Author: azeeadmin

Facebook on Friday announced a new artificial intelligence powered tool that it says will help the social network detect revenge porn – the nonconsensually shared intimate images that, when posted online, can have devastating consequences for those who appear in the photos. The technology will leverage both A.I. and machine learning techniques to proactively detect near nude images or videos that are shared without permission across Facebook and Instagram.

The announcement follows on Facebook’s earlier pilot of a photo-matching technology, which had people directly submit their intimate photos and videos to Facebook. The program, which was run in partnership with victim advocate organizations, would then create a digital fingerprint of that image so Facebook could stop it from ever being shared online across its platforms. This is similar to how companies today prevent child abuse images from being posted to their sites.

The new A.I. technology for revenge porn, however, doesn’t require the victim’s involvement. This is important, Facebook explains, because victims are sometimes too afraid of retribution to report the content themselves. Other times, they’re simply unaware that the photos or videos are being shared.

While the company was short on details about how the new system itself works, it did note that it goes beyond simply “detecting nudity.”

After the system flags an image or video, a specially trained member of Facebook’s Community Operations team will review the image then remove it if it violates Facebook’s Community Standards. In most cases, the company will also disable the account, as a result. An appeals process is available if the person believes Facebook has made a mistake.

In addition to the technology and existing pilot program, Facebook says it also reviewed how its other procedures around revenge porn reporting could be improved. It found, for instance, that victims wanted faster responses following their reports and they didn’t want a robotic reply. Other victims didn’t know how to use the reporting tools or even that they existed.

Facebook noted that addressing revenge porn is critical as it can lead to mental health consequences like anxiety, depression, suicidal thoughts and sometimes even PTSD. There can also be professional consequences, like lost jobs and damaged relationships with colleagues. Plus, those in more traditional communities around the world may be shunned or exiled, persecuted or even physically harmed.

Facebook admits that it wasn’t finding a way to “acknowledge the trauma that the victims endure,” when responding to their reports. It says it’s now re-evaluating the reporting tools and process to make sure they’re more “straightforward, clear and empathetic.”

It’s also launching “Not Without My Consent,” a victim-support hub in the Facebook Safety Center that was developed in partnership with experts. The hub will offer victims access to organizations and resources that can support them, and it will detail the steps to take to report the content to Facebook.

In the months ahead, Facebook says it will also build victim support toolkits with more locally and culturally relevant info by working with partners including the Revenge Porn Helpline (UK), Cyber Civil Rights Initiative (US), Digital Rights Foundation (Pakistan), SaferNet (Brazil) and Professor Lee Ji-yeon (South Korea).

Revenge porn is one of the many issues that results from offering the world a platform for public sharing. Facebook today is beginning to own up to the failures of social media across many fronts – which also include things like data privacy violations, the spread of misinformation, and online harassment and abuse.

CEO Mark Zuckerberg recently announced a pivot to privacy, where Facebook’s products will be joined together as an encrypted, interoperable, messaging network – but the move has shaken Facebook internally, causing it to lose top execs along the way.

While changes are in line with what the public wants, many have already lost trust in Facebook. For the first time in 10 years Edison Research noted a decline in Facebook usage in the U.S., from 67 to 62 percent of Americans 12 and older. Still, Facebook still a massive platform with its over 2 billion users. Even if users themselves opt out of Facebook, that doesn’t prevent them from ever becoming a victim of revenge porn or other online abuse by those who continue to use the social network.

Next year, the world’s top athletes will compete in the Tokyo Summer Games. Some of Japan’s biggest companies will also happily be using the opportunity to show off their latest technologies — namely a fleet of robotics aimed at helping human spectators navigate around the event.

Officials behind the games showcased some of the technologies that will be on display, during a press conference this week. The event is set to show the world Japan’s close working relationships with robotics designed to help an aging populace.

“Robots should not overwhelm people,” Tokyo Olympics Vice General Director Masaaki Komiya said at the event. “Robots are something that have an amicable relationship with human beings and can work together. That’s the kind of robots we envision.”

Toyota, a long time developer of assistive robotics, will take center stage here. The company is a key sponsor of the events bringing 16 support robots to the games, along with delivery robots. Fellow sponsor Panasonic will also participate by bringing 20 robotic exoskeletons to help transport luggage and lift other heavy objects.

The Olympics provide the perfect spotlight for the technologies, as a curious world tunes into the games. But the technologies on display here also fittingly highlight a less flashy side of robotics than we’re accustom to seeing on international television. Instead, they’ll provide a showcase for the role robotics will play in the short term future of many of our day to day lives: providing assistive technologies for those who need them.

This is a tragedy that doesn’t deserve a snappy lede, but it is one that needs to be highlighted because tech companies should be held to account.

Earlier today, there was a horrendous mass mosque shooting in New Zealand that killed 49 people — and because this is 2019, social media was used by the apparent murderers to plan, announce, broadcast and virally resonate what they did.

Some of that — such as the Facebook and Twitter accounts of the perpetrator — have been deleted. Yet nearly 12 hours later, you can still find multiple copies of the shooting videos on YouTube and Twitter, with some being used to promote other things.

YouTube issued a statement several hours ago condemning the snuff videos, adding that it is removing them as soon as they are made aware:

“Our hearts go out to the victims of this terrible tragedy. Shocking, violent and graphic content has no place on our platforms, and is removed as soon as we become aware of it,” said a spokesperson in an email to TechCrunch. “As with any major tragedy, we will work cooperatively with the authorities.”

The turnaround time of “as soon as we become aware” isn’t quite as fast as you might think. Randomly browsing on the most basic of searches in YouTube at around 9am Eastern, we found a number of copies of the shooting incident — the same ones posted as livestreams on Facebook — and reported all of them.

As of writing, three of the first four we clicked on are still up. One of them is even used to promote other videos — gaming-related as it happens.

To be clear, the YouTube links we clicked on are re-uploads of the primary source video from the event, not any allegedly legitimate “news” coverage that’s been uploaded in response to it, much of it coming from chancers who are essentially just hoping to make a little click-money from people browsing for more information. Those don’t only include no-name video posters. The likes of the Daily Mail sickeningly used clips of the video in the name of news.

On Twitter, it was just as easy to find embedded video clips, by way of the New Zealand hashtag plus a keyword or two. These included clips of the shooting, plus several taken by motorists of the police chase for the perpetrators, which present their own casual eeriness and off-color comments from the recorders.

Twitter also issued a statement the mirrored YouTube’s.

“We are deeply saddened by the shootings in Christchurch today,” a spokesperson said in an email to us. “Twitter has rigorous processes and a dedicated team in place for managing exigent and emergency situations such as this. We also cooperate with law enforcement to facilitate their investigations as required.”

Like YouTube, Twitter is also monitoring the platform and has both human and computer-based screenings to field reports. But the situation highlights how — despite the stated commitments from companies that work in social media to track malicious or harmful content on their platforms, and despite all of the tracking algorithms and teams of humans that they have built to help — social media services continue to fail the public when it comes to keeping their platforms from getting exploited for horrendous ends.

Meanwhile, the lead comment on the Reddit thread about the news states, “New Zealand Police has requested the Footage not be shared on social media. Please do not post the Videos. If you see the Videos, bring it to the moderators attention,” and judging from the first couple pages, this appears to be working.

A Reddit spokesperson sent us the following statement: “We are actively monitoring the situation in Christchurch, New Zealand. Any content containing links to the video stream are being removed in accordance with our site-wide policy.”

It’s also worth noting that after a shooter apparently encouraged viewers of his livestream to “subscribe to PewDiePie,” the YouTube star (who has attracted controversy for anti-Semitic messages in the past) tweeted, “I feel absolutely sickened having my name uttered by this person. My heart and thoughts go out to the victims, families and everyone affected by this tragedy.”

Each week, Extra Crunch members have access to conference calls moderated by the TechCrunch writers you read every day. This week, in addition to Zack Whittaker’s discussion about a complicated university grade-hacking case, Josh Constine reported from Austin where he attended SXSW.

While at SXSW, he interviewed the founders of Instagram, Kevin Systrom and Mike Krieger. They discussed autonomy within Facebook after the acquisition, Sen. Elizabeth Warren’s proposal to break up big tech and early experiences being a small team heading a big product. There are indeed some gems about fixing code over dinner and on camping trips after a few drinks.

He also discussed the ins and outs of a few startups he saw at the event, including Ever Loved, which he wrote about this week, Clearbanc and Formant.

For access to Constine’s full transcription and the call audio, and for the opportunity to participate in future conference calls, become a member of Extra Crunch. Learn more and try it for free. 

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Josh Constine: Thanks to everybody for joining the Extra Crunch conference call. I’m Josh Constine, the Editor at Large for Tech Crunch.

On today’s call, we’re going to be discussing SXSW and some of the insights from there, because I know a lot of you don’t go anymore, as SXSW has kind of fallen out of favor amongst the innovation crowd. We’ll talk about my talk with the Instagram founders and what they discussed about why they left Facebook, and what they’re doing next.

We’ll talk a little bit about some of the landscape here, and what’s been changing in terms of who are the big players and who’s kind of pulled back, which might be a sign of companies trying to right their balance books.

And then finally, I’m going to talk about a few startups to watch. And again, as we go through this, if you have questions, feel free to chime in and discuss them with us.

So, let’s kick it off and talk about Instagram founders Kevin Systrom and Mike Krieger. So they left Facebook in September, and this is their first big talk that they did together as a team. And that was really exciting. We did it in front of a 2,500-person audience. It was totally sold out. There was a line thousands of people long, and thousands of people actually had to be turned away. So it was really exciting to have that level of interest, because I think people really do want to know, not only where is the future of social media going, but what really happened inside of Facebook while they were there.

Does a patent application mean a company is particularly serious about a technology? No.

Is every company that makes a phones at least toying around with a folding model? Yes, probably.

It’s tough to know from a series a crude drawings and technical details filed with the USPTO how seriously an individual company is taking these plans. Honestly, most companies are understandably most likely taking a wait and see approach to the tech.

A new patent application spotted by Patently Mobile likely falls into the the latter camp. Google, after all, outsources a lot of its Pixel and other hardware to other device manufacturers — and, notably, doesn’t make its own displays. Even so, the filing shows off a device that folds a bit like a wallet.

“FOLDABLE DISPLAY NEUTRAL AXIS MANAGEMENT WITH THIN, HIGH MODULUS LAYERS” is pretty simple, on the face of it, especially when compared to already announced and soon to be launched offerings from Samsung and Huawei (not to mention the Xiaomi concept that got everyone all excited). It does Google in the same boat as Apple and Motorola, however, as companies that, have at the very least, flirted with the idea of a foldable.

Google, notably, has been on board with the category, at least from a software perspective. The company made a joint announcement with Samsung last year that it would support devices like the Galaxy Fold via Android. So someone, somewhere deep in the bowels of Mountain View has likely been toying with concepts.

As far as consumers are concerned, of course, foldables are still mostly a curiosity, with prices however around $2,000 — double the cost of other flagships. Relatively low barriers of entry have long been among the appeals of the Pixel line, so it’s tough to imagine Google rushing into a $2K foldable this year.

Pi Day is apparently New Job day for tech execs and VCs these days.

Leaving: Lee Fixel

It’s not every day that one of the top VC investors heads out from their shop. TechCrunch’s @cookie aka Connie Loizos has the story:

Lee Fixel, the low-flying head of Tiger Global’s private equity business, is leaving at the end of June, the firm announced today in a letter sent to clients and seen by Reuters . Scott Shleifer and Chase Coleman will continue as co-managers of the portfolios Fixel has overseen, with Shleifer taking over as its head, according to the letter.

Fixel, 39, is reportedly planning to invest his own money and “may start an investment firm in the future,” Tiger Global wrote in the letter.

Tiger Global has become a major force in late-stage investing. As I wrote last fall, it is also part of a small coterie of investment firms which have pushed their portfolio companies to IPO with reasonable speed (the other firm I noted at the time was Benchmark).

One challenge for Tiger has been the rise of the SoftBank Vision Fund, which has driven up valuations for startups and has almost certainly complicated the return profile of many of Tiger’s investments. The two also share a penchant for investing internationally, where Tiger had almost a monopoly position before the Vision Fund burst on the scene.

Another wrinkle worth tracking is the increasing opposition of Indian founders to both Tiger (and specifically Fixel) and SoftBank. As I wrote in the newsletter just a few weeks ago:

There is a clear lack of trust between India’s startup and venture communities, which ultimately threatens the sustainability and growth outlook of the country’s tech sector.

But a solution to the problem is not so cut and dry. Mega growth funds like SoftBank and Tiger Global have given limited control to their Indian portfolio companies and have forced their hands on numerous occasions. Yet Ola’s avoidance of SoftBank has led to lower valuations and more difficult and lengthier fundraising processes.

Leaving: Chris Cox & Chris Daniels

Facebook’s chief product officer is leaving along with Chris Daniels, the VP of WhatsApp. TechCrunch’s Josh Constine summarized the situation:

The changes solidify that Facebook is entering a new era as it chases the trend of feed sharing giving way to private communication. Cox and Daniels may feel they’ve done their part advancing Facebook’s product, and that the company needs renewed energy as it shifts from a relentless growth focus to keeping its users loyal while learning to monetize a new from of social networking.

There has been much ink spilled here about what this all means strategically, but I do think that there are no good times for prominent 13-year and 8-year veterans to leave their positions. Zuckerberg seems ready to begin a whole new era for Facebook, and perhaps neither wanted to make the multi-year commitment that his new vision entails.

That, or Cox unplugged the servers yesterday.

Leaving (America): Jay Jorgensen

A very rare move from the United States to Korea for a senior exec, from TechCrunch’s Catherine Shu:

Coupang, the unicorn that is defining e-commerce in Korea, announced today that it has hired Jay Jorgensen, Walmart’s former global chief ethics and compliance officer, to serve as its general counsel and chief compliance officer. Jorgensen will relocate to Seoul for the position.

Founded in 2010, with a total of $3.4 billion raised from investors, including SoftBank, and a valuation of $9 billion, Coupang currently operates only in Korea, where it is the largest e-commerce player, but has offices in Seoul, Beijing, Los Angeles, Mountain View, Seattle and Shanghai.

Coupang has been the outlier success of the Korean startup ecosystem for the past few years. The company’s founder, Bom Kim, who holds a bachelor’s and an MBA from Harvard, has worked to apply American management models to Coupang, attempting to eschew the insular culture typical of Korea’s technology companies. Clearly, that vision is drawing international talent.

Staying: Zachary Kirkhorn

Tesla is getting some financial help from itself, from TechCrunch’s Kirsten Korosec:

The automaker officially tapped as its next chief financial officer Zachary Kirkhorn, a longtime employee who has been part of the automaker’s finance team for nine years, according to securities filings posted Thursday. The automaker also appointed Vaibhav Taneja, who led the integration of Tesla and SolarCity’s accounting teams, as its chief accounting officer. Taneja, who will report to Kirkhorn, will oversee corporate financial reporting, global accounting functions and personnel.

No telling whether Kirkhorn knows how to blow a whistle though….

No Longer Admitted: Bill McGlashan

Sometimes when you venture to make an investment, it doesn’t always pan out, from Maggie Fitzgerald at CNBC:

TPG’s Bill McGlashan was fired from the private equity firm on Thursday amid the massive college cheating scandal.

McGlashan, 55, has been terminated for cause from his positions with TPG and Rise effective immediately.

“After reviewing the allegations of personal misconduct in the criminal complaint, we believe the behavior described to be inexcusable and antithetical to the values of our entire organization,” said a TPG spokesperson.

McGlashan founded TPG Growth, which has had a litany of successes investing in later-stage startups such as Airbnb.

Leaving (but not by choice): Bird employees

Once high-flying and now somewhat not as high-flying scooter startup Bird announced that it was laying off around 40 employees. From TechCrunch’s Megan Rose Dickey:

“As we establish local service centers and deeper roots in cities where we provide service, we have shifting geographic workforce needs,” a Bird spokesperson told TechCrunch. “We are expanding our employee bases in locations that match our growing operations around the world, while developing an efficient operating structure at our Santa Monica headquarters. The recent events are a reflection of shifting geographical needs and our annual talent review process.”

I hope they flip them the Bird on the way out.

India fintech and the growing proxy war between global tech giants

Written by Arman Tabatabai

South African media conglomerate and investment giant Naspers is reportedly planning to invest $1 billion in India this year.

According to reports earlier this week, Naspers is looking towards India’s budding fintech market in particular to unload the fresh pile of dough it’s sitting on after recently lowering its stake in Tencent and cashing out on Walmart’s $16 billion acquisition of portfolio company Flipkart last year.

The fintech heavy thesis directionally makes sense in the context of Naspers’ broader strategy. Naspers has openly discussed its attraction to India’s financial services market and the company already has an established footprint in the region as the owner of payments platform PayU.

That said, the amount Naspers is reportedly looking to gift in just one year is astounding. Indian fintech startups saw around $2.6 billion of investment in 2018 according to Pitchbook. Naspers’ investment alone would represent a 40% spike in India’s total fintech venture capital.

Though one billion dollars in one year may seem ambitious, Naspers has proven it’s not afraid to pour billions into India and emerging verticals, having just led a $1 billion round in Indian food delivery startup Swiggy only a few months ago.

More importantly, Naspers’ push shows that the company is seriously doubling down in the escalating competition to become the dominant force in India’s booming fintech ecosystem. As we discussed in our recent conversation with Billionaire Raj author James Crabtree, India’s financial system is ripe for disruption. With secular tailwinds like growing mobile penetration and financial literacy, innovative financial models in India have begun leap-frogging traditional institutions, with Google and Boston Consulting Group even forecasting that the market for digital payments in India would reach $500 billion in size by 2020.

And many have taken notice — the number of fintech investments in India has grown at a 200%-plus compound annual growth rate over the last five years, according to data from Pitchbook, as leading investors and global tech powerhouses all battle to become the layer of financial infrastructure on which the future Indian economy sits.

A recent deep dive in the WSJ highlighted how crowded the ongoing fight for Indian payments dominance has become in the context of Paytm, an Indian startup that received a $1.4 billion investment from venture behemoth SoftBank:

The Indian market is one worth fighting for, with hundreds of millions of Indians getting online and starting to transact for the first time, thanks to plummeting prices for mobile data and smartphones.

Digital payments in India are soaring” and “set to explode,” Credit Suisse said in a February research note. They should rise nearly five times to $1 trillion by 2023, the report said…

…Meanwhile, it isn’t just Google and WhatsApp challenging Paytm . Indian e-commerce titan Flipkart, in which Walmart Inc. bought a controlling stake for $16 billion earlier this year, has a popular payments service called PhonePe. Amazon.com Inc. has its own payments service and two of India’s biggest telecom players, Bharti Airtel Ltd. and Reliance Jio Infocomm Ltd., offer digital wallets, as well.”

Next to peers like Alibaba, SoftBank, or Google, Naspers can often seem like the biggest tech company no one has ever heard of. But if its latest swan dive into India can help Naspers strike gold — as it did with its early investment in Tencent — it might just become the company powering the next economies of the world.

Thanks

To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people, and companies. If I can ever be of assistance, hit reply, or send an email to danny@techcrunch.com.

This newsletter is written with the assistance of Arman Tabatabai from New York

Aura Vision, which is part of the current batch of startups at Y Combinator, helps retailers understand who’s visiting their stores and what they’re doing there.

In other words, if you want to see the demographics of who’s visiting the store, or which displays and products are actually prompting customers to linger, or how long customers have to wait in line, Aura Vision can use existing security camera footage to tell you.

“We are focused on specialty retail — everyone on the retail market that isn’t grocery,” CEO Daniel Martinho-Corbishley told me. “We provide them with insights to help them innovate successfully.”

The company was founded by Martinho-Corbishley, CTO Jamie R. Lomelí and CPO Jonathan Blok. Martinho-Corbishley said he and Lomelí both did Ph.D. research at the University of Southampton on machine learning and computer vision, and they “saw the potential for deep learning in the retail industry,” particularly after they “had a look at what else is out there.”

There are companies are trying to use security footage to provide in-store analytics to retailers — for example, there’s Prism Skylabs, which launched at Disrupt in 2011 and is backed by CrunchFund. Others are using technology like wifi and bluetooth to provide similar data.

However, Blok pointed out that installing new sensors in a store can be “a big upheaval.” With Aura Vision, on the other hand, retailers either use the security cameras they’ve already set up — or if they do need to install new cameras, “you’re going to get a security system” out of the process.

In addition, Martinho-Corbishley pointed to the sophistication of Aura Vision’s technology, which can provide “very precise and accuerate insights out from the camera themselves — any camera in the store.” That includes distinguishing between staff and customers in the footage, and determining the demographics of a customer, even if their face isn’t captured.

As for what this kind of analysis does to customer privacy, Martinho-Corbishley noted that the company was “born at the time of GDPR.”

“In that very first year, we made a decision very early on to not identify anyone, so the data that we proviee back to our clients is entirely anonymized,” he said. In other words, it will describe the the behavior of your customers in aggregate, but “we never link that to the person’s identity.”

Aura Vision a charges a subscription fee based on the number of cameras a customer is using each month — something that Martinho-Corbishley said is “a very simple charge” without “crazy hidden fees or crazy retainers.”

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week was a lot of fun. Connie Lozios took the captain’s chair in San Francisco while I manned the sails, and we had Female Founders Fund’s founder Anu Duggal in the studio to round out our crew.

It was a week of conclusions. Our prior notes on YC and Uber and a few other things came home to roost. But, you’re busy so let’s sink our teeth into the good stuff:

Uber’s IPO lands in April: Right before we hit record, news broke that Uber’s IPO will land in April. This isn’t an unexpected result, but it is one that is long-expected. With Lyft’s S-1 live, and in the wild, it’s time for Uber to, ahem, shift and catch up? Regardless, the company’s possible $1 billion raise to fund its research arm is another indicator that Uber is serious about going public. You know, that, and the fact that it’s filed privately.

Q1 IPO pace was slack: Aside from Lyft’s public S-1, there’s been an annoying dearth of public progress on the IPO front from tech’s biggest players. Sure, some companies filed to go public privately, but that’s more annoying than helpful. My point here was undercut by the Uber news, but if Lyft doesn’t debut in March then it’s going to be a complete first-quarter miss.

Stash raises $65 million: Another of the neo-banks raised capital this month, with Stash stacking a fresh $65 million dollars. The firm was coy about the round’s participants (odd), and silent on its new valuation (more normal, but still annoying). What matters is that Stash now has more dosh on hand to compete with Chime and Acorns, each of which recently raised big new rounds this year.

Changes at YC: As expected, and presaged on this very show, Sam Altman is graduating himself to the chairman’s seat at Y Combinator. That and the firm is finding office space in San Francisco. That’s more evidence that the center of gravity has truly shifted here in Northen California. Sand Hill Road is more Route 66 than it is a hyperloop.

And with that failed attempt at a joke, I give up. We’re back in seven days!

Digital identity startup Passbase has bagged $600k in pre-seed funding led by a group of business angel investors from Alphabet, Stanford, Kleiner Perkins, EY; as well as seed fund investment from Chicago-based Upheaval Investments and Seedcamp.

The 2018-founded Silicon Valley-based startup — whose co-founder we chatted to briefly on camera at Disrupt Berlin — is building what it dubs an “identity engine” to simplify identity verification online.

Passbase offers a set of SDKs to developers to integrate facial recognition, liveness detection, ID authenticity checks and ID information extraction into their service, while also baking in privacy protections that allow individual users to control their own identity data.

A demo video of the verification product shows a user being asked to record a FaceID-style 3D selfie by tilting their face in front of a webcam and then scanning an ID document also by holding it up to the camera.

On the developer front, the flagship claim is Passbase’s identity verification product can be deployed to a website or mobile app in less than three minutes, with just seven lines of code.

Co-founder Mathias Klenk tells TechCrunch the system architecture draws on ideas from public-private key encryption, blockchain, and biometric authentication — and is capable of completing “zero-knowledge authentications”.

In practice that means a website visitor or app user can prove who they are (or how old they are) without having to share their full identity document with the service.

Klenk, a Stanford alumni, says the founding team pivoted to digital identity in the middle of last year after their earlier startup — a crypto exchange management app called Coinance — ran into regulatory difficulties right after they’d decided to go full-time on the project.

He says they got a call from Apple, in August 2018, informing them Coinance had been pulled from the AppStore. The issue was they needed to be able to comply with know your customer (KYC) requirements as regulators cracked down on the risk of cryptocurrency being used for money laundering.

“With a quick call to our lawyers, we learned it was because we now needed to complete strong identity verification with every exchange integrated for every user in order to fulfil our KYC obligations,” explains Klenk. “This is how our pivot to Passbase began.”

The experience with Coinance convinced Klenk and his two co-founders — Felix Gerlach (an ex-Rocket Internet product manager/designer) and Dave McGibbon (previously an investment associate at GoogleX) — that there was a “huge opportunity” to build a ‘full-stack’ identity verification tool that was easy for engineering teams to integrate. So it sounds like it’s thinking along similar lines to Estonian startup Veriff.

Klenk claims current vendors “take weeks to integrate and charged thousands of dollars from the start”. And in classic startup formula fashion he too condenses the idea down to: “Stripe for Identity Verification” — arguing that: “In order to solve digital identity verification, you cannot only streamline the identity verification process, you need to enable identity ownership and reuse across different services.”

At the same time, Klenk says the founding team saw a growing need for a privacy-focused identity verification tool — to “protect people’s information by design and help companies collect only the information they need”.

On this he freely cites Europe’s General Data Protection Regulation as an inspiring force. (“GDPR is built into the DNA of this product,” is the top-line claim.)

“Companies gain access to users information in a secure enclave, and avoid the dangers of getting hacked and leaking sensitive information,” says Klenk, describing the system architecture for verification as the core IP of the business.

They’re in the process of filing patents for the “developed technology”, working with two technical advisors, he adds. 

Passbase’s verification stack itself involves modular pieces so that it can adapt to changing threats, as Klenk tells it.

The startup is partnering with service providers for various verification components. Though he says it also has in-house computer vision experts who have built its anti-spoofing and liveness detection.

“This will always be an arms race against the latest spoofing tactics. We plan to stay ahead of the curve by introducing multi-factor authentication techniques and partnering with the best technology providers,” he adds on that.

He says they’re also working with a US-based security company and other security experts to test the robustness and security of their system on an ongoing basis, adding: “We are planning to obtain all required certifications to ensure the security of our system e.g. ISO, Fido.”

Passbase’s product is currently in a closed beta with more than 200 companies signed up to its early access program.

Five have been “handpicked and onboarded” for a closed pilot — and Klenk says it’s now running tests and figuring out final requirements for an open beta launch planned for the middle of this year.

“Our early customers are mostly trust-based marketplaces (like an Airbnb),” he tells TechCrunch. “We are adding features such as PEP, OFAC, and others over the next month to allow us to also service the mobility space, age-restricted products, and eventually online banking and fintechs with KYC obligations.”

The startup’s first tranche of investor funding will be used for building out its core tech and mobile apps — while also “delighting our first clients with our B2B solution, getting traction, nailing product market fit”, as Klenk puts it.

He emphasizes that they’re also keen to nail a healthy startup culture from the get-go — saying that building “an exciting and inclusive place to work” is a priority. (“Since many high growth startups dropped the priority for this in order for growth. We want to get this right from the beginning.”)

On the competitive front, Passbase is certainly driving into a noisy arena with no shortage of past effort and current players touting identity and digital verification services — albeit, all that activity underlines the high demand level for robust online verification.

Demand that’s likely to rise as more policymakers and governments wake up to the risks and challenges posed by online fakes — and prepare to regulate Internet firms.

Discussing the competitive landscape, Klenk name-checks Jumio, Onfido, and Veriff in the identity verification space, though he argues Passbase’s “developer-focused go-to-market and focus on creating digital identity” creates a different set of incentives which he also claims “allow us to get really creative on price and auxiliary offerings”.

“Our competition cares about price x volume. We care about creating a robust and secure network of trusted user-owned digital identities,” he suggests.

On the digital identity from he points to Civic, Verimi, and Authenteq as being focused on “digital and self-sovereign identity”, though he says they have “tended” to take a B2C approach vs Passbase’s “full-stack” developer offering which he claims is “immediately useful to a large market of players”.

There’s clearly plenty still to play for where digital identity is concerned. It remains a complex and challenging problem that loops in all sorts of entities, touchpoints and responsibilities.

But add privacy considerations into the mix and Passbase’s hope is that, by going the extra mile to build a zero-knowledge architecture, it can become a key player.

 

Two days after Spotify announced that it had filed a suit against Apple with the European Commission over anticompetitive practices, Apple today issued its own response of sorts.

In a lengthy statement on its site called “Addressing Spotify’s Claims”, Apple walks through and dismantles some of the key parts of Spotify’s accusations about how the App Store works, covering app store approval times, Spotify’s actual cut on subscription revenues, and Spotify’s rise as a result of its presence on iOS.

At the same time, Apple carefully sidesteps addressing any of Spotify’s demands: Spotify has filed a case with the European Commission to investigate the company over anticompetitive practices and specifically to consider the relationship between Apple and Spotify (and by association any app maker) in terms of whether it is really providing a level playing field, specifically in the context of building and expanding Apple Music, its own product that competes directly with Spotify on the platform that Apple owns.

In fact, Apple doesn’t mention the European Commission, nor the suit, even once in its 1,100+ word statement. Here is what it does cover:

— App Store updates. Spotify has accused Apple of dragging its feet on updates to its apps and deliberately doing to so impacts its ability to distribute its service effectively. The company made 173 updates to its apps on iOS, and while Apple doesn’t speak to any transparency on just how long it takes to approve changes, it notes that Spotify has had more than 300 million downloads of its app, and “the only time we have requested adjustments is when Spotify has tried to sidestep the same rules that every other app follows.” 

It also says it’s worked with Spotify to bring it to more platforms and devices — although it did not address one of Spotify’s specific claims, that Apple’s HomePod is the only home speaker where Spotify is currently not available.

— App store pricing. The crux of Apple’s belief is that Spotify wants to use the benefits of being a revenue-generating app on the store, without paying any dues to be there, living rent-free, as it were.

Apple points out that 84 percent of apps on the App Store are actually free to use (many of them will be ad-supported) and in those cases, they really do not pay anything to Apple. But it believes that if you are going to use its platform to make money, Apple should get a cut. The question has always been just how much of a cut Apple should get.

The company’s development of payments has been a tricky one for Apple. In some regards that is a blessing. It centralises your billing details in one trusted place, which ultimately makes for a secure experience. In others it’s a curse: it imposes a particularly strict set of rules and commissions that everyone must follow and doesn’t give developers or customers any choice for how to take and make payments within apps.

Apple notes that in the case of Spotify, the company is misrepresenting App Store commissions on a number of counts. For one, right now, Apple takes a 30 percent cut on subscriptions in the first year, but after that it brings that down to 15 percent. Spotify failed to mention that commission change, focusing only on the 30 percent figure that makes Apple look especially greedy.

It also notes that a lot of Spotify’s customers are using the free version of the product, not paying for any subscriptions. And given that Spotify has tried to shift more of its billing to its site instead of within the app, claims of losing out money over Apple’s terms and a lack of choice for how to pay within it — you have to use Apple’s in-app payments to pay for subscriptions and other goods in apps — are not valid: “Even now, only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model. Spotify is asking for that number to be zero,” it notes.

What Apple fails to respond to is that Spotify identifies a number of other apps that appear to be given provisions to enable payments that do not run through Apple’s billing, and Apple has not been transparent over how it has chosen those.

— Apple Music versus Spotify. The suit filed with the European Commission and antitrust accusations are not the only two things that Apple does not cover in its response. It also completely fails to give even one mention of its own music product, Apple Music, which competes directly with Spotify.

It does say that “We share Spotify’s love of music and their vision of sharing it with the world,” and instead goes directly after Spotify in the jugular: its own issues with how it controls those wanting to do business on its own platform. “Spotify’s aim is to make more money off others’ work. And it’s not just the App Store that they’re trying to squeeze — it’s also artists, musicians and songwriters,” it notes, pointing to a recent suit against music creators filed by Spotify after the US Copyright Royalty Board required Spotify to increase its royalty payments. “This isn’t just wrong, it represents a real, meaningful and damaging step backwards for the music industry,” Apple notes.

Trust in antitrust

Indeed, while the case is in progress and remains sealed, Spotify has summed up many of its key points in a site that it is promoting called Time to Play Fair. But to be very clear, some of us might be hard pressed to call Spotify exactly an underdog.

Apple is one of the biggest and most profitable companies in the world, and Spotify is still scrambling to prove out the long-term financial viability of music streaming as a business model. But Spotify is also the world’s biggest music streaming company, and in reality both have had their fair share of accusations related to how they leverage control over those using their platforms — app publishers for Apple; musicians and those in related fields for Spotify — for their better financial gain.

Spotify’s best approach, in my opinion, would be to keep this debate and make its case to the European Commission at as high a level as possible. There have been a number of examples already of how regulators in Europe have broken up companies or business models, enforcing different practices in the name of promoting better competition: telecoms, internet access, computer and mobile operating systems, advertising and television are among the areas where it’s already proven that it will champion first not the platform, but those who are trying to use it, especially in cases where the platform companies also happen to directly compete with their customers: where those who own the playing field are forced to provide terms to visiting athletes that ensure they get the same treatment as the home team.

This case would be the first time that app stores are considered on the same terms, a mark of just how ubiquitous they have become.

In that regard, by going through some of Spotify’s claims to provide its own rebuttals, Apple seems to be trying to paint a very specific picture to the public — one that we imagine will also play out as it presents its case to regulators: Spotify is not exactly a small company and it has most definitely benefitted, not failed, by virtue of being in the Apple App Store. That’s a key image that — if successful — will help Apple deflect from being viewed as a monopoly, and subsequently forced to change its practices.