Category: UNCATEGORIZED

Following a slate of temporary and permanent bans from a number of the top online platforms, popular video streaming service Twitch today confirmed that it has disabled the President of the United States’ account. A spokesperson for the site told TechCrunch,

In light of yesterday’s shocking attack on the Capitol, we have disabled President Trump’s Twitch channel. Given the current extraordinary circumstances and the President’s incendiary rhetoric, we believe this is a necessary step to protect our community and prevent Twitch from being used to incite further violence.

Twitch’s actions follow similar measures taken by Facebook, Twitter and Snapchat, which over the course of the last day all placed new restrictions on the president’s account. Facebook took the unprecedented step of suspending the president’s account for the remainder of his term, which ends on January 20.

The company previously removed the “PogChamp” emote featuring the face of gaming figure Ryan Gutierrez after he expressed support for pro-Trump rioters during Wednesday’s chaos on Capitol Hill.

Developing…

It’s the image that’s been seen around the world. One of hundreds of pro-Trump supporters in the private office of House Speaker Nancy Pelosi after storming the Capitol and breaching security in protest of the certification of the election results for President-elect Joe Biden. Police were overrun (when they weren’t posing for selfies) and some lawmakers’ offices were trashed and looted.

As politicians and their staffs were told to evacuate or shelter in place, one photo of a congressional computer left unlocked still with an evacuation notice on the screen spread quickly around the internet. At least one computer was stolen from Sen. Jeff Merkley’s office, reports say.

A supporter of U.S. President Donald Trump leaves a note in the office of U.S. Speaker of the House Nancy Pelosi as the protest inside the U.S. Capitol in Washington, D.C, January 6, 2021. Demonstrators breached security and entered the Capitol as Congress debated the 2020 presidential election Electoral Vote Certification. Image Credits: SAUL LOEB/AFP via Getty Images

Most lawmakers don’t have ready access to classified materials, unless it’s for their work sitting on sensitive committees, such as Judiciary or Intelligence. The classified computers are separate from the rest of the unclassified congressional network and in a designated sensitive compartmented information facility, or SCIFs, in locked-down areas of the Capitol building.

“No indication those [classified systems] were breached,” tweeted Mieke Eoyang, a former House Intelligence Committee staffer.

But the breach will likely present a major task for Congress’ IT departments, which will have to figure out what’s been stolen and what security risks could still pose a threat to the Capitol’s network. Kimber Dowsett, a former government security architect, said there was no plan in place to respond to a storming of the building.

The threat to Congress’ IT network is probably not as significant as the ongoing espionage campaign against U.S. federal networks. But the only saving grace is that so many congressional staffers were working from home during the assault due to the ongoing pandemic, which yesterday reported a daily record of almost 4,000 people dead from COVID-19 in one day.

THE BIG PICTURE

U.S. blames “ongoing” federal agency breaches on Russia

Some consolidation is underway in the world of challenger banking apps. BBVA today told users of Simple — the pioneering mobile and online banking app that it acquired for $117 million in 2014 — that it is planning to shut down the service, moving accounts to BBVA in the process.

In a note it sent out earlier today to users — being shared on Twitter by a number of them — that it will be transitioning their accounts to be serviced by BBVA USA, which already housed the accounts.

“BBVA USA has made the strategic decision to close Simple,” the note reads. “There is no immediate impact to your accounts at Simple and nothing you need to do at this time. Since your deposits are already housed at BBVA USA, they will remain in FDIC insured accounts there, up to the applicable limits. In the future, you Simple account will become exclusively services by BBVA USA, but until then you can continue to access your account and your money through the Simple app or online at Simple.com.”

Users will receive more details in the future about the transition to BBVA, the note continued.

The response from Simple customers has been predictably downbeat. Users migrated to the service specifically to have a faster and more modern experience compared to what they were getting through previous, incumbent providers.

And even though Simple ultimately ended up getting acquired by one of those incumbents — BBVA, headquartered in Spain, is one of the largest banks in the world — it was run largely independently of its owner, as part of BBVA’s attempt to bring on more modern services to attract a younger class of users.

We have contacted both BBVA and Simple for further comment. So far, it looks like only the emailed notification is the only announcement of the changes: there are no alerts within the bank’s mobile app, or on the Simple website.

It is unclear how many users Simple has currently. It had around 100,000 users when it was acquired back in 2014, and some might say that the startup was ahead of its time.

In the years between it launching and now, we’ve seen an explosion in the number and popularity of of so-called neobanks or challenger banks around the world, including Nubank, Chime, Current, N26, Revolut, Monzo, and many more turning what seemed like a radical concept into one that is now fairly commonplace.

Tapping into using a set of APIs to bundle services, and sitting on top of other banks’ infrastructure, these neobanks are more fleet of foot, and provide more modern interfaces on more modern platforms (such as mobile apps), foregoing some of the traditional trappings of banking like visiting physical locations and transacting with tellers, and replacing them with algorithms that, for example, help people manage their finances through the month by analyzing their spend and suggesting ways to save money or organize their finances in a better way.

The turn in events for Simple plays into some of the precariousness of using newer “challenger” banking services: there is always a risk with smaller services that they might not stick around as solidly as their incumbent counterparts — although recent years and bigger banking crises have definitely overturned some of those concepts.

For its part, Simple has not always been perfect. The company has at times turned off certain features — such as Bill Pay, or types of customer accounts — without warning, leaving users scrambling to replace them alternatives.

The question will be now whether users decide to stick with BBVA or turn to exploring another challenger: there are, after all, many options to consider these days.

We’ll update this post as we learn more.

This year, Americans grappled with fear of infection, incredible loss of loved ones, financial stress, isolation and fatigue from constant uncertainty to name a few. Even though we are getting closer to returning to normality as vaccines start to roll out, we can’t write COVID-19 off just yet. We are only now beginning to see the long-lasting effects of the pandemic, specifically its dramatic impact on the mental health crisis in the United States and unfortunately, mental illness has no vaccine.

Nearly 45 million American adults live with mental illness, which has only been exacerbated this year as more than two in five U.S. residents reported struggling with mental health issues as a result of COVID-19.

Even more concerning, according to the World Health Organization, prior to the pandemic, countries around the world were spending less than 2% of national health budgets on mental health, while struggling to meet their populations’ needs. It’s evident that there is not only a lack of focus on mental healthcare, but a lack of access as well.

We’ve seen a recent influx in telemedicine and telehealth services, and provided these solutions are evidence-based and effective, this is the only way for us to scale the widespread demand for support. Put simply, we don’t have enough clinical staff to go around.

When I practiced psychiatry in the U.K.’s National Health Services (NHS), I quickly realized that we were seeing patients too late, sometimes years too late, such that they had far more serious needs than if they had been able to access good quality care earlier. Back then it was clear to me this level of supply-demand gap could only be resolved by deploying technology at scale, and the events of the last year have only reinforced that.

Investors have taken note as well, with many mental health startups raising capital. It’s clear that business leaders have begun to prioritize innovation as a way to pull ourselves out of crisis, with a renewed focus on products adapted to a changed world. We’ve already seen a massive uptick in digital mental health solutions with about 76% of clinicians solely treating patients via telemedicine. The clearest path for managing mental health at scale will be evidence-based, ethical and personalized digital solutions.

Not only will this influx help those who desire flexible care options, but telehealth has also increased the access to care for people who may have limited options in their local communities.

While increasing in popularity, digital mental health solutions have some important challenges to overcome. For one, they must win consumer trust and prove that they can handle personal data ethically and responsibly. With 81% of Americans feeling that the risks of sharing personal data outweigh the benefits, providers must show that they can responsibly secure users’ personal health data due to the sensitive nature of the information and ultimately gain that trust.

This must go beyond compliance with HIPAA and, in Europe, GDPR, and require the development and implementation of an ethical framework to underpin a provider’s digital mental health solutions. However, such efforts must be genuine and avoid falling into the trap of “ethics washing,” so I encourage providers to have the ethics frameworks audited by external experts and to commit to publishing the results.

Digital solutions must also be able to meet the needs of users on an individualized and personalized basis. Many apps meant to help manage mental health take a one-size-fits-all approach and don’t take enough advantage of the technology’s ability to adapt to peoples’ unique symptoms and personal preferences. This is not simply about offering more than one type of intervention, although that is important, it’s the recognition that people engage in technology in different ways.

For instance, at Koa Health we know that some users love going through a program in a step-by-step fashion, whereas others prefer to dip into activities as they need them, and it’s important that we cater equally well for both of these preferences. Generic approaches simply won’t work well for everyone.

Not only do digital solutions need to be responsible with data and be tailored to users, they must work harder to prove their efficacy. Recent research has shown that 64% of mental health apps claimed efficacy yet only 14% included any evidence. The growth in the adoption of technology is encouraging, but positive impact will only result from products designed for efficacy — and able to demonstrate it in high-quality trials. The stronger the evidence base for effectiveness and cost-effectiveness, the more likely healthcare providers and insurers will be to distribute the solutions.

While vaccines are on their way, the mental health impacts of the pandemic may soon overshadow the direct impacts of the pandemic. While health tech has made promising progress, it’s imperative that digital mental healthcare places a stronger emphasis on effective, ethical and personalized care to avert an even larger mental health crisis.

Mobile advertising company Tapjoy has settled with the U.S. Federal Trade Commission over allegations that it was misleading consumers about the in-app rewards they could earn in mobile games. According to the FTC, Tapjoy deceived consumers who participated in various activities — like purchasing a product, signing up for a free trial, providing their personal information like an email address, or completing a survey — in exchange for in-game virtual currency. But when it was time to pay up, Tapjoy’s partners didn’t deliver.

As a result of the ruling, Tapjoy will have to clean up its business by monitoring the offers from advertisers presented to consumers and conspicuously display the terms that explain how rewards are earned. It will also be required to follow through to ensure the offers are delivered and investigate consumer complaints if they are not. Failure to follow the terms of the settlement will result in further fines of up to $43,280 per each violation, the FTC says.

Tapjoy’s business model has been to serve as an intermediary between advertisers, gamers and game developers. The mobile game developers integrate its technology to display the ads — aka “offers” — to their own customers, in order to earn payments for their users’ activity. When the consumer completes the offer by taking whatever action was required, they’re supposed to earn in-game coins or other virtual currency. The app developers then earn a percentage of that ad revenue.

But that often wasn’t happening, the FTC said. Players would jump through hoops, even sometimes spending money and turning over their sensitive data, only to get nothing in return.

What’s more, it said Tapjoy was aware its partners were cheating these consumers and did take action, even when “hundreds of thousands” of consumers filed complaints. This also harmed the game developers, who were cheated out of the promised ad revenues they would have otherwise earned.

“Tapjoy promised gamers in-app rewards for completing advertising offers made by its partners, but then often didn’t deliver,” said Frank Gorman, Acting Deputy Director of the FTC’s Bureau of Consumer Protection, in a statement. “When companies like Tapjoy make promises that depend on their partners’ performance, they’re on the hook to make sure those promises are kept.”

The FTC said Tapjoy’s conduct violated both the FTC Act’s prohibition on unfair business practices as well as the prohibition on deceptive practices. It will now have to actively work to weed out the fraud in its industry, otherwise Tapjoy itself will be held accountable.

App platforms like Apple and Google have struggled with shady ad businesses for years, which target their own customers.

More recently, Apple implemented a policy that requires developers to disclose on its app store listing what sort of information the app collects from customers and how that data is used to track users. This policy also wraps in whatever third-party ad technology may be integrated into the app.

The move is a not-so-subtle push to get developers to stop working with bad actors (like Tapjoy, allegedly) in order monetize their apps and games, and instead turn to a business model where Apple profits: subscriptions. Apple, brilliantly, has positioned this as a fight for consumer privacy and not for consumer dollars.

What’s interesting about this FTC ruling is that it lays the fault for Tapjoy and others like it directly at the platforms’ feet.

Commissioners Rohit Chopra and Rebecca Kelly Slaughter, in a joint statement, described Tapjoy as “a minnow next to the gatekeeping giants of the mobile gaming industry, Apple and Google.”

“By controlling the dominant app stores, these firms enjoy vast power to impose taxes and regulations on the mobile gaming industry, which was generating nearly $70 billion annually even before the pandemic. We should all be concerned that gatekeepers can harm developers and squelch innovation,” the statement reads. “The clearest example is rent extraction: Apple and Google charge mobile app developers on their platforms up to 30% of sales, and even bar developers from trying to avoid this tax through offering alternative payment systems,” they said.

The Commissioners noted, too, that “larger gaming companies” are pursuing legal action against these practices — a reference to Epic Games’ Fortnite lawsuit against Apple over the App Store commissions. But it said smaller developers fear retaliation for speaking up, as it could end up destroying their business if they were to be banned from the app stores.

In other words, the FTC blames the app store business model itself for leading developers to turn to companies like Tapjoy to sustain themselves.

“This market structure also has cascading effects on gamers and consumers. Under heavy taxation by Apple and Google, developers have been forced to adopt alternative monetization models that rely on surveillance, manipulation, and other harmful practices,” the statement reads.

This is not the first FTC action that has resulted from the fallout of the modern app store business model. Last year, the FTC went after kids’ app developer HyperBeard for its use of third-party ad trackers that were used to serve behavioral advertising, in violation of the Children’s Online Privacy Protection Act (COPPA).

Apple is being given a lot of credit in recent weeks for its privacy push, with the launch of its so-called app store “nutrition labels” that help to better highlight the bad actors in the mobile app market. But some of the recent reporting has lacked balance.

Many reports neglect to explain why these alternative business models rose in the first place. The also often don’t detail how Apple will financially benefit from the shift to subscriptions that will result from this mobile ad clampdown. Plus, it’s rarely noted that Apple itself serves behavioral advertising within its own apps which is based on the user data it collects from across its catalog of first-party apps and services. That’s not to say that Apple isn’t doing a service with its privacy push, but it’s a complex matter — this isn’t sports. You don’t have to pick one side or the other.

The Commissioners in their joint statement also hinted that regulation will soon come to the app platform providers, Apple and Google as well, not just mobile ad middlemen like Tapjoy.

“…when it comes to addressing the deeper structural problems in this marketplace that threaten both gamers and developers, the Commission will need to use all of its tools – competition, consumer protection, and data protection – to combat middlemen mischief, including by the largest gaming gatekeepers,” they said.

YouTube just announced that channels publishing “false claims” about the U.S. presidential election will be penalized with a strike, which would temporarily suspend them from posting videos.

If you’re wondering why it took this long, YouTube announced last month (a full month after the presidential election, but right after the “safe harbor” deadline for audits and recounts) that it would remove videos alleging widespread fraud or errors in the election. However, there was a grace period during which videos would be removed without additional penalty to the account.

YouTube says that grace period was supposed to expire on January 21, after Inauguration Day. But since the election results were certified early this morning, after a pro-Trump mob stormed the Capitol, the Google -owned video platform says it’s ending the grace period now.

YouTube also says it has already removed “thousands of videos which spread misinformation claiming widespread voter fraud changed the result of the 2020 election, including several videos President Trump posted to his channel.” That includes taking down a video Trump posted yesterday in which he told rioters, “Go home, we love you. You’re very special.”

The penalties for a strike differ depending on the number of offenses. A first strike results in a one-week suspension of the ability to post videos or livestreams, edit playlists or share other content on YouTube. If an account gets a second strike in a 90-day period, they’ll be suspended for two weeks, with a third strike resulting in permanent removal.

A Google spokesperson provided the following statement on the changes:

Over the last month, we’ve removed thousands of videos which spread misinformation claiming widespread voter fraud changed the result of the 2020 election, including several videos that President Trump posted yesterday to his channel. Due to the disturbing events that transpired yesterday, and given that the election results have been certified, any channel posting new videos with these false claims in violation of our policies will now receive a strike, a penalty which temporarily restricts uploading or live-streaming.  Channels that receive three strikes in the same 90-day period will be permanently removed from YouTube.

While starting a tutoring marketplace is easy, scaling is often where the troubles begin. Tutoring marketplaces require a base of tutors that have the bandwidth and empathy to work with students across different learning styles, goals and comprehension levels. The nuance means that fast scale isn’t foolproof and can lead edtech startups into a classic marketplace downfall: the inability to grow consistently while also providing definite outcomes.

But, as 2020 showed edtech, the demand for quick and convenient help is high. To win post-pandemic, the sector needs to think bigger about the way it can reach more students in an effective and savvy way.

Innovation from Quizlet, Chegg, Course Hero and Brainly shows that the future of tutoring might not look like a 30-minute video on Zoom or Google Hangouts. Instead, modern-day extra help might take the form of an AI-powered chatbot, a live calculator or tech more subtle than either.

Regardless, the rise of tutoring bots over marketplaces illustrates that some of the biggest decision-makers in edtech are taking a scalpel to the way that tutoring used to work and hope to scale faster by doing so.

The businesses driving the change

On January 31, Chegg will close its standalone tutoring service, which matched vetted tutors with students, relaunching it into a live chatbot that answers students’ questions. The move from a tutoring marketplace to chat interface, according to a spokesperson, will help Chegg “dramatically differentiate our offerings from our competitors and better service students.”

“Ever since Chegg Tutors was launched in 2014 we have seen what a powerful tool synchronous tutoring is for learners,” the company said in a statement. “What we have also learned is that the real need for learners is contextualized help directly in the experience of their actual learning environment.”

The closure of a marketplace isn’t necessarily a failure; the company says that live tutoring was never a big part of its business. Still, it’s clear that Chegg didn’t see enough opportunity to match students and tutors live and saw more promise in a chatbot approach. Plus, it goes well with Chegg’s theme of self-directed learning. CEO Dan Rosensweig was unavailable for comment.

Facebook isn’t the only big tech company taking action against Donald Trump’s web presence in the wake of yesterday’s riots in Washington DC.

Shopify, which hosted shops related to Trump’s campaign paraphernalia and the outgoing President’s personal brand, TrumpStore, has apparently taken down both of those properties.

“Shopify does not tolerate actions that incite violence. Based on recent events, we have determined that the actions by President Donald J. Trump violate our Acceptable Use Policy, which prohibits promotion or support of organizations, platforms or people that threaten or condone violence to further a cause,” a Shopify spokesperson wrote in a statement to TechCrunch. “As a result, we have terminated stores affiliated with President Trump.”

News of the move was first reported by The Wall Street Journal.

It’s a reversal of policy for the company which had previously defended the rights of any customer to use the platform and a refusal to engage in what chief executive Tobias Lütke termed censorship.

Consumer financial services startup SoFi is closing in on a deal to go public via a merger with special purpose acquisition company, Social Capital Hedosophia Holdings Corp V, the latest blank check company formed by venture capital investor Chamath Palihapitiya.

An agreement to take SoFi public via a SPAC has been rumored for weeks. This latest advancement, which reveals Palihapitiya as the possible SPAC connection, was first reported by Reuters. The deal would reportedly give SoFi a valuation of more than $6 billion.

SoFi, which is now led by ex-Twitter COO Anthony Noto, was founded more than decade ago to offer ways to secure better financial terms for student loans. The company has expanded those offerings for consumers such as loan, investment and insurance products as well as cash and wealth management tools. It made a move into the B2B realm with its acquisition last April of Galileo.

SoFi has raised millions in capital since its founding, the most recent a $500 million round in 2019 that was led by Qatar Investment Authority, a Doha, Qatar-based private equity and sovereign wealth fund. The company was most recently valued at $4.3 billion.

Palihapitiya has been credited for kicking off the SPAC craze. SPACs, also known as blank-check companies, are formed for the purpose of merging or acquiring other companies. The shell company raises money in an initial public offering with the intent of merging with a privately held company that then becomes publicly traded. A slew of SPACs have occurred in the past 18 months,

In 2017, he raised $600 million for his first SPAC called Social Capital Hedosophia Holdings, which was ultimately used to take a 49% stake in the British spaceflight company Virgin Galactic. Social Capital Hedosophia Holdings Corp V is Palihapitiya’s third SPAC. His second merged with Opendoor in 2020.

What a week. Democracy is still standing and the nation is getting back to work, so let’s press forward, even if it does feel surreal to cover business news after witnessing a live-streamed coup attempt.

Setting aside the tectonic political moment, there’s plenty of activity inside the world of startups we need to discuss.

The pace at which new unicorns are being announced feels incredibly rapid, possibly implying that private-market investors anticipate exit valuations will remain high, and that a venture market that tilted late-stage will continue its bias in this new year.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

Regular readers will recall that as 2020 wrapped up, we noted that “new unicorn formation continue[d] to impress.” That late-2020 trend is becoming a 2021 narrative.

For context, 17 unicorns were minted in the United States during Q3 2020. We don’t have Q4 numbers yet, but should inside the next week or so. There were more than 200 un-exited unicorns in the United States as the fourth quarter kicked off last year.

We’re at four new domestic unicorns in the first week of Q1 2020, along with at least one more from other shores.

Keep in mind that announcement of private-market rounds lag their actual closing, so the deals we’re discussing were likely closed in Q4 2020, not Q1 2021.

Which startups reached the $1 billion threshold required to earn the unicorn tag? The list is long, but Divvy, Hinge Health, Salesloft, Starburst Data and Mambu seem to fit the bill. Lacework and iboss are possibles, along with Ikena Oncology and Senti Biosciences.

Let’s take a look at the rounds to see if we can spot any correlations amidst the data.

New-nicorns

Divvy raised earlier this week, putting together a $165 million round that valued the Utah-based company at $1.6 billion. That was up more than twice its preceding private valuation of around $700 million.