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Main article: China

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African fintech firm Flutterwave raises $35M, partners with Worldpay

14:00 | 21 January

San Francisco and Lagos-based fintech startup Flutterwave has raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.

With the funding, Flutterwave will invest in technology and business development to grow market share in existing operating countries, CEO Olugbenga Agboola — aka GB — told TechCrunch.

The company will also expand capabilities to offer more services around its payment products.

More than payments

“We don’t just want to be a payment technology company, we have sector expertise around education, travel, gaming, e-commerce, fintech companies. They all use our expertise,” said GB.

That means Flutterwave will provide more solutions around the broader needs of its clients.

The Nigerian-founded startup’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad.

Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Booking.com and e-commerce company Jumia.

In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data.

Flutterwave did the payment integration for U.S. pop-star Cardi B’s 2019 performances in Nigeria and Ghana. Those are two of the countries in which the startup operates, in addition to South Africa, Uganda, Kenya, Tanzania, Zambia, the U.K. and Rwanda.

Flutterwave Cardi B Nigeria“We want to scale in all those markets and be the payment processor of choice,” GB said.

The company will hire more business development staff and expand its developer team to create more sector expertise, according to GB.

“Our business goes beyond payments. People don’t want to just make payments, they want to do something,” he said. And Fluterwave aims to offer more capabilities toward what those clients want to do in Africa.

GB Flutterwave disrupt

Olugbenga Agboola, aka GB

“If you are a charity that wants to raise money for cancer research in Ghana, or you want to sell online, or you’re Cardi B…who wants to do concerts in Africa…we want to be able to set up payments, write the code and create the platform for those needs,” GB explained.

That also means Flutterwave, which built its early client base across global companies, aims to serve smaller African businesses, including startups. Current customers include African-founded tech companies, such as moto ride-hail venture Max.ng.

Worldpay partnership

The new round makes Flutterwave the payment provider for Worldpay in Africa.

“With this partnership, any Worldpay merchant in Europe or the U.S. can accept any African payment. If someone goes to pay Netflix with an African card, it just works,” GB said.

In 2019, Worldpay was acquired for a reported $35 billion by FIS, a U.S. financial services provider. At the time of the purchase, it was projected the two companies would generate revenues of $12 billion annually, yet neither has notable presence in Africa.

Therein lies the benefit of collaborating with Flutterwave.

FIS’s Head of Ventures Joon Cho confirmed the partnership with TechCrunch. FIS also backed Flutterwave’s $35 million Series B. US VC firms Greycroft and eVentures led the round, with participation of Visa, Green Visor and African fund CRE Venture Capital.

Flutterwave’s latest funding brings the company’s total investment to $55 million and follows a year in which the fintech company announced a series of weighty partnerships.

In July 2019, the startup joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.

The Alipay collaboration followed one between Flutterwave and Visa to launch a consumer payment product for Africa, called GetBarter.

Flutterwave and African fintech

Flutterwave’s $35 million round and latest partnership are among the reasons the startup has become a standout in Africa’s digital-finance landscape.

As a sector, fintech gains the bulk of dealflow and the majority of startup capital flowing to African startups annually. VC to Africa totaled $1.35 billion in 2019, according to WeeTracker’s latest stats.

While a number of payment startups and products have scaled — see Paga in Nigeria and M-Pesa in Kenya — the majority of the continent’s fintech companies are P2P in focus and segregated to one or two markets.

Flutterwave’s platform has served the increased B2B business payment needs spurred by the decade of growth and reform that has occurred in Africa’s core economies.

The value the startup has created is underscored not just by transactional volume the company generates, but the partnerships it has attracted.

A growing list of the masters of the payment universe — Visa, Alipay, Worldpay — have shown they need Flutterwave to be relevant in Africa.

 


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Foxconn and Fiat Chrysler partner to develop EVs and an “internet of vehicles” business

02:15 | 17 January

Foxconn Technology Group, the Taiwanese electronics giant best known for its iPhone manufacturing contract, is forming a joint venture with Fiat Chrysler Automobiles to build electric vehicles in China.

The joint venture was disclosed in a regulatory filing. Nikkei was first to report the joint venture.

According to the filing, each party will own 50% of the venture to develop and manufacture electric vehicles and engage in an IOV, what Foxconn parent company Hon Hai calls the “internet of vehicles” business. Hon Hai’s direct shareholding in the subsidiary will not exceed 40%, the filing says.

The venture will initially focus on making electric vehicles for China. But these vehicles could be exported at a later date, according to Foxconn.

The wording in the regulatory filing suggests these will be new vehicles that are designed and built from the ground up and not a project to electrify any of the vehicles in FCA’s current portfolio.

The venture could give FCA a better path to capturing more business in China, the world’s largest market for electric vehicles.

Foxconn has invested in other electric vehicle ventures before, although this appears to be the first tie-up in which the company will develop and build the product. EV startup Byton was originally started as Future Mobility Corporation as a joint venture between Harmony Auto, Tencent and Foxconn. And Foxconn is also an investor in XPeng Motors, the Chinese electric vehicle startup that recently raised a fresh injection of $400 million in capital and has taken on Xiaomi  as a strategic investor.

 


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Lucky coffee, unicorn stumbles, and Sam Altman’s YC wager

17:00 | 10 January

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

This week we had TechCrunch’s Alex Wilhelm and

on hand to dig into the news, with
on the dials and more news than we could possibly cram into 30 minutes. So we went a bit over; sorry about that.

We kicked off by running through a few short-forms to get things going, including:

  • Alex wanted to talk about his recent story on Lily AI’s $12.5 million Series A. Canaan led the round into the ecommerce-focused recommendation engine that has a cool take on what people care about.
  • Danny talked about the acquisition of Armis Security to Insight for $1.1 billion, the VC round for self-driving forklift startup Vecna, and an outside-the-Valley round for Houston-based HighRadius.

Turning to longer cuts, the team dug into the latest from SoftBank, its Vision Fund, and the successes and struggles of its enormous startup bets. Leading the news cycle this week were layoffs at Zume, a robotic pizza delivery venture that is no longer pursuing robotic pizza delivery. Now it’s working on sustainable packaging. Cool, but it’s going to be hard for the company to grow into its valuation while pivoting.

Other issues have come up — more here — that paint some cracks onto the Vision Fund’s sunny exterior. Don’t be too beguiled by the bad news, Danny says, venture funds run like J-Curves, and there are still winners in that particular portfolio.

After that, we turned to China, in particular its venture slowdown. The bubble, in Danny’s view, has burst. The story discussed is here, if you want to read it. The short version for the lazy is that not only has China’s venture scene slowed down dramatically, but startups — even those with ample capital raised — are dying by the hundred. But one highly caffeinated Chinese startup continues to find growth in the world’s greatest tea market.

Finally we hit on the Sam Altman wager and the latest from Sisense, which is now a unicorn. All that and we had some fun.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

 


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Air taxi company EHang flies autonomously in the U.S. for the first time

21:34 | 8 January

Aerial passenger drone startup EHang flew its EHang 216 two-seat self-flying taxi fully autonomously in North Carolina last night, a first for the company both in the U.S. and North America. EHang, which is based in Guangzhou, China, has already demonstrated its vehicle in flight both at home, and in different parts of Europe and Asia, but this is the first time its aircraft has received approval to fly by the FAA, and EHang is now working towards extending that approval to flying with passengers on board which is a key requirement for EHang’s eventual goals of offering commercial service in the U.S.

This demonstration flight, which took place in Raleigh, included flying North Carolina governor Roy Cooper on board the two-seat aircraft. Eventually, EHang hopes to deploy these for use across a number of different industries, for transportation of both passengers and cargo along autonomous, short-distance routes in and around urban areas.

EHang had a busy 2019, too – the company began trading publicly on the Nasdaq in December. It also revealed plans to begin operating an aerial shuttle service in Guangzhou, with a pilot citywide drone taxi service intended to show off not only its individual autonomous vehicle capabilities, but also how it can deploy and operate multiple EHang aircraft working in concert with one another and with other aircraft sharing the air space over the city.

Towards the end of 2019, EHang actually completed two trial flights of its 216 vehicles flying simultaneously as an early step towards building out that pilot. The company has already delivered around 40 of its aircraft to paying customers, too, and if all goes to plan, by next month it will have completed a pilot program with the Civil Aviation Administration of China that will allow it to move on to full approval of the airworthiness of its aircraft in the country for commercial flight.

 


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China Roundup: TikTok receives most government requests from India and US

19:00 | 5 January

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. This week, TikTok, currently the world’s hottest social media app, welcomed the new decade by publishing its first transparency report as it encounters rising scrutiny from regulators around the world.

TikTok tries to demystify 

The report, which arrived weeks after it tapped a group of corporate lawyers to review its content moderation policy, is widely seen as the short video app’s effort to placate the U.S. government. The Committee on Foreign Investment in the United States, or CFIUS, is currently probing the app for possible national security risks.

TikTok is owned by Beijing-based tech upstart ByteDance and has been rapidly gaining popularity away from its home turf, especially in the U.S. and India. As of November, it had accumulated a total of 1.5 billion downloads on iOS and Android devices, according to data analytics firm Sensor Tower, although how many materialized into active users is unknown.

The transparency report reveals the number of requests TikTok received from local regulators during the first half of 2019. Such orders include government requests to access user information and remove content from the platform. India topped the list with 107 total requests filed, followed by the U.S. with 79 requests and Japan at 35.

The numbers immediately sparked debates over the noticeable absence of China among the list of countries that had submitted requests. This could be because TikTok operates as a separate app called Douyin in China, where it claimed to have more than 320 million daily active users (in Chinese) as of last July.

TikTok has taken multiple measures to ease suspicions of international markets where it operates, claiming that it stores data of U.S. users in the U.S. and that the app would not remove videos even at the behest of Beijing’s authority.

Whether skeptics are sold on these promises remains to be seen. Meanwhile, one should not overlook the pervasive practice of self-censorship among China’s big tech.

“Chinese internet companies know so well where the government’s red line is that their self-regulation might even be stricter than what the government actually imposes, so it’s not impossible that [the TikTok report] showed zero requests from China,” a person who works at a Chinese video streaming platform suggested to me.

It’s worth revisiting why TikTok has caused a big stir on various fronts. Besides its nationality as a Chinese-owned app and breathtaking rise, the app presents a whole new way of creating and consuming information that better suits smartphone natives. It’s been regarded as a threat to Facebook and compared to Youtube, which is also built upon user-generated content. However, TikTok’s consumers are much more likely to be creators as well, thanks to lower barriers to producing and sharing videos on the platform, venture capitalist David Rosenthal of Wave Capital observed. That’s a big engagement driver for the app.

Another strength of TikTok, seemingly trivial at first sight, is the way it displays content. Videos are shown vertically, doing away the need to flip a phone. In a company blog post (in Chinese) on Douyin’s development, ByteDance recounted that most short-video apps budding in 2016 were built for horizontal videos and required users to pick from a list of clips in the fashion of traditional video streaming sites. Douyin, instead, surfaces only one video at a time, full-screen, auto-played and recommended by its well-trained algorithms. What “baffled” many early employees and interviewees turned out to be a game-changing user experience in the mobile internet age.

Douyin’s ally and enemy 

A recent change in Douyin’s domestic rival Kuaishou has brought attention to the intricate links between China’s tech giants. In late December, video app Kuaishou removed the option for users to link e-commerce listings from Taobao, an Alibaba marketplace. Both Douyin and Kuaishou have been exploring e-commerce as a revenue stream, and each has picked its retail partners. While Kuaishou told media that the suspension is due to a “system upgrade,” its other e-commerce partners curiously remain up and running.

Left: Douyin lets creators add a “shop” button to posts. Right: The clickable button is linked to a Taobao product page.

Some speculate that the Beijing-based company could be distancing itself from Alibaba and moving closer to Tencent, Alibaba’s nemesis and a majority shareholder in Kuaishou. Yunfeng Capital, a venture firm backed by Alibaba founder Jack Ma, has also funded Kuaishou but holds a less significant equity stake. That Douyin has long been working with Alibaba on e-commerce might have also been a source of discordance between Kuaishou and Alibaba.

 


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Tesla surpasses 2019 goal and delivers 367,500 electric vehicles

18:27 | 3 January

Tesla said Friday that it delivered 367,500 electric vehicles in 2019 — 50% more than the previous year — a record-breaking figure largely supported by sales of the cheaper Model 3.

More than one-third of those deliveries — about 112,000 vehicles — occurred in the fourth quarter.

The electric automaker reported production also grew 10% from the previous quarter to 105,000 vehicles.

The results pushed shares up 3.8% in trading Friday morning.

The fourth quarter caps a year that started poorly for Tesla. The company delivered just 63,000 vehicles in the first quarter, nearly a one-third drop from the previous period. The low first-quarter delivery numbers signaled what was to come: wider-than-expected loss of $702 million driven by disappointing delivery numbers, costs and pricing adjustments to its vehicles.

However, the company then rebounded, delivering 95,200 vehicles in the second quarter and then 97,000 electric vehicles in the third quarter.

The positive report comes as Tesla ramps up production of Model 3 vehicles at its new factory in China. Earlier this week, more than a dozen Tesla employees took delivery of the Model 3.

The first public deliveries of Model 3 sedans produced at its Shanghai factory will begin January 7, one year after Tesla began construction on its first factory outside the United States.

Tesla said that it has produced “just under 1,000 customer salable cars and have begun deliveries” in China. “We have also demonstrated production run-rate capability of greater than 3,000 units per week, excluding local battery pack production which began in late December,” the company added in its report.

 


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Made in China: Tesla Model 3 deliveries to Chinese customers to begin January 7

21:32 | 2 January

The first deliveries of Tesla Model 3 sedans made in China will begin January 7, one year after the U.S. automaker began construction on its first factory outside of the United States.

The deliveries to customers — which Reuters was first to report the news based on confirmation from a Tesla representative — is a milestone for Tesla as it tries to carve out market share in the world’s biggest auto market as well as lessen the financial pain caused by tariffs. Deliveries to customers will occur at the Shanghai factory. Earlier this week, more than a dozen Tesla employees took delivery of the Model 3.

“We believe China could become the biggest market for Model 3,” the company said in its third-quarter earnings report.

Producing vehicles in China for Chinese customers allows Tesla to bypass tariffs, but it’s no guarantee that this will be the revenue-generating boon the company needs to push itself into sustained profitability. EV sales have been sluggish for other automakers in China over the past several quarters as the government has rolled back subsidies on new energy vehicles.

The company and its CEO Elon Musk are jumping into the market with gusto, despite gloomy EV sales. Tesla has said the production line at the factory in China will have a capacity of 150,000 units annually and will be a simplified, more cost-effective version of the Model 3 line at its Fremont, Calif. factory.

Tesla China Model 3 parking lot

Aerial photo of Tesla factory in New Lingang District, Shanghai. The number of Model 3 cars in the parking lot is about 500.

Tesla also said this second-generation Model 3 line will be at least 50% cheaper per unit of capacity than its Model 3-related lines in Fremont and at its Gigafactory in Sparks, Nevada.

Tesla struck a deal in July 2018 with the Chinese government to build a factory in Shanghai. It was a milestone for Tesla and CEO Elon Musk, who has long viewed China as a crucial market. And it was particularly notable because China agreed for this to be a wholly owned Tesla factory, not a traditional joint venture with the government. Foreign companies have historically had to form a 50-50 joint venture with a local partner to build a factory in China.

Chinese President Xi Jinping has pushed forward plans to phase out joint-venture rules for foreign automakers by 2022. Tesla was one of the first beneficiaries of this rule change.

The opening of the China factory comes at a time of rising trade tensions between China and the United States. Tesla has been particularly exposed to relations between China and the U.S., and the resulting rising tariffs. Tesla builds its electric sedans and SUVs at its factory in Fremont, Calif. and ships them to China, which subjects the vehicles to an import tariff.

 


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Google has little choice to be evil or not in today’s fractured internet

18:43 | 2 January

Well, we got to January 2nd before the latest angry resignation published by a tech executive on Medium.

Today’s installment comes from Ross LaJeunesse, who was head of international relations at Google and served for more than a decade in various roles at the company. He denounces what he sees as Google’s increasingly failed ambitions to be a company principled on human rights, and poses a series of questions about the future of tech and capitalism:

I think the important question is what does it mean when one of America’s marque’ companies changes so dramatically. Is it the inevitable outcome of a corporate culture that rewards growth and profits over social impact and responsibility? Is it in some way related to the corruption that has gripped our federal government? Is this part of the global trend toward “strong man” leaders who are coming to power around the globe, where questions of “right” and “wrong” are ignored in favor of self-interest and self-dealing? Finally, what are the implications for all of us when that once-great American company controls so much data about billions of users across the globe?

The whole read is interesting, and covers Google’s China operations, its Project Dragonfly censored search crisis, Saudi Arabia’s apps in Google Cloud, and his own personal experience with Google HR.

It’s a manifesto of sorts, and perhaps that isn’t surprising given that LaJeunesse is also running for the Democratic primary in Maine’s senatorial election to compete against Republican incumbent Susan Collins. His critiques of Big Tech seem to be channeling Missouri Republican senator Josh Hawley, and that makes it a fascinating political strategy.

But let’s focus in on the key question at the heart of this debate: does Google have the ability to be “good” or “evil” when it comes to tech’s influence on society? Does it have agency to make a difference on human rights in countries around the world?

My answer is: Google used to have a lot of agency, which is unfortunately declining very, very rapidly.

I’ve talked about the fracturing of the internet into different spheres of influence for quite literally years. Countries like China in particular, but also Russia, Iran and others are seizing more and more exacting control of the internet’s plumbing and applications, subsuming the original internet’s spirit of openness and freedom and placing this communications medium under their iron fists.

As this fracturing has occurred, companies like Google, or Shutterstock, or even the NBA have increasingly faced what I’ve called an “authoritarian straddle” — they can either work with these countries and follow the local rules, or they can just get out, with serious ramifications for their home markets.

Those are the extent of the choices these companies have. Shutterstock is not going to change China’s policy toward photos of the Tiananmen Square protests, any more than Google can try to launch a search engine on the mainland or change Saudi Arabia’s deplorable women’s rights.

To have any agency here at all, you need a monopoly on a product or service so important that the dictatorship has to accept the terms you offer. In other words, these companies need extreme leverage, essentially the ability to go to the regimes and say, “No, fuck you, here’s how it is going to work, we’re going to follow human rights, and you have no choice in the matter.”

What tech companies are discovering — even massive giants like Google, Facebook, Apple, Amazon, and Microsoft — is that they really, truly don’t have that kind of leverage in these countries anymore. Not even Apple, which employs hundreds of thousands of manufacturing workers through its subcontractors in China, can move the needle in that country anymore. Iran shut off the internet for a period of time to dampen the intensity of political protests in that country. Russia last week tested shutting off the internet to make sure it can just pull the plug when it wants.

If whole countries can just flip the switch and turn off “tech,” exactly what leverage do any of these companies have in the first place?

And that diminution of power is a trend that tech companies, and particularly American tech companies, haven’t fully grappled with. They don’t really get a choice anymore in the decisions here. China has its own search engine, and increasingly, its own mobile phone ecosystem unencumbered by U.S. patents and therefore U.S. policy. If Azure leaves Saudi Arabia, Alibaba Cloud is more than willing to step into the gap and make the money instead.

So when you get to LaJeunesse’s comments that he pushed Google internally to formalize some of its values:

My solution was to advocate for the adoption of a company-wide, formal Human Rights Program that would publicly commit Google to adhere to human rights principles found in the UN Declaration of Human Rights, provide a mechanism for product and engineering teams to seek internal review of product design elements, and formalize the use of Human Rights Impact Assessments for all major product launches and market entries.

… one can’t help but feel solace for an optimistic world where a better product design review process might have once improved global human rights.

The issue is far simpler though than it was in the past. You don’t need a human rights protocol, or some sort of review process for market entry. You are either in, or you are out. You either launch in these countries and deal with the inevitable human rights abuses and concomitant consumer protests in the home market, or you maintain your values and you walk away, ignoring the profit mirage from these regimes in the process.

That’s why I recently argued that Google and the NBA should just walk away. I still hold that belief. It’s also why I called on Shutterstock to leave China and return to its more open and free values. No U.S. tech company today has the leverage to make a dent on human rights the way that they did a decade ago. The internet has fractured, data sovereignty is on the rise, and there’s a binary choice to be made whether to engage or to flee. Ultimately, I take LaJeunesse’s side — these companies should walk, because there really isn’t much choice otherwise.

 


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China Roundup: Ant Financial’s new boss and Tencent’s army of new apps

19:00 | 22 December

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. This week, we are looking at what Ant Financial’s executive shakeup could give to Alibaba’s financial affiliate and why Tencent has gone on an app-launching spree.

Return of the old boss

This week, Ant Financial, the online financial services company, 33% of which is owned by Alibaba and controlled by Jack Ma, announced Hu Xiaoming as its new chief executive. Management reshuffles aren’t rare at Alibaba, which prides itself on rotating executives every few months to stay fresh and agile in a competitive environment. The latest reshuffle is providing some clues to where Ant, the world’s most valuable private fintech company, is headed in the coming years.

Hu will take the lead in growing Ant’s domestic payments and financial services units while his predecessor and current chairman Eric Jing will manage overseas expansion and development of new technologies. Having worked at several major Chinese banks, Hu joined Alibaba in 2005 to expand the firm’s budding financial services and has since been credited with helping Ant identify paths to monetization.

Around 2009, Hu made a bold move to initiate a microloan service targeted at small and medium sellers on Alibaba’s e-commerce platform. It was a boon to millions of merchants who otherwise would not be able to borrow from traditional financial institutions because they lacked banking history. Instead, Alibaba assessed their creditworthiness based on digital records, such as online sales and customer ratings. Today, small loans are just one of the many offerings from Ant’s ever-expanding financial empire, which also operates the billion-user Alipay payments app, the world’s largest money market fund and credit-rating system Sesame Credit.

In 2014, the storied executive was assigned to lead Alibaba’s cloud business and later grew it into one of the firm’s fastest-growing segments and a serious contender to Amazon Web Services. Hu was no stranger to Alibaba Cloud, which had already been working to introduce cloud computing to the fintech unit’s existing IT environments (in Chinese). In fact, most of Alibaba Cloud’s early applications happened internally at Alibaba as the company felt the urgency to develop an IT system that was more scalable and customizable than most large international vendors could provide.

Under Hu’s helm, the cloud arm struck a major deal with the government of Hangzhou, Alibaba’s hometown in Eastern China, to ease traffic congestion using data analytics and cloud computing solutions. Government contracts are an important lever for businesses developing costly state-of-the-art technologies, for as soon as an innovation is proven in practice, private demand will pick up over time.

Hu Xiaoming, new CEO of Alibaba’s financial affiliate Ant Financial (Ant Financial via Weibo)

Hu’s experience with commercializing new technologies and cooperating with state agencies makes him the ideal leader of Ant at a critical time. Last year, Ant’s highly anticipated IPO plans were pushed back reportedly because Beijing worried the private firm had amassed too much influence. To allay concerns among regulators and big banks, Ant has in recent times pivoted to focus more on selling technology solutions rather than financial services, per se.

Social networking anxiety

Tencent has launched at least seven new social networking apps since the beginning of 2019. Each comes with a slightly different focus, whether it’s targeting college students or specializing in video-based chatting. Industry observers said Tencent made these moves to defend challengers, particularly ByteDance of which TikTok (or Douyin in China) has taken the world by storm. Although short videos don’t directly compete with Tencent’s messengers WeChat, they certainly are consuming more of people’s screen time. And there are signs that ByteDance is encroaching on Tencent’s core markets after the upstart pushed into video games and messaging.

Tencent might also worry about WeChat’s slowing growth. The slowdown is in part attributed to the app’s already enormous base — more than 1 billion monthly users — so growth has inevitably cooled. WeChat gave Tencent a timely boost at the start of the mobile internet revolution when QQ, Tencent’s messenger that dominated China’s PC era, had seen its day. Now Tencent appears to be in need of a new growth engine, be it a groundbreaking feature of WeChat to rejuvenate the app or a brand new social network to replicate the success of WeChat and QQ.

It’s worth keeping in mind that Tencent, like all other large internet companies in China, is always testing new products to meet shifting landscapes in the tech industry. Tencent is famous for pitting different departments against each other in what it calls an internal “horse race,” which spawned WeChat almost 10 years ago. In most cases, these projects failed to catch on, but the cost of making new apps is negligible for a behemoth like Tencent because much of the development process has been standardized. All it needs is a skunkworks team of a dozen employees, ideally headed by a visionary such as WeChat’s Allen Zhang.

Also worth your attention

Nvidia, the chipmaker known for its GPUs, is already working with some 370 automakers, tier-1 suppliers, developers and researchers in the field of autonomous driving. This week to its family of partners it added China’s largest ride-hailing company, Didi Chuxing . Together the pair will work on developing GPUs for Didi’s Level 4 autonomous cars (which can operate under basic situations without human intervention), the companies said in a statement. Didi, which peeled its autonomous driving unit into a separate company in August, said last month (in Chinese) at an industry conference that it had plans to soon begin testing autonomous vehicles on Shanghai streets.

 


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TikTok’s national security scrutiny tightens as U.S. Navy reportedly bans popular social app

18:43 | 21 December

TikTok may be the fastest-growing social network in the history of the internet, but it is also quickly becoming the fastest-growing security threat and thorn in the side of U.S. China hawks.

The latest, according to a notice published by the U.S. Navy this past week and reported on by Reuters and the South China Morning Post, is that TikTok will no longer be allowed to be installed on service members’ devices, or they may face expulsion from the military service’s intranet.

It’s just the latest example of the challenges facing the extremely popular app. Recently, Congress led by Missouri senator Josh Hawley demanded a national security review of TikTok and its Sequoia-backed parent company ByteDance, along with other tech companies that may share data with foreign governments like China. Concerns over the leaking of confidential communications recently led the U.S. government to demand the unwinding of the acquisition of gay social network app Grindr from its Chinese owner Beijing Kunlun.

The intensity of criticism on both sides of the Pacific has made it increasingly challenging to manage tech companies across the divide. As I recently discussed here on TechCrunch, Shutterstock has actively made it harder and harder to find photos deemed controversial by the Chinese government on its stock photography platform, a play to avoid losing a critical source of revenue.

We saw similar challenges with Google and its Project Dragonfly China-focused search engine as well as with the NBA.

What’s interesting here though is that companies on both sides are struggling with policy on both sides. Chinese companies like ByteDance are increasingly being targeted and stricken out of the U.S. market, while American companies have long struggled to get a foothold in the Middle Kingdom. That might be a more equal playing field than it has been in the past, but it is certainly a less free market than it could be.

While the trade fight between China and the U.S. continues, the damage will continue to fall on companies that fail to draw within the lines set by policymakers in both countries. Whether any tech company can bridge that divide in the future unfortunately remains to be seen.

 


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