Year: 2019

Catalonia’s regional government in Spain has agreed new rules to regulate the vehicle for hire (VTCs) sector that will require ride-hailing companies such as Uber and Cabify to substantially change how they operate in Barcelona and other local cities as soon as this week.

The changes have been agreed by decree, ahead of a planned full restructuring of the law, with the Catalan generalitat saying it wants to ensure VTCs and taxis do not compete for the same work.

As a first step, the government says it will introduce a new rule that requires VTC bookings to be made a minimum of 15 minutes in advance of a pick-up, with municipalities or local metropolitan areas able to require a longer wait time.

It writes that such powers can be used to regulate “the use of public road domain, urban traffic management, environmental protection and the prevention of air pollution”.

Ride-hailing companies Uber and Cabify have previously said they will pull out of the Catalan capital, Barcelona, if a 15-minute wait time rule is introduced. But even if the companies change their mind about leaving they would likely have to suspend services to implement software tweaks to their apps to comply with new restrictions on how VTCs can operate. 

Under the decree, VTC companies will also be prohibited from displaying the real-time geolocation of vehicles for hire in their apps prior to a booking. Only once a booking has been made can the location of the vehicle be displayed.

The decree also bans VTC vehicles from plying for trade by freely circulating in the streets. Instead they will be required to return to a base, such as a parking lot or a garage, to wait for the next booking.

An Uber spokesman told us it’s not commenting at this stage as it waits for the decree to be published later this week.

The decree, which will be published on Thursday, is due to come into force next Friday, according to El Confidential. Although it will also need to be approved by the Catalan parliament — with a month provided for that process.

The Catalan government says fines of up to €1,400 (~$1,600) can be applied to VTC drivers caught infringing the provisions.

Local authorities will be allowed to create a register of VTC vehicles providing a service in their region, with local police forces tasked with carrying out inspections of suspected infringers.

“Impossible for us to continue… “

Safe to say, the incoming regulations aren’t popular with ride-hailing companies.

Last week an Uber spokesperson told us: “If approved, announced restrictions in Catalonia would make it impossible for us to continue offering our UberX service in Barcelona. We continue to call for dialogue with all local stakeholders, including taxis, to find a path forward for the thousands of drivers and users who rely on VTC services in Catalonia.”

A Cabify spokeperson also told us then that if the restrictions were approved the government “will essentially be forcing Cabify out of Barcelona and going against the interests of one million registered users and the wider VTC sector operating in the city”.

“Cabify is absolutely committed with Barcelona and its users, as it does in the 130 cities where the Company operates globally. In case negotiations don’t change this wrong decision, our strategic road map will remain the same. Innovation and Technology are our main drivers to improve mobility in the markets we operate,” the spokesperson added.

At the time of writing Cabify had not responded to a request for comment on the decree being agreed.

Earlier this month another round of taxi strikes kicked off in the Catalan capital, with local taxi drivers also furious about the proposed 15 minute wait. But they couched it as not stringent enough — calling for a minimum of at least 24 hours.

That huelga indefinida of taxis only ended after Barcelona’s mayor pledged to extend the minimum wait time to an hour, reports El Confidential.

The taxi industry’s complaint and long-time beef with ride-hailing companies is the apps represent unfair competition, with VTCs firms accused of operating a taxi service without having the same regulatory burden as taxis.

Last summer another series of taxi strikes in major Spanish cities only ended after the country’s government agreed to devolve regulatory power over the VTC sector to autonomous communities. And Catalonia is the first region to have pushed ahead with applying controls to the sector.

Though its planned changes are clearly not without controversy — and a slick PR campaign by a Spanish VTC association has pushed an online petition to close to 150,000 signatures. (Although local press reports that a signed-in-person petition against the decree that was handed to the Catalan government only had around 10,000 signatures.) 

Meanwhile, the looming prospect of the world’s biggest mobile tradeshow, Mobile World Congress, is likely concentrating local politicians’ minds. The event takes place in Barcelona in just under a month’s time, and in recent years it’s been a strategic ratchet for taxi associations to amp up the pressure of threats to ‘paralyze the city’.

This month the VTC sector has also taken to Barcelona’s streets, albeit to protest a little more quietly. Drivers parked their vehicles along a major road in protest at the proposed changes and some demonstrated outside parliament.

In a tweet in the last few hours following the announcement of today’s decree, the Unauto VTC association claims the sector will have no option but to quit Barcelona, saying it puts 1,000 drivers out of work.

Early reaction from the taxi industry to the government decree is jubilant — with one of the main associations campaigning for tighter regulation on the VTC sector, Elite Taxi BCN, tweeting a government response which gives short shrift to the VTC sector’s claim the changes mean the instant sack for thousands of VTC drivers.

In the cited quotation, the government also dubs the decree “proportionate and competitive”.

“We will not yield to the blackmail of the street nor the blackmail of the offices,” it adds.

The taxi industry’s campaign has also focused on criticising working conditions for drivers in the VTC sector, and claiming multinational companies like Uber offer only precarious work, rather than sustainable employment.

And there is certainly a large chunk of irony in a sector that contains gig economy platform giants trying to argue tighter controls will make its drivers ‘unemployed’ (when Uber, for example, classifies drivers as self-employed contractors, never employees… ).

If Uber does pull out of Barcelona it won’t be the first time either.

The company only relaunched a service in Barcelona last March after its original p2p (non-professional driver) play was forced out in late 2014, following legal challenges driven by the taxi sector.

For the relaunch Uber bought its way in by paying to obtain VTC licenses from existing operator/s. It’s unclear how many Uber drivers operate in the city but Barcelona remains very well served by affordable and accessible public transport options — in addition to plentiful taxis.   

Taxi associations in Madrid have also been striking in protest at VTCs this month, bringing a major road in the Spanish capital to a standstill, per this Reuters report.

There taxi drivers want the government to uphold a ratio of 1 VTC per 30 taxis as a matter of urgency, rather than giving VTC companies four years to comply with the regulation, as it said it would last fall.

Drivers in New York City will soon be able to use Waze — and other navigation apps — in places like tunnels or bridges where it’s common to lose a GPS signal.

The new capability is courtesy of small open source puck-like devices called Waze Beacons that were invented in-house by Gil Disatnik, an engineer who now heads up the beacons program.

These battery-powered beacons broadcast an open standard signal via Bluetooth, which takes over for GPS to provide location data when a car passes through a tunnel.  The beacons, which are powered by Eddystone beacon technology, can transmit messages directly to a smartphone or tablet via Bluetooth.

The company has partnered with New York’s MTA as well as the Port Authority of NY and New Jersey to install these beacons in bridges and tunnels used to enter and exit Manhattan. The Waze Beacons are live, as of Tuesday, in the Holland Tunnel, Lincoln Tunnel, Queens-Midtown Tunnel, and Hugh L. Carey (Brooklyn Battery) Tunnel. About 42 beacons per mile of tunnel are required, according to Waze.

“The Port Authority is strongly committed to leveraging new technology to improve the customer experience for the tens of thousands of travelers who use our crossings each day,” Port Authority Executive Director Rick Cotton said in a statement. “Last year, we launched our Crossing Time app that provides commuters with real-time traffic conditions at all agency bridges and tunnels. Today, we are activating new technology pioneered by Waze that will provide better GPS navigation capabilities for drivers as they drive through the Lincoln and Holland tunnels and MTA tunnels.”

The expansion to New York City follows a pilot launch last year in Chicago. Waze Beacons are installed in nine cities globally, including Boston, Pittsburgh, Rio de Janeiro, Paris,Oslo, Florence, Italy, Haifa, Israel, and Jihlava in the Czech Republic. The beacons, which cost $28.50 each, are open sourced. This means other navigation services can also use the program technology free of charge.

Despite a number of well-publicized hiccups, venture capitalists are betting another $500 million on health insurance provider Clover Health, TechCrunch has learned.

Existing investor Greenoaks Capital led the round, according to the startup, which confirmed it was closing a new round of capital in the coming weeks. Clover Health has raised a total of $925 million to date, garnering a valuation of $1.2 billion with a $130 million Series D funding in 2017. The company, backed by Alphabet’s venture arm GV, Sequoia Capital, Floodgate, Bracket Capital, First Round Capital and more, declined to disclose its latest valuation.

San Francisco-based Clover Health was founded in 2012 by chief executive officer Vivek Garipalli, the former founder of New Jersey healthcare system CarePoint Health; and Kris Gale, who served as the startup’s chief technology officer until transitioning into an adviser role in December 2017. As part of its latest funding round, the company told TechCrunch it’s promoting Andrew Toy, its chief technology officer since early 2018, to the role of president and CTO. He will also join its board of directors.

Varsha Rao, Airbnb’s former chief operating officer, joined the company in September 2017 as COO.

The tech-enabled health insurer differentiates itself from incumbents by collecting and analyzing health and behavioral data to lower costs and improve medical outcomes for its members. It’s part of a new cohort of heavily funded insurtech startups, including Devoted Health and Bright Health, both of which similarly provide Medicare Advantage plans. Devoted Health, backed by Andreessen Horowitz, raised a $300 million Series B funding round three months ago. Bright Health, for its part, brought in a $200 million Series C in late November at a $950 million valuation. It’s backed by Bessemer Venture Partners, Greycroft, NEA and Redpoint Ventures, among others.

Founded in 2012, Clover Health is years older than its aforementioned counterparts. The business, though supported by top-tier investors and plenty of capital, has struggled in the past to shrink its losses. In 2015, Clover Health posted a net loss of $4.9 million only to increase it 7x the following year to $34.6 million, according to financial documents obtained by Axios. At the time, Clover Health had 20,600 Medicare Advantage members, earning it $184 million in taxpayer revenue. According to reporting from CNBC, the company had initially planned to double its membership base each year but was only able to expand from 20,000 in 2016 to 27,000 in September 2017.

Apple, the company formerly known by its trillion-dollar market cap, will be reporting its holiday quarter Q1 2019 earnings today and it may just have the health of the global markets riding on how the financials look.

No pressure.

Earlier this month, Apple CEO Tim Cook issued a letter to investors, slashing Q1 guidance from a range of between $89 billion and $93 billion to just $84 billion. Given that the company revised its guidance just a few weeks ago, there isn’t much of a reason to expect a major revenue miss from the company though things could still go awfully wrong if the company is pessimistic in its Q2 outlook or misses elsewhere.

Apple’s stock price cratered nearly 10 percent when Cook’s investor letter was released, a drop that represented the worst single day plunge for the company in more than five years. The stock has mostly recovered in the weeks since, but it is recovering from a 52-week low it reached earlier this month, a nearly 40 percent decline from its all-time-high in October.

Analysts are certainly going to be scouring the numbers today to get any sort of read into the health of the company’s mobile business moving forward, but they will have less data than ever to make these judgments off of.

During the company’s last investor call, Apple slid in an announcement that they would not be reporting unit sales in subsequent quarterly earnings reports, meaning that you won’t see any flashy “Apple sold XX.X iPhones this quarter” stories floating across your timeline. For the time being, revenue numbers are all we’re working with, though Apple contends that its financial success is growing less tightly correlated with unit sales, likely a result of the widening range of price points in its device categories and a general upward trend in these products’ average selling prices.

Despite the unit sales shift, a lot of analysts will be staring long and hard at a single number this quarter anyway: Greater China revenue.

In Cook’s investor letter, he detailed that “economic weakness in some emerging markets” had “turned out to have a significantly greater impact than we had projected.” India and China have been two incredibly difficult markets for Apple to crack, while the company has definitely made healthy inroads with the iPhone in China, it seems growth is slowing there with Cook going as far to say that the bulk of the company’s guidance reduction was a result of iPhone revenue declines in Greater China.

Investors are going to be left having to judge whether revenue declines are a result of weariness surrounding ongoing U.S./China trade negotiations, a general slowing in China’s economic growth rate, or whether — perhaps most frightening to investors — Apple has just begun to lost its grip to Chinese consumer tech companies. It’s obviously most likely a combination, but you can expect Apple to point to external factors wherever possible.

Q1 2019 was also the first full quarter of sales for Apple’s three newest smartphone models, the iPhone XS, iPhone XS Max and iPhone XR, so we’ll likely get our best look at how the new models are faring and whether existing users are upgrading in developed markets. Cook seemed to hedge bets in his investment letter, noting that a number of macroeconomic trends and more dialed-in factors like consumers taking advantage of Apple’s $29 battery replacement program, impacted iPhone upgrades.

The iPhone’s ability to keep plugging along in its key markets is obviously going to be pretty critical for Apple. The headlines surrounding Apple’s transition to a services company has always been predicated by the fact that iPhone revenues were still climbing, it’s just that Services revenue was climbing even faster. If there prove to be some key heat sinks for Apple in its bread-and-butter hardware verticals, it’s apparent these trends would keep some downward pressure on the stock.

We’ll see how the Cupertino consumer tech giant does when it reports earnings after the bell today, check back here to see how Apple fares.

FanAI, an audience analysis platform for eSports and streaming, is buying New York-based Waypoint Media to improve its analytics tools for eSports players and streamers.

The deal means that Waypoint’s Twitch Middleware API and the “Raven” tracking and URL shortener will be added to FanAI’s product portfolio. The middleware tech has the ability to track every unique registered Twitch viewer so streamers can monitor average watch time, median watch time, and channel engagement.

Financial terms were not disclosed, but a person with knowledge of the deal called the acquisition a significant all-cash transaction. That likely means a nice outcome for Waypoint’s backers, the New York-based investment firm Grand Central Tech.

FanAI Founder and CEO Johannes Waldstein said of the acquisition, “The way they are able to turn billions of data points into workable information is like nothing else available on the market. We will be able to provide a deeper look at audiences with the new tools and having someone like Kevin join us will cement the FanAI services at the top of the industry.”

Using the Raven URL shortener, FanAI customers can follow the ways in which users browse on online platforms, the company said in a statement.

As part of the acquisition, Waypoint’s Chief Product Officer, Kevin Hsu, joins FanAI as Head of Engineering, the company said.

“Combining forces with FanAI is a perfect fit; we work with the same client base and have complementary solutions to the same problem. Traditionally, FanAI has focused on more static information including social and purchasing data, while Waypoint worked to gather digital movements of the audience. Combined, we can provide the best service by giving access to even more detailed and actionable data for clients,” said Hsu, in a statement.

Amazon made its first deal at the 2019 Sundance Film Festival on Monday, with its acquisition of the global rights to a coming-of-age drama, Hala. The film, written and directed by Minhal Baig, and executive produced by Jada Pinkett Smith, tells the story of a 17-year old girl, Hala, raised in a conservative Muslim household, who develops feelings for a classmate that puts her at odds with her traditional upbringing.

The girl, played by Geraldine Viswanathan (Blockers), will also find herself grappling with the knowledge of secret that threatens to unravel her family, according to a description of the film’s plot.

Other cast members include love interest Jesse (Jack Kilmer, Palo Alto); mother, Eram (Purbi Joshi); father, Zahid (Azad Khan); Gabriel Luna (Marvel’s Agents of S.H.I.E.L.D.); and Anna Chlumsky (Veep).

The movie itself is an expansion on a short film Baig made back in 2016, which was named to the 2016 Black List.

Baig herself hails from Chicago, and was chosen in 2017 as a directing mentee for Ryan Murphy’s Half Initiative – Director Mentorship Program. She previously worked as a story editor on Bojack Horseman, and as a staff writer on the Hulu comedy, Untitled Ramy Youssef Project. She also worked on several shorts, including the precursor to Hala, After Sophie, and Pretext, as well as on music videos.

Of note, during production of the new movie, an inclusion rider was applied to bring women into many department head positions, and to 75 percent of critical below-the-line roles.

The film was co-financed and sold by Endeavor Content and produced by Overbrook Entertainment. Hala producers include Clarence Hammond, Jamal Watson and Minhal Baig, and executive producers Jada Pinkett Smith, Jana Babatunde-Bey, Marsha Swinton, James Lassiter, Caleeb Pinkett, Ari Lubet and Aaron Carr.

Apple has steadily been building up a slate of content for its forthcoming streaming service, set to launch this year. However, many of its deals to date have focused on TV series, not films.

It now has a long lineup of shows, including: a reboot of Steven Spielberg’s Amazing Stories, a Reese Witherspoon- and Jennifer Anniston-starring series set in the world of morning TV (which just added Steve Carell), an adaptation of Isaac Asimov’s Foundation books, a thriller starring Octavia Spencer, another Witherspoon comedy (now minus Kristen Wiig), a Kevin Durant-inspired scripted basketball show, a documentary about extraordinary homes, a series from La La Land’s director, a series about Emily Dickinson, a new Peanuts, a comedy from the It’s Always Sunny gang, Oprah stuff, kids content from Sesame Workshop, an M. Night Shymalan thriller, a sci-fi series from Battlestar Galactica’s Ron Moore, and many more.

But Apple has also started to pick up films.

It made first feature film buy last year, with the documentary The Elephant Queen, and more recently, it did a deal for a Sophia Coppola-directed movie starring Bill Murray and Rashida Jones.

Image credit: Sundance Institute 

The long-simmering battle between the U.S. government and Huawei heated up last night when the U.S. DOJ announced that it is pursuing criminal charges against the Chinese hardware maker.

Huawei has, unsurprisingly, denied all wrongdoing, issuing a statement to the press that wonders aloud why it wasn’t given the opportunity to help clear itself of charges following the arrest of its CFO in Vancouver.

The company writes,

Huawei is disappointed to learn of the charges brought against the company today. company  After Ms. Meng’s arrest, the Company sought an opportunity to discuss the Eastern District of New York investigation with the Justice Department, but the request was rejected without explanation. The allegations in the Western District of Washington trade secret indictment were already the subject of a civil suit that was settled by the parties after a Seattle jury found neither damages nor willful and malicious conduct on the trade secret claim. The Company denies that it or its subsidiary or affiliate have committed any of the asserted violations of U.S. law set forth in each of the indictments, is not aware of any wrongdoing by Ms. Meng, and believes the U.S. courts will ultimately reach the same conclusion.

The Chinese government has also been quick to come to the embattled tech giant’s defense.

“For some time now, the United States has deployed its state power to smear and crack down on targeted Chinese companies in an attempt to kill their normal and legal business operations,” Geng Shuang, a spokesperson for China’s Foreign Ministry, said in a statement. “We strongly urge the US to stop its unreasonable crackdown on Chinese companies, including Huawei, and treat Chinese companies objectively and fairly.”

Huawei (and to a lesser extent ZTE) has long been targeted by the U.S. over its alleged ties to the Chinese government. Tensions have made it all but impossible for the rapidly growing company to conquer the North American market.

What could Google’s parent company Alphabet, and the wealth management office of the likes of Jack Dorsey, Mark Zuckerberg and Sheryl Sandberg, understand better than the need for a service to manage all the data their companies are collecting?

As regulations in Europe begin to take effect (and European regulators show their teeth), companies like Collibra, which just raised $100 million at a valuation of over $1 billion from new investor CapitalG (the growth equity investment fund from Alphabet) and returning backers like Iconiq (the family office of Dorsey, Zuckerberg, et al.), are only going to become more important.

Indeed, the recent $57 million fine from France’s data protection watchdog is only a taste of what could be in store for companies like Facebook and Google for non-compliance with new privacy laws. Companies like Colibra and its competitors like Alation, Adaptive Insights, Datum and Informatica are reaping the benefits of this by providing software to oversee how the data that companies are collecting is handled.

The company got its first big boost back in 2008 in the wake of the financial crisis when big banks were confronted with a whole new slew of regulations. Collibra is used to track what data is stored where and how and to ensure that the data is being processed in ways that align with laws on the books.

Colibra’s new round is something of a victory lap for the company — which is coming off a record revenue year, according to a statement.

The company said it would use the new funding to add new products and push sales and marketing.

“Collibra is putting organizations back in control of their data, helping them comply with changing legislation, embrace emerging technologies and capture the information that will enable them to design services and solutions built for the future,” said Derek Zanutto of CapitalG. “We look forward to partnering with Collibra and marrying Google and Alphabet’s machine learning and AI expertise with Collibra’s leadership in data collaboration, workflow management and risk management.”

 Colibra says it has more than 300 customers across industries like financial services, healthcare, retail and technology.

Houzz has built a $4 billion business on the back of a platform and marketplace that lets you plan and execute home improvement projects. But as the startup gears up for its next phase of growth, it is also going through some growing pains. TechCrunch has learned and confirmed the company this month laid off around 110 people in the UK and Germany, along with an additional 70 in its US home market in Q4 of last year.

“We restructured our international marketplace workforce, primarily in our UK and Berlin offices, so that we can double down on the areas that will have the greatest impact for Houzz,” a spokesperson told TechCrunch. “It’s always difficult to go through a restructure at growth stages given the impact on people’s lives. We value and appreciate all of our employees and will do everything we can to retain them. We are introducing as many new opportunities as possible in other parts of the business so that those affected can apply and transition to other positions. For those who will leave Houzz, we are offering a separation package and providing any help we can as they look for a new opportunity. Houzz’s business is strong and we continue to hire and scale teams across our international and U.S. offices.”

Houzz has 1,800 employees, meaning that these two tranches of layoffs account for approximately 10 percent of the company. The spokesperson added that Houzz has been hiring in Q4 in other areas — some 300 people in all — although she did not specify in which department or region.

Houzz is also not providing much information about what departments have been impacted by the layoffs or what happens next, but details posted on social media point to at least one entire international department getting eliminated.

“Purchased items from you in the UK. For the second time one of my orders was canceled. I emailed your offices + tried to call only to find the phone had been disconnected. I tweeted @HouzzUK yesterday & rcv’d a message that all staff had been made redundant,” one customer noted on Twitter.

A source hints to us there could be more layoffs coming, as the company looks to get into the black ahead of a potential IPO.

“The company aims to slash costs in order to be profitable before going public,” the source said.

Starting out as an online community for people redecorating their homes and looking for inspiration and a place to share their ideas — it was co-founded by real-life partners Adi Tatarko (CEO) and Alon Cohen (president) as they were remodelling their own house — Houzz has over the years raised over $600 million from an illustrious group of investors that include DST Global, GGV, Kleiner Perkins, NEA, Sequoia and more. The aim: to build out a much larger and ambitious marketplace to target an industry — home improvement — that’s estimated to be worth well in excess of $1 trillion in North America and Europe alone.

Today, you can buy furniture, decorative items, bathroom and kitchen units and more across some 65 different product areas. Professionals and would-be customers also  use the platform to connect with each other; millions of consumers and over 1 million professionals currently use Houzz.

Over the last several years, the company has also expanded internationally, made acquisitions and launched new technology to fill out that vision. That’s included buying IvyMark to develop a bigger offering for interior designers, and building out an AR-based service, among other moves.

All that rapid growth and development, however, seems to have come with some challenges as Houzz attempted to make the transition from startup to more mature, large business.

Reviews on Glassdoor posted by ex-employees in recent weeks (see here and here) point to issues at the company with how management communicates with staff, the lack of a coherent and consistent strategy, and other operational challenges that can come with building a business with a number of different facets over a relatively crunched period of time.

“The company has fought on many fronts over the last few years — editorial, community, marketplace, vizualization software, paid local marketing,” our source notes. “All promising projects but requiring years of incubation and continued investment.”

Houzz has never commented on IPO plans, but last May it hired Richard Wong from LinkedIn as its CFO. Some took this as a signal of its longer-term intentions to go public.

Companies as diverse as Amazon, Pinterest and Wayfair all compete in one form or another with Houzz, and with its most recent valuation at the $4 billion mark, the question is how Houzz proceeds with its next stage of growth.

A sea of money raised by VCs and PE firms has led to a number of companies in turn raising large, late-stage funding rounds — extending the private life for many a startup.

But on the other hand, a recent run of strong IPOs has also laid the groundwork for more companies to opt for public market exits.

Both of these, as well as a potential acquisition, could all be options for Houzz. In any case, they are all options that could be pushing the company to reassess its cost base and strategy.

We’ll update this story as we learn more. For those impacted by the news, we hope you land on your feet.

As traditional enterprise companies like IBM, Oracle and SAP try to transform into more modern cloud companies, they are finding that making that transition, while absolutely necessary, could require difficult adjustments along the way. Just this morning, SAP announced that it was restructuring in order to save between $750 million and 800 million euro (between approximately $856 million an $914 million).

While the company tried to put as positive a spin on the announcement as possible, it could involve up to 4000 job cuts as SAP shifts into more modern technologies. “We are going to move our people and our focus to the areas where the new economy needs SAP the most: artificial intelligence, deep machine learning, IoT, blockchain and quantum computing,” CEO Bill McDermott told a post-earnings press conference.

If that sounds familiar, it should. It is precisely the areas that IBM has been trying to concentrate on its transformation over the last several years. IBM has struggled to make this change and has also framed workforce reduction as moving to modern skill sets. It’s worth pointing out that SAP’s financial picture has been more positive than IBM’s.

CFO Luca Mucic tried to stress this was not about cost cutting, so much as ensuring the long-term health of the company, but did admit it did involve job cuts. These could include early retirement and other incentives to leave the company voluntarily. “We still expect that there will be a number probably slightly higher than what we saw in the 2015 program where we had around 3000 employees leave the company, where at the end of this process will leave SAP,” he said.

The company believes that in spite of these cuts, it will actually have more employees by this time next year than it has now, but they will be shifted to these new technology areas. “This is a growth company move, not a cost cutting move every dollar that we gain from a restructuring initiative will be invested back into headcount and more jobs,” McDermott said. SAP kept stressing that cloud revenue will reach $35 billion in revenue by 2023.

Holger Mueller, an analyst who watches enterprise companies like SAP for Constellation Research, says the company is doing what it has to do in terms of transformation. “SAP is in the midst of upgrading its product portfolio to the 21st century demands of its customer base,” Mueller told TechCrunch. He added that this is not easy to pull off, and it requires new skill sets to build, operate and sell the new technologies.

McDermott stressed that the company would be offering a generous severance package to any employee leaving the company as a result of today’s announcement.

Today’s announcement comes after the company made two multi-billion dollar acquisitions to help in this transition in 2018, paying $8 billion for Qualtrics and $2.4 billion for CallidusCloud.