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NortonLifeLock acquires Avira in $360M all-cash deal, 8 months after Avira was acquired for $180M

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Only eight months after getting acquired for $180 million, Avira is changing hands again, for double the value: NortonLifeLock today announced that it would acquire the German security firm for around $360 million in an all-cash deal.

The M&A deal is the latest of a series of consolidations and shifts in ownership around both companies: NortonLifeLock came into existence as a standalone company only last year after Symantec’s enterprise security business was acquired by Broadcom for nearly $11 billion. NortonLifeLock is itself today a publicly traded company with a market cap of about $11.5 billion.

Avira, meanwhile, was until April of this year a bootstrapped tech business focusing mainly on security software for consumers. Its products include — like Norton itself — anti-virus software. In Avira’s case (as with Norton’s) that software has been resold by the likes of Facebook (as part of its now-dormant antivirus marketplace). In more recent years, Avira’s clocked up more customers via the white-label deals it makes with big names. Strategic partners today include NTT, Deutsche Telekom, IBM, Canonical and more. Avira has a customer base of millions, covering about 30 million secured devices and 1.5 million paying customers (and many more taking free services); combining that with its white-label partners, it says its software touches about 500 million devices globally today.

Notably, Avira has built its business around a freemium model that Norton said it plans to keep.

Investcorp Technology Partners, the PE division of Investcorp Bank, acquired a majority stake in the company giving it an enterprise valuation of $180 million in April in part to inject some money into the business to give it more firepower to make acquisitions of its own. At the time, it was a notable acquisition not only for putting Avira on the map as a consolidator, but as a signal that the M&A market was picking up after it went dormant in the early days of the coronavirus gripping the global economy.

Ultimately, it looks like Avira became one of the consolidated, instead of a consolidator. NortonLifeLock is likely to use the asset to help it grow specifically in Europe, where Avira has a strong customer base.

“I am delighted to welcome Avira to the Norton family,” said Vincent Pilette, CEO, NortonLifeLock, in a statement. “We strive to bring Cyber Safety to everyone, and acquiring Avira adds a growing business to our portfolio, accelerates our international growth and expands our go-to-market model with a leading freemium solution. Culturally, we are a great match. We share a relentless focus on delivering innovative products to customers and we always think customer-first. We cannot wait to get started with Avira.”

Travis Witteveen, who has been the CEO of Avira through its many phases of ownership, said in a statement that he is “thrilled” with the deal, which has effectively doubled the valuation of his company (in the earlier sale to Investcorp, Avira founder Tjark Auerbach retained a “significant” stake of the company, so that gives him a tidy sum, too).

“NortonLifeLock and Avira are fiercely dedicated to helping protect consumers’ digital lives,” said Witteveen in a statement. “We are thrilled to become part of NortonLifeLock – a company that is synonymous with trust and leadership in Cyber Safety. By leveraging the scale of NortonLifeLock, we can reach and protect more consumers around the globe.”

After the deal closes — which is expected to happen in Q4 2021 — Witteveen and Avira’s CTO Matthias Ollig will join the NortonLifeLock leadership team, NortonLifeLock said.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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UK’s competition watchdog still eyeing Facebook’s Giphy buy

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The UK’s competition regulator will make a decision on whether or not Facebook’s purchase of Giphy has a ‘realistic prospect’ of substantially lessening competition by March 25, it said today, as it continues to scrutinize the acquisition.

“The Competition and Markets Authority (CMA) hereby gives notice pursuant to paragraph (b) of the definition of ‘initial period’ in section 34ZA(3) of the [Enterprise] Act that it has sufficient information in relation to the completed acquisition by Facebook, Inc of Giphy, Inc, (the Merger) to enable it to begin an investigation for the purposes of deciding whether to make a reference for a Phase 2 investigation,” it writes.

“The initial period defined in section 34ZA(3) of the Act in relation to the Merger will therefore commence on the first working day after the date of this notice, ie on 29 January 2021. The end of the initial period and the deadline for the CMA to announce its decision whether to refer the Merger for a Phase 2 investigation is therefore 25 March 2021.”

The Competition and Markets Authority launched a probe of Facebook’s $400M acquisition of the GIF-sharing platform back in June 2020.

The investigation put a freeze on Facebook’s ability to continue activities related to integrating Giphy into its wider business empire — such as integrating products or teams or working on business deals or contracts together — despite having already been completed the acquisition.

Facebook confirmed its plan to acquire Giphy in May 2020 — when it also announced its plan to integrate the platform into its photo and video sharing app, Instagram.

But those plans remain on ice as a result of competition scrutiny in the UK. (Last June Facebook and Giphy confirmed they were complying with the CMA’s order to pause integration activity.)

It’s another sign of the growing regulatory friction that tech giants are facing when they seek to grow via acquisition. Last year, for example, European regulators also spent months eyeing Google’s Fitbit acquisition — although they did finally clear the deal in December. But only after obtaining a number of commitments from the tech giant related to how Fitbit data could be used and rivals’ access to APIs.

In the Facebook-Giphy case, the UK watchdog will make a decision in March on whether to open a deeper and broader Phase 2 investigation (after which it would need to issue a final decision).

It could also decide at that point that there is no ‘realistic prospect’ of a substantial lessening of competition as a result of Facebook acquiring Giphy and conclude its intervene — lifting the bar on continued integration between the pair.

The regulator also has discretion to choose not to open a Phase 2 investigation for other reasons, such as if it believes the market is not of sufficient importance to justify the deeper dive or that benefits to customers from a merger outweigh any negative competitive effects.

Given the acquired business in this case is a platform for swapping reaction GIFs it certainly seems possible the CMA may decide that a deeper dive isn’t merited. But we’ll know more in a couple of months.

Whatever happens, regulatory concern linked to Facebook’s grip on the social web has already delayed its plans for Giphy by well over half a year — and the probe may yet drag on for longer — impacting its ability to move fast (and break things).

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Berlin Brands Group commits $302M to acquire D2C and Amazon merchants

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If the rise of direct-to-consumer businesses has been one of the big e-commerce trends of the last decade, then the growth of startups raising huge rounds to consolidate D2C players, to bring more economies of scale to the model, has definitely been a related theme of the past year.

In the latest move, a startup out of Germany called the Berlin Brands Group has announced that it plans to invest €250 million (about $302 million at today’s rates) to buy up smaller companies and bring them into its fold.

While a lot of the company’s would-be competitors in the consolidation race are focusing primarily on the Amazon Marketplace — leaning on fulfillment by Amazon (FBA) to carry out the distribution and logistics — Peter Chaljawski, the founder and CEO, tells us that it’s a different story in its existing target market of Europe.

“In the M&A market, one big difference between the U.S. and Europe is that the latter is more fragmented,” he said. “In the U.S., D2C sellers do a lot on Amazon. In Europe, there are still lots of alternatives. And in some markets like France, consumers don’t even like Amazon.” This is in addition, of course, to selling directly to consumers and bypassing marketplaces altogether, an area that Chaljawski said will continue to be a big focus for BBG. In all, BBG today says it uses some 100 channels to sell its products.

BBG is not your typical e-commerce startup, in that up to now it’s managed to build a big and profitable business largely on its own steam. And despite being a big e-commerce player in Berlin, BBC has no connection to Rocket Internet, the famous incubator of e-commerce businesses founded in the city.

The $302 million earmarked for acquisitions is coming off the startup’s own balance sheet. And from what we understand, it’s also coming ahead of BBG raising a significant round of outside funding to continue its growth. Although BBG has raised money (of an undisclosed amount, per PitchBook) in the past, this would be its first significant equity round when it closes.

BBG itself has built its own profitable direct-to-consumer business from the ground up. Founded in 2005 first focused on audio equipment (Chaljawski had ambitions to be a DJ in a past life) it has some 14 brands today, covering 2,500 items, that it has hatched and grown itself, which it sells in 28 markets.

The conglomerate model that BBG has taken covers a variety of categories, mostly in consumer electronics (including audio gear, fitness equipment and home appliances), and are sold under a range of different brands like auna, Klarstein and Capital Sports. To date, it says it has sold more than 10 million products, and it is profitable, making €300 million (around $363 million) in revenues in 2020.

Its focus for new acquisitions will include more brands and products in garden, home and living goods, sports, electronics and household appliances, with targets generating anything from €500,000 to €30 million in revenues.

While BBG has mostly been about organic growth, it started taking its first foray into inorganic expansion last December, with the acquisition of home goods brand Sleepwise, which Chaljawski describes as making “a very nice blanket.”

The comfort of a nice blanket might come in handy. Despite its success to date, a number of challenges lie ahead for BBG.

First of these are competitors. BBG’s strategy shift and acquisition plans come at a time when consolidators in the space are starting to emerge, armed with fistfuls of dollars to consolidate smaller brands that have emerged with success on marketplaces like Amazon’s (in fact, primarily the Amazon marketplace) but perhaps without obvious paths to scaling.

They include the likes of Thrasio (which most recently raised $500 million in debt to use to buy companies), SellerX, Heyday, Heroes, Perch and more.

This story from December in the FT (before that most recent debt round of Thrasio’s) estimated that there has been at least $1 billion raised collectively by these companies to build out new online consumer empires based on this model.

The vision for all of them is very clear: they want to create the next Unilever, P&G, or Sony, and they are leveraging new economic models and technology to bring in manufacturing, logistics, economies of scale, sales analytics and new innovations in marketing to do it.

Another challenge is how successful and efficient a company, which has up to now taken a very deliberate and organic path, will be in integrating lots of new brands, with the cultures and business partnerships relationships that exist with those, in tow.

The third is the sourcing of quality brands themselves. As we’ve pointed out before, taking just Amazon as one example, there is a ton of junk sold there, including a whole industry of those who buy off wholesale sites and resell on Amazon, which is one reason why so many merchants sell what look like identical products in specific categories. These marketplace sellers leverage things like SEO and armies of reviews to get their products sifting to the top of huge piles of search results, and they can often sell well, even if they are not great buys for you the consumer. That means misleading signals for a potential consolidator looking for hot companies to snap up.

The balance between how marketplaces are leveraged versus how much brands and their owners try to build these things on their own will be an interesting one to watch in the coming years. Amazon and its ilk have only continued to grow and become more efficient, although this sometimes means they are too powerful rather than more useful for third parties:

On the other hand, we’re seeing another persistent theme to help them: the presence of startups and bigger companies continuing to make tools to help the smaller players stay in the game on their own terms. They include biggies like Shopify, but also newer players like GoSite, Shogun and Xentral.

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Google updates Play Store policies on gamified loyalty programs following confusion in India

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Google has updated and broadened its Play Store policy on gaming loyalty programs to help developers better understand the practices that are permitted, months after confusion about the guidance prompted some backlash in India, the biggest Android market by users.

The company said on Thursday that it now specifies guidance on gamified loyalty programs that are based on a qualified monetary transaction in an app and offer prizes of cash or other real-world cash equivalent perks.

Scores of apps run gamified loyalty programs in their apps to appease and win users. Last year, the company sent notices to several Indian startups including Paytm, Zomato, and Swiggy whose in-app gamifying techniques, the company said at the time, resembled gambling. Google had asked the firms to withdraw from engaging in such gamifying techniques. The new policy covers developers worldwide, the company said.

“App developers in India are actively building uniquely Indian features and services. One example is the use of mini games, quizzes and other gamification techniques to delight users and convert them into loyal customers. These experiences are often launched during important festivals and sporting events, and getting it right within the specific time window is critically important,” wrote Suzanne Frey, Vice President, Product, Android Security and Privacy, in a blog post.

The company still does not permit real gambling apps in India, but said developers globally now will have better clarity on rules so they can inform their strategies.

“This is one of the things we discussed when we spoke to several startup CEOs in India and around the world in the past few months. And, as part of the very first policy update of 2021 we are clarifying and simplifying the policies around loyalty programs and features,” wrote Frey.

A Google spokesperson told TechCrunch that the company will be outlining the full guidelines later today.

As part of the update, the company said it is also launching How Google Play Works, a repository of useful information and best practices to help developers. “It also contains India-specific details on programs that local developers can leverage to find success and scale. For users, this site helps to demystify key aspects of the Google Play platform, and explains how user security and protection remains at the heart of everything we do,” wrote Frey.

In a virtual event on Thursday, Sameer Samat, VP of Android and Google Play at Google, said today’s update is the first of many the company plans to issue this year and it is committed to listening to more feedback from the industry.

More on Google and Jio Platform’s upcoming smartphones

In a wide-range discussion at the event organized by startup network TiE, Samat also talked about the efforts Google is putting into bringing Android-powered smartphones to more people in India. Last year, Google announced an investment of $4.5 billion into Indian telecom operator Jio Platforms. As part of the partnership, the two firms have said they will work on low-cost Android smartphones.

“While India is the fastest growing smartphone market in the world, there are a lack of devices priced in a certain range that prevents a number of consumers from purchasing,” he said. “We have been optimizing Android for entry level devices with Android Go. The point of that project is to enable Android to run on entry level hardware that hopefully brings the price down. There are more than 100 million Android Go smartphones in the market today, but we need to go further than that.”

Samat said the company is trying to bring the set of services that higher-end smartphones feature to “entry-level” handsets it is building with Jio Platforms. “More affordable phones cannot mean lower quality phones.” He suggested that these phones will have a different consumer interface that is directly aimed at users who have not previously used a smartphone.

This is a developing story. More to follow…

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