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Trump’s Huawei ban also causing tech shocks in Europe

Judhajeet Das

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The escalating U.S.-China trade war that’s seen Chinese tech giant Huawei slapped on a U.S. trade blacklist is causing ripples of shock across Europe too, as restrictions imposed on U.S. companies hit regional suppliers concerned they could face U.S. restrictions if they don’t ditch Huawei.

Reuters reports shares fell sharply today in three European chipmakers — Infineon Technologies, AMS and STMicroelectronics — after reports suggested some already had, or were about to, halt shipments to Huawei following the executive order barring U.S. firms from trading with the Chinese tech giant.

The interconnectedness of high-tech supply chains coupled with U.S. dominance of the sector and Huawei’s strong regional position as a supplier of cellular, IT and network kit in Europe suddenly makes political risk a fast-accelerating threat for EU technology companies, large and small.

On the small side is French startup Qwant, which competes with Google by offering a pro-privacy search engine. In recent months it has been hoping to leverage a European antitrust decision against Google  Android last year to get smartphones to market in Europe that preload its search engine, not Google’s.

Huawei was its intended first major partner for such devices. Though, prior to recent trade war developments, it was already facing difficulties related to price incentives Google included in reworked EU Android licensing terms.

Still, the U.S.-China trade war threatens to throw a far more existential spanner in European Commission efforts to reset the competitive planning field for smartphone services — certainly if Google’s response to Huawei’s blacklisting is to torch its supply of almost all Android-related services, per Reuters.

A key aim of the EU antitrust decision was intended to support the unbundling of popular Google services from Android so that device makers can try selling combinations that aren’t entirely Google-flavored — while still being able to offer enough “Google” to excite consumers (such as preloading the Play Store but with a different search and browser bundle instead of the usual Google + Chrome combo).

Yet if Google intends to limit Huawei’s access to such key services, there’s little chance of that.

(In a statement responding to the Reuters report Google suggested it’s still deciding how to proceed, with a spokesperson writing: “We are complying with the order and reviewing the implications. For users of our services, Google Play and the security protections from Google Play Protect will continue to function on existing Huawei devices.”)

Going on Google’s initial response, Qwant co-founder and CEO Eric Léandri told us he thinks Google has overreacted — even as he dubbed the U.S.-China trade war “world war III — economical war but it’s a world war for sure.”

“I really need to see exactly what President Trump has said about Huawei and how to work with them. Because I think maybe Google has overreacted. Because I haven’t [interpreted it] that way so I’m very surprised,” he told TechCrunch.

“If Huawei can be [blacklisted] what about the others?,” he added. “Because I would say 60% of the cell phone sales in Europe today are coming from China. Huawei or ZTE, OnePlus and the others — they are all under the same kind of risk.

“Even some of our European brands who are very small like Nokia… all of them are made in China, usually with partnership with these big cell phone manufacturers. So that means several things but one thing that I’m sure is we should not rely on one OS. It would be difficult to explain how the Play Store is not as important as the search in Android.”

Léandri also questioned whether Google’s response to the blacklisting will include instructing Huawei not to even use its search engine — a move that could impact its share of the smartphone search market.

“At the end of the day there is just one thing I can say because I’m just a search engine and a European one — I haven’t seen Google asking to not be by default in Huawei as search engine. If they can be in the Huawei by default as a search engine so I presume that everyone else can be there.”

Léandri said Qwant will be watching to see what Huawei’s next steps will be — such as whether it will decide to try offering devices with its own store baked in in Europe.

And indeed how China will react.

“We have to understand the result politically, globally, the European consequences. The European attitude. It’s not only American and China — the rest of the world exists,” he said.

“I have plan b, plan c, plan d, plan f. To be clear we are a startup — so we can have tonnes of plans, The only thing is right now is it’s too enormous.

“I know that they are the two giants in the tech field… but the rest of the world have some words today and let’s see how the European Commission will react, my government will react and some of us will react because it’s not only a small commercial problem right now. It’s a real political power demonstration and it’s global so I will not be more — I am nobody in all this. I do my job and I do my job well and I will use the maximum opportunity that I can find on the market.”

We’ve reached out to the Commission to ask how it intends to respond to escalating risks for European tech firms as Trump’s trade war steps up.

Also today, Reuters reports that the German Economy Minister is examining the impact of U.S. sanctions against Huawei on local companies.

But while a startup like Qwant waits to see what the next few months will bring — and how the landscape of the smartphone market might radically reconfigure in the face of sharply spiking political risk, a different European startup is hoping to catch some uplift: Finland-based Jolla steers development of a made-in-Europe Android alternative, called Sailfish OS.

It’s a very tiny player in a Google-dominated smartphone world. Yet could be positioned to make gains amid U.S. and Chinese tech clashes — which in turn risk making major platform pieces feel a whole lot less stable.

A made-in-Europe non-Google-led OS might gain more ground among risk averse governments and enterprises — as a sensible hedge against Trump-fueled global uncertainty.

“Sailfish OS, as a non-American, open-source based, secure mobile OS platform, is naturally an interesting option for different players — currently the interest is stronger among corporate and governmental customers and partners, as our product offering is clearly focused on this segment,” says Jolla co-founder and CEO Sami Pienimäki .

“Overall, there definitely has been increased interest towards Sailfish OS as a mobile OS platform in different parts of the world, partly triggered by the on-going political activity in many locations. We have also had clearly more discussions with e.g. Chinese device manufacturers, and Jolla has also recently started new corporate and governmental customer projects in Europe.”

Tech Passionate and Heavy Geek! Into Blogging world since 2014 and never looked back since then :) I am also a YouTube Video Producer and a Aspiring Entrepreneur. Founder, MyDroidDoes

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Android

The Mate 30 is a moment of truth for Huawei

Judhajeet Das

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The newly unveiled smartphone is a tentative step toward independence from Google

We’ve known this day would come for a long time now. Over the past several months, however, it feels like it has arrived in slow motion. Seemingly legitimate concerns over security and sanction violations have been muddled by chest-puffing and braggadocio and large-headed leaders promising to do deals. Executives were arrested in Canada and the company was added to a trade blacklist, only to be given a temporary reprieve.

This morning, in spite of it all, Huawei unveiled its latest flagship. The Mate 30 Pro is a beast of a smartphone, as we’ve come to expect from the Chinese electronics powerhouse. It has a quartet of cameras aligned in a ring up top. On the flip side, a 6.53-inch flexible OLED hugs the corners of the handset, boasting an always-on functionality — the long-awaited new feature that served as the central selling point for Apple’s latest wearable.

From a 100-foot view, however, it seems inevitable that no one will remember the handset for its screen or cameras or beefy 4,500mAh. It’s what’s missing that’s the most notable. The Mate 30 and Mate 30 Pro don’t use full Android, but rather an open-source version of the operating system based on it. More importantly, they are missing Google’s fundamental apps like Gmail, Maps and Chrome, a central part of the Android experience. Worse yet, there’s no Google Play Store to download them.

The solutions for now are mostly stop-gap. There’s a Huawei-branded browser that lets you download apps through a Huawei-branded channel. There are 45,000 or so. Not bad, but nowhere near the 2.7 million you’ll find via Google Play. There will be better solutions to these, but they take a lot of time and money. Huawei’s got plenty of the latter, though the former has been the cause for some debate amongst those following the company.

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Afore Capital raises second pre-seed venture capital fund

Judhajeet Das

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As expectations from seed investors intensify, a new stage of investment has established itself earlier in the venture-backed company life cycle.

Known as “pre-seed” investing, one of the first legitimate outfits to double down on the stage has refueled, closing its second fund on $77 million.

Afore Capital’s sophomore fund is likely the largest pool of venture capital yet to focus exclusively on pre-seed companies, or pre-product businesses seeking their first bout of institutional capital. In many cases, a pre-seed startup may even be “pre-idea,” yet to fully incorporate. While some funds are happy to invest that early, Afore seeks slightly more mature companies.

Afore invests between $500,000 and $1 million in nascent startups. As it kicks off its second fund, founding partners Anamitra Banerji and Gaurav Jain tell TechCrunch they plan to lead all of their investments.

We have the opportunity to build a firm that defines a category. – Afore founding partner Anamitra Banerji

Standouts in Afore’s existing portfolio include the no-fee credit card company Petal — which has raised roughly $50 million to date — mobile executive coaching business BetterUp, childcare information platform Winnie and Modern Health, a B2B mental wellness platform.

Afore portfolio companies have raised more than $360 million in follow-on funding, with an aggregate market cap of $1.5 billion, Jain, the founding product manager at Android Nexus and former principal at Founder Collective, tells TechCrunch. “These are high-quality teams with high-quality projects and ideas.”

Jain and Banerji — a founding product manager at Twitter and former partner at Foundation Capital — began raising capital for Afore’s $47 million debut fund in 2016. Since then, the landscape for seed investing has shifted. Early-stage investors have begun funneling larger sums of capital to standout teams at the seed, while billion-dollar venture capital funds set aside capital for serial entrepreneurs working on their next big idea. As a result, deal sizes have swelled and deal count has shrunk simultaneously.

“Pre-seed has replaced seed in the venture ecosystem,” Banerji tells TechCrunch. “We saw this early as a result of both of us having been at funds. We knew that this was going to be a massive category just like seed was before it. Now we think it’s clearly here to stay and we have the opportunity to build a firm that defines a category.”

Since launching the firm, the pair explain they’ve noticed more and more founders explicitly stating that they are in the market for a pre-seed round, a statement you wouldn’t have heard as recently as two years ago.

This is a result of Afore’s efforts to legitimize the stage through investments and programming, including its annual Pre-Seed Summit. Though Afore is certainly not the only VC fund focused on the earliest stage of startup investing — other firms deploying capital at the stage include Hustle Fund, which closed an $11.8 million debut fund last year, plus the $20 million immigrant-focused pre-seed fund Unshackled Ventures and the predominant seed and pre-seed stage firm Precursor Ventures, which announced a $31 million second fund earlier this year.

In the past year alone, more than $200 million has been dedicated to the pre-seed stage, with at least nine new funds launching to nurture early-stage startups.

More and more firms are setting up shop at the pre-seed stage as competition at the seed stage reaches new heights. As we’ve previously reported, monster funds are becoming increasingly active at the seed stage, muscling seed funds out of top deals with less dilutive offers. While the pre-seed stage, for the most part, remains protected from competition at the later stage, these firms still have to compete.

“Nobody wants to lose sight of a deal, so they are willing to toss small amounts of capital very early behind interesting founders,” Jain said. “But frankly, we aren’t sure if it’s good for a company to raise that much capital that early in their life cycle.”

Working with a fund that isn’t passionate about what you are building or familiar with the plights of the stage of your business is terrible for founders, adds Jain. Pairing with a focused fund like Afore, on the other hand, allows for “incentive alignment.”

Afore invests across all industries, preferring to back startups in categories “before they are categories.”

“What we are looking for is deep authenticity and passion around the product they are building,” says Banerji. “Ideas on their own aren’t enough. Founder resumes on their own aren’t enough. While we do care about all of those aspects, we get crazy about their clarity of thought in the short term.”

“We don’t take the point of view of ‘here is some money, it’s OK to lose it,’ ” he adds. “For us to invest, the founder must be all in. And we generally don’t invest in celebrity founders; we are going after the underdog founder.”

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Get popcorn for iOS 13’s privacy pop-ups of creepy Facebook data grabs

Judhajeet Das

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Privacy-minded changes to smartphone operating systems which foreground the background activity of third party apps are helping to spotlight more of the surveillance infrastructure deployed by adtech giants to track and profile human eyeballs for profit.

To wit: iOS 13, which will be generally released later this week, has already been spotted catching Facebook’s app trying to use Bluetooth to track nearby users.

facebook BT

Why might Facebook want to do this? Matching Bluetooth (and wif-fi) IDs that share physical location could allow it to supplement the social graph it gleans by data-mining user-to-user activity on its platform.

Such location tracking provides a physical confirm that individuals were (at very least) in close proximity.

Combined with personal data Facebook also holds on people, and contextual data on the nature of the location itself — a bar, say, or a house — there’s a clear path for the company to make inferences about the nature of the relationship between the people who it’s repurposed short range wireless tech to determine are in close contact.

For a company that makes money by serving targeted ads at humans there are clear commercial reasons for Facebook to seek to intimately understand people’s friend networks.

Facebook piggybacking on people’s use of Bluetooth for benign purposes like pairing devices so that its ad business can ‘pair’ people is the sneaky modus operandi that iOS 13 has caught in the act here.

Ads are Facebook’s business, as CEO Mark Zuckerberg famously told the senate last year. But it’s worth noting the social network giant recently sought to push into the dating space — giving it a fresh, product-based incentive to pry into where and with whom humans are spending their time.

Algorithmic matchmaking based on cold signals like shared interests (in basic Facebook currency this might mean stuff like liking the same pages and events) is of course nothing new.

Yet mix in hot-blooded signals gathered by watching who actually mingles with whom, where and when — by repurposing Bluetooth to harvest interpersonal interactions via tracking people’s physical movements — and Facebook can take its curtain-twitching surveillance of human behavior to the next level.

The path of least resistance to tracking people’s movements is if Facebook app users are opting in to location tracking on their devices. Which means users enabling Location Services — a location tracking feature on smartphones that covers GPS, Bluetooth and crowd-sources wi-fi hotspots and mobile cell towers.

Unsurprisingly, then Facebook Dating requires Location Services to be enabled to function. The company confirmed to us that the Facebook app prompts dating users to enable Location Services if they haven’t already. Facebook also told us it doesn’t use wi-fi or Bluetooth to determine a person’s precise location if a user has Location Services turned off.

It also made a point of emphasizing that users can switch Location Services off at any time. Just not if they wish to use, er, Facebook Dating…

As per usual the company is tangling separate purposes for data processing in a way that denies people a meaningful choice over protecting their privacy. Hence Facebook dating users get to ‘choose’ between being able to use the service; or being able to blanket-deny Facebook the ability to track their physical movements. Like it or lump it.

iOS 13’s new privacy pop-ups to call out background app activity are a clear response to such disingenuous methods by an industry Apple CEO Tim Cook has dubbed the data industrial complex — putting a degree of control back in the hands of the user, who gets a third choice of manually disallowing Bluetooth proximity tracking (in the above example).

Android 10 has also recently expanded the location tracking controls it offers users — with the ability to only share location data with apps while you use them. Though Google’s OS lags far behind what Apple is now offering with these granular pop-ups.

Facebook has responded to awkward (for it) privacy changes incoming at the smartphone OS level by putting out an update on location services last week — where it seeks to get ahead of the deluge of data-grab warnings that iOS users of the Facebook app are likely to experience as they update to iOS 13.

Here it tries to spin Apple’s pro-active foregrounding of apps’ background tracking tactics via push notifications as “reminders” — in just one amusing rebrand.

But in a truly shameless contradiction Facebook also goes on to claim that: “You’re in control of who sees your location on Facebook” (because it says users can make use of the Location Services setting on a phone or tablet to deny tracking) — before admitting that switching off Location Services doesn’t actually mean Facebook will not track your location.

Just because you’re signalling very clearly to Facebook that you don’t want your location to be collected by Facebook doesn’t mean Facebook is going to respect that. Hell no!

“We may still understand your location using things like check-ins, events and information about your internet connection,” it writes. (For a clearer understanding of Facebook’s use of the word “understand” in that sentence we suggest you try substituting the word “steal”.)

In a final shameless kicker — in which Facebook almost appears to be trying to claim credit for smartphone OSes building more privacy features in response to its data grabs — the company seeks to finish on a forward-gazing note, per its preferred crisis PR custom, writing: “We’ll continue to make it easier for you to control how and when you share your location.”

Facebook dishing out misleading qualifications (e.g. “easier”) that whitewash the extent of its rampant data grabs is nothing new. But how much longer it can hope to rely on such flimsy figleaves to cover its privacy sins as the winds of change come rattling through remains to be seen…

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