Daily Crunch: Apple’s subscription fix

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The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. Apple’s iOS update makes it easier to get to your subscriptions

Moving the Manage Subscriptions menu so that it’s just one click away from your App Store profile might seem like a minor change, but it was needed: As more mobile apps have adopted subscriptions as a means of generating revenue, it’s become critical to ensure consumers know how to turn off their subscriptions.

Plus, Apple is expected to launch some subscriptions of its own, namely for its streaming video and news services.

2. Instagram confirms that a bug is causing follower counts to change

Don’t panic! Instagram says it’s “aware of an issue that is causing a change in account follower numbers for some people right now” and is “working to resolve this as quickly as possible.”

3. Autonomous truck startup TuSimple hits unicorn status in latest round

Today, TuSimple is taking three to five fully autonomous trips per day for customers on three different routes in Arizona.

4. Sixteen percent of US adults own a smartwatch

The latest figures out of NPD show a continued uptick in smartwatch sales here in the States. The category has been a rare bright spot in an overall flagging wearable space, and the new numbers show gains pretty much across the board.

5. JibJab, one of the first silly selfie video makers, acquired by private equity firm Catapult Capital

Founded in 1999 by brothers Evan and Gregg Spiridellis after they saw “an animated dancing doodie streaming over a 56K modem,” JibJab’s big break came during the 2004 presidential campaign, when its satirical “This Land” racked up more than 80 million views.

6. Eight Sleep unveils The Pod, a bed that’s smarter about temperature

Eight has been focused on bed temperature for a while, first by offering a smart mattress cover and then a smart mattress that allows owners to adjust the surface temperature and even set different temperatures for different sides of the bed. But The Pod goes even further, with a smart temperature mode that will change bed temperature throughout the night to improve your sleep.

7. Ubisoft and Mozilla team up to develop Clever-Commit, an AI coding assistant

Clever-Commit is an assistant that learns from your code base’s bug and regression data to analyze and flag potential new bugs as new code is committed.

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Is Europe closing in on an antitrust fix for surveillance technologists?

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The German Federal Cartel Office’s decision to order Facebook to change how it processes users’ personal data this week is a sign the antitrust tide could at last be turning against platform power.

One European Commission source we spoke to, who was commenting in a personal capacity, described it as “clearly pioneering” and “a big deal”, even without Facebook being fined a dime.

The FCO’s decision instead bans the social network from linking user data across different platforms it owns, unless it gains people’s consent (nor can it make use of its services contingent on such consent). Facebook is also prohibited from gathering and linking data on users from third party websites, such as via its tracking pixels and social plugins.

The order is not yet in force, and Facebook is appealing, but should it come into force the social network faces being de facto shrunk by having its platforms siloed at the data level.

To comply with the order Facebook would have to ask users to freely consent to being data-mined — which the company does not do at present.

Yes, Facebook could still manipulate the outcome it wants from users but doing so would open it to further challenge under EU data protection law, as its current approach to consent is already being challenged.

The EU’s updated privacy framework, GDPR, requires consent to be specific, informed and freely given. That standard supports challenges to Facebook’s (still fixed) entry ‘price’ to its social services. To play you still have to agree to hand over your personal data so it can sell your attention to advertisers. But legal experts contend that’s neither privacy by design nor default.

The only ‘alternative’ Facebook offers is to tell users they can delete their account. Not that doing so would stop the company from tracking you around the rest of the mainstream web anyway. Facebook’s tracking infrastructure is also embedded across the wider Internet so it profiles non-users too.

EU data protection regulators are still investigating a very large number of consent-related GDPR complaints.

But the German FCO, which said it liaised with privacy authorities during its investigation of Facebook’s data-gathering, has dubbed this type of behavior “exploitative abuse”, having also deemed the social service to hold a monopoly position in the German market.

So there are now two lines of legal attack — antitrust and privacy law — threatening Facebook (and indeed other adtech companies’) surveillance-based business model across Europe.

A year ago the German antitrust authority also announced a probe of the online advertising sector, responding to concerns about a lack of transparency in the market. Its work here is by no means done.

Data limits

The lack of a big flashy fine attached to the German FCO’s order against Facebook makes this week’s story less of a major headline than recent European Commission antitrust fines handed to Google — such as the record-breaking $5BN penalty issued last summer for anticompetitive behaviour linked to the Android mobile platform.

But the decision is arguably just as, if not more, significant, because of the structural remedies being ordered upon Facebook. These remedies have been likened to an internal break-up of the company — with enforced internal separation of its multiple platform products at the data level.

This of course runs counter to (ad) platform giants’ preferred trajectory, which has long been to tear modesty walls down; pool user data from multiple internal (and indeed external sources), in defiance of the notion of informed consent; and mine all that personal (and sensitive) stuff to build identity-linked profiles to train algorithms that predict (and, some contend, manipulate) individual behavior.

Because if you can predict what a person is going to do you can choose which advert to serve to increase the chance they’ll click. (Or as Mark Zuckerberg puts it: ‘Senator, we run ads.’)

This means that a regulatory intervention that interferes with an ad tech giant’s ability to pool and process personal data starts to look really interesting. Because a Facebook that can’t join data dots across its sprawling social empire — or indeed across the mainstream web — wouldn’t be such a massive giant in terms of data insights. And nor, therefore, surveillance oversight.

Each of its platforms would be forced to be a more discrete (and, well, discreet) kind of business.

Competing against data-siloed platforms with a common owner — instead of a single interlinked mega-surveillance-network — also starts to sound almost possible. It suggests a playing field that’s reset, if not entirely levelled.

(Whereas, in the case of Android, the European Commission did not order any specific remedies — allowing Google to come up with ‘fixes’ itself; and so to shape the most self-serving ‘fix’ it can think of.)

Meanwhile, just look at where Facebook is now aiming to get to: A technical unification of the backend of its different social products.

Such a merger would collapse even more walls and fully enmesh platforms that started life as entirely separate products before were folded into Facebook’s empire (also, let’s not forget, via surveillance-informed acquisitions).

Facebook’s plan to unify its products on a single backend platform looks very much like an attempt to throw up technical barriers to antitrust hammers. It’s at least harder to imagine breaking up a company if its multiple, separate products are merged onto one unified backend which functions to cross and combine data streams.

Set against Facebook’s sudden desire to technically unify its full-flush of dominant social networks (Facebook Messenger; Instagram; WhatsApp) is a rising drum-beat of calls for competition-based scrutiny of tech giants.

This has been building for years, as the market power — and even democracy-denting potential — of surveillance capitalism’s data giants has telescoped into view.

Calls to break up tech giants no longer carry a suggestive punch. Regulators are routinely asked whether it’s time. As the European Commission’s competition chief, Margrethe Vestager, was when she handed down Google’s latest massive antitrust fine last summer.

Her response then was that she wasn’t sure breaking Google up is the right answer — preferring to try remedies that might allow competitors to have a go, while also emphasizing the importance of legislating to ensure “transparency and fairness in the business to platform relationship”.

But it’s interesting that the idea of breaking up tech giants now plays so well as political theatre, suggesting that wildly successful consumer technology companies — which have long dined out on shiny convenience-based marketing claims, made ever so saccharine sweet via the lure of ‘free’ services — have lost a big chunk of their populist pull, dogged as they have been by so many scandals.

From terrorist content and hate speech, to election interference, child exploitation, bullying, abuse. There’s also the matter of how they arrange their tax affairs.

The public perception of tech giants has matured as the ‘costs’ of their ‘free’ services have scaled into view. The upstarts have also become the establishment. People see not a new generation of ‘cuddly capitalists’ but another bunch of multinationals; highly polished but remote money-making machines that take rather more than they give back to the societies they feed off.

Google’s trick of naming each Android iteration after a different sweet treat makes for an interesting parallel to the (also now shifting) public perceptions around sugar, following closer attention to health concerns. What does its sickly sweetness mask? And after the sugar tax, we now have politicians calling for a social media levy.

Just this week the deputy leader of the main opposition party in the UK called for setting up a standalone Internet regulatory with the power to break up tech monopolies.

Talking about breaking up well-oiled, wealth-concentration machines is being seen as a populist vote winner. And companies that political leaders used to flatter and seek out for PR opportunities find themselves treated as political punchbags; Called to attend awkward grilling by hard-grafting committees, or taken to vicious task verbally at the highest profile public podia. (Though some non-democratic heads of state are still keen to press tech giant flesh.)

In Europe, Facebook’s repeat snubs of the UK parliament’s requests last year for Zuckerberg to face policymakers’ questions certainly did not go unnoticed.

Zuckerberg’s empty chair at the DCMS committee has become both a symbol of the company’s failure to accept wider societal responsibility for its products, and an indication of market failure; the CEO so powerful he doesn’t feel answerable to anyone; neither his most vulnerable users nor their elected representatives. Hence UK politicians on both sides of the aisle making political capital by talking about cutting tech giants down to size.

The political fallout from the Cambridge Analytica scandal looks far from done.

Quite how a UK regulator could successfully swing a regulatory hammer to break up a global Internet giant such as Facebook which is headquartered in the U.S. is another matter. But policymakers have already crossed the rubicon of public opinion and are relishing talking up having a go.

That represents a sea-change vs the neoliberal consensus that allowed competition regulators to sit on their hands for more than a decade as technology upstarts quietly hoovered up people’s data and bagged rivals, and basically went about transforming themselves from highly scalable startups into market-distorting giants with Internet-scale data-nets to snag users and buy or block competing ideas.

The political spirit looks willing to go there, and now the mechanism for breaking platforms’ distorting hold on markets may also be shaping up.

The traditional antitrust remedy of breaking a company along its business lines still looks unwieldy when faced with the blistering pace of digital technology. The problem is delivering such a fix fast enough that the business hasn’t already reconfigured to route around the reset. 

Commission antitrust decisions on the tech beat have stepped up impressively in pace on Vestager’s watch. Yet it still feels like watching paper pushers wading through treacle to try and catch a sprinter. (And Europe hasn’t gone so far as trying to impose a platform break up.) 

But the German FCO decision against Facebook hints at an alternative way forward for regulating the dominance of digital monopolies: Structural remedies that focus on controlling access to data which can be relatively swiftly configured and applied.

Vestager, whose term as EC competition chief may be coming to its end this year (even if other Commission roles remain in potential and tantalizing contention), has championed this idea herself.

In an interview on BBC Radio 4’s Today program in December she poured cold water on the stock question about breaking tech giants up — saying instead the Commission could look at how larger firms got access to data and resources as a means of limiting their power. Which is exactly what the German FCO has done in its order to Facebook. 

At the same time, Europe’s updated data protection framework has gained the most attention for the size of the financial penalties that can be issued for major compliance breaches. But the regulation also gives data watchdogs the power to limit or ban processing. And that power could similarly be used to reshape a rights-eroding business model or snuff out such business entirely.

The merging of privacy and antitrust concerns is really just a reflection of the complexity of the challenge regulators now face trying to rein in digital monopolies. But they’re tooling up to meet that challenge.

Speaking in an interview with TechCrunch last fall, Europe’s data protection supervisor, Giovanni Buttarelli, told us the bloc’s privacy regulators are moving towards more joint working with antitrust agencies to respond to platform power. “Europe would like to speak with one voice, not only within data protection but by approaching this issue of digital dividend, monopolies in a better way — not per sectors,” he said. “But first joint enforcement and better co-operation is key.”

The German FCO’s decision represents tangible evidence of the kind of regulatory co-operation that could — finally — crack down on tech giants.

Blogging in support of the decision this week, Buttarelli asserted: “It is not necessary for competition authorities to enforce other areas of law; rather they need simply to identity where the most powerful undertakings are setting a bad example and damaging the interests of consumers.  Data protection authorities are able to assist in this assessment.”

He also had a prediction of his own for surveillance technologists, warning: “This case is the tip of the iceberg — all companies in the digital information ecosystem that rely on tracking, profiling and targeting should be on notice.”

So perhaps, at long last, the regulators have figured out how to move fast and break things.



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HypeHop is a product to fix sponsored videos

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I’ve been thinking hard about the concept of sponsored content – you can find some of it on TechCrunch if you look hard enough and it appears almost everywhere else. It’s an important consideration because as a online journalist I’ve heard everything from “How much did Apple pay you to post this?” to “How much can I pay you to post something to TechCrunch?”

And I’m sick of it.

Journalists afflict the comfortable and comfort the afflicted. Marketers comfort the comfortable. The only person who wins in that struggle is the guy with the biggest wallet to buy as much coverage as possible. Crypto, for all its faults, promises to change that.

Now I’d like to introduce something else I built (and I never do this on TC so I think it’s pretty important and interesting.) It’s called HypeHop and it’s an experiment in sponsored video. Most sponsored video appears in front of your YouTube selections like a cold sore – you know it’s there, it’s unwanted, and you know it will take a while for it to go away. For example, this deeply applicable ad appeared as my son was watching Nerf videos, for example, proving that algorithms aren’t always the smartest.

Enough.

In the current system marketers pay media platforms for their audience. The marketer gets eyeballs, the media platform gets money, and the user gets bupkus. I wanted to try to change that.

With a few friends I made something called HypeHop. It basically pays you for watching videos. At this point it’s a proof-of-concept that accepts uploaded videos, a small payment for hosting, and then watches the viewer to ensure they are watching the video. “Watching the viewer?” you ask? Sure. We’re being surveilled every day. Isn’t it time we were paid for it?

Viewers currently get about 40 cents in BTC per view. I created a demo video with my son here to show off how it worked and preseeded some videos with BTC to test. Thus far it’s been an interesting experiment.

I’d love to talk to like-minded folks about expanding this technology. I could, for example, see this as a tool to make sponsored posts more interesting to readers – who doesn’t want a few pennies for reading marketing dross – and a way to monetize many marketing tools for readers, producers, and marketers. Ultimately this is a win-win-win in a win-win-lose world and it’s vitally important we look at it as a way forward in our fight against fake news and faker marketing.

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How cities can fix tourism hell

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A steep and rapid rise in tourism has left behind a wake of economic and environmental damage in cities around the globe. In response, governments have been responding with policies that attempt to limit the number of visitors who come in. We’ve decided to spare you from any more Amazon HQ2 talk and instead focus on why cities should shy away from reactive policies and should instead utilize their growing set of technological capabilities to change how they manage tourists within city lines.

Consider this an ongoing discussion about Urban Tech, its intersection with regulation, issues of public service, and other complexities that people have full PHDs on. I’m just a bitter, born-and-bred New Yorker trying to figure out why I’ve been stuck in between subway stops for the last 15 minutes, so please reach out with your take on any of these thoughts: @Arman.Tabatabai@techcrunch.com.
  

The struggle for cities to manage “Overtourism”

Well – it didn’t take long for the phrase “overtourism” to get overused. The popular buzzword describes the influx of tourists who flood a location and damage the quality of life for full-time residents. The term has become such a common topic of debate in recent months that it was even featured this past week on Oxford Dictionaries’ annual “Words of the Year” list.

But the expression’s frequent appearance in headlines highlights the growing number of cities plagued by the externalities from rising tourism.

In the last decade, travel has become easier and more accessible than ever. Low-cost ticketing services and apartment-rental companies have brought down the costs of transportation and lodging; the ubiquity of social media has ticked up tourism marketing efforts and consumer demand for travel; economic globalization has increased the frequency of business travel; and rising incomes in emerging markets have opened up travel to many who previously couldn’t afford it.

Now, unsurprisingly, tourism has spiked dramatically, with the UN’s World Tourism Organization (UNWTO) reporting that tourist arrivals grew an estimated 7% in 2017 – materially above the roughly 4% seen consistently since 2010. The sudden and rapid increase of visitors has left many cities and residents overwhelmed, dealing with issues like overcrowding, pollution, and rising costs of goods and housing.

The problems cities face with rising tourism are only set to intensify. And while it’s hard for me to imagine when walking shoulder-to-shoulder with strangers on tight New York streets, the number of tourists in major cities like these can very possibly double over the next 10 to 15 years.

China and other emerging markets have already seen significant growth in the middle-class and have long runway ahead. According to the Organization for Economic Co-operation and Development (OECD), the global middle class is expected to rise from the 1.8 billion observed in 2009 to 3.2 billion by 2020 and 4.9 billion by 2030. The new money brings with it a new wave of travelers looking to catch a selfie with the Eiffel Tower, with the UNWTO forecasting international tourist arrivals to increase from 1.3 billion to 1.8 billion by 2030.

With a growing sense of urgency around managing their guests, more and more cities have been implementing policies focused on limiting the number of tourists that visit altogether by imposing hard visitor limits, tourist taxes or otherwise.

But as the UNWTO points out in its report on overtourism, the negative effects from inflating tourism are not solely tied to the number of visitors in a city but are also largely driven by touristy seasonality, tourist behavior, the behavior of the resident population, and the functionality of city infrastructure. We’ve seen cities with few tourists, for example, have experienced similar issues to those experienced in cities with millions.

While many cities have focused on reactive policies that are meant to quell tourism, they should instead focus on technology-driven solutions that can help manage tourist behavior, create structural changes to city tourism infrastructure, while allowing cities to continue capturing the significant revenue stream that tourism provides.

Smart city tech enabling more “tourist-ready” cities

THOMAS COEX/AFP/Getty Images

Yes, cities are faced with the headwind of a growing tourism population, but city policymakers also benefit from the tailwind of having more technological capabilities than their predecessors. With the rise of smart city and Internet of Things (IoT) initiatives, many cities are equipped with tools such as connected infrastructure, lidar-sensors, high-quality broadband, and troves of data that make it easier to manage issues around congestion, infrastructure, or otherwise.

On the congestion side, we have already seen companies using geo-tracking and other smart city technologies to manage congestion around event venues, roads, and stores. Cities can apply the same strategies to manage the flow of tourist and resident movement.

And while you can’t necessarily prevent people from people visiting the Louvre or the Coliseum, cities are using a variety of methods to incentivize the use of less congested space or disperse the times in which people flock to highly-trafficked locations by using tools such as real-time congestion notifications, data-driven ticketing schedules for museums and landmarks, or digitally-guided tours through uncontested routes.

Companies and municipalities in cities like London and Antwerp are already working on using tourist movement tracking to manage crowds and help notify and guide tourists to certain locations at the most efficient times. Other cities have developed augmented reality tours that can guide tourists in real-time to less congested spaces by dynamically adjusting their routes.

A number of startups are also working with cities to use collected movement data to help reshape infrastructure to better fit the long-term needs and changing demographics of its occupants. Companies like Stae or Calthorpe Analytics use analytics on movement, permitting, business trends or otherwise to help cities implement more effective zoning and land use plans. City planners can use the same technology to help effectively design street structure to increase usable sidewalk space and to better allocate zoning for hotels, retail or other tourist-friendly attractions.

Focusing counter-overtourism efforts on smart city technologies can help adjust the behavior and movement of travelers in a city through a number of avenues, in a way tourist caps or tourist taxes do not.

And at the end of the day, tourism is one of the largest sources of city income, meaning it also plays a vital role in determining the budgets cities have to plow back into transit, roads, digital infrastructure, the energy grid, and other pain points that plague residents and travelers alike year-round. And by disallowing or disincentivizing tourism, cities can lose valuable capital for infrastructure, which can subsequently exacerbate congestion problems in the long-run.

Some cities have justified tourist taxes by saying the revenue stream would be invested into improving the issues overtourism has caused. But daily or upon-entry tourist taxes we’ve seen so far haven’t come close to offsetting the lost revenue from disincentivized tourists, who at the start of 2017 spent all-in nearly $700 per day in the US on transportation, souvenirs and other expenses according to the U.S. National Travel and Tourism Office.

In 2017, international tourism alone drove to $1.6 trillion in earnings and in 2016, travel & tourism accounted for roughly 1 in 10 jobs in the global economy according to the World Travel and Tourism Council. And the benefits of travel are not only economic, with cross-border tourism promoting transfers of culture, knowledge and experience.

But to be clear, I don’t mean to say smart city technology initiatives alone are going to solve overtourism. The significant wave of growth in the number of global travelers is a serious challenge and many of the issues that result from spiking tourism, like housing affordability, are incredibly complex and come down to more than just data. However, I do believe cities should be focused less on tourist reduction and more on solutions that enable tourist management.

Utilizing and allocating more resources to smart city technologies can not only more effectively and structurally limit the negative impacts from overtourism, but it also allows cities to benefit from a significant and high growth tourism revenue stream. Cities can then create a virtuous cycle of reinvestment where they plow investment back into its infrastructure to better manage visitor growth, resident growth, and quality of life over the long-term. Cities can have their cake and eat it too.

And lastly, some reading while in transit:

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Stitch Fix tumbles 20% in after-hours trading following lukewarm earnings report

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Shares of Stitch Fix plunged more than 20 percent in after-hours trading on Monday following the release of a tepid fourth-quarter earnings report.

The subscription-based retailer and personal styling service’s adjusted earnings exceeded analyst expectations, but its revenue and active users fell short of estimates. In the quarter ending July 28, Stitch Fix reported a net income of $18.3 million, or 18 cents per share, up from analyst’s 4 cents per share estimate. Its reported net revenue of $318.3 million, a 23 percent year-over-year increase, failed to meet analyst expectations of $318.6 million.

The San Francisco-based company’s user base grew 25 percent YoY, to 2.7 million, another disappointment to Wall Street, which was looking for more than 2.8 million.

Stitch Fix, which has a market cap of nearly $4.4 billion, also reported fiscal year 2018 earnings. In its first year as a public company, Stitch Fix had $1.2 billion in net revenue, $44.9 million in net income and an adjusted EBITDA of $53.6 million.

Founder Katrina Lake took the company public on the Nasdaq in November 2017 in a highly anticipated consumer IPO. The company raised $120 million in the process, selling 8 million shares after making a last-minute decision to downsize its offering ahead of its first day of trading.

Following the release of its first-ever earnings report in December, shares of Stitch Fix similarly took a huge hit, plunging down 10 percent on the news.

The company usually finds its footing and, overall, its stock has continued to climb since its IPO. Stitch Fix had its best day yet on September 18 when its stock was valued at $52.44 apiece, up from the initial price of $15 apiece.

Alongside its earnings report, Stitch Fix announced the upcoming launch of Stitch Fix U.K., its first-ever international market expected to be available to consumers by the end of FY 2019. Following the release of its Q3 earnings report, the company announced the hire of Deirdre Findlay as its new chief marketing officer, as well as the launch of Stitch Fix Kids.

On the earnings call Monday, Lake emphasized how both services, Stitch Fix Kids and Stitch Fix U.K., will augment Stitch Fix’s total addressable market.

“We believe our ability to create a uniquely personalized shopping experience is something that will resonate with consumers and brands outside of the U.S.,” Lake said in a statement.

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