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Archivo del Autor: Belen De Leon

Foxconn or Foxgone? Tariffs, Wisconsin and iPhone fires

First some notes on SoftBank’s rumored expansion into China and its weird fund math, then Foxconn and then quick notes on tech depression, Huawei and more.

TechCrunch is experimenting with new content forms. This is a rough draft of something new — provide your feedback directly to the author (Danny at danny@techcrunch.com) if you like or hate something here.

SoftBank has fund visions (and a Vision Fund) for China? That, and more money

Kane Wu at Reuters reported overnight that SoftBank is looking to open an office and hire an investment team in China, which Wu says will be based in Shanghai. That’s following the fund’s recent global expansion with new targeted offices in Saudi Arabia and India.

When I saw this, I sort of did a double-take: SoftBank doesn’t have a presence in China? The fund has reportedly been seeking investments in some of China’s leading unicorn stars, including controversial face recognition startup SenseTime, and leading edtech startup Zuoyebang (作业帮, which literally translates as “school assignment help”). (Hat-tips to Selina Wang at Bloomberg, who seems to just be sitting in Vision Fund partner meetings). And of course, it dumped a pretty penny into WeWork China, where it was part of a $500 million syndicate, and is a huge investor in Didi.

It’s sort of obvious that SoftBank would expand to China. What will be interesting though is to see how the fund structures itself long-term. As far as I know, the Vision Fund is a singular “fund” that invests worldwide (send me an email if I am wrong on this count). China has a thicket of regulations on funds and companies, which is one of several reasons we see specifically China-focused vehicles (such as Lightspeed and Lightspeed China or Sequoia and Sequoia China). If the Vision Fund continues to be a unified fund, that would be a notable strategy shift that might be cloned by other trans-Pacific funds.

Aside: SoftBank Vision Fund math is complicated

Rajeev Misra, board director of SoftBank Group and CEO of SoftBank Investment Advisors. Photo by Drew Angerer/Getty Images.

When it first closed the Vision Fund, SoftBank explained they had raised just over $93 billion in committed capital or, more precisely, around $93.15-$93.2 billion, according to the initial investor presentations and its annual Form D filings. In those docs, SoftBank said that the fund was financed with $28 billion from SoftBank and $65 billion from third-party investors.

On top of the $93 billion raised for the Vision Fund, SoftBank detailed that it had committed $4.5 billion of its own capital to a separate “Delta Fund,” which was used to alleviate conflicts around SoftBank’s Didi investment. Thus, SoftBank’s total VC funding aggregates to around $97.7 billion.

To add a complication, SoftBank later shifted $1.6 billion of the Vision Fund’s previously disclosed $65 billion in third-party capital over to the Delta Fund. In current disclosures, SoftBank shows $91.7 billion of committed capital for the Vision Fund ($28.1 billion from SoftBank and $63.6 billion from third-party investors). For the Delta Fund, SoftBank shows $6 billion in committed capital ($4.5 billion SoftBank contribution and $1.6 billion from third-party investors).

Here is where it gets even more complicated. In its latest filings, SoftBank also notes that it completed the interim closing of an additional $5 billion for the Vision Fund in mid-October, “intended for the installment of an incentive scheme for operations of SoftBank Vision Fund.” That additional cash would bring Vision Fund’s total committed capital to $96.7 billion, and $102.7 billion together with the Delta Fund.

While it wouldn’t be included in the committed equity capital total, SoftBank is also rumored to be raising a $4 billion credit facility to help finance additional acquisitions.

So, it’s probably best to say that the Vision Fund — as constituted right now — is $97 billion or $96.7 billion with precision, assuming this $5 billion reaches a final close.

SoftBank IPO

We have, of course, covered SoftBank quite obsessively, particularly its debt situation (Part 1, Part 2, Part 3, Part 4 and Part 5). What we haven’t covered more recently are the latest developments in SoftBank’s IPO, which is slated for December 19th and expected to bring in a haul of $21 billion. More to come on that front in the coming days.

Foxconn or Foxgone?

U.S. President Donald Trump and Foxconn Chairman Terry Gou. BRENDAN SMIALOWSKI/AFP/Getty Images

The South China Morning Post reported yesterday that Foxconn is investigating expanding its factories to Vietnam in order to avoid tariffs. Makes sense, and I have some calls this week and next trying to suss out how much hardware supply chains have really changed in response to the trade conflict.

That decision though isn’t just about the trade conflict, but also about the quickly increasing wages of Chinese laborers, as well as political interference from Beijing. The Trump administration’s trade policies are just the excuse Foxconn needs to (at least partially) extricate itself from China, while saving face in the process.

What’s interesting is that Foxconn is also dealing with a massive brush fire in Wisconsin, where it received one of the largest economic development incentives ever offered by an American government, a whopping $3 billion package that was expected to drive manufacturing employment in the state.

Overnight, Republicans in the state legislature passed a bill that would place large restrictions on incoming Democratic governor Tony Evers. Jessie Opoien for the (Madison) Cap Times:

Under the bill, legislators would have increased influence over the Wisconsin Economic Development Corporation, and the WEDC board, not the governor, would appoint the job creation agency’s CEO. However, the governor’s power to appoint a CEO would be restored in September 2019.

That is the agency that provided the Foxconn funding, which has become a political football in Wisconsin politics. Republicans are trying to protect one of the major economic legacies of outgoing governor Scott Walker, as well as what they believe is the future direction of manufacturing work in the state. Democrats smell a boondoggle in the making.

If that wasn’t all, rumored skimpy sales for iPhones is putting enormous pressure on Foxconn’s bottom line. Debby Wu at Bloomberg reported two weeks ago that:

The contract manufacturer aims to cut 20 billion yuan ($2.9 billion) from expenses in 2019 as it faces “a very difficult and competitive year,” according to an internal document obtained by Bloomberg. The company’s spending in the past 12 months is about NT$206 billion ($6.7 billion).

Foxconn is a very dynamic organization that has weathered repeated crises over the years. It is pretty much unique in what it does today: very few other companies can scale up and down hundreds of thousands of workers to meet iPhone and other device demands with such alacrity.

But, the fundamentals of the mobile device market have apparently changed dramatically this year, and Foxconn is likely to be the company most harmed as the assembler of those devices. That could destroy not just the Chinese dream of leading in manufacturing, but also the Vietnam and Wisconsin dreams as well.

Also: If you haven’t read it, this poetry by a Foxconn worker who committed suicide really resonated with me. Foxconn’s suicide problem is well-documented, but we often don’t hear from the individuals themselves.

Quick bites

Which big tech companies are most depressed?

Blind, the anonymous enterprise chatting app that has taken the tech world by storm, published survey results asking tech employees “I believe I am depressed.” Roughly 40 percent of employees responded yes. Interestingly, there wasn’t too much variation between companies. Amazon had the highest rate at 43 percent and Apple had the lowest rate at 30 percent. It’s an informal survey, probably without high scientific validation, but it is a reminder for all of us in the community that mental health and burnout is very real in the startup and tech ecosystems and we should be vigilant in helping each other when times are rough.

More bad news for Huawei as British Telecom bans its equipment

This is one of those stories that we are just going to keep hearing about. After bans in Australia and New Zealand, British Telecom has announced they will not just ban Huawei’s 5G equipment, but also its 3G and 4G equipment. Britain, like Aus/NZ, Canada and the U.S., is part of the Five Eyes intelligence network, and national security officials have been leading the crusade against Huawei infrastructure. What’s interesting is not just the rapidity of the bans, but also that the bans haven’t (from what I have seen) migrated outside the Five Eyes community yet.

Pendo commits to hometown of Raleigh

Raleigh skyline. Photo by James Willamor used under Creative Commons via Flickr.

Pendo is a digital product management platform that has had quite a bit of success with customers and has raised more than $100 million in VC funding, most recently a Series D from Sapphire. The company announced that they have received a grant from home state North Carolina’s economic development department to grow in the Raleigh region. Pendo is committing $34.5 million to its headquarters (with the potential of creating 590 jobs), while the state will offer around $8.8 million in potential reimbursements over the next 12 years.

Given what I wrote yesterday about Wes McKinney leaving NYC and heading to Nashville and the work Chattanooga is doing to aid startups, it’s great to see other hotspots like Raleigh, NC invest to build out their ecosystems in a compelling way.

Todd Olson, CEO of Pendo, explained to me by email that, “Office rents in our downtown are a fraction of the cost of operating in other cities, and the cost of living is appealing to our employees. They can afford to buy a house here. In some markets around the country, that is becoming more difficult. It’s also just a nice place to live and work.”

Creative work is increasingly going to have to find a lower-cost home.

What’s next

I am still obsessing about next-gen semiconductors. If you have thoughts there, give me a ring: danny@techcrunch.com.

Thoughts on articles

The LP Anti-Portfolio – Great short read. Lindel Eakman, former managing director at UTIMCO, the University of Texas/Texas A&M endowment, gives a list of funds that he passed on that he now regrets. Unfortunately, this is pretty rare coming from an LP, albeit a former one. It would be great to get more public discussion on which funds were missed and why by LP investors.

Hopefully more reading time tomorrow.

Reading docket

What I’m reading (or at least, trying to read)

  • Huge long list of articles on next-gen semiconductors. More to come shortly.


Source: TechCrunch

Comcast's newest cable channel is Amazon Prime – CNET

It’ll give Comcast’s X1 subscribers their pick: Get your HBO from Comcast or Amazon?
Source: CNET

The adorable Dancebot dancing Bluetooth speaker is $44 with these stackable coupons – CNET

What, your speaker just sits there? This one shakes its groove thing, meaning it’s instantly better than every other speaker ever. Plus: Two excellent portable-hard-drive deals and two equally excellent giveaways.
Source: CNET

2018 Jeep Wrangler JL bombs Euro NCAP crash tests with 1-star result – Roadshow

It’s not like it has a perfect score in the US, either, but at least it has more than a single star.
Source: CNET

Gorilla Glass is shaping up for foldable phones video – CNET

An exclusive look at Corning’s new ultrathin bendable glass that could make it onto the next generation of foldable devices.
Source: CNET

Spotify for Xbox One now works with Cortana voice commands

Spotify arrived on the Xbox One back in August 2017 to give gamers the option of streaming their own tunes while in a gaming session. Today, Spotify is upgrading its app with a few key additions, including most notably support for Cortana voice control, along with other personalization features. With Cortana, gamers will be able to speak their music requests instead of using the controller. That means they can command the music — including being able to play, skip and pause songs — without having to leave their current gaming session, Spotify says.

Before, gamers would have to use Spotify Connect via an app on their phone, tablet or laptop to control or change the music while gaming.

For example, you’ll be able to say things like “Hey, Cortana, play my playlist on Spotify,” or “Hey Cortana, play my Discover Weekly on Spotify.”

This upgrade is currently only available in the U.S., however.

The new app is also introducing an updated experience that’s designed to make it easier for Spotify users to access recently played songs, plus your “Made for You” hub, and your music library.

Spotify says the app can help gamers find their favorite background music, too, by taking into account their listening history when making its recommendations for a more personalized experience.

This part of the update is rolling out more broadly, including the U.S., as well as in Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Colombia, Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, Ireland, Italy, Japan, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Singapore, Slovakia, Spain, Sweden, Switzerland, Taiwan, Turkey and the U.K.

Options like repeat and shuffle are available, too, as are a selection of curated gaming playlists, over on Spotify’s “Gaming Hub” if you get stumped as to what to play.

The update will require the latest version of the Spotify app, which can be downloaded from the Microsoft Store, the company notes.


Source: TechCrunch

WhiteFox Defense lands $12 million as the demand for drone defense technologies intensifies

Four months ago, when two commercial DJI-made drones loaded with 1 kilogram each of plastic explosive <a href=”https://techcrunch.com/2018/08/05/venezuela-claims-drones-loaded-with-explosives-used-in-failed-attack-on-president/”>detonated during a speech from Venezuelan dictator Nicolás Maduro at a military event in Caracas, the world at large was introduced to the newest threat from our automated, dystopian present — cheap weaponized drone technology.

For Luke Fox, the founder and chief executive of WhiteFox Defense Technologies, it was simply the latest in a string of events proving the need for the kinds of services his company is developing. Something he calls “a highway patrol for the sky.”

From drug smuggling to reconnaissance and information gathering to terror attacks, unmanned aerial drones are no longer the provenance of state military and police actors, and are increasingly being used by criminal organizations to open new, aerial fronts in their operations.

“Drones are by far the biggest asymmetric threat that the U.S. faces,” says Fox. “Countries that don’t have a state sponsored drone program are using them [and] it’s where you see people like ISIS are going.”

In the battle for Mosul in Iraq, ISIS flew over 300 drone missions in one month, according to a talk given last year at CyCon from Peter Singer, a senior fellow and strategist at the New America Foundation. One-third of those were strike missions, representing the first time U.S. military faced an aerial attack since the Korean War.

The 24-year-old Fox began thinking seriously about the weaponization of commercial and consumer drone technology six years ago, when he founded WhiteFox Defense.

Creating the company was an extension of the way that Fox had been taught to think about the world as a child, he’s said. Fox grew up in an abusive foster home, raised by a mentally ill foster mother (who was, herself, a child protective service employee) who had adopted him and a number of mentally and physically challenged children.

“The reality i grew up in had my mind constantly looking for vulnerabilities. And instead of seeing these vulnerabilities as opportunities for crime i now had a whole color palette to choose from,” said Fox. “For example when the world started going crazy over drones as recreational toys i saw that they could be used as weapons or crime and this insight into the criminal mind inspired a company that defends the country from drones.”

Fox was adopted from foster care by the librarian of his local Sacramento-area high school, tested out of college and went on to a community college before enrolling in California Polytechnic University in San Luis Obispo.

He began working with drones while in school and credits that introduction to the technology as the inspiration for starting White Fox.

“We previously started out in drone manufacturing starting out in high performance drones for specialty clients and research organizations. we needed affordable drones that were highly capable,” said Fox. “Making a highly capable drone that was very affordable attracted some very shady people. And, realizing that there was only so much we could control, it brought us to ask what is out there? At the time, the only thing to counter drones related attacks was large missiles shooting down large Iranian drones.”

WhiteFox currently has three products either in development or on the market. Two have already been released to a select group of customers in different industries and the entire suite will be launched at the beginning of next year, according to Fox.

Without going into specific details of how the technology works, Fox said that WhiteFox Defense systems can detect, identify and mitigate unauthorized drones flying in a particular airspace.

“It’s not jamming or blocking drones or catching them out of the sky,” says Fox. Rather the idea is to provide situational awareness and identify the type of threat that an errant drone represents — whether the operator is, in Fox’s words, “clueless, careless or criminal.”

What Fox would say is that his company has developed a technology that’s based on identifying and differentiating between drones based on their unique radio frequency signatures. That product for identifying drones operating in a space is complemented by a second technology offering which allows WhiteFox to take control of the unauthorized drones in an airspace.

“One of the technologies that was started at Drones For Change [the company that would become WhiteFox] was a universal controller,” said Fox. “That technology really formed the basis. We asked what if this universal controller could become a master controller to take over any drone that was in your airspace? That solved the problem that got us out of drone manufacturing.”

WhiteFox isn’t alone in its attempts to create anti-drone technology. According to some industry statistics there are at least 70 companies working on drone defense technologies with solutions ranging from deploying other drones to capture unauthorized UAVs to jamming technologies that will block a drone’s signal.

Earlier this year, Airspace Systems raised $20 million for its kinetic(drone vs. drone) approach to drone defense, while Citadel Defense raised $12 million and Dedrone pulled in $15 million for their drone-jamming technologies.  And last year, SkySafe raised $11.5 million for a radio-jamming approach similar to WhiteFox, which forces unauthorized drones out of restricted airspace while permitting authorized drones to still fly.

“As​ ​the​ ​adoption​ ​of​ ​consumer​ ​drones increases,​ ​we​ ​believe​ ​it​ ​is​ ​vital​ ​for​ ​an​ ​ambitious​ ​and​ ​effective​ ​defense​ ​platform​ ​to​ ​emerge,” said Alex Rubacalva, a partner at Stage Venture Partners and an early investor in WhiteFox Defense. 

In all, drone-related startups have raised nearly $2 billion in the last eight years, according to data from Crunchbase, pulled at the beginning of 2018. Roughly $600 million of that investment total has come in 2017 and the early part of 2018 alone, the Crunchbase data indicated.

Technologies like SkySafe and WhiteFox are about more than just defending airspace from malicious actors.

“Counter drone technology is not just about securing spaces from drones and preventing bad things from happening,” says Fox. “It’s about enabling drones to be used in the right way.”

The applications extend far beyond military uses. In fact, Fox’s technology is already being adopted by prisons around the U.S. and, indeed, anywhere where airspace usage can be considered sensitive.

“Someone described as the largest delivery operations in the world is happening at prisons,” said Fox. “You have a lot of money behind buying a DJI at best buy and loading it up with heroin, with drugs, with weapons, with even chinese food that was smuggled in. We found that there were drones smuggling in contraband every single day.”

WhiteFox recently conducted a survey with an undisclosed large public prison system in the United States to study just how pervasive a problem drone-smuggling was among its prison population. What the prison saw as one drone a week flying into restricted airspace became a realization that multiple drone flights per day were occurring in attempts to smuggle contraband onto prison grounds.

Operations extend far beyond police and military applications though, according to Fox.

During the California wildfires, rescue operations were halted thanks to unauthorized usage of drones by civilian operators who wanted to capture footage of the disaster. Their actions potentially risked the lives of not only rescue workers but of the citizens they were trying to save and the fire crews attempting to control the worst wildfire in the state’s history.

“This is one of the fascinating things about this industry as a whole,” says Fox. “It’s not that drones are bad and scary and we need to do something about them. If we’re going to embrace this technology as a society we need to be able to safely integrate it into society.”

From its initial deployments, WhiteFox was able to convince investors to funnel $12 million into the company to finance its expansion plans.

The extension of the company’s seed round included investors like JAM Capital, Stage Venture Partners, Okapi Venture Capital, Serra Ventures, and OCA Ventures. 

“WhiteFox’s customers are armed with a highly robust and scalable-for-deployment technology​ ​platform​ ​that​ ​addresses​ ​the​ ​increased​ ​threat​ ​of​ ​hostile​ ​drones​ ​and enables​ ​greater​ ​control​ ​of​ ​their​ ​airspace.,” said Jeff Bocan, a partner at OKapi Venture Capital, in a statement.​ “Crucially, the WhiteFox’s technology also offers customers the ability to protect against reckless drone use, while enabling “friendly” drones to fly freely – all without any human intervention.”


Source: TechCrunch

App Stores to pass $122B in 2019, with gaming and subscriptions driving growth

Mobile intelligence and data firm App Annie is today releasing its 2019 predictions for the worldwide app economy, including its forecast around consumer spending, gaming, the subscription market, and other highlights. Most notably, it expects the worldwide gross consumer spend in apps – meaning before the app stores take their own cut – to surpass $122 billion next year, which is double the size of the global box office market, for comparison’s sake.

According to the new forecast, the worldwide app store consumer spend will grow 5 times as fast as the overall global economy next year.

But the forecast also notes that “consumer spend” – which refers to the money consumers spend on apps and through in-app purchases – is only one metric to track the apps stores’ growth and revenue potential.

Mobile spending is also expected to continue growing for both in-app advertising and commerce – that is, the transactions that take place outside of the app stores in app like Uber, Amazon, and Starbucks, for example.

Specifically, mobile will account for 62 percent of global digital ad spend in 2019, representing $155 billion, up from 50 percent in 2017. In addition, 60 percent more mobile apps will monetize through in-app ads in 2019.

Mobile gaming to reach 60% market share

As in previous years, mobile gaming is contributing to the bulk of the growth in consumer spending, the report says.

Mobile gaming, which continues to be the fastest growing form of gaming, matured further this year with apps like Fortnite and PUBG, says App Annie . These games “drove multiplayer game mechanics that put them on par with real-time strategy and shooter games on PC/Mac and Consoles in a way that hadn’t been done before,” the firm said.

They also helped push forward a trend towards cross-platform gaming, and App Annie expects that to continue in 2019 with more games becoming less siloed.

However, the gaming market won’t just be growing because of experiences like PUBG and Fortnite. “Hyper-casual” games – that is, those with very simple gameplay – will also drive download growth in 2019.

Over the course of the next year, consumer spend in mobile gaming will reach 60 percent market share across all major platforms, including PC, Mac, console, handheld, and mobile.

China will remain a major contributor to overall app store consumer spend, including mobile gaming, but there may be a slight deceleration of their impact next year due to the game licensing freeze. In August, Bloomberg reported China’s regulators froze approval of game licenses amid a government shake-up. The freeze impacted the entire sector, from large players like internet giant Tencent to smaller developers.

If the freeze continues in 2019, App Annie believes Chinese firms will push towards international expansion and M&A activity could result.

App Annie is also predicting one breakout gaming hit for 2019: Niantic’s Harry Potter: Wizards Unite, which it believes will exceed $100 million in consumer spend in its first 30 days. Niantic’s Pokémon Go, by comparison, cleared $100 million in its first two weeks and became the fastest game to reach $1 billion in consumer spend.

But App Annie isn’t going so far as to predict Harry Potter will do better than Pokémon Go, which tapped into consumer nostalgia and was a first-to-market mainstream AR gaming title.

Mobile Video Streaming

Another significant trend ahead for the new year is the growth in video streaming apps, fueled by in-app subscriptions.

Today, the average person consumers over 7.5 hours of media per day, including watching, listening, reading or posting. Next year, 10 minutes of every hour will be spent consuming media across TV and internet will come from streaming video on mobile, the forecast says.

The total time in video streaming apps will increase 110 percent from 2016 to 2019, with consumer spend in entertainment apps up by 520 percent over that same period. Most of those revenues will come from the growth in in-app subscriptions.

Much of the time consumer spend streaming will come from short-form video apps like YouTube, TikTok and social apps like Instagram and Snapchat.

YouTube alone accounts for 4 out of every 5 minutes spent in the top 10 video streaming apps, today. But 2019 will see many changes, including the launch of Disney’s streaming service, Disney+, for example.

App Annie’s full report, which details ad creatives and strategies as well, is available on its blog.

 


Source: TechCrunch

Yandex gets in the smartphone game

“The Google of Russia” is a fairly apt description, as far as those things go. Yandex has its hand in just about everything internet in its native Russia. Recently additions include a Prime-style service, a smart speaker and, yes, self-driving cars. So it was really only a matter of time before the company unleashed a smartphone on the world.

The internet giant’s first handset is called — rather uninspiredly — the Yandex.Phone. At least you know what you’re getting. Designwise, the handset also looks like a fairly bog standard middling Android handset.

The most interesting bits here are are, naturally, the inclusion of Yandex’s own software. The company says it’s the first to integrate its app ecosystem out of the box. That list includes Alice, the Alexa-style smart assistant it introduced in October of last year.

The spec aren’t much to write home about. There’s a 5.65 display and a pair of cameras on either inside. Inside, it’s got a Snapdragon 630 inside, coupled with 64GB of storage and 4GB of RAM. Oh, and there’s a headphone jack on-board, as well.

The price is certainly right, at 17,990 rubles ($270). It will be on sale tomorrow at the company’s flagship Moscow store, with wider availability starting the following day. As far as availability goes here in the States, I wouldn’t hold my breath. 


Source: TechCrunch

Europe dials up pressure on tech giants over election security

The European Union has announced a package of measures intended to step up efforts and pressure on tech giants to combat democracy-denting disinformation ahead of the EU parliament elections next May.

The European Commission Action Plan, which was presented at a press briefing earlier today, has four areas of focus: 1) Improving detection of disinformation; 2) Greater co-ordination across EU Member States, including by sharing alerts about threats; 3) Increased pressure on online platforms, including to increase transparency around political ads and purge fake accounts; and 4) raising awareness and critical thinking among EU citizens.

The Commission says 67% of EU citizens are worried about their personal data being used for political targeting, and 80% want improved transparency around how much political parties spend to run campaigns on social media.

And it warned today that it wants to see rapid action from online platforms to deliver on pledges they’ve already made to fight fake news and election interference.

The EC’s plan follows a voluntary Code of Practice launched two months ago, which signed up tech giants including Facebook, Google and Twitter, along with some ad industry players, to some fairly fuzzy commitments to combat the spread of so-called ‘fake news’.

They also agreed to hike transparency around political advertising. But efforts so far remain piecemeal, with — for example — no EU-wide roll out of Facebook’s political ads disclosure system.

Facebook has only launched political ad identification checks plus an archive library of ads in the US and the UK so far, leaving the rest of the world to rely on the more limited ‘view ads’ functionality that it has rolled out globally.

The EC said it will be stepping up its monitoring of platforms’ efforts to combat election interference — with the new plan including “continuous” monitoring.

This will take the form of monthly progress reports, starting with a Commission progress report in January and then monthly reports thereafter (against what it slated as “very specific targets”) to ensure signatories are actually purging and disincentivizing bad actors and inauthentic content from their platform, not just saying they’re going to.

As we reported in September the Code of Practice looked to be a pretty dilute first effort. But ongoing progress reports could at least help concentrate minds — coupled with the ongoing threat of EU-wide legislation if platforms fail to effectively self-regulate.

Digital economy and society commissioner Mariya Gabriel said the EC would have “measurable and visible results very soon”, warning platforms: “We need greater transparency, greater responsibility both on the content, as well as the political approach.”

Security union commissioner, Julian King, came in even harder on tech firms — warning that the EC wants to see “real progress” from here on in.

“We need to see the Internet platforms step up and make some real progress on their commitments. This is stuff that we believe the platforms can and need to do now,” he said, accusing them of “excuses” and “foot-dragging”.

“The risks are real. We need to see urgent improvement in how adverts are placed,” he continued. “Greater transparency around sponsored content. Fake accounts rapidly and effectively identified and deleted.”

King pointed out Facebook admits that between 3% and 4% of its entire user-base is fake.

“That is somewhere between 60M and 90M face accounts,” he continued. “And some of those accounts are the most active accounts. A recent study found that 80% of the Twitter accounts that spread disinformation during the 2016 US election are still active today — publishing more than a million tweets a day. So we’ve got to get serious about this stuff.”

Twitter declined to comment on today’s developments but a spokesperson told us its “number one priority is improving the health of the public conversation”.

“Tackling co-ordinated disinformation campaigns is a key component of this. Disinformation is a complex, societal issue which merits a societal response,” Twitter’s statement said. “For our part, we are already working with our industry partners, Governments, academics and a range of civil society actors to develop collaborative solutions that have a meaningful impact for citizens. For example, Twitter recently announced a global partnership with UNESCO on media and information literacy to help equip citizens with the skills they need to critically analyse content they are engaging with online.”

We’ve also reached out to Facebook and Google for comment on the Commission plan.

King went on to press for “clearer rules around bots”, saying he would personally favor a ban on political content being “disseminated by machines”.

The Code of Practice does include a commitment to address both fake accounts and online bots, and “establish clear marking systems and rules for bots to ensure their activities cannot be confused with human interactions”. And Twitter has previously said it’s considering labelling bots; albeit with the caveat “as far as we can detect them”.

But action is still lacking.

“We need rapid corrections, which are given the same prominence and circulation as the original fake news. We need more effective promotion of alternative narratives. And we need to see overall greater clarity around how the algorithms are working,” King continued, banging the drum for algorithmic accountability.

“All of this should be subject to independent oversight and audit,” he added, suggesting the self-regulation leash here will be a very short one.

He said the Commission will make a “comprehensive assessment” of how the Code is working next year, warning: “If the necessary progress is not made we will not hesitate to reconsider our options — including, eventually, regulation.”

“We need to be honest about the risks, we need to be ready to act. We can’t afford an Internet that is the wild west where anything goes, so we won’t allow it,” he concluded.

Commissioner Vera Jourova also attended the briefing and used her time at the podium to press platforms to “immediately guarantee the transparency of political advertising”.

“This is a quick fix that is necessary and urgent,” she said. “It includes properly checking and clearly indicating who is behind online advertisement and who paid for it.”

In Spain regional elections took place in Andalusia on Sunday and — as noted above — while Facebook has launched a political ad authentication process and ad archive library in the US and the UK, the company confirmed to us that such a system was not up and running in Spain in time for that regional European election.

In the vote in Andalusia a tiny Far Right party, Vox, broke pollsters’ predictions to take twelve seats in the parliament — a first since the country’s return to democracy after the death of the dictator Francisco Franco in 1975.

Zooming in on election security risks, Jourova warned that “large-scale organized disinformation campaigns” have become “extremely efficient and spread with the speed of light” online. She also warned that non-transparent ads “will be massively used to influence opinions” in the run up to the EU elections.

Hence the pressing need for a transparency guarantee.

“When we allow the machines to massively influence free decisions of democracy I think that we have appeared in a bad science fiction,” she added. “The electoral campaign should be the competition of ideas, not the competition of dirty money, dirty methods, and hidden advertising where the people are not informed and don’t have a clue that they are influenced by some hidden powers.”

Jourova urged Member States to update their election laws so existing requirements on traditional media to observe a pre-election period also apply online.

“We all have roles to play, not only Member States, also social media platforms, but also traditional political parties. [They] need to make public the information on their expenditure for online activities as well as information on any targeting criteria used,” she concluded.

A report by the UK’s DCMS committee, which has been running an enquiry into online disinformation for the best part of this year, made similar recommendations in its preliminary report this summer.

Though the committee also went further — calling for a levy on social media to defend democracy. Albeit, the UK government did not leap into the recommended actions.

Also speaking at today’s presser, EC VP, Andrus Ansip, warned of the ongoing disinformation threat from Russia but said the EU does not intend to respond to the threat from propaganda outlets like RT, Sputnik and IRA troll farms by creating its own pro-EU propaganda machine.

Rather he said the plan is to focus efforts on accelerating collaboration and knowledge-sharing to improve detection and indeed debunking of disinformation campaigns.

“We need to work together and co-ordinate our efforts — in a European way, protecting our freedoms,” he said, adding that the plan sets out “how to fight back against the relentless propaganda and information weaponizing used against our democracies”.

Under the action plan, the budget of the European External Action Service (EEAS) — which bills itself as the EU’s diplomatic service — will more than double next year, to €5M, with the additional funds intended for strategic comms to “address disinformation and raise awareness about its adverse impact”, including beefing up headcount.

“This will help them to use new tools and technologies to fight disinformation,” Ansip suggested.

Another new measure announced today is a dedicated Rapid Alert System which the EC says will facilitate “the sharing of data and assessments of disinformation campaigns and to provide alerts on disinformation threats in real time”, with knowledge-sharing flowing between EU institutions and Member States.

The EC also says it will boost resource for national multidisciplinary teams of independent fact-checkers and researchers to detect and expose disinformation campaigns across social networks — working towards establishing a European network of fact-checkers.

“Their work is absolutely vital in order to combat disinformation,” said Gabriel, adding: “This is very much in line with our principles of pluralism of the media and freedom of expression.”

Investments will also go towards supporting media education and critical awareness, with Gabriel noting that the Commission will to run a European media education week, next March, to draw attention to the issue and gather ideas.

She said the overarching aim is to “give our citizens a whole array of tools that they can use to make a free choice”.

“It’s high time we give greater visibility to this problem because we face this on a day to day basis. We want to provide solutions — so we really need a bottom up approach,” she added. “It’s not up to the Commission to say what sort of initiatives should be adopted; we need to give stakeholders and citizens their possibility to share best practices.”


Source: TechCrunch

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