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Europe seizes on social media’s purging of Trump to bang the drum for regulation

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Big tech’s decision to pull the plug on president Donald Trump’s presence on their platforms, following his supporters’ attack on the US capital last week, has been seized on in Europe as proof — if proof were needed — that laws have not kept pace with tech market power and platform giants must face consequences over the content they amplify and monetize.

Writing in Politico, the European Commission’s internal market commissioner, Thierry Breton, dubs the 6/1 strike at the heart of the US political establishment as social media’s ‘9/11’ moment — aka, the day the whole world woke up to the real-world impact of unchecked online hate and lies.

Since then Trump has been booted from a number of digital services, and the conservative social media app Parler has also been ejected from the App Store and Google Play over a failure to moderate violent threats, after Trump supporters flocked to the app in the wake of Facebook’s and Twitter’s crackdown.

At the time of writing, Parler is also poised to be booted by its hosting provider AWS, while Stripe has reportedly pulled the plug on Trump’s ability to use its payment tools to fleece supporters. (Although when this reporter asked in November whether Trump was breaching its TOC by using its payment tools for his ‘election defense fund’ Stripe ignored TechCrunch’s emails…)

“If there was anyone out there who still doubted that online platforms have become systemic actors in our societies and democracies, last week’s events on Capitol Hill is their answer. What happens online doesn’t just stay online: It has — and even exacerbates — consequences ‘in real life’ too,” Breton writes.

“Last week’s insurrection marked the culminating point of years of hate speech, incitement to violence, disinformation and destabilization strategies that were allowed to spread without restraint over well-known social networks. The unrest in Washington is proof that a powerful yet unregulated digital space — reminiscent of the Wild West — has a profound impact on the very foundations of our modern democracies.”

The Europe Commission proposed a major update to the rules for digital services and platform giants in December, when it laid out the Digital Services Act (DSA) and Digital Markets Act — saying it’s time to level the regulatory playing field by ensuing content and activity that’s illegal offline is similarly sanctioned online.

The Commission’s proposal also seeks to address the market power of tech giants with proposals for additional oversight and extra rules for the largest platforms that have the potential to cause the greatest societal harm.

Unsurprisingly, then, Breton has seized on the chaotic scenes in Washington to push this already-formed tech policy plan — with his eye on a domestic audience of European governments and elected members of the European Parliament whose support is needed to pass the legislation and reboot the region’s digital rules.

“The fact that a CEO can pull the plug on POTUS’s loudspeaker without any checks and balances is perplexing. It is not only confirmation of the power of these platforms, but it also displays deep weaknesses in the way our society is organized in the digital space,” he warns.

“These last few days have made it more obvious than ever that we cannot just stand by idly and rely on these platforms’ good will or artful interpretation of the law. We need to set the rules of the game and organize the digital space with clear rights, obligations and safeguards. We need to restore trust in the digital space. It is a matter of survival for our democracies in the 21st century.”

The DSA will force social media to clean up its act on content and avoid the risk of arbitrary decision-making by giving platforms “clear obligations and responsibilities to comply with these laws, granting public authorities more enforcement powers and ensuring that all users’ fundamental rights are safeguarded”, Breton goes on to argue.

The commissioner also addresses US lawmakers directly — calling for Europe and the US to join forces on Internet regulation and engage in talks aimed at establishing what he describes as “globally coherent principles”, suggesting the DSA as a starting point for discussions. So he’s not wasting the opportunity of #MAGA-induced chaos to push a geopolitical agenda for EU tech policy too.

Last month the Commission signalled a desire to work with the incoming Biden administration on a common approach to tech governance, saying it hoped US counterparts would work with to shape global standards for technologies like AI and to force big tech to be more responsible, among other areas. And recent events in Washington do seem to be playing into that hand — although it remains to be seen how the incoming Biden administration will approach regulating big tech.

“The DSA, which has been carefully designed to answer all of the above considerations at the level of our Continent, can help pave the way for a new global approach to online platforms — one that serves the general interest of our societies. By setting a standard and clarifying the rules, it has the potential to become a paramount democratic reform serving generations to come,” Breton concludes.

Twitter’s decision to (finally) pull the plug on Trump also caught the eye of UK minister Matt Hancock, the former  secretary of state for the digital brief (now the health secretary). Speaking to the BBC this weekend, he suggested the unilateral decision “raises questions” about how big tech is regulated that would result in “consequences”.

“The scenes, clearly encouraged by President Trump — the scenes at the Capitol — were terrible — and I was very sad to see that because American democracy is such a proud thing. But there’s something else that has changed, which is that social media platforms are making editorial decisions now. That’s clear because they’re choosing who should and shouldn’t have a voice on their platform,” he told the Andrew Marr program.

The BBC reports that Hancock also told Sky News Twitter’s ban on Trump means social media platforms are taking editorial decisions — which he said “raises questions about their editorial judgements and the way that they’re regulated”.

Hancock’s remarks are noteworthy because back in 2018, during his time as digital minister, he said the government would legislate to introduce a statutory code of conduct on social media platforms forcing them to act against online abuse.

More than two years’ later, the UK’s safety-focused plan to regulate the Internet is still yet to be put before parliament — but late last year ministers committed to introducing an Online Safety Bill this year. 

Under the plan, the UK’s media regulator, Ofcom, will gain new powers to oversee tech platforms — including the ability to levy fines for non-compliance with a safety-focused duty of care of up to 10% of a company’s annual turnover.

The proposal covers a wide range of digital services, not just social media. Larger platforms are also slated to have the greatest responsibility for moderating content and activity. And — at least in its current form — the proposed law is intended to apply not just to content that’s illegal under UK law but also the fuzzier category of ‘harmful’ content.

That’s something the European Commission proposal has steered clear of — with more subjective issues like disinformation set to be tackled via a beefed-up (but still voluntary) code of practice, instead of being baked into digital services legislation. So online speech looks set to be one area of looming regulatory divergence in Europe, with the UK now outside the bloc.

Last year, the government said larger social media platforms — such as Facebook, TikTok, Instagram and Twitter — are likely to “need to assess the risk of legal content or activity on their services with ‘a reasonably foreseeable risk of causing significant physical or psychological harm to adults’” under the forthcoming Online Safety Bill.

“They will then need to make clear what type of ‘legal but harmful’ content is acceptable on their platforms in their terms and conditions and enforce this transparently and consistently,” it added, suggesting the UK will in fact legislate to force platforms to make ‘editorial’ decisions.

The consequences Hancock thus suggests are coming for tech platforms look rather akin to the ‘editorial’ decisions they have been making in recent days.

Albeit, the uncomfortable difference he seems to have been articulating is between tech platforms that have massive unilateral power to silence the US president at a stroke and at a point of their own choosing vs tech platforms being made to comply with a pre-defined rules-based order set by legislators and regulators.

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

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Dutch startup QphoX raises €2M to connect Quantum computers with a Quantum modem

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When eventually they become a working reality, Quantum computers won’t be of much value if they simply sit there on their own. Just like the internet, the value is in the network. But right now there’s scant technology to link these powerful devices together.

That’s where QphoX comes in. Thus Dutch startup has raised €2 million to connect Quantum computers with a ‘Quantum modem’.

The funding round was led by Quantonation, Speedinvest, and High-Tech Gründerfonds, with participation from TU Delft.

QphoX aims to develop the Quantum Modem it created at Delft University of Technology (TU Delft) into a commercial product. This networks separate processors together, allowing quantum computers to scale beyond 10’s or 100’s of qubits. Look out for the Singularity folks…

Simon Gröblacher, CEO and co-founder of QphoX told me: “It is the exact same thing as a classical modem except for quantum computers, so it kind of converts electrical and microwave signals to optical signals coherently, so you don’t do any of the quantum information in the process. It then converts it back so you can really have two quantum computers talk to one another.

I noted that there’s more than one type of quantum computer. He countered “We are in principle agnostic to what kind of quantum computer it is. All we do at the moment is we focus on the microwave part, so we can work with superconducting qubits, topological qubits etc. We can convert microwaves to optical signals and they can talk to each other. Currently, the only competitors I know are all the in the academic world. So this is we’re the first company to actually starts building a real product.”

Rick Hao, Principal with Speedinvest’s Deep Tech team, added: “ We want to invest in seed-stage deep technology startups that shape the future and QphoX is well-positioned to make a major impact. Over the next couple of years, there will be rapid progress in quantum computers. Quantum Modem, the product developed by QphoX, enables the development of quantum computers that demonstrate quantum advantage by combining separate quantum processors.”

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UK fashion portal Lyst raises $85M in a ‘pre-IPO’ round, reportedly at a $500M valuation

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E-commerce continues to be a huge focus for investors watching consumer behavior and spending patterns in the wake of the Covid-19 pandemic. In the latest development, UK startup Lyst, a portal for high fashion brands and stores to sell directly to users, has picked up $85 million, in what the startup is describing as a ‘pre-IPO’ round.

The news comes as the company says that it has now grown to 150 million users browsing and buying from a catalog of 8 million products from 17,000 brands and retailers.

List said that gross merchandise value in 2020 was over $500 million, with new user numbers growing 1100% growth in new users. GMV has definitely been accelerating. Lyst has been around since 2010 and said today that lifetime GMV is more than $2 billion.

“Lyst is rapidly becoming a fashion category leader, which hundreds of millions of fashion lovers rely on to decide what to buy. While our app and website already enjoy very large audiences in the USA & Europe, fashion e-commerce remains under-penetrated in general, with huge growth potential globally. We’re excited to use this raise from top-tier investors to continue personalising the fashion shopping experience to each of our millions of customers, while helping our partner brands thrive,” said Chris Morton, Lyst’s CEO and founder, in a statement.

We have contacted the company to ask about the timing and location for a public listing and while it has not commented, we understand that London or New York would be the most obvious locations for a listing, which is not likely to be for another year or even three.

For now, Lyst has disclosed that investors in this latest injection include funds managed by Fidelity International, Novator Capital, Giano Capital and C4 Ventures, as well as a mix of financial and strategic previous backers Draper Esprit, 14W, Accel, Balderton Capital, Venrex and LVMH. Carmen Busquets — a strategic advisor to the company who co-founded Net-a-Porter, one of Lyst’s competitors in the space — also increased her investment in the company with this round, the company said.

Lyst is not disclosing its valuation but PitchBook notes that with this round, it is $500 million post-money. (We’ve also asked the company to confirm whether this is an accurate figure.) Sky News, where the funding news was leaked last night, did not have a valuation figure.

For some further comparison and context, though, Farfetch, another competitor in the same space as Lyst, listed publicly some years ago and currently has a market cap of $14.4 billion. And more generally, there is a lot to play for here online, not just against other pure-play fashion portals, but also standalone retailers, marketplaces like Amazon, and increasingly social media apps like Instagram, TikTok and Snapchat, which are all looking at how they can better capitalize on how their platforms are already being used quite aggressively and widely for social commerce.

Social media sites would be an ironic but perhaps very unsurprising competitor for Lyst, which started life as a pioneer in the concept, creating a way for people to follow influential high fashion brands and influencers on its platform — who were not actually called “influencers” at the time, but curators and bloggers (the more things change, eh?) — and get alerts when items would be posted by them for sale.

People might have originally been very skeptical about how well high fahion (read: expensive, sometimes esoteric) might play over screens, but over time Lyst and the others in the same proved it all out in spades, raising successive rounds over time to back up its premise. Balenciaga, Balmain, Bottega Veneta, Burberry, Fendi, Gucci, Moncler, Off-White, Prada, Saint Laurent and Valentino are among the brands that appear on Lyst today.

Over the years, more variations and competitors have presented themselves, but the salient fact remains that high fashion has a huge target audience delivered in the right way, and that is something that investors, brands, influencers, and these marketplaces themselves have all doubled down on in the pandemic.

It’s been a time when people who have not found themselves outright struggling financially (and there are lot of those, unfortunately), have instead found themselves with more disposable income since they went out and travelled significantly less than before. Fashion and buying goods for ourselves has become a form of escapism, and for those who get a lift out of the tree falling in the forest and being there to hear the sound, we can still put on the outfits, snap ourselves for our Stories, and exposure will still be ours.

“Lyst has made huge progress over the past year with its industry leading app for the fast- growing online luxury fashion market – a trend which looks set to continue as consumers retain their newfound digital habits, and demand for fashion rises further post-pandemic. In recent years we have seen other high-growth fashion tech businesses taking the next step, and we believe Lyst is well positioned to capitalise on this market momentum. Draper Esprit has backed Lyst since Series A and we believe this latest round sets the business up for an exciting next phase,” said Nicola McClafferty, a partner, Draper Esprit, in a statement.

Lyst also announced a few appointments to firm up its executive bench in the lead-up to its next steps as a company. Mateo Rando previously at Spotify, is joining as chief product officer to focus largely on Lyst’s popular mobile app. And Emma McFerran, formerly general counsel and chief people officer, is stepping up as COO and a new board member.

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Holidu books $45M after growing its vacation rentals business ~50% YoY during COVID-19

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Vacation rental startup Holidu has tucked $45 million in Series D funding into its suitcase — bringing its total raised since being founded back in 2014 to more than $120M.

The latest funding round is led by 83North with participation from existing investors Prime Ventures, EQT ventures, Coparion, Senovo, Kees Koolen, Lios Ventures and Chris Hitchen. Also participating, with both equity and debt, is Claret Capital (formerly Harbert European Growth Capital).

The financing will be ploughed into product development; doubling the size of the tech team; and on building out partnerships to keep expanding supply, Holidu said.

While the global pandemic clearly hasn’t been kind to much of the travel industry, the Munich-headquartered startup has been able to benefit from coronavirus-induced shifts in traveller behavior.

People who may have booked city breaks or hotels pre-COVID-19 are turning to private holiday accommodation in greater numbers than before — so they can feel safer about going on holiday and perhaps enjoy more space and fresh air than they’ve had at home during coronavirus lockdowns.

Having flexible cancelation options is also now clearly front of mind for travellers — and Holidu credits moving quickly to build in flexible cancellation and payment solutions with helping fuel its growth during the pandemic.

Holidu’s meta search engine compares listings on sites like Airbnb, Booking.com, HomeAway and Vrbo and provides holidaymakers with tools to zoom in on relevant rentals — offering granular filters for property amenities; property type; and distances to the beach/lake etc.

It can also be used to search only for listings with a free cancelation policy.

“We see that many travellers have chosen vacation rentals in rural destinations over hotels or cities,” confirms CEO and co-founder Johannes Siebers. “In spite of this shift in preference, the overall European vacation rental market declined in 2020 due to the strong travel restrictions in many months. Holidu managed to grow against this trend by responding very quickly to the increased demand for domestic lodging and for flexible cancellation options.”

The startup saw year-over-year growth of circa 50% in 2020 — and greater than 2x growth in its contribution margin, per Siebers.

“[That] enabled us to become profitable with our search business,” he adds. “Revenues for 2021 are still difficult to forecast due to the uncertain pandemic and political outlook but we expect a significantly higher growth rate compared to 2020.”

Holidu is active in 21 countries with its search engine — which now combines more than 15M vacation rental offers from over a thousand travel sites and property managers. In July 2020 alone, it said that more than 27M travellers used the product.

Its search engine business has a mixed business model, with Holidu taking a commission per click with a minority of its partners and earning a commission for each booking generated with the majority.

In another strand of its business, under the Bookiply brand, it works directly with property owners to help them maximize bookings via a software-and-service solution — offering to take the digital management strain in exchange for a cut of (successful) bookings.

Back in 2019 it was managing 5,000 properties via Bookiply. Now Siebers says it’s “on track” to grow to more than 10,000 properties by the end of this year.

Bookiply has become the largest supplier of vacation rentals in what it described as “important leisure destinations” such as the Balearic Islands, Canary Islands and Sardinia (which are all very popular holiday destinations with German travellers).

Part of the Series D funding will go on opening more Bookiply offices across Europe so it can grow its service offering for regional vacation rental owners.

The division aims to reach property owners whose properties are not yet online, as well as optimizing digital listings that aren’t doing as well as they might, so having physical service locations is a strategy to help with onboarding owners who may be newbies to digital listing.

Commenting on the funding in a statement, Laurel Bowden, partner at 83North said: “Vacation rentals are a very competitive market and Holidu’s growth throughout the pandemic has been highly impressive. We are attracted by their strong operating efficiency and proven ability to grow market by market.”

Last year Holidu was among scores of startups in the travel, accommodation and jobs sectors that signed a letter to the European Commission urging antitrust action against Google.

The coalition accused the tech giant of unfairly leveraging its dominant position in search in order to elbow into other markets via tactics like self-preferencing, warning EU lawmakers that homegrown businesses were at risk without swift enforcement to rein in abusive behaviors.

Although in Holidu’s case it’s managed to grow despite the pandemic — and despite Google.

Asked how much of an ongoing concern Google’s behavior is for the growth of its business, Siebers told TechCrunch: “Given its size and market position, we believe Google carries a special responsibility in the search market. Furthermore, we believe in merit based competition to drive innovation and provide users with the best products. We have joined the letter to the EC as in our view, Google does not fully live up to its responsibilities in all areas of its product.

“The way Google displays specialized search products in many travel verticals does, in our view, not comply with the principle of fair, merit based competition. It gives Google’s own product eyeballs which no other player could attract in the same way.”

“We have not yet seen noticeable changes in Google’s search box integration but we are confident that Google will eventually provide a level playing field. Even if this would take some time and is important, we are not overly worried as we have a very diversified business. Among others, with Bookiply we have a strongly growing offering towards homeowners which is independent of Google’s activities in the market,” he added.

Since the coalition wrote the letter the Commission has unveiled a legislative proposal to apply ex ante regulations to so called ‘gatekeeper’ platforms — a designation that looks highly likely to apply to Google, although the Digital Markets Act (DMA) is still a long way off becoming pan-EU law.

Siebers said Holidu supports this plan for a set of ‘dos and don’ts’ that the most powerful platforms must abide by.

“We are supportive of the commission’s proposal and believe not only the act itself but also enforcement will drive innovation and better products for customers,” he added. “Enabling free and fair competition is a core deliverable for a regulator in a market place and we have high expectations towards the EU in this regard. If we achieve this, I am certain we will  see an  increase in innovation, investments and activities in areas which are currently impacted by gatekeeper’s activities.”

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