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Facebook hit with antitrust probe for tying Oculus use to Facebook accounts

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Facebook’s bad week just got worse: It’s being investigated in Germany for linking usage of its VR product, Oculus, to having a Facebook account.

The tech giant raised the hackles of the VR community this summer when it announced it would be merging users of the latest Oculus kit onto a single Facebook account — and would end support for existing Oculus account users by 2023.

New users were immediately required to have a Facebook account in order to log in and access content for the virtual reality kit.

In August Facebook also announced that it was changing the name of the VR business it acquired back in 2014 for around $2BN — and had allowed to operate separately — to “Facebook Reality Labs“, signalling the assimilation of Oculus into its wider social empire.

(Related: The last of Oculus’ original co-founders left the company last year.)

In recent years Facebook has been pushing to add a ‘social layer’ to the VR platform — but the heavy-handed requirement for Oculus users to have a Facebook account has not proved popular with gamers.

Now antitrust authorities are taking an interest in the move.

Germany’s Federal Cartel Office (aka, the Bundeskartellamt) said today that it’s instigated abuse proceedings against Facebook to examine the linkage between Oculus VR products and its eponymous social network.

In a statement, its president, Andreas Mundt, said:

In the future, the use of the new Oculus glasses requires the user to also have a Facebook account. Linking virtual reality products and the group’s social network in this way could constitute a prohibited abuse of dominance by Facebook. With its social network Facebook holds a dominant position in Germany and is also already an important player in the emerging but growing VR (virtual reality) market. We intend to examine whether and to what extent this tying arrangement will affect competition in both areas of activity.

The FCO has another ‘abuse of dominance proceeding’ ongoing against Facebook — related to how it combines user data for ad profiling in a privacy-hostile way which the authority contends is an abuse of Facebook’s market dominance.

That case is seen as highly innovative in how it combines privacy and antitrust concerns so is being closely watched.

The latest FCO proceeding against Facebook comes at an awkward time for the tech giant, which has been hit with a massive antitrust lawsuit from 46 U.S. States — accusing it of suppressing competition through monopolistic business practices.

As antitrust regulators have stepped up their scrutiny of Zuckerberg’s empire in recent years, Facebook has responded aggressively: Announcing a plan to consolidate its messaging products onto a single technical backend, as well as adding Facebook branding to its acquisitions — in an apparent bid to make it harder for competition regulators to order a break up.

Facebook’s PR has also sought to cloak the ‘single backend’ move by claiming it will increase user privacy.

Yet the states’ antitrust case against the company includes filings that show a Facebook executive discussing using moments of perceived increased competition for its business as an opportunity to decrease user privacy.

So, uh, awkward….

Reached for comment on the FCO Oculus proceeding, a Facebook spokesperson sent us this statement: “While Oculus devices are not currently available for sale in Germany, we will cooperate fully with the Bundeskartellamt and are confident we can demonstrate that there is no basis to the investigation.”

The tech giant has used a series of legal tactics to block the FCO’s earlier order against ‘superprofiling’ users.

Last year Facebook successfully applied to block the order banning it from combining user data. However Germany’s Federal Court of Justice reversed the decision of the Higher Regional Court — confirming the FCO’s order.

Although the hearing on the main proceeding is still pending at the Düsseldorf Higher Regional Court — currently scheduled for March 26, 2021 (after being postponed from a date in November).

Facebook also responded to the Federal Court of Justice ruling by filing another emergency appeal against the FCO’s order — succeeding for a second time in blocking the order against combining user data.

The FCO says it does not have a route to appeal this preliminary block on points of law — meaning it’s had to lodge a complaint with the Federal Court of Justice, which it did on December 2.

In a statement, Mundt criticized Facebook for resorting to “legal remedies” to block the order which he said is delaying relief for consumers and competitors vis-a-vis Facebook’s abusive practices.

“The fact that Facebook has resorted to various legal remedies is not surprising in view of the significance which our proceedings have for the group’s business model. Nevertheless, the resulting delay in proceedings is of course regrettable for competition and consumers,” he said.

“This is the second time that the Higher Regional Court has preliminarily granted an emergency appeal filed by Facebook. The deadline imposed on Facebook for implementing our demands has again been suspended. As in our view the reasons for this are not sustainable, we have immediately filed a complaint with the Federal Court of Justice. We want the clock to be ticking again for Facebook.”

Facebook using courts to block attempts to hold its business model accountable for violating regional laws is par for the course in Europe.

The tech giant has recently succeeded in blocking a preliminary order from Ireland’s Data Protection Commission to suspend personal data transfers to the US by applying for a judicial review of the regulator’s process, for example.

It also sought to block Irish courts from referring the Schrems II case, which underpins that decision, to the CJEU in the first place — though it did not succeed.

In public remarks in September, Facebook VP Nick Clegg claimed it’s taking that legal action not to defend its own business model but to “try to send a signal that this is a really big issue for the whole European economy, for all small and large companies that rely on data transfers” — which he suggested would be “absolutely disastrous” for the EU as a whole.

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Indonesian logistics startup SiCepat raises $170 million Series B

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SiCepat, an end-to-end logistics startup in Indonesia, announced today it has raised a $170 million Series B funding round. Founded in 2014 to provide last-mile deliveries for small merchants, the company has since expanded to serve large e-commerce platforms, too. Its services now also cover warehousing and fulfillment, middle-mile logistics and online distribution.

Investors in SiCepat’s Series B include Falcon House Partners; Kejora Capital; DEG (the German Development Finance Institution); Telkom Indonesia’s investment arm MDI Ventures; Indies Capital; Temasek Holdings subsidiary Pavilion Capital; Tri Hill; and Daiwa Securities. The company’s last funding announcement was a $50 million Series A in April 2019.

In a press statement, The Kim Hai, founder and chief executive officer of SiCepat’s parent company Onstar Express, said the funding will be used to “further fortify SiCepat’s position as the leading end-to-end logistics service provider in the Indonesian market and potentially to explore expansion to other markets in Southeast Asia.” SiCepat claims to be profitable already and that it was able to fulfill more than 1.4 million packages per day in 2020.

The logistics industry in Indonesia is highly fragmented, which means higher costs for businesses. At the same time, demand for deliveries is increasing thanks to the growth of e-commerce, especially during the COVID-19 pandemic.

SiCepat is one of several Indonesian startups that have raised funding recently to make the supply chain and logistics infrastructure more efficient. For example, earlier this week, supply chain SaaS provider Advotics announced a $2.75 million round. Other notable startups in the space include Kargo, founded by a former Uber Asia executive, and Waresix.

SiCepat focuses in particular on e-commerce and social commerce, or people who sell goods through their social media networks. In statement, Kejora Capital managing partner Sebastian Togelang, said the Indonesian e-commerce market is expected to grow at five-year compounded annual growth rate of 21%, reaching $82 billion by 2025.

“We believe SiCepat is ideally positioned to serve customers from e-commerce giants to uprising social commerce players which contribute an estimated 25% to the total digital commerce economy,” he added.

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InsurGrid raises pre-seed financing to help modernize legacy insurance agents

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Insurance agents spend hours handling paperwork and grabbing client information over the phone. A new seed-stage startup, InsurGrid, has developed a software solution to help ease the process, and make it easier for agents to serve existing clients — and secure new ones.

InsurGrid gives agents a personalized platform to collect information from clients, such as date of birth, driver’s license information and policy declaration. This platform helps agents avoid sitting on long calls or managing back-to-back emails, and instead gives them one spot to understand how all their different clients function. It is starting with property and casualty management.

The startup integrates with 85 insurance carriers, serving as the software layer instead of the provider. Using the InsurGrid platform, insurers can ask clients to upload information and within seconds be registered as a policyholder. This essentially turns into a living Rolodex that insurers can use to access information on the account, and offer quotes on a faster rate.

Image Credits: InsurGrid

There’s a monetary benefit in providing better service. Eden Insurance, a customer of InsurGrid, said that people who submit information through the platform converted at an 82% higher rate than those who don’t. Jeremy Eden, the agency owner of Eden Insurance, said they were able to show consumers that its plan was $300 cheaper than its existing rate.

At the heart of InsurGrid is a bet from the founding team that legacy insurance agents aren’t going anywhere. Co-founder/CEO Chase Beach pointed out that the majority of the $684 billion of annual property and casualty insurance premiums in the United States is distributed by approximately 800,000 agents working in 16,000 brokerages. So far, InsurGrid works with more than 150 of those agencies.

When asked if InsurGrid ever had plans to offer its own insurance, similar to insurtech giants Hippo, Lemonade and Root, Beach said that it is solely working on innovating around the sales process for now. He said that these big companies, which have either recently gone public or are planning to, still rely on agents to be successful.

“Instead of us replacing the insurance agent, what if we gave them that same level of technology of a Hippo or large carrier,” Beach said. “And provide them with the digital experiences so they can compete in 2021.”

As time goes on, he sees insurance agents taking the same role that financial advisors or real estate agents take: “very much involved in the process because they are that expert.”

Other startups that have popped up in this space include Gabi, Trellis and Canopy Connect. The differentiator, the team sees, is that Beach comes from a 144-year-old insurance legacy, giving him key insights on how to sell to agents in a successful and effective way. It is starting with sales, but expect InsurGrid to expand to other parts of the insurance process as well.

To help them compete with new and old startups, InsurGrid recently raised $1.3 million in pre-seed financing to help it fulfill its goal to be the “underdog for the underdogs,” Beach said. Investors include Engineering Capital, Hustle Fund, Vess Capital, Sahil Lavingia and Trevor Kienzle.

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Backed by Blossom, Creandum and Index, grocery delivery and dark store startup Dija launches in London

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Dija, the London-based grocery delivery startup, is officially launching today and confirming that it raised £20 million in seed funding in December — a round that we first reported was partially closed the previous month.

Backing the company is Blossom Capital, Creandum and Index Ventures, with Dija seemingly able to raise pre-launch. In fact, there are already rumours swirling around London’s venture capital community that the upstart may be out raising again already — a figure up to £100 million was mooted by one source — as the race to become the early European leader in the burgeoning “dark” grocery store space heats up.

Image Credits: Dija

Over the last few months, a host of European startups have launched with the promise of delivering grocery and other convenience store items within 10-15 minutes of ordering. They do this by building out their own hyper-local, delivery-only fulfilment centres — so-called “dark stores” — and recruiting their own delivery personnel. This full-stack or vertical approach and the visibility it provides is then supposed to produce enough supply chain and logistics efficiency to make the unit economics work, although that part is far from proven.

Earlier this week, Berlin-based Flink announced that it had raised $52 million in seed financing in a mixture of equity and debt. The company didn’t break out the equity-debt split, though one source told me the equity component was roughly half and half.

Others in the space include Berlin’s Gorillas, London’s Jiffy and Weezy, and France’s Cajoo, all of which also claim to focus on fresh food and groceries. There’s also the likes of Zapp, which is still in stealth and more focused on a potentially higher-margin convenience store offering similar to U.S. unicorn goPuff. Related: goPuff itself is also looking to expand into Europe and is currently in talks to acquire or invest in the U.K.’s Fancy, which some have dubbed a mini goPuff.

However, let’s get back to Dija. Founded by Alberto Menolascina and Yusuf Saban, who both spent a number of years at Deliveroo in senior positions, the company has opened up shop in central London and promises to let you order groceries and other convenience products within 10 minutes. It has hubs in South Kensington, Fulham and Hackney, and says it plans to open 20 further hubs, covering central London and Zone 2, by the summer. Each hub carries around 2,000 products, claiming to be sold at “recommended retail prices”. A flat delivery fee of £1.99 is charged per order.

“The only competitors that we are focused on are the large supermarket chains who dominate a global $12 trillion industry,” Dija’s Menolascina tells me when I ask about competitors. “What really sets us apart from them, besides our speed and technology, is our team, who all have a background in growing and disrupting this industry, including myself and Yusuf, who built and scaled Deliveroo from the ground up”.

Menolascina was previously director of Corporate Strategy and Development at the takeout delivery behemoth and held several positions before that. He also co-founded Everli (formerly Supermercato24), the Instacart-styled grocery delivery company in Italy, and also worked at Just Eat. Saban is the former chief of staff to CEO at Deliveroo and also worked at investment bank Morgan Stanley.

During Dija’s soft-launch, Menolascina says that typical customers have been doing their weekly food shop using the app, and also fulfilling other needs, such as last minute emergencies or late night cravings. “The pain points Dija is helping to solve are universal and we built Dija to be accessible to everyone,” he says. “It’s why we offer products at retail prices, available in 10 minutes – combining value and convenience. Already, Dija is becoming a key service for parents who are pressed for time working from home and homeschooling, as one example”.

Despite the millions of dollars being pumped into the space, a number of VCs I’ve spoken to privately are sceptical that fresh groceries with near instant delivery can be made to work. The thinking is that fresh food perishes, margins are lower, and basket sizes won’t be large enough to cover the costs of delivery.

“This might be the case for other companies, but almost everyone at Dija comes from this industry and knows exactly what they are doing, from buying and merchandising to data and marketing,” Menolascina says, pushing back. “It’s also worth pointing out that we are a full-stack model, so we’re not sharing our margin with other parties. In terms of the average basket size, it varies depending on the customer’s need. On one hand, we have customers who do their entire grocery shop through Dija, while on the other hand, our customers depend on us for emergency purchases e.g. nappies, batteries etc.”

On pricing, he says that, like any retail business, Dija buys products at wholesale prices and sells them at recommended retail prices. “Going forward, we have a clear roadmap on how we generate additional revenue, including strategic partnerships, supply chain optimisation and technology enhancements,” adds Menolascina.

Dija testing on Deliveroo

Image Credits: TechCrunch

Meanwhile, TechCrunch has learned that prior to launching its own app, Dija ran a number of experiments on takeout marketplace Deliveroo, including selling various convenience store items, such as potato chips and over-the-counter pharmaceuticals. If you’ve ever ordered toiletry products from “Baby & Me Pharmacy” or purchased chocolate sweets from “Valentine’s Vows,” you have likely and unknowingly shopped at Dija. Those brands, and a number of others, all delivered from the same address in South Kensington.

“Going direct to consumer without properly testing pick & pack is a big risk,” Menolascina told me in a WhatsApp message a few weeks ago, confirming the Deliveroo tests. “We created disposable virtual brands purely to learn what to sell and how to replenish, pick & pack, and deliver”.

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