Alibaba has backed Akulaku, M-Pay (eMonkey), DANA, Wave Money and Mynt (GCash), while Tencent has invested in Voyager Innovations (PayMaya), SHAREit, iflix, Ookbee and Sanook.

U.S. tech firms have also recently entered the scene. In June 2020, Gojek closed a $3 billion Series F round from Google, Facebook, Tencent and Visa. Google, together with Singapore’s Temasek Holdings, invested some $350 million in Tokopedia in October. Meanwhile, Microsoft invested an undisclosed amount in Grab in 2018 and has invested $100 million in Indonesian e-commerce firm Bukalapak.

Venture capitalists

In Q1 2021, Southeast Asian startups raised $6 billion, according to DealStreetAsia, positioning 2021 as another record year for VC investment in the region.

The region is also rising in prominence as a destination for investment capital relative to the rest of Asia. Regional VC investment grew 5.2 times to $8.2 billion in 2020 from $1.6 billion in 2015, as we can see in the table below.

Venture capital investment by region 2015-2020

Image Credits: Jungle VC

Southeast Asia also has many opportunities for VC investment relative to its market size. From 2015 to 2020, China saw VC investment of nearly $300 per person; for Southeast Asia — despite a recent investment boom — this metric sits at just $47.50 per person, or just a sixth of that in China. This implies a substantial opportunity for investments to develop the region’s digital economy.

The region’s rising population and growth prospects are higher due to China’s population growth challenges, alongside the latter’s higher digital economy market saturation and maturity.

#alibaba, #asia, #asia-pacific, #bridgewater-associates, #china, #column, #e-commerce, #ec-column, #ec-southeast-asia-oceania, #facebook, #ggv-capital, #google, #internet-penetration, #james-dyson, #joseph-phua, #lazada, #lazada-group, #microsoft, #online-shopping, #paul-allen, #private-equity, #ray-dalio, #sergey-brin, #singapore, #southeast-asia, #startups, #temasek-holdings, #tencent, #tokopedia, #united-states, #venture-capital

Epic Games to shut down Houseparty in October, including the video chat ‘Fortnite Mode’ feature

Houseparty, the social video chat app acquired by Fortnite maker Epic Games for a reported $35 million back in 2019, is shutting down. The company says Houseparty will be discontinued in October when the app will stop functioning for its existing users; it will be pulled from the app stores today, however. Related to this move, Epic Games’ “Fortnite Mode” feature, which leveraged Houseparty to bring video chat to Fortnite gamers, will also be discontinued.

Founded in 2015, Houseparty offered a way for users to participate in group video chats with friends and even play games, like Uno, trivia, Heads Up and others. Last year, Epic Games integrated Houseparty with Fortnite, initially to allow gamers to see live feeds from friends while gaming, then later adding support to livestream gameplay directly into Houseparty. At the time, these integrations appeared to be the end goal that explained why Epic Games had bought the social startup in the first place.

Now, just over two years after the acquisition was announced, and less than half a year since support for livestreaming was added to the app, Houseparty is shutting down.

The company didn’t offer any solid insight into what, at first glance, feels like an admission of failure to capitalize on its acquisition. But the reality is that Epic Games may have something larger in store beyond just video chat. That said, all Epic Games would say today is that the Houseparty team could no longer give the app the attention it required — a statement that indicates an executive decision to shift the team’s focus to other matters.

While none of the Houseparty team members are being let go as a result of this move, we’re told, they will be joining other teams where they will work on new ways to allow for “social interactions” across the Epic Games family of products. The company’s announcement hinted that those social features would be designed and built at the “metaverse scale.”

The “metaverse” is an increasingly used buzzword that references a shared virtual environment, like those provided by large-scale online gaming platforms such as Fortnite, Roblox and others. Facebook, too, claims the metaverse is the next big gambit for social networking, with CEO Mark Zuckerberg having described it as an “embodied internet that you’re inside of rather than just looking at.”

To some extent, Fortnite has begun to embrace the metaverse by offering non-gaming experiences like online concerts you attend as your avatar, and other live events. Ahead of its shutdown, Houseparty also toyed with live events that users would co-watch and participate in alongside their friends.

An Epic Games spokesperson tells TechCrunch the Houseparty team has worked on (and continues to work on) a number of other projects that focus on social. But some of the “multiple, larger projects” Epic Games has in the works remain undisclosed, we’re told.

In terms of social products, Houseparty’s technology now underpins all of Fortnite voice chat and the features they built are widely available for free to developers through Epic Games Services. They also worked on building out new social experiences, which have ranged from the social RSVP functions for Fortnite’s global events, like the recent Ariana Grande concert, to the upcoming “Operation: Sky Fire” event for collaborating quests and other game mechanics. More social functionality and new experiences are also being built into Fortnite’s user-generated content platform, Create Mode.

While it may seem odd to close an app that only last year experienced a boost in usage due to the pandemic, it appears the COVID bump didn’t have staying power.

At the height of lockdowns, Houseparty had reported it had gained 50 million new sign-ups in a month’s time as users looked to video apps to connect with family and friends while the world was shut down. But as the pandemic wore on, other video chat experiences gained more ground. Zoom, which had established itself as an essential tool for remote work, became a tool for hanging out with friends after-hours, as well. Facebook also started to eat Houseparty’s lunch with its debut of drop-in video chat “Rooms” last year, which offered a similar group video experience. And bored users shifted to audio-based social networking on apps like Clubhouse or Twitter Spaces.

Image Credits: Apptopia

According to data from Apptopia, Houseparty has been continually declining since the pandemic bump. To date, its app has seen a total of 111 million downloads across iOS and Android, with the majority (63 million) on iOS. The U.S. was Houseparty’s largest market, accounting for 43.4% of downloads, followed by the U.K. (9.8%), then Germany (5.6%).

Epic Games, meanwhile, said the app served “tens of millions” of users worldwide. It insists the closure wasn’t decided lightly, nor was the decision to shutter “Fortnite Mode” made due to lack of adoption.

Houseparty will alert users to the shutdown via in-app notifications ahead of its final closure in October. At that point, Fortnite Mode will also no longer be available.

#android, #app-store, #apps, #computing, #epic-games, #exit, #facebook, #fortnite, #gaming, #houseparty, #mark-zuckerberg, #metaverse, #mobile, #online-games, #roblox, #social, #social-networking, #software, #uno, #video-gaming

Facebook’s first smart glasses make the case for face-worn wearables

Facebook’s first pair of smart glasses doesn’t feel like much of a Facebook product.

You won’t find the Facebook logo emblazoned on them or even its name in small print by the serial code. They aren’t Facebook Stories or Ray-Ban’s Facebook Stories or even Ray-Ban Stories in collaboration with Facebook. Unlike other Facebook-designed hardware like the Quest 2 or Portal, the Ray-Ban Stories feel more self-aware and restrained as though the company knew exactly what use cases they needed to hit, and stopped themselves from trying to do much more than that.

The glasses made in partnership with eyewear giant EssilorLuxottica are certainly the most basic device Facebook has shipped. They only do a few things, you can take photos and videos, you can take phone calls and you can listen to music. That’s it. But bringing audio into the mix via near-ear speakers embedded in the arms of the frames makes these a much more realized device than Snap’s Spectacles which shipped five years ago.


Ray-Ban’s classic dumb Wayfarers (left) next to the smart Ray-Ban Stories Wayfarers (right)

Let’s dig a bit into what this device does and how it feels to use it in daily life.

One thing to note about the $299 Ray-Ban Stories is that they can be worn pretty inconspicuously. People are probably more likely to notice the cameras than their slightly inflated dimensions. That’s already a revolutionary advance, which pushes these past the level of “toy” which Spectacles never really seemed to eclipse. The Ray-Ban partnership was particularly savvy given the thicker-than-average frames on their standard Wayfarer design.

What onlookers are more likely to notice is you tapping the frame of your glasses to control them. Pressing the  button on the right arm will take a 30-second video, a long-press will snap a photo. You can also use the voice command, “Hey Facebook, take a video” and do the same for photos — for the record, I’m not sure whether this is a sentence I’d feel great about hearing a stranger nearby me in public say. A small LED light sparks up when the camera is capturing footage though it’s a pretty low-key indicator.

The photo and video quality of the glasses is pretty middling, but plenty of forgiveness can be levied given the size of the device. The twin 5 MP cameras can shoot 2592 x 1944 pixel photos and 1184 x 1184 pixel square format videos. The quality seems to be about on-par with where smartphone cameras were about ten years ago, so it’s clear there’s plenty of room for improvement. Post-processing on the phone during upload enhances the photos and hides some of their struggles with low-lighting while making the photos pop a bit more with saturation.

The twin camera setup is used to add 3D effects to your photos, but at the moment the filters aren’t great and there’s honestly not much there. Hopefully, Facebook invests a bit more in the software over time but with fairly low quality photos, I don’t completely see the reasoning in having two cameras to begin with.

Also worth noting, is that using the glasses requires linking them to a new Facebook app called View, which is basically a simple media viewer app which gets around limitations in how media from external devices can be uploaded to your phone. This is where you can also make quick edits to your photos and videos before dumping them to your photo roll or sharing them to Facebook or Instagram.

Audio is probably the most interesting bit of these glasses. The near-ear speakers will surprise you with their quality in a quiet spaces and leave you dissatisfied once you find yourself in a noisier environment. Unfortunately for Facebook, most outdoor spaces are a bit louder and sunglasses are mostly being used outdoors. The audio will work in a pinch outdoors for listening to tunes, but I honestly can’t see them replacing my AirPods anytime soon. The audio is much better suited for low-fidelity activities like phone calls, but I also had some issues with the three-microphone array picking up too much background noise while I was walking outdoors.

Battery life is surprisingly solid, but they also have the benefit of a charging battery case which is incidentally the best place to store them. The case is a little bulky but they also include a microfiber pouch to protect the lenses. Facebook says you can get 6 hours of straight audio and “all-day” usage otherwise.

One of their weirder quirks is their lack of water-proofing or even splash-proofing, something that doesn’t seem like a great quality for a pair of sunglasses. It’s just one more thing indicating that while the thicker frame aesthetic of sunglasses makes more sense for a smart glasses design, this product really thrives more indoors.


This isn’t first rodeo when it comes to hardware and you can see the company’s maturation.

They aren’t an AR/VR device, but you can also see generations of Oculus products in the Ray-Ban Stories‘ design. On-ear audio born from the Oculus Go, a touchpad interface reminiscent of the Gear VR, simple and restrained audio controls first launched on the Quest. The hardware is a distillation of features and lessons learned from selling VR to a generally indifferent public that has seemed to warm up to it a bit over the years.

Meanwhile, you can also see years of Facebook screwing up its messaging and torching its brand name in the process, making itself the boogeyman of both political parties, courting enemies in the press and earning an outsized amount of distrust from the average internet user, something that probably led to these carrying so little Facebook branding. The Ray-Ban Stories will certainly have their detractors, but Facebook choosing to be conservative in their functionality and not toss in too many future-flung passive sensors will likely do them a favor. The Facebook View app is bare bones and Facebook details that photos and videos captured using the Stories won’t be used to serve ads. All that said, while we’ve certainly come a long way since the Google Glass debut in 2013, face-mounted cameras still feel icky when it comes to privacy in public and this device will undoubtedly reignite that conversation in a major way.

Baggage aside, my broadest takeaway is that the Ray-Ban Stories feel like a very important product — one that actually sells the idea of face-worn wearables.

The glasses are smartly designed and can be worn discreetly. That said, it’s clear Facebook made plenty of sacrifices to achieve such an aggressive form factor; the glasses honestly don’t do anything particularly well — photo and video quality is pretty lackluster, the in-frame speakers perform poorly outdoors and calls aren’t the most pleasant experience. All that said, I think Facebook mostly made the right compromises for a product that they’ve repeatedly indicated is meant to be a stepping stone on the road towards augmented reality glasses.

Facebook’s smart Ray-Ban Stories alongside my pair of classic Ray-Ban 2140 Wayfarers

#augmented-reality, #computing, #display-technology, #eyewear, #facebook, #glasses, #google, #hardware, #mixed-reality, #oculus, #smartphone, #sunglasses, #tc, #technology, #wearable-devices

WhatsApp “end-to-end encrypted” messages aren’t that private after all

WhatsApp logo

Enlarge / The security of Facebook’s popular messaging app leaves several rather important devils in its details. (credit: WhatsApp)

Yesterday, independent newsroom ProPublica published a detailed piece examining the popular WhatsApp messaging platform’s privacy claims. The service famously offers “end-to-end encryption,” which most users interpret as meaning that Facebook, WhatsApp’s owner since 2014, can neither read messages itself nor forward them to law enforcement.

This claim is contradicted by the simple fact that Facebook employs about 1,000 WhatsApp moderators whose entire job is—you guessed it—reviewing WhatsApp messages that have been flagged as “improper.”

End-to-end encryption—but what’s an “end”?

This snippet from WhatsApp's <a href="https://faq.whatsapp.com/general/security-and-privacy/end-to-end-encryption/">security and privacy</a> page seems easy to misinterpret.

This snippet from WhatsApp’s security and privacy page seems easy to misinterpret. (credit: Jim Salter)

The loophole in WhatsApp’s end-to-end encryption is simple: The recipient of any WhatsApp message can flag it. Once flagged, the message is copied on the recipient’s device and sent as a separate message to Facebook for review.

Read 14 remaining paragraphs | Comments

#biz-it, #encrypted-messaging, #encryption, #end-to-end-encryption, #facebook, #tech, #whatsapp

UK offers cash for CSAM detection tech targeted at e2e encryption

The UK government is preparing to spend over half a million dollars to encourage the development of detection technologies for child sexual exploitation material (CSAM) that can be bolted on to end-to-end encrypted messaging platforms to scan for the illegal material, as part of its ongoing policy push around Internet and child safety.

In a joint initiative today, the Home Office and the Department for Digital, Media, Culture and Sport (DCMS) announced a “Tech Safety Challenge Fund” — which will distribute up to £425,000 (~$584k) to five organizations (£85k/$117k each) to develop “innovative technology to keep children safe in environments such as online messaging platforms with end-to-end encryption”.

A Challenge statement for applicants to the program adds that the focus is on solutions that can be deployed within e2e encrypted environments “without compromising user privacy”.

“The problem that we’re trying to fix is essentially the blindfolding of law enforcement agencies,” a Home Office spokeswoman told us, arguing that if tech platforms go ahead with their “full end-to-end encryption plans, as they currently are… we will be completely hindered in being able to protect our children online”.

While the announcement does not name any specific platforms of concern, Home Secretary Priti Patel has previously attacked Facebook’s plans to expand its use of e2e encryption — warning in April that the move could jeopardize law enforcement’s ability to investigate child abuse crime.

Facebook-owned WhatsApp also already uses e2e encryption so that platform is already a clear target for whatever ‘safety’ technologies might result from this taxpayer-funded challenge.

Apple’s iMessage and FaceTime are among other existing mainstream messaging tools which use e2e encryption.

So there is potential for very widespread application of any ‘child safety tech’ developed through this government-backed challenge. (Per the Home Office, technologies submitted to the Challenge will be evaluated by “independent academic experts”. The department was unable to provide details of who exactly will assess the projects.)

Patel, meanwhile, is continuing to apply high level pressure on the tech sector on this issue — including aiming to drum up support from G7 counterparts.

Writing in paywalled op-ed in Tory-friendly newspaper, The Telegraph, she trails a meeting she’ll be chairing today where she says she’ll push the G7 to collectively pressure social media companies to do more to address “harmful content on their platforms”.

“The introduction of end-to-end encryption must not open the door to even greater levels of child sexual abuse. Hyperbolic accusations from some quarters that this is really about governments wanting to snoop and spy on innocent citizens are simply untrue. It is about keeping the most vulnerable among us safe and preventing truly evil crimes,” she adds.

“I am calling on our international partners to back the UK’s approach of holding technology companies to account. They must not let harmful content continue to be posted on their platforms or neglect public safety when designing their products. We believe there are alternative solutions, and I know our law enforcement colleagues agree with us.”

In the op-ed, the Home Secretary singles out Apple’s recent move to add a CSAM detection tool to iOS and macOS to scan content on user’s devices before it’s uploaded to iCloud — welcoming the development as a “first step”.

“Apple state their child sexual abuse filtering technology has a false positive rate of 1 in a trillion, meaning the privacy of legitimate users is protected whilst those building huge collections of extreme child sexual abuse material are caught out. They need to see th[r]ough that project,” she writes, urging Apple to press ahead with the (currently delayed) rollout.

Last week the iPhone maker said it would delay implementing the CSAM detection system — following a backlash led by security experts and privacy advocates who raised concerns about vulnerabilities in its approach, as well as the contradiction of a ‘privacy-focused’ company carrying out on-device scanning of customer data. They also flagged the wider risk of the scanning infrastructure being seized upon by governments and states who might order Apple to scan for other types of content, not just CSAM.

Patel’s description of Apple’s move as just a “first step” is unlikely to do anything to assuage concerns that once such scanning infrastructure is baked into e2e encrypted systems it will become a target for governments to widen the scope of what commercial platforms must legally scan for.

However the Home Office’s spokeswoman told us that Patel’s comments on Apple’s CSAM tech were only intended to welcome its decision to take action in the area of child safety — rather than being an endorsement of any specific technology or approach. (And Patel does also write: “But that is just one solution, by one company. Greater investment is essential.”)

The Home Office spokeswoman wouldn’t comment on which types of technologies the government is aiming to support via the Challenge fund, either, saying only that they’re looking for a range of solutions.

She told us the overarching goal is to support ‘middleground’ solutions — denying the government is trying to encourage technologists to come up with ways to backdoor e2e encryption.

In recent years in the UK GCHQ has also floated the controversial idea of a so-called ‘ghost protocol’ — that would allow for state intelligence or law enforcement agencies to be invisibly CC’d by service providers into encrypted communications on a targeted basis. That proposal was met with widespread criticism, including from the tech industry, which warned it would undermine trust and security and threaten fundamental rights.

It’s not clear if the government has such an approach — albeit with a CSAM focus — in mind here now as it tries to encourage the development of ‘middleground’ technologies that are able to scan e2e encrypted content for specifically illegal stuff.

In another concerning development, earlier this summer, guidance put out by DCMS for messaging platforms recommended that they “prevent” the use of e2e encryption for child accounts altogether.

Asked about that, the Home Office spokeswoman told us the tech fund is “not too different” and “is trying to find the solution in between”.

“Working together and bringing academics and NGOs into the field so that we can find a solution that works for both what social media companies want to achieve and also make sure that we’re able to protect children,” said said, adding: “We need everybody to come together and look at what they can do.”

There is not much more clarity in the Home Office guidance to suppliers applying for the chance to bag a tranche of funding.

There it writes that proposals must “make innovative use of technology to enable more effective detection and/or prevention of sexually explicit images or videos of children”.

“Within scope are tools which can identify, block or report either new or previously known child sexual abuse material, based on AI, hash-based detection or other techniques,” it goes on, further noting that proposals need to address “the specific challenges posed by e2ee environments, considering the opportunities to respond at different levels of the technical stack (including client-side and server-side).”

General information about the Challenge — which is open to applicants based anywhere, not just in the UK — can be found on the Safety Tech Network website.

The deadline for applications is October 6.

Selected applicants will have five months, between November 2021 and March 2022 to deliver their projects.

When exactly any of the tech might be pushed at the commercial sector isn’t clear — but the government may be hoping that by keeping up the pressure on the tech sector platform giants will develop this stuff themselves, as Apple has been.

The Challenge is just the latest UK government initiative to bring platforms in line with its policy priorities — back in 2017, for example, it was pushing them to build tools to block terrorist content — and you could argue it’s a form of progress that ministers are not simply calling for e2e encryption to be outlawed, as they frequently have in the past.

That said, talk of ‘preventing’ the use of e2e encryption — or even fuzzy suggestions of “in between” solutions — may not end up being so very different.

What is different is the sustained focus on child safety as the political cudgel to make platforms comply. That seems to be getting results.

Wider government plans to regulate platforms — set out in a draft Online Safety bill, published earlier this year — have yet to go through parliamentary scrutiny. But in one already baked in change, the country’s data protection watchdog is now enforcing a children’s design code which stipulates that platforms need to prioritize kids’ privacy by default, among other recommended standards.

The Age Appropriate Design Code was appended to the UK’s data protection bill as an amendment — meaning it sits under wider legislation that transposed Europe’s General Data Protection Regulation (GDPR) into law, which brought in supersized penalties for violations like data breaches. And in recent months a number of social media giants have announced changes to how they handle children’s accounts and data — which the ICO has credited to the code.

So the government may be feeling confident that it has finally found a blueprint for bringing tech giants to heel.

#apple, #csam, #csam-detection, #e2e-encryption, #encrypted-communications, #encryption, #end-to-end-encryption, #europe, #facebook, #g7, #general-data-protection-regulation, #home-office, #law-enforcement, #policy, #privacy, #social-media, #tc, #uk-government, #united-kingdom, #whatsapp

Microsoft acquires video creation and editing software maker Clipchamp

Video editing software may become the next big addition to Microsoft’s suite of productivity tools. On Tuesday, Microsoft announced it’s acquiring Clipchamp, a company offering web-based video creation and editing software that allows anyone to put together video presentations, promos or videos meant for social media destinations like Facebook, Instagram, and YouTube. According to Microsoft, Clipchamp is a “natural fit” to extend its exiting productivity experiences in Microsoft 365 for families, schools, and businesses.

The acquisition appealed to Microsoft for a few reasons. Today, more people are creating and using video, thanks to a growing set of new tools that allow anyone — even non-professionals — to quickly and easily perform advanced edits and produce quality video content. This, explains Microsoft, has allowed video to establish itself as a new type of “document” for businesses to do things like pitch an idea, explain a process, or communicate with team members.

The company also saw Clipchamp as an interesting acquisition target due to how it combined “the simplicity of a web app with the full computing power of a PC with graphics processing unit (GPU) acceleration,” it said. That makes the software a good fit for the Microsoft Windows customer base, as well.

Clipchamp itself had built a number of online tools in the video creation and editing space, including its video maker Clipchamp Create, which offers features for trimming, cutting, cropping, rotating, speed control, and adding text, audio, images, colors, and filters. It also provides other tools that make video creation easier, like templates, free stock video and audio libraries, screen recorders, text-to-speech tools, and others for simplifying a brand’s fonts, colors and logos for use in video. A discontinued set of utilities called Clipchamp Utilities had once included a video compressor and converters, as well as an in-browser webcam recorder. Some of this functionality was migrated over to the new Clipchamp app, however.

After producing the videos with Clipchamp, creators can choose between different output styles and aspect ratios for popular social media networks, making it a popular tool for online marketers.

Image Credits: Clipchamp

Since its founding in 2013, Clipchamp grew to attract over 17 million registered users and has served over 390,000 companies, growing at a rate of 54% year-over-year. As the pandemic forced more organizations towards remote work, the use of video has grown as companies adopted the medium for training, communication, reports, and more. During the first half of 2021, Clipchamp saw a 186% increase in video exports. Videos using the 16:9 aspect ratio grew by 189% while the 9:16 aspect ratio for sharing to places like Instagram Stories and TikTok grew by 140% and the 1:1 aspect ratio for Instagram grew 72%. Screen recording also grew 57% and webcam recording grew 65%.

In July, Clipchamp CEO Alexander Dreiling commented on this growth, noting the company had nearly tripled its team over the past year.

“We are acquiring two times more users on average than we did at the same time a year ago while also doubling the usage rate, meaning more users are creating video content than ever before. While social media videos have always been at the forefront of business needs, during the past year we’ve also witnessed the rapid adoption of internal communication use cases where there is a lot of screen and webcam recording taking place in our platform,” he said.

Microsoft didn’t disclose the acquisition price, but Clipchamp had raised over $15 million in funding according to Crunchbase.

This is not Microsoft’s first attempt at entering the video market.

The company was recently one of the suitors pursuing TikTok when the Trump administration was working to force a sale of the China-owned video social network which Trump had dubbed a national security threat. (In order to keep TikTok running in the U.S., ByteDance would have needed to have divested TikTok’s U.S. operations. But that sale never came to be as the Biden administration paused the effort.) Several years ago, Microsoft also launched a business video service called Stream, that aimed to allow enterprises to use video as easily as consumers use YouTube. In 2018, it acquired social learning platform Flipgrid, which used short video clips for collaboration. And as remote work became the norm, Microsoft has been adding more video capabilities to its team collaboration software, Microsoft Teams, too.

Microsoft’s deal follows Adobe’s recent $1.28 acquisition of the video review and collaboration platform Frame.io, which has been used by over a million people since its founding in 2014. However, unlike Clipchamp, whose tools are meant for anyone to use at work, school, or home, Frame.io is aimed more directly at creative professionals.

Dreiling said Clipchamp will continue to grow at Microsoft, with a focus on making video editing accessible to more people.

“Few companies in tech have the legacy and reach that Microsoft has. We all grew up with iconic Microsoft products and have been using them ever since,” he explained. “Becoming part of Microsoft allows us to become part of a future legacy. Under no other scenario could our future look more exciting than what’s ahead of us now. At Clipchamp we have always said that we’re not suffering from a lack of opportunity, there absolutely is an abundance of opportunity in video. We just need to figure out how to seize it. Inside Microsoft we can approach seizing our opportunity in entirely new ways,” Dreiling added.

Microsoft did not say when it expected to integrate Clipchamp into its existing software suite, saying it would share more at a later date.

 

#biden-administration, #bytedance, #ceo, #collaboration-software, #computing, #exit, #facebook, #instagram, #ma, #microsoft, #microsoft-teams, #microsoft-windows, #mobile-software, #online-tools, #productivity-tools, #software, #technology, #tiktok, #trump, #trump-administration, #united-states, #video, #web-app, #webcam

Performance marketing agency MuteSix bets on content and data to boost DTC e-commerce

Warby Parker filing to IPO last week was one more sign that direct-to-consumer (DTC) is an extremely powerful e-commerce trend. But LA-based performance marketing agency MuteSix didn’t wait that long to build its business around scaling DTC brands.

Created in 2014 and acquired by Dentsu in 2019, MuteSix was recommended to TechCrunch by Rhoda Ullmann, VP Consumer at Sense, a Boston-based startup building a home energy monitor. “They demonstrate best-in-class expertise with Facebook and Google paid ad platforms. They also have a very smart and efficient approach to creative development that was critical to helping us scale,” she wrote. (If you have growth marketing agencies or freelancers to recommend, please fill out our survey!)

Besides Sense, MuteSix’s former and current clients include companies such as Adidas, Petco, Ring and Theragun, to whom it provides a full range of marketing services, including top-notch direct response videos. But regardless of whether you can afford this, we think you’ll learn interesting lessons from our conversation with their CRO, Greg Gillman. The key takeaway? In today’s highly competitive ad environment, both content and data are kings.

Editor’s note: The interview below has been edited for length and clarity.

What can you tell us about MuteSix as an agency?

Greg Gillman

Image Credits: MuteSix

Greg Gillman: We’ve been around for about nine years. We started out as a Facebook ad agency — as opposed to a lot of agencies that start out by saying they do everything, we decided to focus on what we were really good at. At the time, it was doing Facebook media buying for e-commerce companies. Primarily here in LA, which is kind of the hub of these companies, but also all over. And then bit by bit, we grew the organization.

At this point, we’re a little over 400 people, and we manage upward of $500 million in spend on Facebook and Google, including Instagram and YouTube. What we’ve grown into is a one-stop shop for DTC e-commerce companies: We manage all the channels that a DTC brand needs. And we’re a performance agency; everything we do is based on results. People come to us to drive revenue into their e-commerce businesses.

Why do you think that performance marketing is the right fit for DTC?

DTC entrepreneurs are more focused on immediate impact, because if they’re not selling product, there’s no large brand propping them up. So I think that doing DTC marketing requires you to be more performance focused. For agencies that work with large brands, usually it’s more about impression buying versus performance buying. They can say: I did a reach campaign today to hit 10 million eyeballs, and whatever happens happens, because at the end of the day, you just told us to do 10 million impressions. It’s different than working with a group like us that’s trying to optimize every small piece of the funnel, and being accountable for the entire funnel to drive as much sales or revenue.

What type of clients do you work with?

The majority of the companies we work with are digitally native DTC companies. We’ve mostly stayed in that lane, because we’re really good at it. That being said, we work with companies of all sizes — startups, companies that are already established, and very large companies that need to rework both their creative and their media buying strategy.

I oversee sales, marketing and partnerships, and my role is really trying to figure out which brands make most sense to partner with MuteSix. We’re looking for high-growth brands that we can scale, and we’ve learned through the years that what works well are demonstrable products that have cool user value props.

We’ve worked with lots of startups at different points in the funnel, starting from the ground up and working with them through various rounds of funding, all the way through acquisitions, including two by unicorns. But these days, ground up is tougher. I like them to have some proof of concept — putting through $10,000-$15,000 per month on Facebook or $5,000-10,000 on Google usually shows me that there’s some life to it. But I don’t want to limit us if it’s a cool idea. I talk to a lot of people who come back once they’ve proven it out a little bit.


Have you worked with a talented individual or agency who helped you find and keep more users?

Respond to our survey and help other startups find top growth marketers they can work with!


What kind of clients are definitely not a good fit?

It won’t be a fit if there’s no real unique value prop for the product. If it’s just another run-of-the-mill company, a consultant can charge them a lower amount of money and set up Facebook ads, but what we are looking for are high-growth businesses.

The compensation for our campaign managers is actually tied to the performance of the campaigns, so if I bring a bunch of campaigns that we can’t scale, we’re gonna have a lot of unhappy media buyers who ask: “Greg, why would we take on this brand?” It’s a business model that has helped us attract top talent, but we need to make sure that we’re bringing brands that we think we can scale.

And it’s easier than ever to start a company, but it’s tougher now to scale it and take it past the $2 million-$3 million run rate. So I always revert back to asking founders: What are five reasons why people want to buy your product? What are the five reasons that they don’t? If the entrepreneur has trouble answering this, it’s not going to work. If they can’t tell somebody why their business is good, then we’re not going to be good at selling it.

How is MuteSix different from other agencies?

I’d say the main difference is that we have a 70-person in-house video creative team; and what we’re really good at doing is shooting and coming up with performance content. Not just content that looks and feels great, but video that is reverse-engineered to sell product.

Another key component is that we have a whole data science team that is also integrated with our media buying team, and that helps companies navigate things like attribution and signal loss due to the iOS 14 update. Right now, that means focusing on looking at the whole picture rather than by channel and working on mix-modeling attribution.

What are some of the things your data team focuses on?

One of the biggest things that brands struggle with is figuring out attribution, and how you continue to spend money even though you may have lost some signal into the platform. If Facebook skews too heavily, and Google is on last click, then sometimes it looks like things are never working. To help companies make informed business decisions, we are building statistical models that show information at higher-than-the-platform level.

We are also building better segments of customer profiles that help the clients understand who their core audience is, but also helps us build predictive audiences for finding new people.

Another big thing we’re trying to solve is incrementality. We work with large brands that have a strong organic following on social media; and their question is: “Hey, Greg, why should I spend more money if I would have acquired those users anyway?” So we’ve done incrementality testing with brands that spend a lot in other channels than Facebook and Google. We helped them build out different ways to look at the data so that we continue to spend in those channels and they actually know the incremental lift that they’re getting.

There’s one other piece that I think is super important and usually overlooked: first-party data. We work with brands to try and acquire as much of that first-party data as possible, segment it and use it, because that’s what they’d be left with if Facebook shut off tomorrow.

How do you prepare and adapt for changes in the marketing ecosystem?

Because we work with so many brands, we have a lot of senior leadership on each channel level. We routinely meet across departments and share insights. The data science team also builds pretty robust reporting. We try to stay ahead of our brands and to be forward-thinking about anything that is ultimately going to impact the agency. We’re constantly trying to hack our way through things like the types of content that work and things that we know will help us scale.

That’s how we have always approached it. Every major shift in our business was done to answer the needs of the brands that we were working with. For instance, there’s a data side to our business because it’s more important than ever to use that. Facebook used to be a platform where you could throw anything at the wall, and you would get a 4x or 5x return. No one’s asking about data when you’re literally printing money out of Facebook, right? It only happens when the margins get tight. But then Facebook became a more crowded platform, and the same happened with Google: more advertisers, higher CPM and a more competitive environment. We needed to be smarter about what we were doing, so we built out our data team.

Now there’s two levers that we can pull: the data side and the creative side of the business. Again, we are a performance marketing agency, focusing on all the levers. Because platforms like Facebook are only going to be more competitive, they’re only going to get more expensive, and we are only going to lose more traffic. So the more agile agencies have to think much farther outside of what we are doing on these platforms; because we’re going to make up the incremental revenue on things like SMS, influencer marketing and organic content, to continue to drive money into the top of the funnel.

Why is your content arm so important as a lever?

We have an integrated solution where our media buyers are paired directly with our video editors and producers to allow us to be agile and quick; because as everyone knows, content is king. What we try to do is optimize around things like what we call the thumbs-up rate on Facebook — three-second video views. If I held someone for that long in their newsfeed, I can potentially get them into our flow. We do the same on YouTube, and we do things like this on programmatic, because the name of the game is to get people into the funnel and work them through it. And we’re using both our data science team and our creative team to build out and optimize on the front end around these quick metrics to get things moving.

In my opinion, there’s no close second to an SMB agency that has a content arm like we do. Leveraging our content team to build performance content is one of the biggest levers that we have. Three and a half years ago, Facebook was telling us: “If you don’t build video content, and if you don’t prioritize video in the newsfeed, it’s not going to work.” At the time, we leaned in very hard — and the pain of growing a creative team of 70 people is real, especially in LA. But it’s allowed us to scale our agency.

#content-marketing, #d2c, #d2c-brands, #dtc, #e-commerce, #facebook, #growth-marketing, #los-angeles, #marketing, #online-advertising, #startups, #tc, #tc-experts, #verified-experts

Driven by live streams, consumer spending in social apps to hit $17.2B in 2025

The live streaming boom is driving a significant uptick in the creator economy, as a new forecast estimates consumers will spend $6.78 billion in social apps in 2021. That figure will grow to $17.2 billion annually by 2025, according to data from mobile data firm App Annie, which notes the upward trend represents a five-year compound annual growth rate (CAGR) of 29%. By that point, the lifetime total spend in social apps will reach $78 billion, the firm reports.

Image Credits: App Annie

Initially, much of the livestream economy was based on one-off purchases like sticker packs, but today, consumers are gifting content creators directly during their live streams. Some of these donations can be incredibly high, at times. Twitch streamer ExoticChaotic was gifted $75,000 during a live session on Fortnite, which was one of the largest ever donations on the game streaming social network. Meanwhile, App Annie notes another platform, Bigo Live, is enabling broadcasters to earn up to $24,000 per month through their live streams.

Apps that offer live streaming as a prominent feature are also those that are driving the majority of today’s social app spending, the report says. In the first half of this year, $3 out every $4 spend in the top 25 social apps came from apps that offered live streams, for example.

Image Credits: App Annie

During the first half of 2021, the U.S. become the top market for consumer spending inside social apps with 1.7x the spend of the next largest market, Japan, and representing 30% of the market by spend. China, Saudi Arabia, and South Korea followed to round out the top 5.

Image Credits: App Annie

While both creators and the platforms are financially benefitting from the live streaming economy, the platforms are benefitting in other ways beyond their commissions on in-app purchases. Live streams are helping to drive demand for these social apps and they help to boost other key engagement metrics, like time spent in app.

One top app that’s significantly gaining here is TikTok.

Last year, TikTok surpassed YouTube in the U.S. and the U.K. in terms of the average monthly time spent per user. It often continues to lead in the former market, and more decisively leads in the latter.

Image Credits: App Annie

Image Credits: App Annie

In other markets, like South Korea and Japan, TikTok is making strides, but YouTube still leads by a wide margin. (In South Korea, YouTube leads by 2.5x, in fact.)

Image Credits: App Annie

Beyond just TikTok, consumers spent 740 billion hours in social apps in the first half of the year, which is equal to 44% of the time spent on mobile globally. Time spent in these apps has continued to trend upwards over the years, with growth that’s up 30% in the first half of 2021 compared to the same period in 2018.

Today, the apps that enable live streaming are outpacing those that focus on chat, photo or video. This is why companies like Instagram are now announcing dramatic shifts in focus, like how they’re “no longer a photo sharing app.” They know they need to more fully shift to video or they will be left behind.

The total time spent in the top five social apps that have an emphasis on live streaming are now set to surpass half a trillion hours on Android phones alone this year, not including China. That’s a three-year CAGR of 25% versus just 15% for apps in the Chat and Photo & Video categories, App Annie noted.

Image Credits: App Annie

Thanks to growth in India, the Asia-Pacific region now accounts for 60% of the time spent in social apps. As India’s growth in this area increased over the past 3.5 years, it shrunk the gap between itself and China from 115% in 2018 to just 7% in the first half of this year.

Social app downloads are also continuing to grow, due to the growth in live streaming.

To date, consumers have downloaded social apps 74 billion times and that demand remains strong, with 4.7 billion downloads in the first half of 2021 alone — up 50% year-over-year. In the first half of the year, Asia was the largest region region for social app downloads, accounting for 60% of the market.

This is largely due to India, the top market by a factor of 5x, which surpassed the U.S. back in 2018. India is followed by the U.S., Indonesia, Brazil and China, in terms of downloads.

Image Credits: App Annie

The shift towards live streaming and video has also impacted what sort of apps consumers are interested in downloading, not just the number of downloads.

A chart that show the top global apps from 2012 to the present highlights Facebook’s slipping grip. While its apps (Facebook, Messenger, Instagram and Facebook) have dominated the top spots over the years in various positions, TikTok popped into the number one position last year, and continues to maintain that ranking in 2021.

Further down the chart, other apps that aid in video editing have also overtaken others that had been more focused on photos or chat.

Image Credits: App Annie

Video apps like YouTube (#1), TikTok (#2) Tencent Video (#4), Bigo Live (#5), Twitch (#6), and others also now rank at the top of the global charts by consumer spending in the first half of 2021.

But YouTube (#1) still dominates in time spent compared with TikTok (#5), and others from Facebook — the company holds the next three spots for Facebook, WhatsApp and Instagram, respectively.

This could explain why TikTok is now exploring the idea of allowing users to upload even longer videos, by increasing the limit from 3 minutes to 5, for instance.

In addition, because of live streaming’s ability to drive growth in terms of time spent, it’s also likely the reason why TikTok has been heavily investing in new features for its TikTok LIVE platform, including things like events, support for co-hosts, Q&As and more, and why it made the “LIVE” button a more prominent feature in its app and user experience.

App Annie’s report also digs into the impact live streaming has had on specific platforms, like Twitch and Bigo Live, the former which doubled its monthly active user base from the pre-pandemic era, and the latter which saw $314.2 million in consumer spend during H1 2021.

“The ability of social media users to communicate with each other using live video – or watch others’ live broadcasts – has not only maintained the growth of a social media app market, but contributed to its exponential growth in engagement metrics like time spent, that might otherwise have saturated some time ago,” wrote App Annie’s Head of Insights, Lexi Sydow, when announcing the new report.

The full report is available here.

#android, #app-annie, #apps, #asia, #asia-pacific, #bigo-live, #brazil, #china, #computing, #facebook, #head, #india, #indonesia, #instagram, #japan, #media, #messenger, #mobile, #mobile-applications, #mobile-software, #operating-systems, #saudi-arabia, #social, #social-media, #software, #south-korea, #tiktok, #twitch, #united-kingdom, #united-states, #video, #video-hosting, #youtube

Apple’s dangerous path

Hello friends, and welcome back to Week in Review.

Last week, we dove into the truly bizarre machinations of the NFT market. This week, we’re talking about something that’s a little bit more impactful on the current state of the web — Apple’s NeuralHash kerfuffle.

If you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny


the big thing

In the past month, Apple did something it generally has done an exceptional job avoiding — the company made what seemed to be an entirely unforced error.

In early August — seemingly out of nowhere** — the company announced that by the end of the year they would be rolling out a technology called NeuralHash that actively scanned the libraries of all iCloud Photos users, seeking out image hashes that matched known images of child sexual abuse material (CSAM). For obvious reasons, the on-device scanning could not be opted out of.

This announcement was not coordinated with other major consumer tech giants, Apple pushed forward on the announcement alone.

Researchers and advocacy groups had almost unilaterally negative feedback for the effort, raising concerns that this could create new abuse channels for actors like governments to detect on-device information that they regarded as objectionable. As my colleague Zach noted in a recent story, “The Electronic Frontier Foundation said this week it had amassed more than 25,000 signatures from consumers. On top of that, close to 100 policy and rights groups, including the American Civil Liberties Union, also called on Apple to abandon plans to roll out the technology.”

(The announcement also reportedly generated some controversy inside of Apple.)

The issue — of course — wasn’t that Apple was looking at find ways that prevented the proliferation of CSAM while making as few device security concessions as possible. The issue was that Apple was unilaterally making a massive choice that would affect billions of customers (while likely pushing competitors towards similar solutions), and was doing so without external public input about possible ramifications or necessary safeguards.

A long story short, over the past month researchers discovered Apple’s NeuralHash wasn’t as air tight as hoped and the company announced Friday that it was delaying the rollout “to take additional time over the coming months to collect input and make improvements before releasing these critically important child safety features.”

Having spent several years in the tech media, I will say that the only reason to release news on a Friday morning ahead of a long weekend is to ensure that the announcement is read and seen by as few people as possible, and it’s clear why they’d want that. It’s a major embarrassment for Apple, and as with any delayed rollout like this, it’s a sign that their internal teams weren’t adequately prepared and lacked the ideological diversity to gauge the scope of the issue that they were tackling. This isn’t really a dig at Apple’s team building this so much as it’s a dig on Apple trying to solve a problem like this inside the Apple Park vacuum while adhering to its annual iOS release schedule.

illustration of key over cloud icon

Image Credits: Bryce Durbin / TechCrunch /

Apple is increasingly looking to make privacy a key selling point for the iOS ecosystem, and as a result of this productization, has pushed development of privacy-centric features towards the same secrecy its surface-level design changes command. In June, Apple announced iCloud+ and raised some eyebrows when they shared that certain new privacy-centric features would only be available to iPhone users who paid for additional subscription services.

You obviously can’t tap public opinion for every product update, but perhaps wide-ranging and trail-blazing security and privacy features should be treated a bit differently than the average product update. Apple’s lack of engagement with research and advocacy groups on NeuralHash was pretty egregious and certainly raises some questions about whether the company fully respects how the choices they make for iOS affect the broader internet.

Delaying the feature’s rollout is a good thing, but let’s all hope they take that time to reflect more broadly as well.

** Though the announcement was a surprise to many, Apple’s development of this feature wasn’t coming completely out of nowhere. Those at the top of Apple likely felt that the winds of global tech regulation might be shifting towards outright bans of some methods of encryption in some of its biggest markets.

Back in October of 2020, then United States AG Bill Barr joined representatives from the UK, New Zealand, Australia, Canada, India and Japan in signing a letter raising major concerns about how implementations of encryption tech posed “significant challenges to public safety, including to highly vulnerable members of our societies like sexually exploited children.” The letter effectively called on tech industry companies to get creative in how they tackled this problem.


other things

Here are the TechCrunch news stories that especially caught my eye this week:

LinkedIn kills Stories
You may be shocked to hear that LinkedIn even had a Stories-like product on their platform, but if you did already know that they were testing Stories, you likely won’t be so surprised to hear that the test didn’t pan out too well. The company announced this week that they’ll be suspending the feature at the end of the month. RIP.

FAA grounds Virgin Galactic over questions about Branson flight
While all appeared to go swimmingly for Richard Branson’s trip to space last month, the FAA has some questions regarding why the flight seemed to unexpectedly veer so far off the cleared route. The FAA is preventing the company from further launches until they find out what the deal is.

Apple buys a classical music streaming service
While Spotify makes news every month or two for spending a massive amount acquiring a popular podcast, Apple seems to have eyes on a different market for Apple Music, announcing this week that they’re bringing the classical music streaming service Primephonic onto the Apple Music team.

TikTok parent company buys a VR startup
It isn’t a huge secret that ByteDance and Facebook have been trying to copy each other’s success at times, but many probably weren’t expecting TikTok’s parent company to wander into the virtual reality game. The Chinese company bought the startup Pico which makes consumer VR headsets for China and enterprise VR products for North American customers.

Twitter tests an anti-abuse ‘Safety Mode’
The same features that make Twitter an incredibly cool product for some users can also make the experience awful for others, a realization that Twitter has seemingly been very slow to make. Their latest solution is more individual user controls, which Twitter is testing out with a new “safety mode” which pairs algorithmic intelligence with new user inputs.


extra things

Some of my favorite reads from our Extra Crunch subscription service this week:

Our favorite startups from YC’s Demo Day, Part 1 
“Y Combinator kicked off its fourth-ever virtual Demo Day today, revealing the first half of its nearly 400-company batch. The presentation, YC’s biggest yet, offers a snapshot into where innovation is heading, from not-so-simple seaweed to a Clearco for creators….”

…Part 2
“…Yesterday, the TechCrunch team covered the first half of this batch, as well as the startups with one-minute pitches that stood out to us. We even podcasted about it! Today, we’re doing it all over again. Here’s our full list of all startups that presented on the record today, and below, you’ll find our votes for the best Y Combinator pitches of Day Two. The ones that, as people who sift through a few hundred pitches a day, made us go ‘oh wait, what’s this?’

All the reasons why you should launch a credit card
“… if your company somehow hasn’t yet found its way to launch a debit or credit card, we have good news: It’s easier than ever to do so and there’s actual money to be made. Just know that if you do, you’ve got plenty of competition and that actual customer usage will probably depend on how sticky your service is and how valuable the rewards are that you offer to your most active users….”


Thanks for reading, and again, if you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny

Lucas Matney

#american-civil-liberties-union, #apple, #apple-inc, #apple-music, #artificial-intelligence, #australia, #bryce-durbin, #bytedance, #canada, #china, #computing, #electronic-frontier-foundation, #encryption, #extra-crunch, #facebook, #federal-aviation-administration, #icloud, #india, #ios, #iphone, #japan, #linkedin, #new-zealand, #pico, #richard-branson, #siri, #spotify, #tech-media, #technology, #united-kingdom, #united-states, #virgin-galactic, #virtual-reality, #y-combinator