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The GoPro-ification of the iPhone

Hello friends, and welcome back to Week in Review!

Last week, we talked about some sunglasses from a company that many people do not like very much. This week, we’re talking about Apple and the company 1,600 times smaller than it that’s facing similar product problems.

Thanks for joining in — follow my tweets @lucasmtny for more.


(Photo by Brooks Kraft/Apple Inc.)

the big thing

When you get deep enough into the tech industry, it’s harder to look at things with a consumer’s set of eyes. I’ve felt that way more and more after six years watching Apple events as a TechCrunch reporter, but sometimes memes from random Twitter accounts help me find the consumer truth I’m looking for.

As that dumb little tweet indicates, Apple is charging toward a future where it’s becoming a little harder to distinguish new from old. The off-year “S” period of old is no more for the iPhone, which has seen tweaks and new size variations since 2017’s radical iPhone X redesign. Apple is stretching the periods between major upgrades for its entire product line and it’s also taking longer to roll out those changes.

Apple debuted the current bezel-lite iPad Pro design back in late 2018 and it’s taken three years for the design to work its way down to the iPad mini while the entry-level iPad is still lying in wait. The shift from M1 Macs will likely take years as the company has already detailed. Most of Apple’s substantial updates rely on upgrades to the chipsets that they build, something that increasingly makes them look and feel like a consumer chipset company.

This isn’t a new trend, or even a new take, it’s been written lots of times, but it’s particularly interesting as the company bulks up the number of employees dedicated to future efforts like augmented reality, which will one day soon likely replace the iPhone.

It’s an evolution that’s pushing them into a similar design territory as action camera darling GoPro, which has struggled again and again with getting their core loyalists to upgrade their hardware frequently. These are on laughably different scales, with Apple now worth some $2.41 trillion and GoPro still fighting for a $1.5 billion market cap. The situations are obviously different, and yet they are both facing similar end-of-life innovation questions for categories that they both have mastered.

This week GoPro debuted its HERO10 Black camera, which brings higher frame rates and a better performing processor as it looks to push more of its user audience to subscription services. Sound familiar? This week, Apple debuted its new flagship, the iPhone 13 Pro, with a faster processor and better frame rates (for the display not the camera here, though). They also spent a healthy amount of time pushing users to embrace new services ecosystems.

Apple’s devices are getting so good that they’re starting to reach a critical feature plateau. The company has still managed to churn out device after device and expand their audience to billions while greatly expanding their average revenue per user. Things are clearly going pretty well for the most valuable company on earth, but while the stock has nearly quadrupled since the iPhone X launch, the consumer iPhone experience feels pretty consistent. That’s clearly not a bad thing, but it is — for lack of a better term — boring.

The clear difference, among 2.4 trillion others, is that GoPro doesn’t seem to have a clear escape route from its action camera vertical.

But Apple has been pushing thousands of employees toward an escape route in augmented reality, even if the technology is clearly not ready for consumers and they’re forced to lead with what has been rumored to be a several-thousand-dollar AR/VR headset with plenty of limitations. One of the questions I’m most interested in is what the iPhone device category looks likes once its unwieldy successor has reared its head. Most likely is that the AR-centric devices will be shipped as wildly expensive iPhone accessories and a way to piggy back off the accessibility of the mobile category while providing access to new — and more exciting — experiences. In short, AR is the future of the iPhone until AR doesn’t need the iPhone anymore. 


Image Credits: Tesla

other things

Here are the TechCrunch news stories that especially caught my eye this week:

Everything Apple announced this week
Was it the most exciting event Apple has ever had? Nah. Are you still going to click that link to read about their new stuff? Yah.

GoPro launches the HERO10 Black
I have a very soft spot in my heart for GoPro, which has taken a niche corner of hardware and made a device and ecosystem that’s really quite good. As I mentioned above, the company has some issues making significant updates every year, but they made a fairly sizable upgrade this year with the second-generation of their customer processor and some performance bumps across the board.

Tesla will open FSD beta to drivers with good driving record
Elon Musk is pressing ahead with expanding its “Full Self-Driving” software to more Tesla drivers, saying that users who paid for the FSD system can apply to use the beta and will be analyzed by the company’s insurance calculator bot. After 7 days of good driving behavior, Musk says users will be approved.

OpenSea exec resigns after ‘insider trading’ scandal
NFTs are a curious business; there’s an intense amount of money pulsating through these markets — and little oversight. This week OpenSea, the so-called “eBay of NFTs,” detailed that its own VP of Product had been trading on insider information. He was later pushed to resign.

Apple and Google bow to the Kremlin
Apple and Google are trying to keep happy the governments of most every market in which they operate. That leads to some uncomfortable situations in markets like Russia, where both tech giants were forced by the Kremlin to remove a political app from the country’s major opposition party.


Gitlab logo

Image Credits: Gitlab

extra things

Some of my favorite reads from our Extra Crunch subscription service this week:

What could stop the startup boom?
“…We’ve seen record results from citiescountries and regions. There’s so much money sloshing around the venture capital and startup worlds that it’s hard to recall what they were like in leaner times. We’ve been in a bull market for tech upstarts for so long that it feels like the only possible state of affairs. It’s not…”

The value of software revenue may have finally stopped rising
“…I’ve held back from covering the value of software (SaaS, largely) revenues for a few months after spending a bit too much time on it in preceding quarters — when VCs begin to point out that you could just swap out numbers quarter to quarter and write the same post, it’s time for a break. But the value of software revenues posted a simply incredible run, and I can’t say “no” to a chart…

Inside GitLab’s IPO filing
“…The company’s IPO has therefore been long expected. In its last primary transaction, GitLab raised $286 million at a post-money valuation of $2.75 billion, per PitchbBook data. The same information source also notes that GitLab executed a secondary transaction earlier this year worth $195 million, which gave the company a $6 billion valuation…”


Thanks for reading, and again, if you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny

Lucas Matney

Apple and Google bow to pressure in Russia to remove Kremlin critic’s tactical voting app

Apple and Google have removed a tactical voting app created by the organization of jailed Kremlin critic, Alexei Navalny, from their respective mobile app stores in Russia.

Earlier this week Reuters reported that the Russian state had been amping up the pressure on foreign tech giants ahead of federal elections — appropriating the language of “election interference” to push US companies to censor the high profile political opponent to president Putin.

On Twitter today, a key Navalny ally, Ivan Zhdanov, tweeted that his organization is considering suing Apple and Google over removal of the apps — dubbing the act of censorship a “huge mistake”.

Zhdanov has also published what he says is Apple’s response to Team Navalny — in which the tech giant cites the Kremlin’s classification of a number of pro-Navalny organizations as “extremist” groups to justify its removal of the software.

(Image credit: Screengrab of detail from Apple’s notification to the developer, via Zhdanov’s tweet)

Apple and Google routinely say they comply with ‘all local laws’ in the countries where they operate.

However in Russia that stance means they have become complicit in acts of political censorship.

“We note that the Prosecutor’s Office of the Russian Federation and the Prosecutor’s Office of the City of Moscow have also determined that the app violates the legislation of the Russian Federation by enabling interference in elections,” Apple writes in the notification of takedown it sent to the developer of the tactical voting app.

“While your app has been removed from the Russia App Store, it is still available in the App Stores for the other territories you selected in App Store Connect,” Apple adds.

Apple and Google have been contacted for comment on the removal of Navalny’s app.

Формальное основание удаления приложений: признание ФБК экстремистской организацией.
То, как ФБК признавали экстремистской организацией – было не судом, а издевательством над здравым смыслом. @google @Apple совершают огромную ошибку. pic.twitter.com/3AG4tHXdZp

— Ivan Zhdanov (@ioannZH) September 17, 2021

 

Also via Twitter, Zhdanov urged supporters to focus on the tactical voting mission — tweeting a link to a video hosted on Google-owned YouTube which contains recommendations to Russians on how to cast an anti-Putin vote in the parliamentary elections taking place today until Sunday.

Navalny’s supporters are hoping to mobilize voters across Russia to cast tactical ballots in a bid to unseat Putin by voting for whatever candidate has the best chance of defeating the ruling United Russia party.

Their tactical voting strategy has faced some criticism — given that many of the suggested alternatives are, at best, only very weakly opposed to Putin’s regime.

However Navalny’s supporters would surely point out they are having to operate within a flawed system.

After Apple and Google initially refused to remove Navalny’s ‘Smart Voting’ app, last month, the Russian state has been attempting to block access to his organization’s website.

It has even reportedly targeted Google docs — which supporters of Navalny have also been using to organize tactical voting efforts.

Screengrab of the Smart Voting app on the UK iOS app store (Image credits: Natasha Lomas/TechCrunch)

Earlier this month Reuters reported that Russia’s communications regulator, Roskomnadzor, had threatened Apple and Google with fines if they did not remove the Smart Voting app — warning that failure to comply could be interpreted as election meddling.

Russian press has also reported that Apple and Google were summoned to a meeting at the Federation Council on the eve of the election — as Putin’s regime sought to force them to do his anti-democratic bidding.

According to a report by Kommersant, the tech giants were warned the Russian Federation was preparing to tighten regulations on their businesses — and told to “come to their senses”, facing another warning that they were at a “red line”.

The last ditch effort to force the platforms to remove Navalny’s app did then pay off.

In recent weeks, Roskomnadzor has also been targeting VPN apps in the country for removal — making it hard for Russians to circumvent the local ban on Navalny’s app by accessing the software through the stores of other countries.

Local search giant, Yandex, has also reportedly been ordered not to display search results for the Smart Voting app.

Earlier this year, Putin’s regime also targeted Twitter — throttling the service for failing to remove content it wanted banned, although Roskomnadzor claimed the action was related to non-political content such as minors committing suicide, child sexual exploitation and drug use.

Jolla hits profitability ahead of turning ten, eyes growth beyond mobile

A milestone for Jolla, the Finnish startup behind the Sailfish OS — which formed, almost a decade ago, when a band of Nokia staffers left to keep the torch burning for a mobile linux-based alternative to Google’s Android — today it’s announcing hitting profitability.

The mobile OS licensing startup describes 2020 as a “turning point” for the business — reporting revenues that grew 53% YoY, and EBITDA (which provides a snapshot of operational efficiency) standing at 34%.

It has a new iron in the fire too now — having recently started offering a new licensing product (called AppSupport for Linux Platforms) which, as the name suggests, can provide linux platforms with standalone compatibility with general Android applications — without a customer needing to licence the full Sailfish OS (the latter has of course baked in Android app compatibility since 2013).

Jolla says AppSupport has had some “strong” early interest from automotive companies looking for solutions to develop their in-case infotainment systems — as it offers a way for embedded Linux-compatible platform the capability to run Android apps without needing to opt for Google’s automotive offerings. And while plenty of car makers have opted for Android, there are still players Jolla could net for its ‘Google-free’ alternative.

Embedded linux systems also run in plenty of other places, too, so it’s hopeful of wider demand. The software could be used to enable an IoT device to run a particularly popular app, for example, as a value add for customers.

“Jolla is doing fine,” says CEO and co-founder Sami Pienimäki. “I’m happy to see the company turning profitable last year officially.

“In general it’s the overall maturity of the asset and the company that we start to have customers here and there — and it’s been honestly a while that we’ve been pushing this,” he goes, fleshing out the reasons behind the positive numbers with trademark understatement. “The company is turning ten years in October so it’s been a long journey. And because of that we’ve been steadily improving our efficiency and our revenue.

“Our revenue grew over 50% since 2019 to 2020 and we made €5.4M revenue. At the same time the cost base of the operation has stablized quite well so the sum of those resulted to nice profitability.”

While the consumer mobile OS market has — for years — been almost entirely sewn up by Google’s Android and Apple’s iOS, Jolla licenses its open source Sailfish OS to governments and business as an alternative platform they can shape to their needs — without requiring any involvement of Google.

Perhaps unsurprisingly, Russia was one of the early markets that tapped in.

The case for digital sovereignty in general — and an independent (non-US-based) mobile OS platform provider, specifically — has been strengthened in recent years as geopolitical tensions have played out via the medium of tech platforms; leading to, in some cases, infamous bans on foreign companies being able to access US-based technologies.

In a related development this summer, China’s Huawei launched its own Android alternative for smartphones, which it’s called HarmonyOS.

Pienimäki is welcoming of that specific development — couching it as a validation of the market in which Sailfish plays.

“I wouldn’t necessarily see Huawei coming out with the HarmonyOS value proposition and the technology as a competitor to us — I think it’s more proving the point that there is appetite in the market for something else than Android itself,” he says when we ask whether HarmonyOS risks eating Sailfish’s lunch.

“They are tapping into that market and we are tapping into that market. And I think both of our strategies and messages support each other very firmly.”

Jolla has been working on selling Sailfish into the Chinese market for several years — and that sought for business remains a work in progress at this stage. But, again, Pienimäki says Jolla doesn’t see Huawei’s move as any kind of blocker to its ambitions of licensing its Android alternative in the Far East.

“The way we see the Chinese market in general is that it’s been always open to healthy competition and there is always competing solutions — actually heavily competing solutions — in the Chinese market. And Huawei’s offering one and we are happy to offer Sailfish OS for this very big, challenging market as well.”

“We do have good relationships there and we are building a case together with our local partners also to access the China market,” he adds. “I think in general it’s also very good that big corporations like Huawei really recognize this opportunity in general — and this shapes the overall industry so that you don’t need to, by default, opt into Android always. There are other alternatives around.”

On AppSupport, Jolla says the automative sector is “actively looking for such solutions”, noting that the “digital cockpit is a key differentiator for car markers — and arguing that makes it a strategically important piece for them to own and control.

“There’s been a lot of, let’s say, positive vibes in that sector in the past few years — new comers on the block like Tesla have really shaken the industry so that the traditional vendors need to think differently about how and what kind of user experience they provide in the cockpit,” he suggests.

“That’s been heavily invested and rapidly developing in the past years but I’m going to emphasize that at the same time, with our limited resources, we’re just learning where the opportunities for this technology are. Automative seems to have a lot of appetite but then [we also see potential in] other sectors — IoT… heavy industry as well… we are openly exploring opportunities… but as we know automotive is very hot at the moment.”

“There is plenty of general linux OS base in the world for which we are offering a good additional piece of technology so that those operating solutions can actually also tap into — for example — selected applications. You can think of like running the likes of Spotify or Netflix or some communications solutions specific for a certain sector,” he goes on.

“Most of those applications are naturally available both for iOS and Android platforms. And those applications as they simply exist the capability to run those applications independently on top of a linux platform — that creates a lot of interest.”

In another development, Jolla is in the process of raising a new growth financing round — it’s targeting €20M — to support its push to market AppSupport and also to put towards further growing its Sailfish licensing business.

It sees growth potential for Sailfish in Europe, which remains the biggest market for licensing the mobile OS. Pienimäki also says it’s seeing “good development” in certain parts of Africa. Nor has it given up on its ambitions to crack into China.

The growth round was opened to investors in the summer and hasn’t yet closed — but Jolla is confident of nailing the raise.

“We are really turning a next chapter in the Jolla story so exploring to new emerging opportunities — that requires capital and that’s what are looking for. There’s plenty of money available these days, in the investor front, and we are seeing good traction there together with the investment bank with whom we are working,” says Pienimäki.

“There’s definitely an appetite for this and that will definitely put us in a better position to invest further — both to Sailfish OS and the AppSupport technology. And in particular to the go-to market operation — to make this technology available for more people out there in the market.”

 

Untitled Ventures joins the scramble for Russian & Eastern European startups with a $118M warchest

Sorry Mr. Putin, but there’s a race on for Russian and Eastern European founders. And right now, those awful capitalists in the corrupt West are starting to out-gun the opposition! But seriously… only the other day a $100 million fund aimed at Russian speaking entrepreneurs appeared, and others are proliferating.

Now, London-based Untitled Ventures plans to join their fray with a €100 million / $118M for its second fund to invest in “ambitious deep tech startups with eastern European founders.”

Untitled says it is aiming at entrepreneurs who are looking to relocate their business or have already HQ’ed in Western Europe and the USA. That’s alongside all the other existing Western VCs who are – in my experience – always ready and willing to listen to Russian and Eastern European founders, who are often known for their technical prowess.

Untitled is going to be aiming at B2B, AI, agritech, medtech, robotics, and data management startups with proven traction emerging from the Baltics, CEE, and CIS, or those already established in Western Europe

LPs in the fund include Vladimir Vedeenev, a founder of Global Network Management>. Untitled also claims to have Google, Telegram Messenger, Facebook, Twitch, DigitalOcean, IP-Only, CenturyLinks, Vodafone and TelecomItaly as partners.

Oskar Stachowiak, Untitled Ventures Managing Partner, said: “With over 10 unicorns, €1Bn venture funding in 2020 alone, and success stories like Veeam, Semrush, and Wrike, startups emerging from the fast-growing regions are the best choice to focus on early-stage investment for us. Thanks to the strong STEM focus in the education system and about one million high-skilled developers, we have an ample opportunity to find and support the rising stars in the region.”

Konstantin Siniushin, the Untitled Ventures MP said: “We believe in economic efficiency and at the same time we fulfill a social mission of bringing technological projects with a large scientific component from the economically unstable countries of the former USSR, such as, first of all, Belarus, Russia and Ukraine, but not only in terms of bringing sales to the world market and not only helping them to HQ in Europe so they can get next rounds of investments.”

He added: “We have a great experience accumulated earlier in the first portfolio of the first fund, not just structuring business in such European countries as, for example, Luxembourg, Germany, Great Britain, Portugal, Cyprus and Latvia, but also physically relocating startup teams so that they are perceived already as fully resident in Europe and globally.”

To be fair, it is still harder than it needs to be to create large startups from Eastern Europe, mainly because there is often very little local capital. However, that is changing, with the launch recently of CEE funds such as Vitosha Venture Partners and Launchub Ventures, and the breakout hit from Romania that was UIPath.

The Untitled Ventures team:
• Konstantin Siniushin, a serial tech entrepreneur
• Oskar Stachowiak, experienced fund manager
• Mary Glazkova, PR & Comms veteran
• Anton Antich, early stage investor and an ex VP of Veeam, a Swiss cloud data management company
acquired by Insight Venture Partners for $5bln
• Yulia Druzhnikova, experienced in taking tech companies international
• Mark Cowley, who has worked on private and listed investments within CEE/Russia for over 20 years

Untitled Ventures portfolio highlights – Fund I
Sizolution: AI-driven size prediction engine, based in Germany
Pure app – spontaneous and impersonal dating app, based in Portugal
Fixar Global –  efficient drones for commercial use-cases, based in Latvia,
E-contenta – based in Poland
SuitApp – AI based mix-and-match suggestions for fashion retail, based in Singapore
• Sarafan.tech, AI-driven recognition, based in the USA
Hello, baby – parental assistant, based in the USA
Voximplant – voice, video and messaging cloud communication platform, based in the USA (exited)

US blames China for Exchange server hacks and ransomware attacks

The Biden administration and its allies has formally accused China of the mass-hacking of Microsoft Exchange servers earlier this year, which prompted the FBI to intervene as concerns rose that the hacks could lead to widespread destruction.

The mass-hacking campaign targeted Microsoft Exchange email servers with four previously undiscovered vulnerabilities that allowed the hackers — which Microsoft already attributed to a China-backed group of hackers called Hafnium — to steal email mailboxes and address books from tens of thousands of organizations around the United States.

Microsoft released patches to fix the vulnerabilities, but the patches did not remove any backdoor code left behind by the hackers that might be used again for easy access to a hacked server. That prompted the FBI to secure a first-of-its-kind court order to effectively hack into the remaining hundreds of U.S.-based Exchange servers to remove the backdoor code. Computer incident response teams in countries around the world responded similarly by trying to notify organizations in their countries that were also affected by the attack.

In a statement out Monday, the Biden administration said the attack, launched by hackers backed by China’s Ministry of State Security, resulted in “significant remediation costs for its mostly private sector victims.”

“We have raised our concerns about both this incident and the [People’s Republic of China’s] broader malicious cyber activity with senior PRC Government officials, making clear that the PRC’s actions threaten security, confidence, and stability in cyberspace,” the statement read.

The National Security Agency also released details of the attacks to help network defenders identify potential routes of compromise.

Several allies, including the U.K. and the members of NATO, also backed the Biden administration in its findings. In a statement, the U.K. government found Beijing responsible for a “pervasive pattern” of hacking. The Chinese government has repeatedly denied claims of state-backed or sponsored hacking.

The Biden administration also blamed China’s Ministry of State Security for contracting with criminal hackers to conduct unsanctioned operations, like ransomware attacks, “for their own personal profit.” The government said it was aware that China-backed hackers have demanded millions of dollars in ransom demands against hacked companies. Last year, the Justice Department charged two Chinese spies for their role in a global hacking campaign that saw prosecutors accuse the hackers of operating for personal gain.

Although the U.S. has publicly engaged the Kremlin to try to stop giving ransomware gangs safe harbor from operating from within Russia’s borders, the U.S. has not previously accused Beijing of launching or being involved with ransomware attacks.

“The PRC’s unwillingness to address criminal activity by contract hackers harms governments, businesses, and critical infrastructure operators through billions of dollars in lost intellectual property, proprietary information, ransom payments, and mitigation efforts,” said Monday’s statement.

The statement also said that the China-backed hackers engaged in extortion and cryptojacking, a way of forcing a computer to run code that uses its computing resources to mine cryptocurrency, for financial gain.

The Justice Department also announced fresh charges against four China-backed hackers working for the Ministry of State Security, which U.S. prosecutors said were engaged in efforts to steal intellectual property and infectious disease research into Ebola, HIV and AIDS, and MERS against victims based in the U.S., Norway, Switzerland and the United Kingdom by using a front company to hide their operations.

“The breadth and duration of China’s hacking campaigns, including these efforts targeting a dozen countries across sectors ranging from healthcare and biomedical research to aviation and defense, remind us that no country or industry is safe. Today’s international condemnation shows that the world wants fair rules, where countries invest in innovation, not theft,” said deputy attorney general Lisa Monaco.

To end cyberterrorism, the government should extend a hand to the private sector

Mark Testoni
Contributor

Mark Testoni is the CEO at SAP National Security Services, Inc. Prior to joining SAP NS2, Mark held leadership positions at SAP and Oracle and served for 20 years in the U.S. Air Force.

Joseph Moreno
Contributor

Joseph Moreno is the general counsel at SAP National Security Services, Inc. He previously served as a federal prosecutor and staffer to the FBI 9/11 Review Commission and is a lieutenant colonel in the U.S. Army Reserve.

It is said that the best way to lose the next war is to keep fighting the last one. The citadels of the medieval ages were an effective defense until gunpowder and cannons changed siege warfare forever. Battlefield superiority based on raw troop numbers ceded to the power of artillery and the machine gun.

During World War I, tanks were the innovation that literally rolled over fortifications built using 19th-century technology. Throughout military history, innovators enjoyed the spoils of war while those who took too long to adapt were left crushed and defeated.

Cyberwarfare is no different, with conventional weapons yielding to technologies that are just as deadly to our economic and national security. Despite our military superiority and advances on the cyber front, America is still fighting a digital enemy using analog ways of thinking.

Despite our military superiority and advances on the cyber front, America is still fighting a digital enemy using analog ways of thinking.

This must change, and it begins with the government making some difficult choices about how to wield its offensive powers against an enemy hidden in the shadows, how to partner with the private sector and what it will take to protect the nation against hostile actors that threaten our very way of life.

Colonial Pipeline was one step forward, two steps back

In the aftermath of the ransomware attack against Colonial Pipeline, the Russia-linked hacking group known as DarkSide reportedly shuttered and the Federal Bureau of Investigation recovered part of the $4.4 million ransom that was paid. These are positive developments and an indicator that our government is taking these types of attacks seriously. But it does not change the fact that cyberterrorists, acting with impunity in a hostile foreign country using a technique that has been known for years, managed to shut down the country’s largest oil pipeline and walk away with millions of dollars in ransom payments. They will likely never face justice, Russia will not face any real consequences and these attacks will no doubt continue.

The reality is that while companies can get smarter about cyber defenses and users can get more vigilant in their cyber hygiene practices, only the government has the power to bring this behavior to a halt.

Countries that permit cybercriminals to operate within their borders should be made to hand them over or be subject to crippling economic sanctions. Those found providing sanctuary or other assistance to such individuals or groups should face material support charges like anyone who assists a designated terrorist organization.

Regulators should insist that cryptocurrency exchanges and wallets help track down illicit transactions and parties or be cut off from the U.S. financial system. Law enforcement, the military and the intelligence community should be aggressively working to make it so difficult, so unsafe and so unprofitable for cyberterrorists to operate that they would not dare attempt another attack against American industry or critical infrastructure.

Government must facilitate cooperation with private actors

Our biggest vulnerability and missed opportunity is the inability of public and private entities to form a unified front against cyberwar. It is essential from both a defensive and offensive perspective that the government and private sectors share cyber risk and incident information in real time. This is not currently happening.

Companies are too scared that in revealing vulnerabilities they will be sued, investigated and further victimized by the very government that is supposed to help them defend against attack. The federal government still has no answer for the problems of overclassification of information, overlapping bureaucracies and cultural barriers that provide no incentive to proactively engage with private industry to share information and technologies.

The answer is not to strong-arm companies into coming to the table and expect one-way information flow. Private actors should be able to come forward voluntarily and share information without having to fear plaintiff litigation and regulatory action. Self-disclosed cyber data made in real time should be kept confidential and used to defend and fight back, not to further punish the victim. That is no basis for a mutual partnership.

And if federal agencies, the military or the intelligence community have intelligence about future attacks and how to prevent them, they should not sit on it until long after it will do any good. There are ways to share information with private industry that are safe, timely and mutually beneficial.

Cooperation should also go beyond the exchange of cyber event information. The private sector and academia account for a massive amount of advancement in the cyber space, with total research and development spending split roughly 90%-10% between the private and public sector over the past two decades.

Our private sector — with technology companies employing the best and brightest spanning from Silicon Valley to Austin, Texas, to the technology corridor of Northern Virginia — has a tremendous amount to offer to the government yet remains a largely untapped resource. The same innovations driving private-sector profit should be used to strengthen national security.

China has already figured this out, and if we cannot find a way to leverage private-sector innovation and young talent in the United States, we will fall behind. If there has ever been a call to action where the Biden administration, Democrats and Republicans in Congress can set politics aside and embrace bipartisan solutions, this is it.

Look to the military-defense industry model

Thankfully, there is a model public-private dynamic that in many ways is working. Weapons systems today are almost exclusively manufactured by the Defense Industrial Base, and when deployed to the battlefield there is constant two-way communication with warfighters about vulnerabilities, threats and opportunities to improve effectiveness. This relationship was not forged overnight and is far from perfect. But after decades of efforts, secure collaboration platforms were developed, security clearance standards were established and trust was formed.

We must do the same between cyber authorities in the federal government and actors throughout the private sector. Financial institutions, energy companies, retailers, manufacturers and pharmaceuticals must be able to engage the government to share real-time cyber data in both directions. If the federal government learns of a threat group or technique, it should not only take the offensive to shut it down but also push that information securely and quickly to the private sector.

It is not practical for the FBI, the Department of Homeland Security or the military to assume the burden of defending private networks against cyberattacks, but the government can and should be a shoulder-to-shoulder partner in the effort. We must adopt a relationship that recognizes this is both a joint battle and burden, and we do not have years to get it right.

Call to action

When you look at the history of war, the advantage has always gone to those who innovate first. With respect to cyberwarfare, the solution does not lie solely in advanced technologies like artificial intelligence, quantum computing or blockchain. The most powerful development in today’s war against cyberterrorism might be as simple as what we all learned in preschool: the value of sharing and cooperation.

The government, the technology industry and the broader private sector must come together not only to maintain our competitive edge and embrace advances like cloud computing, autonomous vehicles and 5G, but to ensure that we defend and preserve our way of life. We have been successful in building public and private partnerships in the past and can evolve from an analog relationship to a digital one. But the government must take the reins and lead the way.

AdTech startup Tomi raises Seed funding to make real estate ads perform as well as ecommerce

Industries like real estate, automotive, and financial services have long and offline sales cycles and digital advertising tends not to perform well in these areas. The conversion rates are low and because the real-world assets are offline the temptation of advertisers is to buy leads and clicks, which can inflate customer acquisition costs. People are browsing but they end up buying offline, basically.

A new startup, Tomi plans to address this issue by processing a user’s behavior on a company’s website (using a tracking pixel, combined with ad APIs and CRMs) to help companies reach customers more in the way an ecommerce business would.

It’s now raised a $1M seed round from investors including Begin Capital and Phystech Leadership Fund.

Founded by Konstantin Bayandin — a former senior director of digital marketing and technology at Compass and chief marketing officer at Ozon, ‘Russia’s Amazon’ — Tomi competes against similar AdTech companies such as Anytrack, Sociaro, Meetotis, Alytics and Postclick.

However, the difference, Bayandin says, is that Tomi “focuses on offline conversions and works with multiple ad channels, such as Facebook, Instagram and Google.”

Bayandin says: “Real-estate companies would love to leverage online ads in order to sell their inventory but it turns out to be too expensive and difficult. People like to browse but rarely convert and most of these transactions happen offline. So real-estate clients don’t know how to optimize for their real buyers. Tomi uses machine learning to analyze the way real buyers browse the website and optimize ad campaigns towards conversions.”

The background to all this is that with Apple closing down IDFA, Google planning to remove third-party cookies from its Chrome browser, and the latest iOS 14.5 update allowing users opt out of “personalized ads”, the entire ad business is in flux, so new tools are going to be required. Bayandin says Tomi is part of this new wave of AdTech.

$100 million… Leta Capital wants to be a friend to Russia-speaking founders everywhere

It’s become increasingly obvious over the last few years, as Vladimir Putin has tightened his grip on his country, that Russian entrepreneurs who want to engage properly with the rest of the world have had to leave their mother country. Gone are the days when a startup in Russia might attract attention from many Western investors. The same, alas, is true of Russian-speaking Belorussians, many of whom have left the country after brutal crackdowns there. Ukraine’s economy also remains sub-par due to the ongoing Russian aggression in the East of the country. So it’s fallen to enterprising Russian-speaking investors in and outside Russia to work out the best ways to harness the obvious talent out there.

Leta Capital makes a play of investing in Russian-speaking entrepreneurs based just about anywhere. It’s now launching its third and largest fund to date and says it will invest over $100 million in UK, European, and US-based growth-stage tech companies over the next three years. Its focus will be Seed/ Round A / Round B investments. It intends to invest in the range of $2-5 million and will be focused on software, IT, and internet technologies

The new fund will to hone in on East European and Russian-speaking entrepreneurs. Particularly those operating out of international hubs such as London and New York.

Leta’s founder and former tech entrepreneur Alexander Chachava says Russian-speaking startups based abroad are often – these days – over-looked and under-valued by Western VCs and investors, and I dare say he’s right. Prejudice isn’t just about skin color, as we all know.

Chachava says his fund has invested over $45 million to date since 2012, going into 30 technology companies including Synthesis AI, Unigine, InDriver, NovaKid (which I covered last year) and 365Scores.

Exits include the sale of Bright Box HK to Zurich Insurance Group in 2017, and WeWork’s acquisition of sales and marketing platform Unomy.

Chachava said: “While we are significantly broadening our geographic focus towards key global hubs, our strategy effectively remains the same: to identify exciting, high-potential technology start-ups and entrepreneurs, and support them in realizing their international ambitions.”

Chachava says his own research suggests there are in excess of 17,000 Russian-speaking and East European tech entrepreneurs and start-ups active in the UK, Europe, and US.

“Our analysis shows they continue to be undervalued and overlooked for funding, despite often generating significant cash when it comes to ARR. These entrepreneurs are some of the most dynamic and technically skilled in the world, and for investors, they represent a massive untapped opportunity.”

He has a point. Significant businesses such as Telegram, Revolut, TradingView, PandaDoc, and Preply were all started by Russian speakers who are emigres from their respective Russian-influenced countries.

Leta says its first “evergreen” fund of $15 million was fully deployed in early 2020, delivering a gross IRR of 27% per annum to investors. Its second $50 million fund had its first closing in September 2018 and has committed about 60% of its capital, says the company.

Leta will invest out of an entity in the Cayman Islands, but doesn’t plan to have an office right now, and nor will it need it to invest.

As Chachava told me over a Zoom call: “The last two years, we have not been not traveling too much, our work has been downgraded to Zoom calls. But before that, we spent a couple of months in the US, a couple of months in Western Europe. I was a frequent visitor to London but I don’t think we need space anymore in our modern world.”

On-demand grocery startup Food Rocket launches in the Bay Area, goes up against delivery giants

On-demand grocery startups like Gorillas are invading Europe right now, but although on-demand-everything is kinda old-hat in the Bay Area, a new startup thinks it might just be able to do something new.

Food Rocket says it has raised a $2 million investment round from AltaIR Capital, Baring Vostok fund, and the AngelsDeck group of business angels, including Philipp Bashyan, of Russia’s Yonder, who has joined as an investor and advisor.

Yes, admittedly ok this tiny startup is competing with DoorDash, GoPuff, InstaCart and Amazon Fresh. Maybe let’s not into that…

Using the company’s mobile app, users can order fresh groceries, ready-to-eat meals, and household goods that will be delivered within 10-15 minutes, says the startup, which will be servicing SoMa, South Park, Mission Bay, Japantown, Hayes Valley, and others. The company hopes to open 150 ‘dark stores’ on the West Coast as part of its infrastructure.

Vitaly Aleksandrov, CEO, and co-founder of Food Rocket said: “The level of competition in this market in the U.S. is still manageable, which is why we have the opportunity to become leaders in the sphere of fast delivery of basic products and household goods. We aim to replace brick-and-mortar supermarkets and to change consumers’ current habits in regards to grocery shopping.”

What can we say? Good luck?

Juul inventor’s Myst lands funding as institutional investors turn to China’s e-cigs

Over the past several years, institutional investors had largely shied away from China’s e-cigarette makers, an industry that was teeming with shoddy workshops and lacked regulatory oversight. But investors’ attitude is changing as China sets in motion its strictest ever regulation on electronic cigarettes.

Myst Labs, a Chinese e-cigarette maker co-founded in 2019 by Chenyue Xing, a chemist who was part of the team at Juul that invented nicotine salts, a key ingredient in vaping, recently raised “tens of thousands of dollars” from a Series B funding round. The financing was led by its existing investor, IMO Ventures. Thomas Yao, CEO and another co-founder of Myst, is a founding partner of IMO Ventures.

In March, one of China’s top tech policy makers published a set of draft rules that would bring e-cigarettes under the same regulatory scope as traditional tobacco, which means vaping companies will need licenses for production, wholesale and retail operations in the world’s largest manufacturer and exporter of e-cigarettes.

These changes will deal a blow to small producers with poor quality control, leaving the industry with a handful of established and compliant players, Fang Wang, head of marketing at Myst, told TechCrunch.

For one, standardizing production is costly, Li said. From ceramic coils, batteries, to fragrance, every component and ingredient of a vape will need to meet stringent requirements. E-cigarette companies will also need to pay tobacco taxes, an important source of tax revenue for the Chinese government.

The other challenge is how to lower nicotine content. Many current products on the market have a relatively high nicotine concentration at 3-5%, so if China is in line with the European Union standard of 1.7%, many small brands will be forced out of business because they lack the know-how to produce low-nicotine vapes that still satisfy users’ crave, suggested Li.

“We’ve received a lot of investor interest in the past few months. Before that, professional, institutional investors often avoided e-cigarette companies, but they are showing more willingness now as regulations take shape,” Li added.

Myst declined to list its other investors but said they include high-profile individuals invovled in the e-bike sharing company Lime, Facebook and the bitcoin industry.

Most of Myst’s current sales are from China, where it has opened 600 stores and plans to reach a footprint of 1,000 stores in the next few quarters. Overseas, the startup has a retail footprint in Malaysia, Russia, Canada and the United Kingdom, where it’s selling in over 30 shopping malls and a few hospitals through its distribution partner, Ecigwizard.

The new funding will allow Myst to further expand its sales network and strengthen its research and development. The company prides itself on its product containing 1.7% nicotine, which it claims can deliver the effect of a 3% counterpart. At her lab, Xing is currently working on e-liquids with “natural tobacco contents” and without organic acids, additives that allow nicotine salts to vaporize and be absorbed.

Myst is still a relatively small player compared to China’s market dominator Relx, which went public in New York earlier this year and is applying for a license to sell in the U.S. But Yao is optimistic about Myst’s future. Vaping, he said, is one of the fastest-growing consumer categories in China. Myst’s recent sales are tripling every three months.

“In other consumer areas, you rarely see a top player commanding 60-70% of the market, so there is still a lot of room for the top 10 players to grow,” the CEO said.

Russian surveillance tech startup NtechLab nets $13M from sovereign wealth funds

NtechLab, a startup that helps analyze footage captured by Moscow’s 100,000 surveillance cameras, just closed an investment of more than 1RUB billion ($13 million) to further global expansion.

The five-year-old company sells software that recognizes faces, silhouettes and actions on videos. It’s able to do so on a vast scale in real time, allowing clients to react promptly to situations It’s a key “differentiator” of the company, co-founder Artem Kukharenko told TechCrunch.

“There could be systems which can process, for example, 100 cameras. When there are a lot of cameras in a city, [these systems] connect 100 cameras from one part of the city, then disconnect them and connect another hundred cameras in another part of the city, so it’s not so interesting,” he suggested.

The latest round, financed by Russia’s sovereign wealth fund, the Russian Direct Investment Fund, and an undisclosed sovereign wealth fund from the Middle East, certainly carries more strategic than financial importance. The company broke even last year with revenue reaching $8 million, three times the number from the previous year, ane expects to finish 2020 at a similar growth pace.

Nonetheless, the new round will enable the startup to develop new capabilities such as automatic detection of aggressive behavior and vehicle recognition as it seeks new customers in its key markets of the Middle East, Southeast Asia and Latin America. City contracts have a major revenue driver for the firm, but it has plans to woo non-government clients, such as those in the entertainment industry, finance, trade and hospitality.

The company currently boasts clients in 30 cities across 15 countries in the Commonwealth of Independent States (CIS) bloc, Middle East, Latin America, Southeast Asia and Europe.

These customers may procure from a variety of hardware vendors featuring different graphic processing units (GPUs) to carry out computer vision tasks. As such, NtechLab needs to ensure it’s constantly in tune with different GPU suppliers. Ten years ago, Nvidia was the go-to solution, recalled Kukharenko, but rivals such as Intel and Huawei have cropped up in recent times.

The Moscow-based startup began life as a consumer software that allowed users to find someone’s online profile by uploading a photo of the person. It later pivoted to video and has since attracted government clients keen to deploy facial recognition in law enforcement. For instance, during the COVID-19 pandemic, the Russian government uses NtechLab’s system to monitor large gatherings and implement access control.

Around the world, authorities have rushed to implement similar forms of public health monitoring and tracking for virus control. While these projects are usually well-meaning, they inspire a much-needed debate around privacy, discrimination, and other consequences brought by the scramble for large-scale data solutions. NtechLab’s view is that when used properly, video surveillance generally does more good than harm.

“If you can monitor people quite [effectively], you don’t need to close all people in the city… The problem is people who don’t respect the laws. When you can monitor these people and [impose] a penalty on them, you can control the situation better,” argued Alexander Kabakov, the other co-founder of the company.

As it expands globally, NtechLab inevitably comes across customers who misuse or abuse its algorithms. While it claimed to keep all customer data private and have no control over how its software is used, the company strives to “create a process that can be in compliance with local laws,” said Kukharenko.

“We vet our partners so we can trust them, and we know that they will not use our technology for bad purposes.”

PicsArt hits 130 million MAUs as Chinese flock to its photo editing app

If you’re like me, who isn’t big on social media, you’d think that the image filters that come inside most apps will do the job. But for many others, especially the younger crowd, making their photos stand out is a huge deal.

The demand is big enough that PicsArt, a rival to filtering companies VSCO and Snapseed, recently hit 130 million monthly active users worldwide, roughly a year after it amassed 100 million MAUs. Like VSCO, PicsArt now offers video overlays though images are still its focus.

Nearly 80 percent of PicsArt’s users are under the age of 35 and those under 18 are driving most of its growth. The “Gen Z” (the generation after millennials) users aren’t obsessed with the next big, big thing. Rather, they pride themselves on having niche interests, be it K-pop, celebrities, anime, sci-fi or space science, topics that come in the form of filters, effects, stickers and GIFs in PicsArt’s content library.

“PicsArt is helping to drive a trend I call visual storytelling. There’s a generation of young people who communicate through memes, short-form videos, images and stickers, and they rarely use words,” Tammy Nam, who joined PicsArt as its chief operating officer in July, told TechCrunch in an interview.

PicsArt has so far raised $45 million, according to data collected by Crunchbase. It picked up $20 million from a Series B round in 2016 to grow its Asia focus and told TechCrunch that it’s “actively considering fundraising to fuel [its] rapid growth even more.”

picsart

PicsArt wants to help users stand out on social media, for instance, by virtually applying this rainbow makeup look on them. / Image: PicsArt via Weibo

The app doubles as a social platform, although the use case is much smaller compared to the size of Instagram, Facebook and other mainstream social media products. About 40 percent of PicsArt’s users post on the app, putting it in a unique position where it competes with the social media juggernauts on one hand, and serving as a platform-agnostic app to facilitate content creation for its rivals on the other.

What separates PicsArt from the giants, according to Nam, is that people who do share there tend to be content creators rather than passive consumers.

“On TikTok and Instagram, the majority of the people there are consumers. Almost 100 percent of the people on PicsArt are creating or editing something. For many users, coming on PicsArt is a built-in habit. They come in every week, and find the editing process Zen-like and peaceful.”

Trending in China

Most of PicsArt’s users live in the United States, but the app owes much of its recent success to China, its fastest growing market with more than 15 million MAUs. The regional growth, which has been 10-30 percent month-over-month recently, appears more remarkable when factoring in PicsArt’s zero user acquisition expense in a crowded market where pay-to-play is a norm for emerging startups.

“Many larger companies [in China] are spending a lot of money on advertising to gain market share. PicsArt has done zero paid marketing in China,” noted Nam.

Screenshot: TikTok-related stickers from PicsArt’s library

When people catch sight of an impressive image filtering effect online, many will inquire about the toolset behind it. Chinese users find out about the Armenian startup from photos and videos hashtagged #PicsArt, not different from how VSCO gets discovered from #vscocam on Instagram. It’s through such word of mouth that PicsArt broke into China, where users flocked to its Avengers-inspired disappearing superhero effect last May when the film was screening. China is now the company’s second largest market by revenue after the U.S.

Screenshot: PicsArts lets users easily apply the Avengers dispersion effect to their own photos

A hurdle that all media apps see in China is the country’s opaque guidelines on digital content. Companies in the business of disseminating information, from WeChat to TikTok, hire armies of content moderators to root out what the government deems inappropriate or illegal. PicsArt says it uses artificial intelligence to sterilize content and keeps a global moderator team that also keeps an eye on its China content.

Despite being headquartered in Silicon Valley, PicsArt has placed its research and development center in Armenia, home to founder Hovhannes Avoyan. This gives the startup access to much cheaper engineering talents in the country and neighboring Russia compared to what it can hire in the U.S. To date, 70 percent of the company’s 360 employees are working in engineering and product development (50 percent of whom are female), an investment it believes helps keep its creative tools up to date.

Most of PicsArt’s features are free to use, but the firm has also looked into getting paid. It rolled out a premium program last March that gives users more sophisticated functions and exclusive content. This segment has already leapfrogged advertising to be PicsArt’s largest revenue source, although in China, its budding market, paid subscriptions have been slow to come.

picsart 1

PicsArt lets users do all sorts of creative work, including virtually posing with their idol. / Image: PicsArt via Weibo

“In China, people don’t want to pay because they don’t believe in the products. But if they understand your value, they are willing to pay, for example, they pay a lot for mobile games,” said Jennifer Liu, PicsArt China’s country manager.

And Nam is positive that Chinese users will come to appreciate the app’s value. “In order for this new generation to create really differentiated content, become influencers, or be more relevant on social media, they have to do edit their content. It’s just a natural way for them to do that.”

It’s time to disrupt nuclear weapons

Beatrice Fihn
Contributor

Beatrice Fihn is the executive director of the International Campaign to Abolish Nuclear Weapons and the winner of the 2017 Nobel Peace Prize.

“Atomic bombs are primarily a means for the ruthless annihilation of cities.”

Those are the words of Leo Szilard, one of the scientists who pushed for the development of nuclear weapons. He wrote them as part of a petition signed by dozens of other scientists who had worked on the Manhattan Project pleading with President Harry Truman not to use the nuclear bomb on Japan.

Mere months after its introduction in 1945, the architects of today’s nuclear world feared the implications of the technology they had created.

Nearly 75 years later it’s time again to ask technologists, innovators, entrepreneurs and academics: will you be party to the ‘ruthless annihilation of cities’? Will you expend your talents in the service of nuclear weapons? Will you use technology to create or to destroy?

Our moment of choice

Humanity is at another turning point.

A new nuclear arms race has begun in earnest with the US and Russia leading the way; tearing up the promise of lasting peace in favor of a new Cold War. Russia’s latest weapon is built to destroy entire coast lines with a radioactive tsunami. The US is building new nuclear weapons that are ‘more likely to be used’.

Meanwhile, North Korea appears to again be building its nascent nuclear weapons program. And India and Pakistan stand on the verge of open nuclear conflict, which climate modeling shows could lead to a global famine killing upwards of 2 billion people.

An Indian student wearing a mask poses with her hands painted with a slogans for peace during a rally to mark Hiroshima Day, in Mumbai on August 6, 2018. (PUNIT PARANJPE/AFP/Getty Images)

How do we stop this march toward oblivion?

The Treaty on the Prohibition of Nuclear Weapons has created an opening — a chance to radically change course with the power of international law and shifting norms. The nuclear ban treaty will become international law once 50 nations have ratified it. We are already at 22.

The financial world is also recognizing the risk, with some of the world’s biggest pension funds divesting from nuclear weapons. But there is something even more powerful than the almighty dollar; human capital.

“It took innovation, technological disruption, and ingenuity to create the nuclear dawn. We will need those same forces in greater measure to bring about a nuclear dusk.”

The nuclear weapons industrial complex relies on the most talented scientists, engineers, physicists and technologists to build this deadly arsenal. As more of that talent moves into the tech sector, defense contractors and the Pentagon is seeking to work with major technology companies and disruptive startups, as well as continue their work with universities.

Without those talented technologists, there would be no new nuclear arms race. It’s time to divest human capital from nuclear weapons.

A mistake to end humanity?

Just over one year ago Hawaiians took cover and frantically Googled, “What to do during a nuclear attack”. Days later many Japanese mobile phone users also received a false alert for an inbound nuclear missile.

The combination of human error and technological flaws these incidents exposed makes accidental nuclear attacks an inevitability if we don’t move to end nuclear weapons before they end us.

The development of new machine learning technologies, autonomous weapons systems, cyber threats and social media manipulation are already destabilizing the global political order and potentially increasing the risk of a nuclear cataclysm. That is why it’s vital that the technology community collectively commits to using their skills and knowledge to protect us from nuclear eradication by joining the effort for global nuclear abolition.

A mock “killer robot” is pictured in central London on April 23, 2013 during the launching of the Campaign to Stop “Killer Robots,” which calls for the ban of lethal robot weapons that would be able to select and attack targets without any human intervention. The Campaign to Stop Killer Robots calls for a pre-emptive and comprehensive ban on the development, production, and use of fully autonomous weapons. (Photo: CARL COURT/AFP/Getty Images)

We need to stop this foolish nuclear escalation in its tracks. Our commitment must be to a nuclear weapons-free world, by disrupting the trajectory we are currently heading on. Business as usual will likely end in nuclear war.

It took innovation, technological disruption, and ingenuity to create the nuclear dawn. We will need those same forces in greater measure to bring about a nuclear dusk — the complete disarmament of nuclear-armed states and safeguards against future proliferation.

The belief that we can keep doing what we have done for seven decades for another seven decades is naive. It relies on a fanciful, misplaced faith in the illogical idea of deterrence. We are told simultaneously that nuclear weapons keep the world safe, by never being used. They bestow power, but only make certain states powerful.

This fallacy has been exposed by this moment in time. Thirty years after the end of the Cold War, nuclear weapons have proliferated. Key treaties have been torn up or are under threat. And even more states are threatening to develop nuclear weapons.

So I am putting out a call to you: join us with this necessary disruption; declare that you will not have a hand in our demise; declare that you will use technology for good.

Yahoo agrees $50M settlement package for users hit by massive security breach

One of the largest consumer internet hacks has bred one of the largest class action settlements after Yahoo agreed to pay $50 million to victims of a security breach that’s said to have affected up to 200 million U.S. consumers and some three billion email accounts worldwide.

In what appears to be the closing move to the two-year-old lawsuit, Yahoo — which is now part of Verizon’s Oath business [which is the parent company of TechCrunch] — has proposed to pay $50 million in compensation to an estimated 200 million users in the U.S. and Israel, according to a court filing.

In addition, the company will cover up to $35 million on lawyer fees related to the case and provide affected users in the U.S. with credit monitoring services for two years via AllClear, a package that would retail for around $350. There are also compensation options for small business and individuals to claim back costs for losses associated with the hacks. That could include identity theft, delayed tax refunds and any other issues related to data lost at the hands of the breaches. Finally, those who paid for premium Yahoo email services are eligible for a 25 percent refund.

The deal is subject to final approval from U.S. District Judge Lucy Koh of the Northern District of California at a hearing slated for November 29.

Since Yahoo is now part of Oath, the costs will be split 50-50 between Oath and Altaba, the holding company that owns what is left of Yahoo following the acquisition. Altaba last month revealed it had agreed to pay $47 million to settle three legal cases related to the landmark security breach.

Yahoo estimates that three billion accounts were impacted by a series of breaches that began in 2013. The intrusion is believed to have been state-sponsored attack by Russia, although no strong evidence has been provided to support that claim.

The incident wasn’t reported publicly until 2016, just months after Verizon announced that it would acquire Yahoo’s core business in a $4.8 billion deal.

At the time, Yahoo estimated that the incident had affected “at least” 500 million users but it later emerged that data on all of Yahoo’s three billion users had been swiped. A second attack a year later stole information that included email and passwords belonging to 500 million Yahoo account holders. Unsurprisingly, the huge attacks saw Verizon negotiate a $350 million discount on the deal.

Russia’s Telegram ban that knocked out 15M Google, Amazon IP addresses had a precedent in Zello

Russia blocking access to Telegram after the messaging app refused to give it access to encrypted messages has picked up an unintended casualty: we’re now up to over 15 million IP addresses from Amazon and Google getting shut down by the regulators in the process, taking various other (non-Telegram) services down with it.

Telegram’s CEO Pavel Durov earlier today said that its reach in the country has yet to see an impact from the ban 24 hours on, with VPNs, proxies and third-party cloud services stepping in to pick up the slack for its roughly 14 million users in the country, and third parties refusing to buckle under requests from Roskomnadzor, the regulator, to remove the app from its stores and servers.

“Thank you for your support and loyalty, Russian users of Telegram. Thank you, Apple, Google, Amazon, Microsoft — for not taking part in political censorship,” Durov noted.

But Telegram’s Russia crisis is not the first time that an app banned by the Russian government has had to rely on third-party support to navigate its position with users. A recent precedent involving a much smaller communications app sheds some light on how all of this works. And ironically, its own run-in may have been the reason for why the government moved so quickly to block so many IP addresses around Telegram’s, affecting more than just the app itself.

A little over a year ago, the walkie-talkie app Zello received a notice from the Russian regulator Roskomnadzor. Zello was informed that it would be banned unless it started to host records of the conversations that were taking place on the app on Russian servers — in compliance with a hosting requirement that Russia put in place for ISPs back in 2014 as part of its efforts to tighten its control of digital information in the name of national security.

You might remember the name Zello from its bump of attention when a wave of people hit by Hurricane Harvey in Texas used it to communicate with each other when voice services went down or became too clumsy to use, but mobile internet connections stayed up. “Voice is how we most naturally communicate, and push-to-talk and radio-style communication is instant, no dialling or waiting,” said Zello CEO Bill Moore. “It can be with one person or large groups and build relationships and to solve problems.”

The startup itself is based out of Austin, Texas and has around 120 million registered users, with around four million monthly active users.

Moore — who had in the past also founded and run another Texas startup, TuneIn — said in an interview this week that Zello’s run-in with Russia started about a year ago, when the regulator started to block the application in Spring 2017, after Zello refused to cooperate with the hosting requirement, both on grounds of cost and principle.

(Cost: because it’s a small startup. And principle: because Zello is built in a way where messages are stored locally, both for direct messages and those sent in more widely-distributed channels, the feature that Moore believes might have been “why Zello annoyed Russia,” because protestors used these channels to coordinate activities.”)

Instead of buckling and leaving Russia, Zello decided to use to some software it had written years before, when the app had been issued with a block in Venezuela after it ran afoul of the government there — software “that let us change IP addresses for our service,” as Moore describes it. The change in IP addresses essentially meant that as Zello was shut down in one place, it was able to hop to another, using services from either AWS or Google Cloud.

Moore said that Zello — which originally hosted its service on IBM’s cloud before the ban — used its IP hopping tactic for nearly a year, moving first across IP addresses on Amazon and then hopping to Google Cloud when Amazon got too hot. By the time Zello started using Google Cloud, the government was well on to Zello’s ways, and it took only about 10 days before Google asked Zello to stop, Zello’s CTO and founder Alexey Gavrilov added.

“About a month ago, the press in Russia began to report that Roskomnadzor was threatening to block millions of addresses if that’s what it took to get Zello [to retreat]. That was when Amazon said, ‘you need to stop changing IP addresses,’” Gavrilov said. “We tried to get Amazon to reconsider, making the case that by asking us to stop, it is are really acting the same way that ISPs do that are controlled by Russia. Zello is not damaging, but Russia is by blocking. It’s not wise to go along with that threat.”

His argument echoes what Durov has been saying in defense of Telegram, although it didn’t appear to wash for the smaller app. “We lost that debate,” Gavrilov said.

Moore and Gavrilov say they believe Telegram may be using a similar kind of approach to move around Amazon- and Google-based IP addresses (I’ve tried to contact Durov to ask about this but have not had a reply; Google and Amazon also have not replied to my emails). However, now, with the Russian authorities well aware of the tactic, it simply decided to block large swathes of IPs to act more quickly, rather than negotiate with cloud companies to pick out which IP addresses were actually being used.

Partly because of the size of the service in question, and partly because of the blanket blocking, the difference between the IP addresses being blocked varied from just over 2,000 for Zello to more than 15 million by the time Telegram attempted its own IP hops.

Zello still believes that it was not in the wrong in its own encounters with the Russian government, although its appeals to Amazon and Google, and eventually Apple and others who host the app on their stores, ultimately didn’t wash.

“We believe that Zello doesn’t violate Russian law because originally the hosting requirement was written for ISPs, and Zello is not an ISP,” Moore said. “We cooperate with law enforcement on a consistent basis and do what we can under the law.” But like Telegram, Zello takes the view that the medium should not be attacked because of how it is used. “Terrorists drink water, but I don’t think we should outlaw water, either,” is how Moore describes his stance.

Since about two weeks ago, the only way that people in Russia can use Zello is by way of VPN proxies. Zello has a fairly even distribution of its several millon monthly active users across several countries, including the U.S., Mexico, Brazil, and Hong Kong. Russia had been one of its top markets until this happened, but the cost to Zello has been about half of its active users in the country, which now stand at 200,000.

“We don’t like to think about how we’ve lost half our users there,” Gavrilov said. “We like to think about how many we’ve managed to keep.”

Zello has always been ad-free and free to use by regular consumers. Moore said that the company is profitable, making its revenues through a premium tier for businesses to have their own private channels. So far, Zello is completely bootstrapped, although Moore said that it is likely it will want to raise money eventually to grow its consumer business.

Neither CTO nor CEO think that Russian bans impact the company’s wider business.

“In my opinion, incidents like these only help companies like Telegram and Zello on the global market,” Gavrilov (a native of Russia) said. “Realistically, Russia is a small share of the Telegram user base, and standing up to the demands in Russia just communicates to everyone else that you can trust these people. That only makes it more valuable.”

Crunch Report | Hey Dillon Francis, iPhone X Is Now Available For Pre-Order

Today we’re hanging out with EDM artist Dillon Francis, Apple opens for iPhone X pre-orders and releases a sleeve for MacBooks, Walmart starts using robots in stores and Russia condemns Twitter for banning two of its media companies from advertising on the platform. All this on Crunch Report. Read More

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Russia targeted election systems in 21 states, successfully hacking some

 On Friday, the Department of Homeland Security notified nearly half of the U.S. states that their election systems were targeted by Russia-affiliated hackers in an attempt to influence the 2016 election. In most of the states targeted, the hackers were engaged in preliminary activities like scanning. In other states hackers attempted to infiltrate systems and failed, but in a small selection… Read More

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Yes, Vladimir Putin has gone shirtless again to remind you of his dad bod power

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You already know that the golfing, TV watching, Twitter-obsessed U.S. president is on vacation, but you might not have known that Russia’s President Vladimir Putin is on vacation, too. 

Luckily for you, we just got our hands on Putin’s vacay photos, and they’re full of spymaster-in-the-Siberian-tundra cheesecake. 

In photos released by the Kremlin on Saturday, Putin is shown going on a fishing trip with a few friends. 

The first photo (above) is innocent enough, showing the Russian leader steering a boat through the Siberian waters. And look at all those layers. Since it’s not that cold in the Republic of Tuva (where the fishing trip occurred) this time of year, things probably got steamy pretty fast.  Read more…

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Stephen Colbert grilling Oliver Stone about Putin is excruciating to watch

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It shouldn’t be surprising in this current political climate that Oliver Stone’s four-part Showtime series about Russia’s leader, Vladimir Putin, hasn’t had the warmest of receptions.

Stephen Colbert is more known for his quips, but a meeting with Stone on The Late Show on Monday proved too irresistible for the host. Colbert asked the director if he was “cosying up” to what some would call a dictator.

“You know, you have to be polite because this was a two-year deal, and it was four times, and I was with him numerous times,” Stone explained.

Colbert admittedly hadn’t watched the series yet, but asked Stone what would surprise him about Putin when watching it. Read more…

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Trump 'Crazy': President described by fired FBI director Comey as 'outside realm of normal'

When President Donald Trump accused outgoing President Barack Obama in March of ‘wiretapping’ him, James B. Comey, then the FBI director, was “flabbergasted,” reports the New York Times in a breakdown of Comey’s thuggish dismissal that includes jawdropping detail. The president, Comey told his FBI associates, was “outside the realm of normal,” even “crazy.”

Those are the words he used, reports the Times.

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Russian flags rained down in a confetti-style protest during Trump's rally

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Trolling is mostly dumb, but sometimes it’s an art. 

President Donald Trump held a rally in Pennsylvania on Saturday and, as he was speaking, someone tossed a bunch of tiny Russian flags, confetti-style, in front of the cameras streaming his speech to news networks. 

As far as protests go, it certainly earns points for creativity. 

The Trump campaign and administration officials have had a lot of unexplained contact with Russian officials, much of which is currently under investigation. A former campaign manager allegedly laundered money for a Ukrainian political party with ties to the Russian government. The FBI got a surveillance court order in the summer of 2016 to watch a Trump adviser because of an investigation into links between the Kremlin and the current president’s campaign. And if you’re looking for more…oddities…they’re not hard to find. Read more…

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People are quitting LiveJournal in droves after Russian owners ban political, LGBTQ talk

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Venerable blog platform LiveJournal is now saying goodbye to some of its biggest users, after announcing it’s taking steps to comply with Russian law.

The platform, which moved its servers to Russia in December last year, updated its terms of service last week, Gizmodo reports.

Under the terms, content deemed as “political solicitation,” or that “contradictory to the laws of the Russian Federation” will be banned.

Russian law gives censors sweeping powers to ban political and pro-LGBTQ content under the guise of national security. But critics say the law has been used as an excuse to discriminate against the LGBTQ community. Read more…

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Livejournal's Russian owners announce new anti-LGBT policy, fandom stages mass exodus

Mitch Wagner writes, “LiveJournal is a venerable online community that predates Facebook and even blogging. It got acquired by a Russian company a few years ago, but some of its American and British users hung on, including sf and fantasy writers and fans. Lately, I know one of my friends was scrambling to leave, but I’d been too busy to look into why.”
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Kate McKinnon plays Jeff Sessions as Forrest Gump in 'SNL' cold open

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In the immortal words of Mr. Gump: “Life is like a box of chocolates. You never know what you’re gonna get.”

So if you’re Octavia Spencer, you just might serve a very special kind of pie to Attorney General Jefferson Beauregard Sessions on Saturday Night Live

Spencer made an unusual host cameo in tonight’s cold open. She showed up as her Oscar-winning character from The Help, Minny, all to deliver a hot slice of “chocolate” pie to Kate McKinnon’s Sessions in a hilarious Forrest Gump send-up.

For those who haven’t been following recent events, the attorney general is in a spot of bother right now over meetings he had with the Russian ambassador. Meetings Sessions apparently failed to disclose during his Senate confirmation hearing.  Read more…

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Obsessed with the Trump-Russia drama? You're doing it right.

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Maybe your spouse is worried about you. Perhaps it’s your employer. They’ve noticed marked declines in your attention in recent weeks. Just stop refreshing the New York Times and Washington Post, they say. Turn off CNN. Or if you’re into the harder stuff: Stop. Checking. Twitter

Maybe you too have started to wonder whether you’re getting too obsessed with the Trump-Russia storyline right now. The news is coming so thick and fast, it can be hard not to stare slack-jawed at each new development. 

But do you absolutely have to read every new drop of information about Jeff Sessions and Russian Ambassador Sergey Kislyak? Did you really have to watch that whole mad-ass Carter Page interview, instead of just the edited bit, where the Trump associate admitted meeting that same gentleman from Moscow at the GOP convention?  Read more…

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'The Americans' lucks out with its ads in the New York Times

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After Russia re-entered the news, The Americans knew its fifth season would be relevant. But nobody could’ve known just how relevant it would actually be. 

Days before the show—which follows two Soviet spies living deep undercover near Washington, D.C. in the 1980s—returns for its new season on FX, the series got some prime ad placement on the New York Times website. 

well that’s one way to take out an ad pic.twitter.com/CoX4QcyMZi

— Ross Neumann (@rossneumann) March 3, 2017

FX took out major advertising for the show just as news broke that Attorney General Jeff Sessions met with a Russian ambassador, lied about it during his confirmation hearings, and would recuse himself from any inquiry into Russia’s attempts to influence the 2016 U.S. election. Twitter users noticed the fortuitous timing.  Read more…

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This house was 3D-printed in just 24 hours

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As we start to 3D-print everything — including houses, of all things — it’s pretty impressive that a company built one in just 24 hours.

Located in Russia, this 400-square-foot home (37 square meters) was built in just a day, at a cost of just over $10,000.

3D-printing company Apis Cor built the house using a mobile printer on-site.

Image: APIS COR

Image: APIS COR

The main components of the house, including the walls, partitions and building envelope were printed solely with a concrete mixture.

Fixtures like windows and furnishings were later added on, and a shiny coat of paint added to the exterior of the house. Read more…

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Three kinds of propaganda, and what to do about them

Jonathan Stray summarizes three different strains of propaganda, analyzing why they work, and suggesting counter-tactics: in Russia, it’s about flooding the channel with a mix of lies and truth, crowding out other stories; in China, it’s about suffocating arguments with happy-talk distractions, and for trolls like Milo Yiannopoulos, it’s weaponizing hate, outraging people so they spread your message to the small, diffused minority of broken people who welcome your message and would otherwise be uneconomical to reach.
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U.S. spies are withholding intelligence from Donald Trump, who has none

Capping off Donald J. Trump’s No Good Very Bad Horrible Day today, the Wall Street Journal reports that senior U.S. intelligence officials are deliberately withholding sensitive information from the President because they don’t trust him. Today’s report cites sources inside the White House, and underscores the deep mistrust between career spies and the imploding kakistocracy.

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Trump aides were in constant contact with top Russian officials during campaign

This is so much bigger than Watergate. America has not seen a political crisis of this magnitude for generations. The other shoe drops on #Flynngate tonight. Trump, Manafort, and Flynn’s activities “raise a red flag.” The U.S. government is in “unbelievable turmoil.” Who is in charge of America?

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Yes, Hillary Clinton tweeted about the end of Michael Flynn. Yes, it was glorious.

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Hillary Clinton only puts down the cheese platter and logs off Netflix for special occasions these days (she deserves a break). And today was special.

White House national security adviser Michael Flynn resigned late Monday after reports emerged that he mislead the administration about his talks with Russia before Donald Trump even took office. We won’t got into it here, but it’s juicy.

Needless to day, Twitter enjoyed itself. After all, Flynn was trotted out regularly on the campaign trail to harangue Clinton about her email scandal, accusing the Democratic candidate of thinking she was above the law. And now, well. Read more…

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Russia may turn Snowden over to U.S. as 'gift' to 'curry favor' with Trump (who wants to kill the NSA leaker)

U.S. intelligence officials say Russia ‘is considering’ sending Edward Snowden back to the United States as a “gift” to President Donald Trump, who has consistently referred to the NSA leaker as a “spy” and a “traitor” for whom the death penalty would be appropriate punishment.

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Deutsche Bank fined for laundering Russian money

U.K. and U.S. authorities fined Deutsche Bank of Germany was $629 million for helping crooked Russian plutocrats move $10 billion out of Russia.

Via Bloomberg:

From April 2012 to October 2014, mirror trades were used by Deutsche Bank customers to transfer more than $6 billion from Russia, through the German lender’s arm in the U.K., to overseas bank accounts including in Cyprus, Estonia, and Latvia, the FCA said. Another nearly $4 billion in suspicious “one-sided trades” were also carried out.

The mirror trades allowed clients to buy local blue-chip shares for rubles, while the same stocks would be sold in London for dollars, in order to obtain the U.S. currency. Although such trades can be legal, there was a lack of controls in place at Deutsche Bank to prevent money laundering and other offenses.

A couple of weeks ago Western Union was fined $586 million for colluding with organized crime. The CEOs of both companies kept their jobs.

By Christoph F. Siekermann – Fotografiert am 17. September 2005, CC BY-SA 3.0, Link

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Trump to sign yet another trash executive order, this time on 'the cyber'

‘President’ Donald Trump is expected to sign an executive order addressing cybersecurity today, Reuters reports in an item that cites “two sources familiar with the situation.” The EO is expected to be Trump’s first action to address what he called a top priority of his administration during the Presidential campaign.

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