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This Week in Apps: Sneak peek at TikTok shopping, new iOS and Android betas, kids’ app Prodigy hit with FTC complaint

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Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.

The app industry is as hot as ever, with a record 218 billion downloads and $143 billion in global consumer spend in 2020.

Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.

Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.

This week, we’ve got a first look at one of TikTok’s early e-commerce tests, which involves a program for sellers involving product anchors on videos and the option for affiliate sales. We’re also digging into the new iOS and Android betas, the FTC complaint against math app Prodigy and more.

Top Stories

TikTok tests a new e-commerce experience in Indonesia

The Financial Times recently reported TikTok was preparing to launch a range of new e-commerce experiences in 2021, including the ability for creators to share links to products, support for affiliate sales, and even livestreamed shopping. Now, we’ve got a first look at some of the live tests around e-commerce that TikTok has in progress.

The company recently launched a “Seller University” website aimed at its Indonesian audience, where it details how brands can advertise their products on video. Here, TikTok explains brands have two ways to advertise, either by making their own videos or by working with affiliates.

“If you choose to sell through your personal page, you can then display products via livestreaming or short videos, with product anchors embedded in your content. When customers view your content, they can be redirected to the corresponding product detail page by clicking on the product anchor,” the site explains.

The Seller University also details other information, like how to sign up to be a TikTok seller and what sort of products are prohibited, along with other rules and guidelines.

Image Credits: TikTok

TikTok Sellers have to provide their contact information, including location, phone, email, shop and warehouse location, and other required documentation to be approved. They can then set up a Seller profile, where they can manage other users associated with their account. Once live as a Seller on the app, they’ll have a “TikTok Shop” on the second tab on their profile, which users can view when they visit the page.

When their videos showing their products are viewed, there are “product anchors” embedded in the content. Clicking on these anchors will redirect the viewer to the product detail page where they can transact. In addition, brands can collaborate with TikTok influencers to promote their products through a new “TikTok Affiliate” program.

Image Credits: TikTok

TikTok told TechCrunch the program is a test of its e-commerce solutions in Indonesia, and one of several product tests in the area of e-commerce.

Consumer advocacy groups file FTC complaint against edtech app Prodigy

A coalition of 20 consumer advocacy groups, led by the Campaign for a Commercial-Free Childhood, have filed an FTC complaint against the popular edtech app Prodigy, which offers a math learning app for web and mobile. The app is designed much like modern-day freemium games, with math “battles” designed to improve math skills, grades and test scores.

The complaint alleges a variety of abuses, including how it aggressively pushes kids using the free version provided to schools to nag parents for the paid $59 annual subscription, which includes a richer gaming experience.

The groups also take issue with the app’s in-app rewards and badges — some of which are only available to paid users, including fancier loot boxes — saying these features cause division between those who pay and those who can’t. And it alleges that Prodigy’s claims about educational improvements don’t hold merit.

In response, Prodigy says it takes the concerns seriously, but over 95% of users play the game for free and the business model involving the paid membership is how free access is provided.

“Without this model, we would be required to put all of our educational content behind a paywall, which contradicts our mission of providing full access to fun and engaging math learning,” a company spokesperson said. “The alternative would be to generate revenue via advertising, which is not a model we believe best benefits or protects our users. We never show third-party ads on our platform, nor do we sell or lease any other user information to third parties,” they noted.

The FTC has stepped up its enforcement over how apps targeting children can behave, with a focus on data collection practices and COPPA violations, which has resulted in fines for apps like TikTok and YouTube. This complaint, however, is not about children’s privacy, but rather how they’re being marketed to via edtech.

Weekly News

Platforms: Apple

Apple rolls out iOS 14.5, beta 2. The update includes a new Apple Music interface with the ability to share lyrics on social and use new swipe gestures; new Shortcuts actions for taking screenshots, setting screen orientation switching between cellular data modes, and more; expanded support for iPad privacy features (in relation to shutting off the microphone); and more than 200 new emoji.

The most notable new emoji include the heart on fire, exhaling face, face in clouds, gender options for people with beards and an updated syringe that removes the blood, making it more useful for conversations about the COVID vaccine.

Apple welcomed the teams from 13 app companies in its inaugural cohort for Apple’s Entrepreneur Camp for Black Founders and Developers. The program focuses on building technical skills and designing a great user experience through sessions, hands-on labs, one-on-ones with Apple experts and engineers, and more. VC firm Harlem Capital will also offer mentorship.

Participants include fitness app B3am, news app Black, music app Bar Exam, 3D photos app Film3D, MIDI Controller app FormKey, healthcare app Health Auto Export, gardening app Hologarden, remote learning solution Hubli (beta testing), game Justice Royale, sneaker enthusiast app Kickstroid, nail art app Nailstry, social app Peek: Movies & TV Shows and music app TuneBend.

Platforms: Google

Google launches the first developer preview of Android 12. The update includes new privacy controls; pre-set password complexity levels of high, medium and low; other improved user experience tools and app compatibility improvements; the ability to transcode media into higher-quality formats like the AV1 image format; transitions and animations for notifications, plus the ability to decorate notifications with custom content; enrollment-specific IDs for employee-owned devices; streamlined credential management for unmanaged devices; an improved screenshot editor; better support for multi-channel audio; Project Mainline improvements; and more.

Google’s Play Store adds support for Nearby Sharing. The feature allows users to share apps and updates with nearby Android devices.

Google suspended the Trump 2020 app from the Play Store for non-functionality. The app would either hang upon first launch or immediately reported a server error. Google says the app was in violation of its policies around non-functional apps, but the app can return if it’s fixed.

E-commerce

YouTube says it’s now beta testing a new e-commerce shopping experience in the app that allows creators to market products to fans, who can then buy directly on YouTube. The feature, which aims to compete with TikTok’s growing shopping ambitions, will expand later in 2021 beyond the initial group of creators.

Image Credits: YouTube

Fintech

Robinhood’s CEO Vlad Tenev testified before Congress this week over the GameStop frenzy. Tenev denied helping hedge funds and asked for the SEC to modify trading rules. AOC pointed out that Robinhood isn’t truly free, it’s just hiding the cost from retail investors by subsidizing free trades with payment for order flow. (A percentage of its revenue Tenev ridiculously claimed he couldn’t recall, saying only “it’s over 50%.”)

From the hearing, via CSPAN

Social

TikTok parent ByteDance is exploring a sale of its TikTok operations in India to Bangalore-headquartered Glance, a mobile content platform founded by InMobi founder Naveen Tewari. Glance operates a TikTok rival Roposo, which has seen massive growth since TikTok was banned in India over national security concerns. The two companies — ByteDance and Glance parent InMobi Pte — share an investor with SoftBank, which initiated the talks, per a Bloomberg report.

Instagram is fixing the iMessage bug. Some suspected the issue was related to Apple and Facebook’s ongoing public battles, but Instagram said the problem where Instagram links in iMessage wouldn’t show a preview was just a bug. The company noted a fix will arrive soon.

TikTok inks a multi-year deal with UFC which includes livestreams of pre- and post-fight content, and other behind-the-scenes footage. The content will stream on UFC TikTok accounts including @UFC, @UFCRussia, @UFCBrasil and @UFCEurope.

Douyin, the Chinese version of TikTok, now has 550 million users for its in-app Search feature alone. The app last reported in September it had 600 million daily users, indicating an even larger base of MAUs.

Right-wing social network Parler announced it’s back online for existing users and will re-open to new users next week. The company also has a new interim CEO, Mark Meckler, who previously co-founded the Tea Party Patriots.

Triller is mired in controversy over its MAUs. A Billboard report says the company misrepresented the number of monthly active users it had — 25 million instead of the 50 million it claimed. Triller CEO Mike Lu had said the discrepancies didn’t matter because there’s “no legal definition” for an MAU. After the report came out, Lu denied the company was inflating its numbers. We happen to recall that Triller immediately threatened to sue over a report that it had inflated its downloads last year.

Photos

YouTube star David Dobrik’s photo-sharing app Dispo, backed by a $4 million seed, launched into private beta to a ton of buzz. The app quickly maxed out TestFlight’s 10,000-person limit, instead of being the low-key beta debut the team had expected. Dispo’s gimmick is that users have to wait 24 hours to see the photos they snap.

Messaging

 

Image Credits: WhatsApp

WhatsApp will roll out an in-app banner in an attempt to better explain its new privacy policy. When clicked, users will be directed toward policy information they can review at their leisure ahead of the May 15 deadline to accept the changes.

Streaming & Entertainment

Image Credits: App Annie

Clubhouse has topped 8 million global downloads, 2.6 million of which were in the U.S., according to a new report from App Annie. The report also highlighted the broader impact Clubhouse is having on social audio, as local audio apps are gaining new installs, too.

Global mobile users streamed 935 billion hours of video in 2020, up 40% YoY, says App Annie. The pandemic impacts were clear — users went from 146 billion hours in Q1 2019 to 240 billion in Q4 2020, a 65% rise in two years.

Cameo, the app that connects customers with celebs for paid personalized messages, is said to be raising $100 million, valuing its business at $1 billion, reports Bloomberg Quint. Not coincidentally, Facebook just began testing its Cameo clone, Super.

YouTube reveals its 2021 plans. In a blog post from Chief Product Officer Neal Mohan, YouTube gave a look at coming updates across its suite of apps:

  • YouTube to redesign its YouTube VR app homepage to improve navigation, accessibility and search functionality.
  • YouTube says it will expand its video chapters feature to add chapters automatically and update the watch experience to be more intuitive, including on the tablet.
  • YouTube TV, now with 3 million-plus users, will introduce a paid add-on that will support 4K streaming, DVR for off-line playback and unlimited simultaneous in-home streams.
  • YouTube Kids will add a feature that allows parents to specify the channels and videos their kids are allowed to watch.
  • YouTube will expand its Applause tipping feature to more creators in 2021.
  • YouTube Music will improve playlist creation and make those playlists more discoverable.
  • And as noted above, YouTube is testing an e-commerce feature that lets users check out on the app.
  • YouTube Shorts, an in-app TikTok rival of sorts, will come to the U.S. in March, following its tests in India.

Gaming

Microsoft xCloud, the game streaming service that lets users play Xbox games on Android tablets and phones, has begun testing a web version. In a review by The Verge, the experience is described as similar to the mobile version, with a simple launcher, recommendations, access to cloud games through Xbox Game Pass Ultimate and the ability to resume recently played games.

Apple demanded sensitive data from Valve to aid in its legal battle with Epic Games. The request included things like total yearly sales of apps and in-app products; annual ad revenues from Steam; annual revenues from Steam; annual earnings gross or net from Steam; and more. Apple also wanted the names of all Steam apps, price and IAP, and date range available. Valve, not surprisingly, did not agree to this. PCGamer has the full report.

Epic Games expands its legal fight with Apple to the EU. The Fortnite owner filed a formal antitrust complaint with the European Commission, alleging Apple’s anti-competitive restrictions that have “eliminated competition in app distribution and payments.” Epic Games is also fighting Apple in the U.S., U.K. and Australia.

Stadia layoffs shocked team. Google Stadia, the game streaming service available via Chromecast Ultra, the Chrome browser, ChromeOS tablets and the Stadia mobile app for Android, recently shut down its in-house game development studio, Stadia Games and Entertainment. A report from Kotaku this week indicates how much of a surprise this was to team, as just days before the mass layoffs, leadership was praising staff for their “great progress.”

Health & Fitness

Apple tells developers that only apps submitted by recognized public health authorities will be able to publish “health pass” apps to the App Store. These apps are designed to show someone’s COVID-19 testing and vaccination status. Apple says it will accept apps from government, medical and other credentialed institutions, healthcare providers, laboratories and test kit manufacturers.

Apple promotes iOS health apps to Apple Card holders. In honor of American Heart Month, Apple emailed Apple Card users savings on iOS health apps including Strava, Ten Percent Happier, Sleep Cycle and Lifesum.

U.S. health & fitness apps saw over 405 million installs in 2020, up 22% year-over-year, reports Sensor Tower. The apps, which benefited from gym closures amid COVID, saw $838 million in consumer spend, up 42% YoY. The average age of users also continued climb, demonstrating better retention with older users.

Image Credits: Sensor Tower

A second report from the firm indicated U.S. pharmacy app installs were up 47% as the COVID-19 vaccine began to roll out.

Productivity

Microsoft launched a unified app for iPad that combines Word, PowerPoint, Excel and OneNote into one single app. The app is a free download with in-app subscriptions, starting at $6.99/month. A $69.99/year subscription is also available. Microsoft previously launched unified apps for the iPhone and Android.

Government & Policy

TikTok faces a new series of regulatory complaints in Europe, including unfair terms over its virtual currency, whose exchange rate can be modified by TikTok; unfair terms in relation to copyright, related to TikTok’s ability to redistribute users’ videos without paying them (e.g. for ads); child safety concerns over suggestive content and “hidden marketing” of its branded Hashtag Challenges; and other accusations of misleading data processing and privacy practices.

North Dakota’s Senate votes down the App Store bill that would have forced Apple to allow users to sideload apps on their mobile devices. The bill was funded by the advocacy group Coalition for App Fairness, which includes Epic Games, Spotify, Match Group, Tile and others with a beef against Apple over its commission structure. Similar bills are under consideration in Arizona and Georgia.

Adtech

The Post-IDFA Alliance, which consists of Liftoff, Fyber, Chartboost, InMobi, Vungle and Singular, launched a new “No IDFA? No Problem” resource that aims to help publishers and advertisers navigate the iOS 14 transition.

Security

File sharing app SHAREit, one of the world’s most popular apps, is found to have several security flaws, researchers reported. The vulnerabilities could be abused to leak sensitive user data and “execute arbitrary code” with app permissions.

Funding and M&A

✨ Robinhood rival Public.com raised $220 million just months after its $65 million Series C, as previously reported by TechCrunch. Prior investors returned, including Greycroft, Accel, Tiger Global, Inspired Capital, and others, valuing the business at $1.2 billion.

✨ Robinhood rival Webull raised $150 million in a new round that values the business at over $1 billion. The brokerage was founded by Alibaba alum Wang Anquan and, like Public.com, has benefitted from the exodus of disgruntled Robinhood users, who left over the GameStop debacle.

✨ Math learning app Photomath raised $23 million in Series B funding in a round led by Menlo Ventures. The app, now with 220 million downloads, lets you point your phone at a math problem and it explains the solution.

✨ Live video shopping startup Talkshoplive raised $3 million from Spero Ventures for its live video shopping platform that lets users watch its videos on the web and mobile web — or anywhere else they’re embedded.

✨ Event networking app Grip raised a $13 million Series A, despite the pandemic. The app pivoted last year to support virtual, hybrid and live events, instead of just in-person events.

✨ Mobile gaming startup Artie raised $10 million for its gaming platform that lets users play mobile games without installing an app, from the browser or anywhere links can be shared online. Investors included Zynga founder Mark Pincus, Kevin Durant and Rich Kleiman’s Thirty Five Ventures, Scooter Braun’s Raised In Space, Shutterstock founder Jon Oringer, Tyler and Cameron Winklevoss, Googler Manuel Bronstein and YouTube co-founder Chad Hurley.

✨ Low-code app development service OutSystems raised $150 million in a round led by Abdiel Capital and Tiger Global, valuing the business at $9.5 billion.

✨ Cross-border neobanking app Zolve raised $15 million in a seed round led by Accel and Lightspeed. The app was founded by the Raghunandan G, the founder of ride-hailing firm TaxiForSure, which exited to Ola. It’s aimed at people moving from India to the U.S. or vice versa.

✨ Dating app Jigsaw raised $3.7 million for its app that hides daters’ faces with puzzle pieces in an effort to push users to engage and get to know each other before the reveal. While “face reveals” are popular on social media, a dating app that does this lends itself to objectifying people by not showing the face, as users focus on the daters’ body instead.

Downloads

Outfit

Image Credits: Outfit

TechCrunch this week covered DIY home renovation startup Outfit, which leverages consumers’ mobile devices to help them with their home projects. After submitting information, including dimensions and photos, Outfit’s app offers the customer a step-by-step guide for completing the project, including documenting their space, getting items and tools delivered, a custom to-do list and receiving support while the project is underway.

Hush

Image Credits: Hush

Hush, a recently launched Safari ad blocker for Mac, iPhone and iPad, does more than just block ads. The app also works to block other invasive trackers and those annoying cookie warnings that now pop up everywhere due to GDPR laws. (it actually doesn’t consent or deny the “accept cookies?” requests — it just blocks the scripts and elements on the website. It doesn’t interact with the site or click any buttons.

Unlike some blockers, Hush doesn’t collect your data. It doesn’t log your browser habits or passwords or even collect crash reports. It’s also free, but you can sponsor the developer on GitHub.

Zillow’s update

The updated version of Zillow’s 3D Home app introduced new technology that combines into one interface 3D Home tours, listing photos and AI-generated floor plans. To create the floor plans and home tour, the app uses computer vision and machine learning on panoramic photos the agent or photographer captured using the app and a 360-degree camera. The app also leverages AI to predict things like room dimensions and square footage. Both the home tour and floor plan can then be automatically uploaded to the lists and added to a website, MLS or shared on email/social media.

Due to the pandemic, Zillow 3D Home tours published on for-sale listings increased 255% during 2020 as customers used it as a safer way to tour properties, the company also noted.

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

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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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Daily Crunch: Square acquires Tidal

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Square buys a majority stake in Jay-Z’s Tidal, WhatsApp improves its desktop app and Hopin raises even more funding. This is your Daily Crunch for March 4, 2021.

The big story: Square acquires Tidal

Square announced this morning that it has purchased a majority stake in Tidal, the music streaming service founded by Jay-Z. It sounds like an odd fit at first, which Square CEO Jack Dorsey acknowledged in a tweet asking, “Why would a music streaming company and a financial services company join forces?!”

His answer: “It comes down to a simple idea: finding new ways for artists to support their work. New ideas are found at the intersections, and we believe there’s a compelling one between music and the economy. Making the economy work for artists is similar to what Square has done for sellers.”

Square is paying $297 million in cash and stock for the deal, which will result in Jay-Z joining Square’s board.

The tech giants

WhatsApp adds voice and video calling to desktop app — This should provide relief to countless people sitting in front of computers who have had to reach for their phone every time WhatsApp rang.

Apple’s App Store is now also under antitrust scrutiny in the UK — The U.K.’s Competition and Markets Authority announced that it’s opened an investigation following a number of complaints from developers alleging unfair terms.

Google speeds up its release cycle for Chrome — Mozilla also moved to a four-week cycle for Firefox last year.

Startups, funding and venture capital

Hopin confirms $400M raise at $5.65B valuation — For Hopin, the round is another rapid-fire funding event.

Coursera is planning to file to go public tomorrow — The company has been talking to underwriters since last year, but tomorrow could mark its first legal step in the process to IPO.

Luxury air travel startup Aero raises $20M — The startup describes its offering as “semi-private” air travel.

Advice and analysis from Extra Crunch

As activist investors loom, what’s next for Box? — A company with plenty of potential is mired in slowing growth.

Unraveling ThredUp’s IPO filing: Slow growth, but a shifting business model — ThredUp is a used-goods marketplace approaching the public markets in the wake of Poshmark’s own strong debut.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Everything else

SITA says its airline passenger system was hit by a data breach — Global air transport data giant SITA has confirmed a data breach involving passenger data.

How to successfully dance the creator-brand tango — What makes creators succeed, and how should brands work with them?

Announcing the Early Stage Pitch-Off Judges — On April 2, TechCrunch will feature 10 top startups across the globe at the Early Stage Pitch Off.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

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Making sense of the $6.5B Okta-Auth0 deal

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When Okta announced that it was acquiring Auth0 yesterday for $6.5 billion, the deal raised eyebrows. After all, it’s a substantial amount of money for one identity and access management (IAM) company to pay to buy another, similar entity. But the deal ultimately brings together two companies that come at identity from different sides of the market — and as such could be the beginning of a beautiful identity friendship.

The deal ultimately brings together two companies that come at identity from different sides of the market — and as such could be the beginning of a beautiful identity friendship.

On a simple level, Okta delivers identity and access management (IAM) to companies who use the service to provide single-sign-on access for employees to a variety of cloud services — think Gmail, Salesforce, Slack and Workday.

Meanwhile, Auth0 is a developer tool providing coders with easy API access to single-sign-on functionality. With just a couple of lines of code, the developer can deliver IAM tooling without having to build it themselves. It’s a similar value proposition to what Twilio offers for communications or Stripe for payments.

The thing about IAM is that it’s not exciting, but it is essential. That could explain why such a large number of dollars are exchanging hands. As Auth0 co-founder and CEO Eugenio Pace told TechCrunch’s Zack Whittacker in 2019, “Nobody cares about authentication, but everybody needs it.”

Putting the two companies together generates a fairly comprehensive approach to IAM covering back end to front end. We’re going to look at why this deal matters from an identity market perspective, and if it was worth the substantial price Okta paid to get Auth0.

Halt! Who goes there?

When you think about identity and access management, it’s about making sure you are who you say you are, and that you have the right to enter and access a set of applications. That’s why it’s a key part of any company’s security strategy.

Gartner found that IAM was a $12 billion business last year with projected growth to over $13.5 billion in 2021. To give you a sense of where Okta and Auth0 fit, Okta just closed FY2021 with over $800 million in revenue. Meanwhile Auth0 is projected to close this year with $200 million in annual recurring revenue.

Identity and access management market numbers from Gartner.

Image Credits: Gartner

Among the top players in this market according to Gartner’s November 2020 Magic Quadrant market analysis are Ping Identity, Microsoft and Okta in that order. Meanwhile Gartner listed Auth0 as a key challenger in their market grid.

Michael Kelly, a Gartner analyst, told TechCrunch that Okta and Auth0 are both gaining something from the deal.

“For Okta, while they have a very good product, they have marketing muscle and adoption rates that are not available to smaller vendors like Auth0. When having [IAM] conversations with clients, Okta is almost always on the short list. Auth0 will immediately benefit from being associated with the larger Okta brand, and Okta will likewise now have credibility in the deals that involve a heavy developer focused buyer,” Kelly told me.

Okta co-founder and CEO Todd McKinnon said he was enthusiastic about the deal precisely because of the complementary nature of the two companies’ approaches to identity. “How a developer interacts with the service, and the flexibility they need is different from how the CIO wants to work with [identity]. So by giving customers this choice and support, it’s really compelling,” McKinnon explained.

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