Year: 2020

The Chinese government could reshape Ant Group’s business, Tesla plans to launch in India next year and the FAA announces a new ID requirement for drones. This is your Daily Crunch for December 28, 2020.

The big story: China presents ‘rectification’ plan for Ant Group

Less than two months ago, Chinese authorities halted the planned IPO of Ant Group, the payments and fintech company that spun out of Alibaba nearly a decade earlier.

Now the government has laid out a plan for how Ant Group can become compliant and presumably go public, with steps including a renewed focus on payments, obtaining necessary licenses for its credit business, establishing a financial holding company, revamping several of its other business lines (credit, insurance, wealth management) and increasing compliance for its securities business.

Meanwhile, Chinese authorities are also investigating Alibaba over antitrust concerns. The crackdown is prompting global investors to unload their Chinese tech stocks.

The tech giants

Tesla to make India debut “early” next year — Tesla will begin operating in India in “early” 2021, a top Indian minister said today.

Samsung hasn’t announced the Galaxy S21 yet, but you can already reserve one — If you’re on the Samsung Mobile mailing list, you may have received an email compelling you to “Get ready to jump to the next Galaxy.”

U.S. government appeals the injunction against its TikTok ban — Earlier this month, Judge Carl Nichols in Washington became the second U.S. judge to block the Commerce Department’s attempt to stop the TikTok app from being downloaded from U.S. app stores.

Startups, funding and venture capital

Chinese online education app Zuoyebang raises $1.6B from investors including Alibaba — The rivalry between China’s top online learning apps has become even more intense this year.

Indian startups raised $9.3B in 2020 — This is the first time since 2016 that startups in India have raised less than $10 billion in a year.

Equity Monday: No, tech news doesn’t stop over the holidays — Alex Wilhelm discusses the latest startup and venture capital headlines, including some of the stories in this very newsletter.

Advice and analysis from Extra Crunch

How Niantic evolved Pokémon GO for the year no one could go anywhere — Analysts estimate that 2020 was Pokémon GO’s highest-earning year yet.

Four keys to international expansion — Levin Bunz watched more than a hundred of Rocket Internet’s incubated companies attempt to internationalize.

2021 will be a calmer year for semiconductors and chips (except for Intel) — Four trends to watch for, from VC funding of silicon startups to U.S.-China trade.

(Extra Crunch is our membership program, which aims to democratize information about startups. You can sign up here for a holiday deal good through January 3. Read more about the deal here.)

Everything else

New FAA rule requires Remote ID for drones — Remote ID effectively works as a kind of digital license plate for unmanned aircraft.

Music made 2020 better, but we failed to make 2020 better for musicians — In a year where music was our lifeline, why didn’t we return the favor?

Original Content podcast: “The Mandalorian” season two goes deep into Star Wars mythology — “The Mandalorian” just wrapped up its second season on Disney+.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3 p.m. PST, you can subscribe here.

Japan’s ambitious second asteroid return mission, Hayabusa 2, has produced a wealth of material from its destination, Ryugu, which astronomers and other interested parties are almost certainly champing at the bit to play with. Though they may look like ordinary bits of charcoal, they’re genuine asteroid surface material — and a little something shiny, too.

Hayabusa 2 was launched in 2014, and arrived at the asteroid named Ryugu in 2018, at which point it deployed a couple landers to test surface conditions. It touched down itself in the next year, blasting the surface with a space gun so that it could collect not just the surface gravel but what might lie beneath it. After a long trip home it reentered the atmosphere on December 5 and was collected in the Australian desert.

Although everything worked perfectly, the team could never really be sure they would truly get the samples they hoped for until they opened the sample collection containers in a sealed room back at headquarters. The materials inside have been teased in a few tweets, but today JAXA posted all of the public images along with some new explanations and discoveries.

For one thing, the “sample catcher” itself had grains of sediment from Ryugu. Perhaps this material, exposed to different conditions than that of the containers, will prove different when analyzed.

For another, sample container C appears to have an “artificial object” in it! But don’t get excited — as the team writes on their blog, “the origin is under investigation, but a probable source is aluminium scraped off the spacecraft sampler horn as the projectile was fired to stir up material during touchdown.”

In other words, it’s probably a bit of the probe that came off during the not-so-gentle process of shooting the asteroid and crashing into it.

But the most important bit is all the rocks collected as planned. As you can see by the scale bar, these are little more than pebbles, but they’re large enough to show evidence of all kinds of processes leading to their particular shape and makeup. There’s also plenty of smaller-scale dirt and dust from below the surface that scientists hope could show signs of organic materials and water, the building blocks of life as we know it.

The success of the mission is worth celebrating, and the team has only just begun studying the materials brought back from Ryugu — so we can expect more information soon as they perform the painstaking work of analysis on these priceless samples. The Hayabusa 2 Twitter account is probably the best way to stay up to date day to day.

The Exchange is taking a break from vacation to dig into the new Qualtrics S-1 filing. Then the column and newsletter are back on hold until January 4th.

This afternoon, Qualtrics, a software company that helps companies poll their employee base, customers, and others, filed to go public. It’s the second time that the Utah-based unicorn has done so, failing the first time to complete its offering after SAP swooped in and bought it for around $8 billion in cash.

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SAP announced in late July of this year that Qualtrics would be spun out via an IPO, bringing the smaller company’s saga full-circle.

The new S-1 filing — you can view the 2018 original here — is a different animal from the first. First, Qualtrics is larger than it was, and older. And its financials are more complex as it extricates itself from its soon-to-be-erstwhile corporate parent.

Qualtrics intends to list on the Nasdaq under the ticker symbol “XM.”

Looking back at my chat with Ryan Smith, then Qualtrics CEO and today its chairman, and Bill McDermott, then SAP’s CEO and today the CEO of ServiceNow, it’s hard to believe that the acquisition deal was only two years ago.

Much has changed since late 2018. Let’s see what happened to Qualtrics in the meantime. We’ll dig into the financials, the company’s implied valuation range — spoiler: it has gone up — and whatever else we can shake loose.

The new Qualtrics S-1

A few things up top. First, SAP will be the company’s controlling shareholder after the Qualtrics’ IPO. That’s early in the S-1 filing. And, Smith and Silver Lake are investing in the company as part of its new debut.

The FAA today announced that it will be issuing two new rules for drone pilots in the U.S. The first is the implementation of a long-awaited Remote ID. The system effectively works as a kind of digital license plate for unmanned aircraft, broadcasting identifying details, including the location of the craft.

The full text of the finalized new rule can be found here. In short, drone operators will have one of three methods for complying:

1. Operate a standard Remote ID drone that broadcasts identification and location information of the drone and control station;

2. Operate a drone with a Remote ID broadcast module (may be a separate device attached to the drone), which broadcasts identification, location, and take-off information; or

3. Operate a drone without Remote ID but at specific FAA-recognized identification areas.

While some drone operators are likely to be put off by additional regulation, its arrival is understandable given the sheer volume and speed of drone adoption. The FAA says that more than 1.7 million drones have been registered in the U.S., along with around 203,000 certifications for drone pilots. Those numbers will likely only snowball as more drones are deployed for commercial purposes.

Notably, the FAA sees the new rules as a method for accelerating drone deliveries in the U.S. “The new rules make way for the further integration of drones into our airspace by addressing safety and security concerns,” FAA Administrator Steve Dickson said in a release tied to the news. “They get us closer to the day when we will more routinely see drone operations such as the delivery of packages.”

Also new is the “Operations Over People and at Night” rule, which, as the name implies, regulates both the ability to fly over people and fly at night. The rule features a number of different qualifications for compliance, including weighing less than 0.55 pounds to fly overhead.

According to the rule, “small unmanned aircraft must not cause injury to a human being that is equivalent to or greater than the severity of injury caused by a transfer of 25 foot-pounds of kinetic energy upon impact from a rigid object, does not contain any exposed rotating parts that could lacerate human skin upon impact with a human being, and does not contain any safety defects.”

In order to fly at night, drones need to sport operational anti-collision lights that can been see for three miles. The rules are set to be officially published next month, officially becoming effective 60 days later. Drone makers will have a year and a half to begin adding Remote ID to their devices. In August, the FAA granted Amazon permission for delivery trials.

Pokémon GO was created to encourage players to explore the world while coordinating impromptu large group gatherings — activities we’ve all been encouraged to avoid since the pandemic began.

And yet, analysts estimate that 2020 was Pokémon GO’s highest-earning year yet.

Niantic’s approach to 2020 was full of carefully considered changes, and I’ve highlighted many of their key decisions below.

Consider this something of an addendum to the Niantic EC-1 I wrote last year, where I outlined things like the company’s beginnings as a side project within Google, how Pokémon Go began as an April Fools’ joke and the company’s aim to build the platform that powers the AR headsets of the future.

Hit the brakes

On a press call outlining an update Niantic shipped in November, representatives said the company had tossed out its product roadmap, which included a handful of new features that have yet to see the light of day. They declined to say which features were removed, noting that it just didn’t make sense to release them right now.

Instead, as any potential end date for the pandemic slipped further into the horizon, the team refocused in Q1 2020 on figuring out ways to adapt what already worked and adjust existing gameplay to let players do more while going out less.

Turning the dials

As its name indicates, GO was never meant to be played while sitting at home. John Hanke’s initial vision for Niantic was focused around finding ways to get people outside and playing together; from its very first prototype, Niantic had players running around a city to take over its virtual equivalent block by block. They’d spent nearly a decade building up a database of real-world locations that would act as in-game points meant to encourage exploration and wandering. Years of development effort went into turning Pokémon GO into more and more of a social game, requiring teamwork and sometimes even flash mob-like meetups for its biggest challenges.

Now it all needed to work from the player’s couch.

The earliest changes were those that were easiest for Niantic to make on-the-fly, but they had dramatic impacts on the way the game actually works.

Some of the changes:

• Doubling the players “radius” for interacting with in-game gyms, landmarks that players can temporarily take over for their in-game team, earning occupants a bit of in-game currency based on how long they maintain control. This change let more gym battles happen from the couch.
• Increasing spawn points, generally upping the number of Pokémon you could find at home dramatically.
• Increasing “incense” effectiveness, which allowed players to use a premium item to encourage even more Pokémon to pop up at home. Niantic phased this change out in October, then quietly reintroduced it in late November. Incense would also last twice as long, making it cheaper for players to use.
• Allowing steps taken indoors (read: on treadmills) to count toward in-game distance challenges.
• Players would no longer need to walk long distances to earn entry into the online player-versus-player battle system.
• Your “buddy” Pokémon (a specially designated Pokémon that you can level up Tamagotchi-style for bonus perks) would now bring you more gifts of items you’d need to play. Pre-pandemic, getting these items meant wandering to the nearby “Pokéstop” landmarks.

By twisting some knobs and tweaking variables, Pokémon GO became much easier to play without leaving the house — but, importantly, these changes avoided anything that might break the game while being just as easy to reverse once it became safe to do so.

GO Fest goes virtual

For obvious reasons, many of us are spending the final week of 2020 looking forward. Samsung is hoping some folks are looking far enough ahead to reserve a spot in line for its still-unannounced Galaxy S21 handset (not an official name, mind, but probably a safe guess).

If you’re on the Samsung Mobile mailing list, you may well have received an email, compelling you to “Get ready to jump to the next Galaxy.” The link brings you to a reservation page that offers up some perks for getting in early on the company’s new flagship, including credits on other Samsung products like Galaxy earbuds.

The company recently noted that it would have more information in January – be it at CES or, more likely, a standalone event. That bucks trends a bit, which have found the company introducing its latest Galaxy S devices closer to Mobile World Congress (the S20 — pictured above — was announced February 11). Of course, MWC has been delayed until late June next year, and nothing is really normal besides.

As I noted in a recent piece, 2020 was the roughest in a series of rough years for the smartphone industry, so why not get those pre-orders started a little early? And hey, not everyone got what the wanted for the holiday. Why not treat yourself to a new phone?

The good news is we (think we) know a lot about the unannounced phone. Samsung’s never been great at keeping things under wraps and we’re already starting to see some key details leaking out a few weeks ahead of the expected official unveil. Surprisingly, camera specs look to more or less be in line with the last model, after the company promised some big imaging strides in 2021. Perhaps those updates will arrive more in the form of software, instead of straight hardware bumps.

Specs from Winfuture point to – naturally – the Snapdragon 888 in the U.S., with the Exynos 2100 chip in other locales. The S21 sports a 6.2-inch display and 4000mAh battery, where as the Plus upgrades things to 6.7 inches and 4,800mAh, per the leak.

Samsung is expected to make everything official on January 14.

 

Volkswagen Group has developed a mobile electric vehicle charger that can autonomously navigate parking areas, power up an EV and then make its way back to its outpost without the intervention of humans.

The prototype, which VW Group Components created, aims to showcase how the automaker will expand charging infrastructure over the next few years to meet the expected demand that will arise as it produces and sells more electric vehicles. VW Group has committed to launching dozens of electric models over the next decade. The group’s Volkswagen brand plans to build and sell 1.5 million electric cars by 2025.

“Setting up an efficient charging infrastructure for the future is a central task that challenges the entire sector,” Volkswagen Group Components CEO Thomas Schmall said in a statement. “We are developing solutions to help avoid costly stand-alone measures. The mobile charging robot and our flexible quick-charging station are just two of these solutions.”

VW Group is developing a portfolio of different DC charging products, including a DC wallbox that charges up to 22 kilowatts. The automaker began piloting its DC wallbox earlier this month at some of its production sites in Germany. VW Group is also planning to launch a flexible — yet still more stationary — quick-charging station will be launched onto the market in early 2021.

The mobile charging robot doesn’t have a release date. The company said now that it has reached prototype status it will be “comprehensively further developed.” There is one caveat for the mobile charger. VW said that car-to-X communication, which allows a vehicle to “talk” to infrastructure, will be one prerequisite for the mobile charger to reach market maturity.

The charging robot prototype can be started via an app launched by the vehicle owner or car-to-x communication. Once the communication begins, the mobile charger turns on — two digital eyes open on the display — and it steers towards a vehicle. The mobile charger opens the charging socket flap as well as connects or disconnect the plug. The mobile charger is also able to move and then connect the vehicle to an energy storage unit. Once the charging is complete, the robot collects the mobile energy storage unit and takes it back to a central charging station.

Schmall said the DC charging products will not just focus on customers’ needs and the technical prerequisites of electric vehicles, but will also consider the economical possibilities of possible partners such as operators of parking bays and underground car parks.

You can watch the video of the mobile charging robot in action below.

Global investors are running from Chinese tech stocks in the wake of the government’s crackdown on Ant Group and Alibaba, two high-flying businesses founded by Ma Yun (Jack Ma) that were once hailed as paragons of China’s new tech elite.

Shares of major technology companies in the country have fallen sharply in recent days, with Bloomberg calculating that Alibaba, Tencent, JD.com and Meituan have lost around $200 billion in value during a handful of trading sessions.

Already reeling from the last-minute halt of the public debut of Ant Group, a major Chinese fintech player with deep ties to Alibaba, the e-commerce giant came under new fire, as China’s markets watchdog opened a probe into its business practices concerning potentially anticompetitive behavior.

Ant Group was itself summoned by the government on December 26th, leading to a plan that will force the company to “rectify” its business practices.

Shares of Alibaba are off around 30% from their recent, record highs set in late October. Tech shares are also off in the country more broadly, with one Chinese-technology-focused ETC falling around 8% from recent highs, including a 1.5% drop today.

The American Depositary Receipts used by traders to invest in Alibaba fell from around $256 per share at the close of Wednesday trading on the New York Stock Exchange to around $222 last Thursday. The company is down another half point today. It was worth more than $319 per share earlier in the quarter.

It’s clear that the rising tensions between China’s tech giants and the country’s ruling Communist Party have investors spooked. But Jack Ma’s relationship with the Chinese government has always been a bit more fraught than that of his peers. Ma Huateng (Pony Ma), the founder of Tencent, and Xu Yong (Eric Yong) and Li Yanhong (Robin Li), the co-founders of Baidu, have kept lower profiles than the Alibaba founder.

Bloomberg has a good synopsis of the state of the market right now. The companies that are most directly in the crosshairs appear to be Ma Yun’s, but at different times, Tencent has been the focus of Chinese regulators bent on curbing the company’s influence through gaming.

Specifically for Alibaba things have gone from bad to worse, and a boosted share buyback program was not enough to halt the bleeding.

Whether this new round of regulations is a solitary blip on the radar or the signal of an increasing interest in Beijing tying tech companies closer to national interests remains to be seen. As the tit-for-tat tech conflict between the U.S. and China continues, many companies that had seen their growth as apolitical may become caught in the diplomatic crossfire.

Other tech companies are seeing their fortunes rise, boosted by newfound interest from the central government in Beijing.

This is already apparent in the chip industry, where China’s push for self-reliance has brought new riches and capital for new businesses. It’s true for Liu FengFeng, whose company, Tsinghon, was able to raise $5 million for its attempt at building a new semiconductor manufacturer in the country. Intellifusion, a manufacturer of chipsets focused on machine learning applications, was able to raise another $141 million back in April.

Private investors may be less enthused at the prospect of backing Chinese tech upstarts who could face government censure should the regulatory winds shift. Whether other startup markets in the region — India, Japan, among others — will benefit from the Chinese regulatory barrage will be interesting to track in 2021.

 

The U.S. government is appealing the ruling that blocked the Trump administration’s TikTok ban, according to a new court filing. On December 7, 2020, U.S. District Court Judge Carl Nichols in Washington became the second U.S. judge to block the Commerce Department’s attempt to stop the TikTok app from being downloaded from U.S. app stores, citing threats to national security.

The Trump administration had raised concerns over the video-sharing app due to its Chinese ownership by way of parent company ByteDance, and the potential risk of TikTok’s U.S. user data being accessed by the Chinese government. This ultimately resulted in President Trump’s decision to use his executive order power to ban TikTok from the U.S. market.

TikTok, in response, had vowed to fight the order in court while it also entered negotiations with American companies over the potential sell-off of its U.S. operations, in case the order was upheld.

However, prior to the Dec. 7 ruling on the matter, a group of TikTok creators successfully challenged the ban, when U.S. Judge Wendy Beetlestone in Pennsylvania issued an injunction that blocked the restrictions that would have otherwise stopped TikTok from operating in the U.S. The creators said the ban would have caused them to lose their income by way of their brand sponsorships and other opportunities afforded by the platform.

Following that order, Judge Nichols in the separate case led by TikTok ruled that Trump overstepped his authority in trying to ban the app from the U.S., referring to the agency’s action as “arbitrary and capricious.”

The U.S. Commerce Dept. spokesperson said at the time of the ruling it would continue to comply with the injunctions but intended to “vigorously defend the [executive order] and the Secretary’s implementation efforts from legal challenges.”

Today, it has followed through on that statement with its appeal.

Of course, the decision as to whether the U.S. will continue its attempt to ban TikTok will ultimately reside with the incoming Biden administration.

The news of today’s filing was first reported by Reuters.

TikTok declined to comment on the appeal. The U.S. Commerce Dept. has not responded to a request for comment.

US government appeals TikTok injunction by TechCrunch on Scribd

When kids today want to learn about a new topic they’re interested in, they’ll often turn to YouTube. But the quality of the educational content on the platform can be hit or miss, depending on what specific videos kids happen to come across. Tappity, a digital educational startup now backed by $1.3 million in seed funding, aims to offer an alternative. Its video library offers entertaining and interactive live-action videos kids enjoy, while also ensuring the content itself is aligned with current educational standards.

The two-year old startup was co-founded by CEO Chad Swenson, his brother and CTO Tanner Swenson, and CPO Lawrence Tran.

As Chad explains, the idea for Tappity emerged from his interest in designing interactive learning experiences, which resulted in a senior project eight years ago where he created an interactive experience to help students learn about evolution. Over the years that followed, he began to experiment with different concepts in this area, but never planned for anything of venture scale.

However, Chad says he later realized there could be an opportunity to develop content based around the Next Generation Science Standards (NGSS) — the set of K-12 science content standards that were developed by a consortium of multiple U.S. states — whose adoption across the U.S. is now growing.

“A lot of parents were looking for healthier alternatives to YouTube,” Chad says. “And I really started to believe this is something that could be much bigger.”

He found also that the science-based topics kids are generally interested in are often those that are aligned with what the NGSS aims to teach — like space, dinosaurs, geology and others.

“A big inspiration was just looking at the most popular books on Amazon for kids,” Chad adds, noting that a large number of these books are focused on STEM-related subjects.

Chad met his co-founder Lawrence Tran when consulting for fintech startup Bill.com, and convinced him and his brother Tanner to work on the startup.

Over the course of a couple of years, Tappity has developed tools that make it easier and efficient to produce interactive, educational video content. Today, the library includes over 200 science lessons for kids ages 4 to 10, across thousands of videos.

While the video clips themselves are pre-recorded, they give the kids the feeling of having a one-on-one interaction with the character on the screen. For example, if the teacher is building something and needs a screwdriver, the kids can pass it to her in the app when she asks. But they’ll also have a lot of other fun options they can do instead, like passing her tape or even throwing pizza at her — and she’ll react. The teacher may also engage with kids in other ways, too, like responding to what they drew in the app, among other things.

Currently, Tappity’s teacher Haley the Science Gal (Haley McHugh), a childhood entertainment expert with over 10 years of experience, is leading the lessons which span topics like space, life science, earth science and physical science.

In addition to the video lessons, kids are engaged with an in-app points system for completing activities. The app also offers follow-up emails for parents so they can track what kids are learning and further engage them.

Due to the COVID pandemic, and the resulting screen fatigue that comes from virtual schooling, Tappity adapted some lessons to include offline activities — like drawing with paper and pens, for instance. And on Sundays, Tappity offers more involved activities parents and kids can do together — like baking cookies that you turn into Pangea or making a volcano.

Tappity expects to have over 1,000 hours of video content by the end of next year, and over 4,000 hours by the year after, Chad notes.

When the team of three applied to startup accelerator Y Combinator, Tappity was small but profitable, thanks to its in-app subscription tiers that average around $9 per month. Today, the company has over 5,000 paying customers and over 20,000 weekly active users who have collectively completed 30 million lessons to date.

The company has now raised a seed round of $1.3 million from Y Combinator, Mystery Science founder Keith Schacht, Toca Boca founder Björn Jeffery, Brighter Capital (Yun-Fang Juan), former Spotify CTO Andreas Ehn, and others.

In the near-term, Tappity is working to expand its team and bring its lessons — that today are only available on iOS — to the web. Over time, the company’s goal is to create a large library of interactive educational content.

While the COVID pandemic has inspired VCs to invest in more edtech startups, the longevity of some of these businesses in the post-COVID world remains to be seen. Where Tappity is different from many of these remote learning startups or those designed for the classroom, is that its focus is not on selling into the school system.

“Teachers have picked it up organically — we give it away free to schools right now,” Chad explains. “But we’re not dedicating any resources to it because we’re focused on the parents’ and kids’ needs, which are quite a bit different,” he says.

Tappity’s app is available iOS, and includes some free content outside of the subscription.